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Innovative Composites International (TSX-V: IC) (ICI) leads the way in thermoplastics by setting new standards in the housing, transportation and composite panel industries with their advanced, environmentally friendly materials. With state of the art new designs such as prefab modular homes, cargo containers and structural insulated panels, ICI has been able to create innovative solutions across a vast variety of industries. The publically traded company continues to grow, finding new ways to apply their unique composite materials to different applications. Their 3 distinct product lines, Structure-Lite, EcoScape and Hero-451, have proven to be successful breakthroughs in modern technology and are used in many different applications. Their flagship product, Structure-Lite composite panels are the base for many of their products. Widely used in the transportation industry, the panels are used for cargo containers, truck body panels as well as highway sound barrier panels. Using recycled materials such as plastic water bottles, the panels are environmentally friendly made with low cost, readily available raw materials. This lets the panels be created quickly and efficiently and able to be customized for nearly any application. Already the panels have been used not only in the transportation sector but also for durable horse trailers and marine docks and decking. The versatility and durability of ICI’s composite panels makes them ideal to replace many conventional materials. The composite panels won’t rust, rot or warp and each one is insect, water and UV resistant. The incredible strength to weight ratio also makes them much lighter compared to steel panels, which have the same strength but are twice as heavy. A key component of ICI’s composite panels is their unique thermoplastic fibre reinforced composite skin material. This skin, owned and manufactured exclusively by ICI, forms the outer layer of the panels and offers unmatched durability and strength to these lightweight panels. The special manufacturing process ensures the bonds between the fibres and thermoplastic material are nearly impenetrable. Impact resistant, impervious to water and made with 100% recyclable materials, the thermoplastic fibre reinforced composite skin material gives ICI’s Structure-Lite panels their incredible durability and versatility. Unlike most fibre-reinforced materials, the thermoplastic skin can also be formed into various shapes, making it ideal to use in the transportation and marine industries. Designed and created from an adaptation of the Structure-Lite panels, ICI’s EcoScape houses are a marvel of engineering and architecture. Compared to other prefab modular homes, the EcoScape line has been designed for easy, fast assembly, able to be completed in only a few days. The strength and durability of the panels make them ideal for disaster prone areas, being both earthquake and hurricane resistant. Once the panels are delivered on site, they can be quickly assembled by non-skilled labour thanks to its ingenious modular design. ICI has also designed an emergency shelter that can be assembled in a few hours after being delivered to nearly anywhere in the world. The shelter uses the same design components as the EcoScape houses and unlike many other temporary shelters, these can be used for up to 5 years or put away in storage with no degradation. Not limiting their engineering feats to composite panels, ICI has also created Hero-451, a natural fire prevention chemical. Non-toxic, environmentally friendly and bromide free, Hero-451 can be applied to textiles, wood and other materials to increase fire resistance and prevent combustion in even the most extreme conditions. The 100% biological components allow products to be safely treated without harming the environment or producing any harmful emissions when exposed to flame. Already treatments for Christmas trees and blankets have proven the effectiveness of Hero-451’s
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TSX-V: IC
November 2011
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This presentation includes or incorporates by reference certain statements that are “forward-looking (forecasted) statements”.
Forward-looking statements included in this presentation include, but are not limited to, statements with respect to: (i) continued development of Company’s products and business; (ii) the Company’s growth strategy; (iii) future protection of intellectual property and improvements to existing processes and products; (iv) regulatory and related approvals; (v) input and other costs; and (vi) liquidity, working capital, and capital expenditures.Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. As a result, actual actions, events or results may differ materially from those described in forward-looking information, and there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended . Although forward-looking information contained in this short form prospectus is based upon what management of the Company believes are reasonable assumptions, the Company cannot assure investors that actual results will be consistent with the forward-looking information. Forward-looking information contained herein is as of the date of this presentation and the Company disclaims any obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise, except as required by law. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated. Accordingly, readers should not place undue reliance on forward-looking information due to the inherent uncertainty therein.
Disclaimer
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Investment Highlights
Commercializing a break-through composite modular housing system
Cheaper, faster to assemble, extremely versatile
Low cost housing market estimated at: $500 billion annually*
Rapidly growing sales
Agreements in place for over $200 million in revenue over the next 3 years
A strong pipeline of additional large scale housing projects under development
Ramping up second manufacturing facility to service demand
Start-up expected in March 2012
Annual capacity 5 million square feet of housing
Strong, experienced management team
CEO was responsible for 38 Magna Int’l plants with 7,000 employees
Supported by a high-profile Board
*UN-Habitat volume estimate at $15,000/unit
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ICI Products Explained
*UN-Habitat volume estimate at $15,000/unit
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EcoScapeTM Affordable Housing – Overview
Substantially cheaper than comparable homes built with conventional materials
Hurricane and earthquake resistant
Rot, mold, rust, termite resistant
Exterior and interior finishes are pre-installed
Shipped in modules, assembled “as-is” with unskilled labor
Full flexibility of floor plans and insulation characteristics
Wall panels are one piece: increased energy efficiency
Made in the USA
Design is patent pending
Full house assembly in 1-2 days
Affordable Housing
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Low Cost Housing – Global Market
Massive Market: 96,000 units required daily1
42 million people displaced in 20102
Tier 2 Strategy: ICI partners with market leaders in target industries and leverages their existing sales channels for faster product roll-out.
Strong global partners:
Barclays Gedi Group (“BGG”)
International construction conglomerate specializing in affordable housing
Over 100 years of combined experience in large scale project execution
Has completed more than 200 projects totaling over $9 billion
1Source: UN-Habitat2NRC- Internal Displacement Monitoring Centre
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Sales Pipeline: BGG
Project: US$4 billion for 210,000 homes in Haiti
Size: 2,000,000 sq. ft.
Pricing: Estimated at $34/sf. ft.
Timing: Start shipping in the 1st Quarter 2012
ROFR: 75% of plant output for 5 years
Pipeline: Several additional projects under development
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Affordable Housing – Haiti
Building Back Better Communities initiative
Up to $4 billion in projects to be awarded
Spearheaded by Clinton Global Initiative
Named finalist in October 2010
Model home shipped for EXPO on the ground
since June 2011
Haiti Government in place as of October 2011
Well positioned to win a large proportion of contracts:
Superior characteristics of the homes
Made in the USA
Already have contracts/buildings in Haiti
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Sales Pipeline: Brazil
Project: US$72 billion “Minha Casa, Minha Vida” (my House, my Life)
Partners: Millenium Brasil
Green Construction Co
Timing: 30 homes/week initially
50 homes/week after 6 months
Pricing: Estimated at $41/square foot
Milestones: Final design approval in 60 days
Model home shipped in early 2012
Building code certification 1st Quarter 2012
Commercial shipments commence after SC plant start-up
Build a facility in Brazil in 3 years subject to 10 million square feet annual demand
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Projects – over 200,000 units under development
Affordable Housing – Pipeline
Country Project Scope ICI is targeting
Haiti 210,000 30,000Brazil 3,000,000 50,000+Ghana/Nigeria 500,000 100,000Antigua 10,000 3,000Saudi Arabia 250,000 17,000Surinam 50,000 18,000South Africa 750,000 50,000+
Opportunities in the US and Canada:
US Army Corps of Engineers: “350,000 homes required in the US”
In discussions with First Nations, current backlog at 85,000 homes
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Structure Lite™ Panel Existing Sales
Tonneau covers
Two production contracts
Replacing aluminum
Containers & Trailers
Three active customers
Over 50% weight reduction compared to steel
Easy to assemble, foldable and stackable
No rust, rot, mold - enhanced durability
Made in the USA
Moving & Storage: $16 Billion market
Design is applicable to intermodal containers
and tractor trailers
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Intellectual Property
“Picket Fence Approach”
1st Layer
4 product patents are pending
Additional patents under development
2nd Layer
2 Patents on the manufacture of the Fiber Reinforced Thermoplastic skin
3 Patents on utilization of recycled materials in the skin and core
Panel design is trade secreted
3rd Layer
Equipment designed and engineered in-house
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Manufacturing Plants Overview
Sault Sainte Marie, MI
Annual capacity of $20 million
Same fully automated equipmentproduces ALL the different panels
Orangeburg, SC
126,000 sq. ft. (12,000 sq. ft. office)
60 Miles from ocean port
Current lease extends until 2017
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South Carolina Plant Overview
PHASE 1 PHASE 2
Processing: 10 ft/minute 20 ft/minute
Components (foam/skin): Purchased Integrated
Capacity: 5,000,000 sq. ft. 10,000,000 sq. ft
CAPEX: $5,000,000 $7,500,000
Recycled materials utilization: Limited Skin & Core
Acquired raw material supplier with patents to utilize recycled plastics
A variety of polymers can be used including PET, Nylon etc.
Allows ICI to be the lowest cost producer of these materials – major competitive advantage
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Management
Terry Ball – President and CEO
30 years of commercialization experience, 18 years at Magna International Inc., ex COO of Magna’s plastics group with $800 million in sales and 7,000 employees
Ilja Troitschanski – CFO
12 years business development/finance experience with micro cap technology companies, 7 years with publicly listed companies
Bryce Clark- Director of Manufacturing
12 years at Magna International Inc. ex Director of Operations of Systems Lighting Division, which employed 1,000 people, with sales of $300 million
Greg Brower - Director R&D
35 years of composites experience. Former head of Advanced Composite Development at Magna International
John Sorge – VP Sales and Marketing
24 year track record in sales and marketing in the thermoplastics industry
Full team bios can be found on our website: www.innovativecompositesinc.com
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Board of Directors & Advisory Board
Hon John D. ReynoldsCanadian politician, ex Vice Chair of the Commonwealth
Robert PulteMember of the Pulte Homes family, 30 years in housing
Brian ColburnGeneral legal counsel at Magna Int’l Inc. for 28 years
Fraser Wray Former VP of Magna Int’l Inc. andPresident of Decoma Int’l Inc.
Kenneth KeeleyRetired in 1997 as Division President of Airgas, Inc., (NYSE)
Christopher KrubaGeneral legal counsel at KS Centoco
Full team bios can be found on our website: www.innovativecompositesinc.com
Board of Directors Advisory Board
Hugh “Ted” Price35 years with the CIA, retired in1995as Deputy Director Operations
John GlandLed R&D teams at GM and Exxon,PhD from Berkley
James DrouilliardLead R&D expert at Magna,42 years experience in composites
Scott C. DoreyFounding partner at BHP Advisors,15 years financing experience
Dennis WoodsSuccessful aluminum extrusion entrepreneur
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Capitalization
Share Capitalization Overview Notes
Insiders own 30% on FD basis
Burn rate at $400,000/month
Agreements in place for $200+ million in sales over 36 months
Historical gross margins at 30%
No debt other than the convertible debenture
Four research analysts initiated coverage
Share price $ 0.95
52 week low $ 0.42
52 week high $ 1.09
Millions Basic FD1,2
Shares outstanding 69.4 95.6
Market capitalization $ 65.9 $ 90.9
Cash $ 5.0 $ 14.0
Debt2 $ 2.1 $ -
EV $ 63.0 $ 76.9
1. Includes 5 million warrants at a weighted exercise price of $0.35
and 10.1 million options at a weighted exercise price of $0.44.
2. Includes $2.0 million in debentures convertible into 6.6 million units
(share plus whole warrant $0.45 strike price)
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Summary
Breakthrough product for the massive low cost housing market
Product viability proven through rapidly growing sales
Agreements in place for over $200 million in revenue over three years
Strong housing project pipeline
Experienced team of commercialization experts
South Carolina facility start-up planned for March 2012
