FLintstone : - Ultra Motor, Ultra Bagger - From Russia With Assets

Flintstone are one of the most unusual and innovative of companies as they source most of their investments from Russia. The company was established specifically to take advantage of cold war ex-Soviet technologies. FLT provides an excellent play on the Russian technology market which has done well in recent months, while FLT has gone largely unnoticed. I feel the stock offers a mixture of solid investments and blue sky potential. The market cap is is currently only 6.18m with 47,554,000 shares in issue. Up to Sept 2003 the company had cash of £963,000 which was predicted to last until March 2006.

The main excitement around the stock surrounds Ultra Motor. An electric motor technology that, like most of FLT's investments, was sourced in Russia. FLT hold 80% of Ultra Motor athough, as the results suggested, the company is looking for funding to take various projects forward. Following any funding FLT's stake will almost inevitably be reduced as they are intent on making their existing cash last until 2006.

Clearly there are a lot of electric motors around but FLT reported that independent tests at Southampton University showed that the Ultra Motor beats existing competitors on all the main performance indicators; speed, acceleration and distance travelled. Equally important the technology is low maintenance and costs little to produce. This would enable Flintstone to enter the high volume markets for pedelecs (electric bikes) and scooters in places such as India and China.

For a company with such a small market cap it is surprising to see that some of their stakes are probably less than a year away from possible IPO. Some are close to profitability and Hardide in particular is thriving on a recent investment and subsequent bouyant order book.

Further details on the technology stakes held by Flintstone:-

ULTRA MOTOR

A regenerative, high-torque, high efficiency, direct drive DC motor for light electric vehicles. Cost FLT 50k with 160k commitment. FLT own 80%.
Huge markets for electric powered bikes (Pedelecs) in India and China. Both markets need to get emissions down – especially China because they are hosting the 2008 Olympics. Technology is sufficently advanced for cimmercial launch subject to a funding being achieved as detailed in the last FLT results.

The Ultra Motor surpassed all tests on performance, efficiency and power according to FLT. David Chestnutt, CEO of FLT, claims tests at Southampton University show that the Ultra Motor can outperform all other commercially available pedelec motors and light electric vehicle drives.

From recent trading statement “Flintstone is pleased to announce that initial tests of the Ultra Motor have surpassed all performance, efficiency and power output expectations. The Ultra Motor is designed for use in light electric vehicles. It is a novel, regenerative, high torque, high efficiency, direct drive DC motor being developed by the Ultra Motor Company, in which Flintstone has an 80% shareholding.”

Professor Vasily Shkondin, a Russian engineer, is the inventor of a whole family of at least 70 motors for the Ultra Motor company with each one designed for a different application. He learned his trade in the Russian Navy. Rumours have circulated that the original initiative may have been super quiet submarine motors and the Ultra Motor technology emerged from these projects.

Ultra Motor’s Justin Martin says “We think we can double the range of battery electric vehicles from a typical 53 miles to 100 miles and reduce the 30mph 7s acceleration showed by cars such as the Ford Thimk! To 4.5 to 5s.”

Target markets include pedelecs, scooters, electric cars, wheelchairs and stair lifts. Market worth £18.7b over next 5 years according to FLT. 3m pedelecs were produced in China in 2002.

In the U.S. it is possible to put a 750W motor on bicycles without getting into motorcycle legislation. Other sizeable markets are India and Japan.

Justin Martin believes the Ultra Motor’s characteristics are suitable for washing machines and other domestic appliances. The motors could be mounted directly on the backs of the washing machine drums and do away with the need for a belt drive, or the space required to mount the motor beneath the drum.

The most popular electric equivalent of a 50cc motorcycle (350 watts) is a massive seller in China. The Chinese motorcycle can do 30 km/h (speed), 50 km/h (distance). Ultra Motor independent tests indicate this could be improved to 40 to 45 km/h (speed) and 75 km/h (distance). The retail price per Ebike in the west is approximately $1000 but significantly lower in the Far East and India.

HARDIDE

New super hard and wear resistant coating solution for steel and hard alloy components. Chemically resistant. The gas treatment process can enhance the life of steel components by a factor of 10. More effective than other liquid treatments

Novel use of tungsten carbide. Produces surfaces with a micro hardness of up to 3,000 hv making it significantly harder than curandom, titanium nitride, quartz sand, cyanidation of cemented coatings.

U.S. market for high performance ceramic coatings was estimated at $1b on 2002 and $2.5b worldwide.

Directors believe that as Hardide replaces other surface treatments, not just ceramic coatings, the worldwide market could be much larger.

Recently raised £1.983m (400,000 more than expected) and is attracting interest from oil and gas companies. To be used to “satisfy the current growing demand for Hardide technology.” Chairman added in results to 30 sept. 2003 “The company have positioned itself to be a major supplier of coatings for customers from a wide range of business sectors including oil and gas exploration and industrial machinery and we expect positive results from its recent endeavours.”

New 8500 sq ft premises in Bicester. Completed installation of a new generation, industrial size, CVD coating machine. Hardide anticipates placing an order for another machine “and the financial prospects and potential of Hardide are more of a reality than at any stage in the company’s future.” (From results to Sept 2003).


BIOCOTE

A range of anti-bacterial power coatings for metal, wood and plastic surfaces. This was sourced from the UK as it fitted FLT’s portfolio.

Holds a portfolio of international and national patents for the use of anti-bacterial coatings. Independently tested and certified by a number of independent organisations.

Hygienic product surfaces for healthcare, food processing in domestic, commercial and public premises. Selling into healthcare, catering and scientific markets.

For example it could be included in the manufacturing process of hospital beds and only add 1% to the cost. Could help address the hospital super-bug problem?

Powder coating market reached £2.5 billion in 1998.

First licence won in Aug 2002. Have subsequently won another nine and a further six are expected soon.

“Continues to sign new licenses and moves towards cash breakeven and profit in early 2005.” From results to Sept 2003.

FIRESTOP

Range of fire retardant additives and halogen free flame retardants for textiles, polymers, metals and wood. Ecologically friendly. Minimise effect on physical properties and reduce the emission of toxic fumes.

Fully certified by BAE for use on commercial airlines.

Flame retardant market estimated to be worth £2.6n in 2003

In discussions with several commercial organisations about the exploitation of the flame retardant materials.

Expected to start making commercial sales of Noflan next year. Pref share investors are considering a follow-on-investment that will require FLT to provide a further £250,000. In view of recent achievements FLT will continue their support with this investment.

Manufacturing agreement “should ensure that Firestone Chemicals Limited achieves cash breakeven and profit on a monthly basis within the next twelve months.”


KERONITE

Another metal hardening process for use on aluminium, magnesium and titanium surfaces. Forecast to make a profit for year ending March 2004. Trying to target the automotive industry for sales. Magnesium due to its lightweight properties is becoming an increasingly popular material, despite its susceptibility to galvanic corrosion which can be eliminated by the Keronite coating process. Possibly the most advanced investment. Double figure licenses in Europe, U.S. and Far East.

INTELLIKRAFT

Rechargeable battery systems based on advances in nano-technology treatment of advanced ceramic material.

Tests by one of the world’s leading product testing companies in 2002 showed that Intellikraft batteries stored more than 130% more energy than the same sized mobile industry standard lithium-ion batteries.

Inventor, Dr Spirin, and team left and returned to Moscow. Knocked development back a year. Back on track. FLT initially held 20% but sold 10% for £500,000 in 2001

Market for rechargeable batteries estimated to be $27b in 2000

Moved to smaller premises. “Continued the development of a power piezo application which is currently being trialled with a multi-national company” From results to Sept 2003.

Oxford Technology 2 VCT lead investor


VALUATIONS OF FLT STAKES AS DETAILED IN RESULTS TO SEPT 2003

(Valuation based on last paid price for equity, in line with BVCA methodology)



Biocote £2.653m FLT stake 31.5%

Firestop Chemicals £3.38m FLT stake 63.46% (and preference shareholding of 31.2%)

Hardide £6m FLT stake 45.62%

Intellikraft £24.6m* FLT stake 9.94%
*Value written down to 6m due to failures on delivery targets

Keronite £10m FLT stake 16.09%

Ultra Motor Company £50,000 FLT stake 80%

Ceraheat (dormant business) - FLT stake 100%

Fixed assets including intangible assets and investments per the group balance sheet at cost are £4,467,000

LINKS

Ultra Motor Company

http://www.ultramotors.co.uk
http://www.solus-strategic.com/dev/ultramotor
http://www.shelleys.demon.co.uk/apr03mot.htm

Flintstone Technologies

http://www.flintstoneplc.com
http://www.flintstoneplc.com/media/Flintstone%20October%20News.pdf
http://www.seymourpierce.com/pdf/prospectuses/recent/Flintstone_Technologies_Plc.pdf

Ebikes/pedelecs/electric transport

http://www.extraenergy.org/main.php
http://pedelec.com/taipei/lectures/pdf/pedelec-design.pdf


Hardide

http://www.hardide.com/
http://www.oion.co.uk/success_story/hardide.html

Biocote

http://www.oxfordtechnology.com/files/Biocote.html
http://www.biocote.com/base.html
http://www.allgood.co.uk/biocote.php
http://www.laboratorytalk.com/news/bco/bco000.html
http://www.engineeringtalk.com/news/bco/bco100.html

Firestop

http://www.firestop.uk.com

Keronite

http://www.keronite.com/
http://www.azom.com/details.asp?ArticleID=1438

Intellikraft

http://www.oxfordtechnology.com/files/Intellikraft.html