Lithium Werks. Tapping into the global lithium opportunity. Company Presentation. June, 2017

Transcription

1 Lithium Werks Tapping into the global lithium opportunity Company Presentation June,

2 Safe Harbor This presentation may contain forward-looking statements within the meaning of the safe-harbor provisions of the Private Litigation Reform Act of 1995, including statements regarding the Company s expected production and sales. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of Lithium Werks ( LW or the Company ) to differ materially from the results expressed or implied by such statements. These risks and uncertainties include, without limitation, economic downturn adversely affecting demand for the Company s products, fluctuations in the cost of raw materials, the Company s dependence on, or inability to attract additional, major customers for a new significant portion of its net sales, the Company s ability to increase manufacturing capabilities to satisfy orders from new customers, changes in the laws of the PRC that affect the Company s operations, the devaluation of the U.S. Dollar relative to the Renminbi, the Company s dependence on the growth in demand for industrial and specialty applications and the success of manufacturers of the end applications that use its battery products, the Company s ability to expand sales in the ESS, UPS and Telecom markets, responsiveness to competitive market conditions, the Company s ability to successfully manufacture Li-Ion batteries in the time frame and amounts expected, the market acceptance of the Company s Li-Ion products, and changes in foreign, political, social, business, and economic conditions that affect the Company s production capabilities or demand of its products. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company has no obligation to update the forward-looking information contained in this presentation. 2

3 1 EXECUTIVE SUMMARY 3

4 EXECUTIVE SUMMARY: OVERVIEW Lithium Werks, Inc. is a new Delaware C Corp entity, that has been formed in March 17 to participate in the fast growing lithium rechargeable markets Who we are We are focused on the production of top-class Industrial and Specialty based products that directly address the needs of global companies for a longer lasting and lower cost battery solutions for today s power hungry electronic devices and Energy Storage applications The company was co-founded by T. Joseph Fisher, a proven global battery leader with 30+ years of international leadership experience, and Christian Ringvold, a seasoned business executive with a solid track record and extensive experience in corporate strategy, business development and finance Together, they have the vision of growing Lithium Werks into a leading low cost producer of specialty Lithium batteries, as well as being a leading Value Added Reseller, producing game-changing products, and generating above industry growth and profitability. Energy storage systems is the key segment of the lithium battery market offering largest growth potential, particularly for Value Added Resellers that are able to supply high-tech cost efficient solutions The opportunity The market is consolidating quickly but solid opportunity is present to create a new market leader by partnering or acquiring smaller Tier II players that possess strong technology and client base yet lack the scale to effectively compete globally essentially growing into the major global Value Added Reseller Lithium Werks has now been presented with a unique opportunity to acquire the Industrial & Specialty business of A123 Systems, LLC, a leading global Lithium battery company, with a strong reputation in the marketplace, solid customer base and unparalleled engineering capabilities 4

5 EXECUTIVE SUMMARY: THE DEAL The transaction is a Management Buy Out of the existing A123 Systems Industrial business. It includes the manufacturing base and all the global customers of this strong global #2 business in the world of cylindrical power cells for Industrial and Specialty applications basically all non-transportation applications, and includes Golf Carts and Fork Lifts. The Deal The acquisition includes the Global Sales of the division along with the stock purchase of the A123 Systems (China) Materials, Co., Ltd, which includes two plants located in an EPZ (Export Processing Zone) in Changzhou, China and about 300 employees. LW also acquires a royalty free license for A123 s proprietary, patented and world renowned Nanophosphate TM technology (valid until 2025), along with the trademarks of Nanophosphate TM and Power, Safety and Life TM The acquisition also includes a contract manufacturer agreement for A123 s world leading Motorsports business, as well as a medium term supply agreement with A123 for one of their largest Transportation customers for a specialized battery module Lithium Werks has the expertise and capabilities to grow into the industry leader in a large, high-potential market. We are looking to raise up to $10m in new Equity, Asset based lending and/or other financing instruments, to provide adequate growth capital to rapidly grow sales and profits via a consolidation of production facilities into a smaller building, and more efficient layout, yielding significant cost reductions, as well as the introduction of a new lower cost, higher energy cylindrical cell. 5

6 EXECUTIVE SUMMARY: VALUE PROPOSITION & DEAL SYNERGIES The acquisition will instantly position Lithium Werks as one of the key non transportation leading players in the market, with global annual revenues of $50M and a solid base of global customers Unlocking instant market access & building credibility credibility Tapping into new market and growth opportunities Developing value-added partnerships and amplifying revenue potential The deal would provide LW with immediate validation in the market through A123 s reputation and client network With the deal the company would purchase a diversified base of global customers in the personal mobility, medical, industrial and specialty markets Acquisition would also bring in the necessary scale as well as substantial annual sales and solid profit potential, securing solid profit potential within the first years of operations Through the acquisition of target s strong engineering & pack capabilities, LW would be perfectly positioned to act on the opportunity to enter the fast-growing verticals of Energy Storage Systems, UPS Data Centers and Telecom where incumbents are quickly moving away from lead acid battery solutions LW would be producing products ideally fit for customers emerging needs - supplying longer lasting, more powerful and lower cost of total ownership Lithium rechargeable solutions LW will develop sales and distribution agreements with other leading lithium battery producers, who are looking for VARs of their cells in the fast growing verticals LW has already reached the sales and distribution agreement with a fast growing Lithium Polymer battery company for North America & Europe regions and is eyeing more similar arrangements in the future 6

7 1 THE COMPANY: LITHIUM WERKS 7

8 THE COMPANY Leading global Specialty Lithium Ion battery producer and Value Added Reseller, providing lithium-ion energy storage solutions that offer world-class performance tailored to applications in the industrial and energy markets CORPORATE HEADQUARTERS: Orlando, Florida EMPLOYEES: 326 people SALES OFFICES: Livonia (Michigan), Manchester (UK), Shenzhen (China) PRODUCTION FACILITIES: 2 plants in an EPZ (Export Processing Zone) in Changzhou, China with 200,000,000 Wh of manufacturing capacity KEY PRODUCT FOCUS: World-class Industrial, Specialty and Consumer based lithium battery products INTELLECTUAL PROPERTY: multiple patents & patent applications, including world renowned Nanophosphate TM technology and "Power, Safety and Life" TM 8

9 KEY AREAS OF FOCUS Key market Other markets VAR operations in the energy sector (ESS / UPS/Telecom markets) with the focus on Industrial and Specialty based products E-Bikes IoT Robotics Aerospace & Defense Other areas of focus Golf cart market battery applications through BMS / Controller partner, with a future goal of making a dedicated Plug-n-Play golf car solution Partnering with other Battery Management System companies for the Fork Lift Market Drones Medical Equipment and Mobile Medical cart batteries Airport handling equipment Industrial cleaning equipment Mining Equipment Alternative Power Units High end remote controlled toys Emergency Lighting 9

10 OUR CUSTOMERS 10

11 THE TEAM T. Joseph Fisher, III Christian Ringvold CEO & President EVP, Corporate Strategy, Business Development Seasoned business executive with 30+ years of experience in batteries, personal care products and clean-tech markets Most recently, a VP of A123 Systems, as the global head of Industrial battery activities Previously served as CEO & President of Valence Technology, VP at Energizer Holdings Group; CEO & President of Contour Energy System, and founder of the successful consulting battery company JCF International, LLC BS in Industrial Management (University of Cincinnati) and an MBA from the West Virginia College of Graduate Studies Solid track record and extensive experience in business development Worked with multiple global brands helping them to successfully achieve growth and execute market strategies Expansive network and knowledge in being a door opener in North America and the Nordic Countries In the past managing director for NorMedical AS, being key to company s development and success in the North American marketplace MBA from LeMoyne College, Syracuse N.Y 11

12 THE TEAM Robert K. Holshouser John Aittama Chief Financial Officer Chief Operations Officer Finance leader with diverse experiences in manufacturing and sales operations and 20+ years of track record in finance More than 20 years of successful experience in Operations and Product Design, overseeing operations in Europe, Asia and USA Previously worked as a Director of Financial Planning & Analysis at A123 Systems, leading global management reporting, business planning, cash flow and financial analysis for global regions Transitioned A123 Systems from Oracle to QAD and established project cost tracking system to support growth Most recently Vice President of Product Quality at Orchid Orthopedic Solutions, overseeing 14 medical device design and manufacturing sites Worked 6+ years at A123 Systems as; Director of Quality for Asia Pacific, Global Director for Product Design and Sustaining Engineering, and Director of Michigan Operations Led financial planning and implementation of turnaround plan that brought underperforming Glass business to profitability, enabling sale of ~$500M Glass Division to independent investor MBA from the University of California (Berkeley), BS in Mechanical Engineering from GMI Engineering & Management Institute and completed Senior Management Program at IESE University of Navarra (Spain) As the leader for Michigan operations ran $8mm+ under budget and increased capacity to 150%, producing record number of cells (4 million pieces). MS in Mechanical Engineering from Michigan Technological University and BS in Mechanical Engineering from Western Michigan University, 6-sigma Black belt 12

13 2 OPERATIONS & FINANCIAL SNAPSHOT 13

14 OUR PRODUCTS CELLS Cylindrical Prismatic pouch POUCH CELL MODULES Cell selection Cell balancing and monitoring electronics Packaging / testing / manufacturing LEAD-ACID REPLACEMENT Standard module form factor 2-3X the run-time and half the weight of similar sized lead acid battery modules Product family current in re-development Lower cost of ownership 14

15 BEST-IN-CLASS NANOPHOSPHATE TM TECHNOLOGY Proprietary, patented and world renowned Nanophosphate TM technology with a significant advantage over other iron phosphates Significantly higher rate capability Higher power Better life Increased safety 15

16 PROVEN MANUFACTURING CAPABILITIES Two plants located in an EPZ (Export Processing Zone) in Changzhou, China with 200,000,000 W Hrs of manufacturing capacity Local control over product quality Changzhou plant has been producing globally recognized quality products for more than a decade, in the past having produced cylindrical cells for BMW ActiveHybrid series Powder made in CZ by Johnson-Matthey Coating Cell Assembly Module Assembly Regular quality audits to ensure consistently high and improving standards of the production processes Changzhou is TS certified UL, UNDOT and IEC approved products Original Gross Fixed Investment of $54m 16

17 SOLID FINANCIAL PERFORMANCE P&L (DEC 16, $) BALANCE SHEET (APR 17, $) Net sales 40,288,707 Cost of goods sold (36,173,591) Gross profit 4,116,116 Operating expenses (2,168,227) Research and development (240,632) Selling expenses (52,926) General & administrative expenses (1,874,669) EBITDA 1,947,889 Operations loss (1,177,434) Loss before income taxes (1,540,539) Net loss (2,882,196) Cash & Cash Equivalents 843,344 Accounts receivable 12,913,563 Inventory 11,974,135 Total current assets 34,045,586 Property, Plant & Equipment 13,624,227 Other assets 2,937,840 Investment in subsidiaries (5,350) Total Assets 50,602,303 Accounts payable 1,427,687 Other current liabilities 1,987,276 Other long-term liabilities 11,000,000 Total Stockholder s Equity 36,187,340 Total Liabilities & Stockholder's Equity 50,602,303 Note: Per Audited Statements and A123 Systems 17

18 ATTRACTIVE BUSINESS FORECAST Forecasted P&L $27M Revenue in 2017, > $60M in 2019 $70 $ % 14.0% $ % 13% 2018 EBITDA margin $40 $ % 8.0% 6.0% $20 4.0% 137% Revenue growth expected through 2019 $10 $ % 0.0% Revenue Gross profit EBITDA, % 18

19 3 THE MARKET 19

20 LI-ION BATTERY MARKET IS TRANSITIONING INTO THE STAGE OF EXPLOSIVE GROWTH... 5x Global battery consumption is set to increase 5x over the next 10 years, reaching US$77.42 bn in kt Global lithium demand will increase from 181kt Lithium Carbonate Equivalent (LCE) in 2015 to 535kt LCE by 2025 This is the dawn of the Lithium-ion Age. The rapid development of more powerful, rechargeable batteries will revolutionize power generation and distribution. 20

21 ...TRIGGERED BY THE EMERGENCE OF A NUMBER OF NEW APPLICATIONS MARKETS NICHE BREAKTHROUGH NORMALIZED MATURE Selected industrial & commercial applications Emerging product applications in a number of diverse industries, still relatively small compared to other sectors Energy Storage Promising emerging market but still 5 years away, with 50%+ expected CAGR to 2025 Transportation Key industry behind the lithium demand growth (28% CAGR) Consumer electronics One of the key li-ion application markets; currently stabilizing with 10% CAGR Non-battery applications Industrial non-battery applications representing the largest share of lithium consumption (3% CAGR) 21

22 LI-ION MARKET HAS YET TO REACH MATURITY AND CONTINUES TO FIND NEW APPLICATIONS PHEV s Hybrids Buses Portable Solar Energy Storage Energy storage system Stationary energy storage EV s TRANSPORTATION growing market ENERGY STORAGE growing market Residential energy storage Tablets CONSUMER ELECTRONICS expanding market INDUSTRIAL growing market Drone E-bikes Smartphones Wearables Portable Medical Equipment Medical mobility vehicles Golf carts Forklift Robots 22

23 ENERGY STORAGE MARKET OFFERS THE LARGEST GROWTH POTENTIAL Industry estimates put ESS lithium demand growth estimates at >40% CAGR expecting the market to grow to be a 50GWh per annum market by 2025 Energy Storage market is reaching an inflexion point Driven by the declining costs of lithium-ion batteries, battery storage is now economically feasible for a number of Energy Storage applications The impact on installed capacity has been immediate, with installed battery capacity in Energy Storage products doubling in two years, albeit off a low base Lithium-ion batteries should be the leading technology, with superior performance and rapidly falling costs helping ensure it will be the battery of choice in Energy Storage Lithium battery consumption is expected to reach 48GWh (54% CAGR), accounting for 97% of battery use in Energy Storage As a result, lithium demand should increase from virtually nothing in 2015 to 34kt LCE in

24 EXECUTIVE SUMMARY: THE DEAL The transaction is a Management Buy Out of the existing A123 Systems Industrial business. It includes the manufacturing base and all the global customers of this strong global #2 business in the world of cylindrical power cells for Industrial and Specialty applications basically all non-transportation applications, and includes Golf Carts and Fork Lifts. The Deal The acquisition includes the Global Sales of the division along with the stock purchase of the A123 Systems (China) Materials, Co., Ltd, which includes two plants located in an EPZ (Export Processing Zone) in Changzhou, China and about 300 employees. LW also acquires a royalty free license for A123 s proprietary, patented and world renowned Nanophosphate TM technology (valid until 2025), along with the trademarks of Nanophosphate TM and Power, Safety and Life TM The acquisition also includes a contract manufacturer agreement for A123 s world leading Motorsports business, as well as a medium term supply agreement with A123 for one of their largest Transportation customers for a specialized battery module Lithium Werks has the expertise and capabilities to grow into the industry leader in a large, high-potential market. We are looking to raise up to $10m in new Equity, Asset based lending and/or other financing instruments, to provide adequate growth capital to rapidly grow sales and profits via a consolidation of production facilities into a smaller building, and more efficient layout, yielding significant cost reductions, as well as the introduction of a new lower cost, higher energy cylindrical cell. 24

25 SUMMARY REASONS TO CONSIDER INVESTMENT Large, broad and fast growing market place Patented and world class technology Nanophosphate under patents through 2025 Use of the Battery World known Power, Safety and Life Experienced and knowledgeable management team Existing diversified global customer base Significant cost reduction opportunity via move to new building with more efficient layout, lower variable and fixed costs Upside potential to bring in new Pack business through improved engineering focus and lower cell costs A123 Systems will retain a 20% equity stake 25

26 For further questions please contact: Joe Fisher CEO & President +1 (314) Truls Oma Erichsrud Investor Relations & Business Development +1 (305) Christian Ringvold, MBA EVP, Corporate Strategy & Business Development +1 (775)