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©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™
InvestorPresenta,onNovember2008
©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™
2
SafeHarborDisclaimer
Theinforma:oninthispresenta:onmayinclude"forward‐lookingstatements"withinthemeaningofthePrivateSecuri:esLi:ga:onReformActof1995thatinvolverisksand uncertain:es, par:cularly statements an:cipa:ng future growth in revenues.Words such as “an:cipates,” “es:mates,” “expects,” “projects,” “intends,” “plans,”“believes” and words and terms of similar substance used in connec:on with anydiscussion of future opera:ng or financial performance iden:fy forward‐lookingstatements. There can be no assurances that forward‐looking statements will beachieved, and actual results could differ materially from those suggested by theforward‐lookingstatements.Importantfactorsthatcouldcauseactualresultstodiffermaterially include: the comple:on and filing of the applicable documents with theSecuri:esandExchangeCommissionandtheCompany'sfulfillmentoftheobliga:onsunder the applicable indentures. Therefore, any forward‐looking statements in thispresenta:onshouldbeconsideredinlightofvariousimportantfactors,includingtherisks and uncertain:es listed above, as well as others. The Company makes nocommitment to reviseorupdate any forward‐looking statements inorder to reflecteventsorcircumstancesaWerthedateanysuchstatementismade.
©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™
3
InvestmentHighlights
• Demandforsolarpowerincreasing
– PVproduc:oncostdropping– Fossilfuelsmorevola:le
• Surfectuniquelyposi:onedincapitalconstrainedmarket
– drama:callyreducessolarcosts&increasesefficiency
• FirstprogrammablePVwaferpla:ngtechnology
• Modularapproachidealcustomersolu:on
• Accelera:ngmovetowards“gridparity”
• High‐marginandscalableoutsourcingandlicensingmodel
• Solidporcolioofintellectualproperty
Surfect:workingattheheartofsolarpower
©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™SolarIndustryTrends
• Solarpower8yeargrowth~40%peryear
• Industrypricingpressure&difficultfundingenvironment– Costperkilowag‐hourofphotovoltaicsystemshasbeendropping,while
electricitygeneratedfromfossilfuelsisbecomingmoreexpensive
– Supplychaindynamicswillforcemanufacturerstoadoptapplica:onspecifictechnologytoenhance/preservemargins
• NewreportbyCleanEdge&Co‐opAmericastatessolarpowertoreachcostparitywithconven:onalpowerby2015– Solarpower'scontribu:oncouldgrowto10%ofthena:on'spowerneedsby
2025
4
“…to reach the 10% goal, solar photovoltaic companies will need to streamlineinstalla*ons andmake solar power a "plug‐and‐play" technology, that is, itmust besimple and straighEorward to buy the components of the system, connect themtogether,andconnectthesystemtothepowergrid.”–CleanEdge,Inc.&Co‐opAmericaFounda9on
©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™
5
• Modulecostshavedeclinedfrom~$100/Wto~$4/W‐duringthis:meworldwideinstalla:onshaveincreasedtoover3GW/yrin2007&~10GWofcumula:veinstalledcapacity
AnnualPVProduc,on
©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™SolarPanelComponents
Optics
Interconnect
Semiconductor
Cell
Heat Sink
Diodes
Interconnect
Module/Panel
Rectifier
Batteries
Charge Control
Array/ System
Inverter
Monitor/Meter Shielding
Highefficiencymetalinterconnectreducesproduc:oncostsandimproves
integra:onaswellasperformance
©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™KeyMarketDrivers
• Solardemandexpandingrapidlyasalterna:vetooilandgas
• Waferpla:ngtechnologiesmovingtoaddresssolarapplica:ons
• Challenge‐togetmorepowerfromthewafers
• Requirement‐50%costreduc:onandvolumeincrease
• Pla:nglinesneedtobemoreflexible&lesscapitalintensive
• Manyapplica:on‐specificpackageformats&newpla:ngchemistries
• Shortageofequipmentsuppliersacrosstheindustry
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©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™Introduc,ontoSurfectTechnologies
• Surfect’sadvancedinterconnectandpackagingsolu:onsforsolarcellapplica:ons:– Improvesolarcellmanufacturingspeedandyields– Significantlylowercostofmetalliza:on– Processtechnologyco‐developedanddeliveredwithtools
• Surfect’sSmartSolu:ons™helpproducersofsolarcellsandmodulesreducethecostperdeliveredwagofsolarcellsandimprovetheefficiencyofwaferlevelprocessing
• Surfect’suniquepla:ngprocessisbasedonaproprietaryDirectEnergyPla:ng™technology,whichusesultrasonicenergytocreatethemetalinterconnectonthesiliconwafers
• Thecompany’s“plug‐and‐play”pla:ngandintegratedpackagingsolu:onsarecomputer‐driven,simpletooperateandcanaccommodatemul:plechemistries
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Proprietarysingle‐cellelectropla,ngtool&process
©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™DirectEnergyPla,ng™
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• Superiorprocess• Lowercost• Higherthroughput• Moreuniformdeposi,on
ProprietaryprocessusingadvancedultrasonicsandDSPtechnologytodeposit
Low‐costmetal“interconnect”onsolarcells
DEPvs.Compe,ngprocesses
Result:Improvedsolarreliability,cost,performance
©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™Providing“ElectricGlue”
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Surfect’shighperformance,low‐costinterconnectincreasessolarcellefficiency,helpingbringmoreelectricityfromcelltopaneltogrid
Outcome:Improvedpowermanagementintegra,ngelectronicsclosertosolarcellbringsindustry
closertogridparity
©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™ScalableProcess&Tool
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IntelligentFramewithVer:callyStackedDEP™Pla:ngEngines
©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™
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AKeyRoleintheSolarSupplyChain
• Over30yearsexperienceinpackagingandminiaturiza:ontechnology• Applyingsemiconductorpackagingprocessestoop:mizesiliconuse&efficiency• Highefficiencymetalsolu:onsandintegra:ontechnology• Usingthesetoolstodrivemoduleandsystemdesign
SilicaSource Ingot Wafers Cells Panels/
Systems
SilicaSource Ingot Wafers Cells
Panels/Systems
IndustryToday:
SupplyChainConsolida:on:
Panels/Systems
©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™Compe,,veEnvironment
• Substan:alwaste• Environmentallyunfriendlymaterials
Waste
Acquisi,onCost
SpaceRequirements
StaffTraining/Safety
• Fullyenclosedsystem• Lessbreakage• Greenmaterials/lesswaste
• Highacquisi,oncost• Largeupfrontcapitalrequirement
• Modulardesign• Purchaseon“as‐needed”basis• Farlowermaterialcosts
• Smallerindividualunits• Efficientspaceu:liza:on
• Computerdriven• Simpleandsafertooperate• Real‐:meprocessfeedback
• Extensivetraining• Highsafetyconcerns
• Largeunits• Requiresamplefloorspace• Requiresairhandlingforfumes
Opera,ngFactors• Higherthroughput/uniformity• Lowmaintenanceandpersonnelrequirements
• Manualprocess/:meintensive• Higherlaborcost/technicalpersonnelrequired
*AMAT/Baccinni;BTU/DEK;NexxSystems;Semitool;Technic13
©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™EnablingFasterMoveto“GridParity”
Wereduceproduc:oncostsandimproveefficiency&performancewith
highefficiencymetaltechnology
• Targetforgridparityiselectricitycostof$0.10‐0.15perkWh• U.S.avg.costofretailelectricity
• ThistranslatesintoturnkeyPVsystemcostof$3.60‐4.00perwa`• Currently$6.00‐8.00perwa`
• Requiresmodulepricesof$2.00‐3.00perwa`• Currently$3.50‐5.00perwa`*
Over50%reduc,onincostandover30%increaseinoutput
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StandardCellMetalliza:on–SilverPaste
ImprovedplatedMetalliza:onSource:PV‐Tech(Solland)
ImprovedGridMetalliza:onSource:Day4Energy
BacksideplatedMetalliza:onSource:PV‐Tech(Sunpower)
©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™ReducingPVCost
AdvancedMetalliza,on:
ReduceResistanceandRecombina:on
ModuleStandardPackaging:SolarICTM
IntegratedPackaging
HeatSink/TEC:Reducetemperature
AdvancedSolarICSmartModule
UNDERDEVELOPMENT
Surfectiswellposi*onedinacapitalconstrainedmarketgivenourabilitytodrama*callyreducesolarcost.
15
©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™BarrierstoEntry
• IntellectualProperty– ThreepatentsissuedtoSurfectintheU.S.andanothereightpendingglobally
coveringSurfect’selectrochemicalprocess,electrodeposi:onapparatus,pla:ngapparatusandmethod,compositemagne:cpar:clesandfoils,amongothers• 2005:Sub‐micron&NanoSizePar:cleEncapsula:onbyElectrochemicalProcess
andApparatus• 2005:Electrodeposi:onApparatusandMethodusingMagne:cAssistanceand
RotaryCathodeforFerrousandMagne:cPar:cles• 2004:MetalHydrideCompositeMaterials
– Newpatentspendingandunderdevelopment
• Clearlydefinedupgradeplacormforbothhardware,processandsoWware
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©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™SalesStrategy
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• EstablishstrategicpartnershipsintheUS,EuropeandAsiawithwell‐established,mul:‐na:onaldistributorsandchemicalmanufacturers– SignedEuropeandistributorforbothsolarandsemiconductorwithofficesin
Germany,ItalyandUK
– SignedAsiansalesrepresenta:ve,basedinKoreawith20yeartrackrecordinsolarandsemiconductorsales
– Koreansolardevelopmentcenter
• Expanddirectsales&marke:ngteamtofocusonend‐usercustomers
• Pursuelicensing&royaltyarrangements
©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™Timeline&Near‐termGoals
• PartnerwithAsianmanufacturerformassproduc:onofDirectEnergyPla:ngtechnology
• SignJVagreementwith1mul:‐na:onalmanufacturer&distributor
• AddnewVP/directorofProductManagement&Sales/Marke:ng
• Signnewend‐usercustomeragreementswith2‐3solarcompanies
Sept Oct Nov Dec Jan Feb Mar Apr May June
DesignandCAD
Build
ShipandQualify
Automa,onIntegra,on
Produc,onBuild
2008
2009
July August
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©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™RevenueModel
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2Customerspermonth
6Customerspermonth
10Customerspermonth
Revenue
GrossMargin
EBITDAMargin
$10Mil.p/yr
28‐30%
‐‐
$30Mil.p/yr
50‐52%
25‐26%
$50Mil.p/yr
50‐52%
27‐28%
CommonSharesOutstanding 121.9M
TotalOp:onsOutstanding(Avg.StrikePrice$0.16) 55.2M
TotalWarrantsOutstanding(Avg.StrikePrice:$0.08) 116.5M
_________________________________________________________________________
TotalPoten:alSharesOutstanding 293.6M
Goaltomaintaingrossmarginof50+%toself‐fundexpansion
©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™SeniorManagement
• SteveAnderson,ChiefExecu,veOfficerStevejoinedSurfectin2004andbecameCEO,President,andadirectorofSurfectHoldingsinSeptember2006.A28yearpackagingindustryveteran,hismarke:ngandtechnicaldevelopmentac:vi:eshavefocusedonelectronicsmanufacturingandbringinginnova:veinterconnecttechnologytothesemiconductorindustry.HewasformerlyCEOofSiliconBandwidthandSVPofCorporateMarke:ngandBusinessDevelopmentatAmkorTechnology,Inc.andalsospentseveralyearsatTexasInstruments.StevehasaBSEEdegreeinengineeringfromtheUniversityofNorthDakota.
• RichardTung,VPOpera,onsMr.Tunghasheldgeneralmanagementandopera:onsmanagementposi:onsintheUnitedStatesandAsiaPacificregionforover25years.PriortojoiningSurfect,hewastheDirectorofManufacturingEngineeringforCypressSemiconductor.Previously,Mr.TungwaswithAmkorTechnologyforovertenyears.Heheldavarietyofengineeringandmanagementposi:ons,eventuallygainingthe:tleofVicePresidentofQualityEngineering.Mr.Tunghasalsoheldsenioropera:onsposi:onswithNa:onalSemiconductorandTexasInstruments.HeholdsaMasterofScienceinChemistryfromtheUniversityofMalayaandaMasterofBusinessAdministra:onfromtheUniversityofPhoenix.DavidPham,SolarProductManager
• DavidPham,SolarProductManagerMr.Phamhasextensiveexperienceinthesolarandalterna:veenergysectors.PriortojoiningSurfect,hewasChiefConsultantattheNextLevelGroupwherehisresponsibili:esincludedsales,marke:ng,andrenewableenergyconsul:ngforsmalltolargebusinesses.Previously,Mr.PhamworkedforSolvisionIncorporatedastheGlobalApplica:onsEngineeringManager.Mr.Phamhasalsoheldposi:onswithHitachiSemiconductor,AdvancedMicroDevices,andMotorola.Hehaswrigenninebooks,presenta:ons,andpapersandhasaBachelorofSciencefromUniversityofCaliforniainelectricalandcomputerengineering.
• TerryGafron,ProductManager,SoiwareMr.Gafronhasextensiveexperienceinelectricalengineeringandautoma:onprogramming.Previously,hewasemployedatMicronTechnology,Inc.from2001un:l2008,mostrecentlyholdingtheposi:onofCharacteriza:on/Instrumenta:onEngineer.HealsostartedandrananRFtestequipmentdevelopmentcompanywherehefocusedonprovidingleadingRFtesttechnologytocustomersworkingwithlocalinvestors.Mr.Gafronhasco‐authoredanumberoftechnicalar:clesonsemiconductortechnologyandsharesaporcolioofthreepatents,oneofwhichhasbeengrantedandtheothersinvariousstatesofapproval.Mr.GafronholdsaB.S.E.E.andM.S.E.E.fromBoiseStateUniversityinIdaho.
©2008SurfectTechnologies,Inc.
SmartSolu*onsforCleanEnergy™SurfectTechnologies
Wemakesolarlessexpensive,moreefficient,andmoreeffec9ve.