Innovations in Electrostatic Coating for Foods

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Innovations in Electrostatic Coating for Foods

• Scottsdale, AZ USA

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Our Business Is

• Enhancing Food Quality Safety through
  Innovations in Electrostatic Coating

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Did you know that

• Every single Burger King French fry is coated
  with a clear coat ?
• 1.2 Billion pounds of fries, every year?
• Every single HoneyBaked Ham is made by hand?
• 10s of millions of dollars worth every holiday
  season?

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Did you know

• Electrostatic Coating brought you timed release
  medicines and carbonless carbon paper?
• That both harnessed previously unknown properties
  of simple gelatin powder?
• That both were discovered and perfected by the
  same man?

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Input from U.S. Customers

• Using significant input from our existing
  customers
• Con Agra
• Nestle
• McCain Foods
• Hillshire Farms
• J.R. Simplot
• We set out to develop a better coating system
  that used less ingredients and generated far less
  waste

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Industry Problems

• Our customers approached us needing great help
  with some common challenges
• Adhesion
• Ingredient waste
• Consistency / Quality Control
• Food Safety

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Great, Disruptive Discoveries were made
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Bonding the powder particles to the Food surfaces

• By creating a very precise method and apparatus,
  we could create a permanent BOND every time
  between the fine (dry) powders and virtually any
  organic target surface.

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Exponentially Improved Results

• This bond dramatically enhances the expected
  properties of the coating.
• Flavors are greatly enhanced with fractional
  quantities
• Oxygen barriers are created, stopping spoilage
• Moisture is actively contained
• Bacteria on a food surface are sought out and
  killed instantly
• Coatings for color and flavor stay attached
• Rough product handling will NOT detach the coating

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U.S. Patent Issued

• US Patent 6,312,740 was granted for the Method
  and Apparatus for Electrostatic Coating of Foods

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A New Discovery

• All previous electrostatic coating was simply an
  attraction
• Clever
• Somewhat Useful
• But Not Extraordinary
• It turned out that our unique bonding phenomenon
  had never before been
• Created
• Observed
• Quantified

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Focus our Assets

• We Focus our discoveries where the impact will be
  greatest
• Faster to the market
• Faster to Profits
• Zero-in on the best of all the opportunities

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French Fries

• We Created a Cooperative Partnership with the
  Largest Producer of French Fries in the world
• Proved the product at their RD Lab
• Designed, Built, and Sold them a prototype
  coating system
• Installed the Kitto System in their Pilot Plant
• Product Development is active right now

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University of Arizona Meat Science Labs

• We sponsored research where we developed and
  quantified the ability to completely kill e.coli,
  listeria, and salmonella bacteria on meats.
• It is so effective, even meats stored in open
  containers at elevated temperatures are
  completely safe!

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Flame Glazed Ham Machine

• KCT invented an automated flame-glazing machine
  that cuts the time to produce a honey-glazed ham
  by 80
• We have a USDA commissary operation in Ontario CA
  in partnership with our ingredient supplier
• Expect to be in full production for Farmer Johns
  (Hormel) by Thanksgiving 2009

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Business Model

• We will LEASE the machinery By the Pound
• We capture the annuity revenue stream from the
  powders
• We never relinquish control of the technology or
  the hardware

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Payback

• The direct costs of the Machines/System are
  recovered in months, not years

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Margins

• Coating Ingredients margins
• Range from 10 to 40
• Dependent on proprietary properties
• Machinery/System margins are 50
• Revenue stream will grow quickly
• To 50 Million
• Can reach in excess of 100 Million

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USDA Approvals

• All our equipment is USDA approved
• All ingredients we use are already USDA approved
• By including the ingredients in the system
  leases, we make them proprietary

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2M in new Capital is Needed

• Expand Intellectual Property Protection
• Grow the Flame-Glazed Ham business
• Build the Machines to be Leased
• Establish a Modest Facility Test Kitchen
• Bring key industry people on board
• Sales Professional
• Food Scientist

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Groundbreaking Discovery

• This is an entirely new, VERY basic, disruptive
  phenomenon
• Properly funded and managed we will create huge
  NEW businesses and opportunities

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Exit Strategy

• These discoveries make a very attractive company
  with compelling growth and market penetration
  numbers.
• Possibilities are quite strong that a major food
  ingredient company (i.e. a supplier to KCT) would
  want to acquire us.
• We represent incremental growth to them with a
  new proprietary use of their products

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Bold Opportunity

• Kitto Coating Technologies is poised to create
• New Markets
• Bold Opportunities for Growth
• Groundbreaking Technological Advances
• Far-Reaching Potential