FLITE introduces a patented process to protect industrial materials from rust, ice or fouling, using clean lasers instead of toxic coatings.
We have completed 2 customer validation projects and have scheduled 10 more in aviation, food and beverage, automotive and robotics sectors. We have licensed technology to develop from 3 leading research institutions and grown the team to 9. We also have pending contracts with the US Department of Defense, and access to more than $2M in non-dilutive funding in Canada and the United States.
In each of our target industries, improving a product's resistance to these surface problems results in a $1B+ opportunity - safe surfaces for medical implants, copper-free marine biofouling protection for ships, preventing ice on aircraft in flight, and rust resistance on pipelines for water, oil and gas. Oil and gas is a particularly large segment, spending over $1 trillion per year to deal with rust issues. There are heat dissipation and friction improvements to apply in automotive and HVAC systems, as well as broad uses in sensors and semiconductors for self-cleaning purposes. Our customers are looking for operational savings, product longevity, and a better green profile by reducing or eliminating chemicals from their products.
Problem or Opportunity
Rust, ice and fouling are chronic industrial problems that affect every industry at every scale. The $100B protective coatings industry provides limited protection against these problems, in an expensive, temporary and toxic product suite. When we talk to our prospective clients, they have often been experimenting with new coatings to help deal with these basic problems continuously - in the case of oil and gas or aviation, for more than 40 years with no significant improvement. When they see that FLITE is offering a completely different approach, they are eager to explore the benefits.
Solution (product or service)
Our technique applies a laser pulse to the surface of metal, glass, plastic, ceramics and other materials. The pulses do not affect the basic properties of the material, but leave behind a texture on the surface that repels water or oil. Our patented laser process can be integrated in two locations. First, at the end point of the manufacturing process, so that products are delivered to the customer with significant resistance and self-cleaning capabilities. Second, we are creating field-use devices, so that customers can work with the aircraft, electrical towers, water and oil pipes in their maintenance cycles, so that they can resist these problems without a new layer of coatings.
We are faced with competition from the coatings sector, specifically from the 30+ companies offering some form of functional coating (superhydrophobic, oleophobic, omniphobic). This market segment is seeing ~$2B in annual revenue with a compound growth rate far above the rest of the coatings industry, although there is no clear leader yet. Most of our customers have tried these products, seen the benefits of the functionality but abandoned the product for this reason. When we arrive, we tell them that they can have this functionality without worrying about the temporary nature of the paint, and they are eager to try FLITE's approach.
Advantages or differentiators
These competitors have excellent solutions for niche problems (ie. paint cans, ketchup bottles, cell phones) but are almost never used for heavy industrial problems because of low survivability in harsh conditions over time. FLITE's main advantages are - we are not a coating, so their is no concern that the protection will disappear because of cracking, peeling, exposure to the sun, wind or freezing temperatures, yellowing or aging - we can apply our technique to virtually any solid material (metals, plastics, glass, ceramics, semiconductors and composites) - we are 100% green, so the client is not concerned with the chemicals used for surface preparation, priming, coating, cleaning and maintenance, their effect on the employees, consumers, or the environment
After demonstrating the effect of our technique in the lab for each customer's product (in a paid project), we plan to integrate the technology directly into their supply chain for recurring licensing and royalty fees. Although the cost of the initial setup may be higher than coating products, the use of the technology is based solely on electricity (and license fees) over time. Our clients pay between $40,000-$90,000 for testing (a source of basic revenue), and when a license is created, a mixture of annual fees and royalties is negotiated based on the life cycle and business case for each client. We expect that in the next 5 years, we operate 200-250 validation projects leading to 50 licenses. Our estimated contract value is $2M / year / client at 80-90% margins.
Many of the clients have 20-40 year life cycles for products and are more interested in flat licenses, and others with short cycles (semiconductor, consumer products) expect more of a royalty participation on their premium products. Our lead customer profile is usually the head of innovation scouting or engineering research for companies in the Fortune 1000. We are reaching our customer base through trusted partners who promote innovation, such as Techstars, Plug and Play Centers, and the Starburst Group (aviation). Once we begin working with a manufacturer in the supply chain, we are also exposed to others that they serve. Finally, we have relationships with defense contractors in 4 countries, creating a high-value military channel for dual-use technologies.
Money will be spent on
Building our our own lab facility to respond to existing customer demand and begin creating our own IP, increasing the team size to explore opportunities in medical and semiconductor and marine sectors, and acquiring and protecting some key IP licenses from Europe.
Offer for investor
We are negotiating with a lead investor for 50% of the current round in a combination of equity and convertible debt, but we are open to negotiating with a smart investor or group with a vision of the company for a particular geography or business sector.
Our main risks deal with scaling up the technology and integrating into a variety of manufacturing environments; the laser-robotic system's speed and costs in this area have to be controlled, although we are no longer concerned about technical feasibility. A secondary risk is that a miraculous coating or metamaterial will emerge with excellent properties, low costs and environmental friendliness. Finally, we are licensing IP and developments from multiple universities, so we have to protect and develop our patent portfolio over time.
Incubation/Acceleration programs accomplishment
We were participants in the CENTECH Accelerator (Montreal, 10/2018), the CRIAQ accelerator (11/2018), Techstars Air Force (4/2019), Starburst (10/2019), FreeElectrons (2/2020) and the Joules Accelerator (11/2020).
Won the competition and other awards
We are finalists of the Vernadsky Challenge, 2nd place winners of the Entrepreneurship World Cup in Dubai, and winners of the Startupalooza pitch contest in New York, the Colorado Cleantech Industries Association Oil and Gas Challenge, and Best in Show for the Society of Petroleum Engineers ATCC Event.
Among others, the patents we are licensing from the University of Rochester include WO2008097374A3 - Ultra-short duration laser methods for the nanostructuring of materials US7420685 Dispersion-free automatically phase-matched and broad spectral-band femtosecond autocorrelation technique US8685185 Femtosecond laser pulse surface structuring methods and materials resulting therefrom US20080216926 Ultra-short duration laser methods for the nanostructuring of materials US20080299408 and US20080299408A1 Femtosecond laser pulse surface structuring methods and materials resulting therefrom US20120328905 Nanostructured materials methods and applications