Canadian Company Spotlight

SOFAME Technologies Inc. has been around for twenty-five years. The company custom engineers and manufactures high-efficiency direct-contact industrial hot water heating and waste heat recovery systems at its plant in Montreal. Sofame's products extract up to 99% of heat from flue gases depending on the application, and also from wastewater, and return the energy in the form of high temperature hot water or pre-heated make-up air.

Industrial energy efficiency has attracted a lot of attention lately due mainly to the economic downturn which is driving cost reduction. Sofame’s equipment has reduced its customers’ industrial heating costs by from 8 to 25%, making it a proven technology with low if any technical risks. In addition to economically recovering heat from waste energy, Sofame's custom-engineered equipment also helps customers to significantly reduce CO2 and NOX emissions, allowing them to qualify for carbon offsets and CDM credits. Sofame’s technology and the company’s experience in boiler room retrofitting is world leading, patented and green. Sofame serves building owners, institutional, industrial and commercial markets through a network of dedicated engineering representatives in the United States, Canada and Europe.

Profile

Global demand for energy has been increasing, particularly in the developing world in countries like China and India. This means that rising energy costs have become a threat to the long-term health of western economies where most of the world’s energy is consumed.

New technologies such as solar power, wind power and wave or tidal power are emerging to meet the challenge of reducing dependence on imported foreign fossil fuels. New technologies are exciting, but they are often the most costly and unproven alternative when a crisis occurs. Therefore companies and governments are looking for new ways to reduce their domestic consumption of fossil fuels that are often imported from other countries, further straining current and capital account balances.

Sofame’s products heat water for commercial-industrial applications. The heat source in a Sofame system can be either natural gas, number two heating oil, or waste recovered from flue gases. Sofame’s direct-contact water heaters often achieve 99% efficiency compared to traditional indirect-contact water heaters which can be up to 85% efficient, or as low as 50% efficient, depending on their age. That balance of a minimum 14% represents fuel that is purchased by end-users, combusted to make hot water, and sent up the stack (chimney) as waste heat. This is costly for customers, particularly when energy prices are high, and bad for the environment because waste heat contributes to global warming. Excess combustion also releases CO2 and NOX into the atmosphere, which are even more detrimental to the global environment because they trap the warming rays of the sun in the upper atmosphere.

Sofame’s products have won engineering awards in the United States and Canada. At Xstrata Mines in New Brunswick, an assessment of a recent Sofame project was carried out after 12 months of operation and showed that the PercothermTM direct contact economizer had decreased steam consumption in the flotation process by 7,100 pounds per hour or 16%, reducing energy costs by $850,000 per year. Overall, in 2007 the Brunswick mine achieved a 6% reduction in total energy consumption, significantly contributing towards Xstrata Zinc’s targeted average reduction in energy intensity of 1% per annum. The Zinc Dryer Heat Recovery project received the innovation award from the New Brunswick Consulting Engineering Society.

At Trudeau International Airport in Montreal, four Sofame PercothermTM units were installed in 2004. The new thermal plant has helped Montreal-Trudeau reduce its overall energy consumption by more than 55%, or a reduction of 1.4 million cubic metres of gas. As a result, it produces 2,659 tons less carbon dioxide annually and yet comfortably heats the new terminal which is 80% larger than the old terminal. In 2007, the Montreal-Trudeau thermal plant project won first place in the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Technology Awards. This award recognizes outstanding achievements by members who have successfully applied innovative building design in the areas of occupant comfort, indoor air quality and energy conservation.

Sofame was founded in 1984 by Luc Mandeville and Michel Dallaire. Its first product was the Launrec RBTTM, a waste water heat recovery system, designed for laundries and dyers.

In 1994, the Company obtained its patent for the Hybrid PercomthermTM and stood out as the world's first manufacturer of a technology producing energy by direct contact in addition to recovering thermal effluents.

Sofame further developed markets for industrial process water heating and heating of institutional and multiple-unit rental buildings. The year 1997 marked a turning point for Sofame as it was listed on the Toronto Exchange under the symbol SDW. That year, Sofame also obtained a patent for its Ultra-High Efficiency (UHE PercomaxTM) water heater, of which it is still the world's only authorized manufacturer. In 1999, Sofame achieved a breakthrough in the European market. Its first major contract was the installation of a PercothermTM on the site of the Gaz de France Montoire de Bretagne LNG terminal. During that year, it also received one of its numerous awards (20 over the years), from the prestigious ASHRAE (American Society of Heating, Refrigerating and Air Conditioning Engineers).

In the last 20 years, over 300 SOFAME units have been installed. Some of the current installations include the pulp and paper industry, the dying and textiles industry, food processing facilities, hospitals, universities, cardboard recycling, meat packing, hotels, cement and district heating. To this day, SOFAME holds 5 Canadian patents and 4 American patents, as well as its new provisional patent on the Sofame Steam PumpTM. It is the sole proprietor of these technologies.

Sofame Technologies is also listed in the United States under the symbol SFMGF. Standard and Poor’s, by way of the S&P/TSX Market Access Program, has published a manual exemption for the Company on April 24, 2009 in conformity with local securities regulations. With publication into S&P Corporation Records under the S&P/TSX Market Access Program, Canadian listed companies are able to meet “blue sky” compliance requirements in up to thirty-eight states. The program enables US-based brokers to solicit their clients’ interest in the company.

Sofame Products VS Current Technologies

Water Tube Boilers

• Existing “indirect” technology developed in the 1800’s
• Flame heats metal, which in turn heats water
• 65% efficiency on a seasonal basis due to thermal dynamics
• Environmentally inefficient: 35% of energy wasted (flue gas up to 700°F)
• Professional supervision required: Stationary engineers

Competitive Advantages

• Increases efficiency from 65% seasonal average to 95-99%
• Savings on construction, maintenance and insurance
• Reduction of greenhouse gas emissions
• Users qualify for carbon credits (subject to local legislation)
• Payback generally between 6 months – 3 years
• Unique space heating technology
• Most extensive guarantee in the market (5 years)
• Cutting edge internet-ready control system technology

Products

Sofame products are custom-engineered, custom-manufactured, high efficiency, direct-contact heat recovery and hot water heating systems. Sofame’s products extract up to 99% of heat from flue gases depending on the application, and also from waste water. The recovered energy is returned to the process or building as hot water or pre-heated make-up air. In addition to economically recovering heat from waste energy, Sofame’s products also significantly reduce greenhouse gas emissions. Sofame’s technology is protected by several patents, and an R&D program is under way to enhance Sofame’s global marketing strategy by creating patents on two new products. Sofame’s products are purchased by building owners, institutions, industrial facilities and commercial establishments with the technical support of Sofame’s network of independent North American and European manufacturer’s representatives. The capacities of recovered energy in a Sofame system typically start at 1 MW per hour, which is the approximate equivalent of a 150-room hotel.

PercomaxTM - Direct Contact Water Heater

Is a direct-contact, natural gas filled, water heater designed to heat water to temperatures up to 185 F (85 C)

The Percomax™ is used for process water heating, hydronic (water) space heating, domestic hot water heating, fresh air heating, and boiler make-up water preheating. Its advantages include very high efficiencies (up to 100%), minimum required maintenance, reduced emission of atmospheric pollutants, no constant supervision required, not classified as a pressure vessel, no explosion-proof room, lower insurance premiums, rapid unit start-up, and the feasibility of outside installation in any climate.

PercothermTM - Condensing Stack Economizer

Direct-Contact, condensing stack economizer which recouperates the residual heat contained in a boiler's flue gas and transfers the heat to a cold water stream. Hot water is produced at temperatures as high as 140 F (60 C).

The Percotherm™ is used for hydronic (water) space heating, pre-heating of domestic water or boiler make-up water, domestic hot water heating, fresh air heating and heating of process water. It offers very high efficiency (boiler seasonal efficiency can be improved by up to 20% and more). Other features are minimum maintenance, reduced emission of pollutants, and no need for constant supervision, not classified as a pressure vessel, no explosion-proof room, lower insurance premiums, and rapid unit start-up,. This unit can increase the output of existing boilers or even allow for a reduction of installed boiler capacity.

Launrec RBTTM – Wastewater Heat Recovery

The Launrec RBT™ is a free-standing heat recovery system which recovers energy from waste water.

The Launrec RBT™ system produces “free” hot water by recovering 75% or more of the energy contained in process waste water. It is principally designed for industrial laundries and dye houses which create warm effluents laden with lint.

Hybrid PercothermTM - Water Heater and Stack Economizer Combined

Direct-Contact, condensing stack economizer equipped with an integral, fully modulating burner. Therefore, the Hybrid PercomthermTM provides boiler flue gas heat recovery from existing boilers, and also supplies its own heat source to completely satisfy process hot water demand. Hot water is produced at temperatures as high as 185 F (85 C), when the Hybrid PercomthermTM is natural gas fired.

The Hybrid Percomtherm™ is designed to complement existing boilers by recovering waste energy and adding a new heat source. Common applications are for boiler plant expansions when capacity limits have been reached. A Hybrid Percomtherm™ can be used to retrofit and replace an aging boiler in an existing boiler room, and make the whole boiler plant 99% efficient. A Hybrid Percomtherm™ is typically used for hydronic (water) space heating, fresh air heating, boiler make-up water preheating, process water heating, and domestic hot water heating. Its advantages include very high efficiencies (up to 100%), minimum required maintenance, reduced emission of atmospheric pollutants, no constant supervision required, not classified as a pressure vessel, no explosion-proof room, lower insurance premiums, rapid unit start-up, and the feasibility of outside installation in any climate.

UHE PercomaxTM - Water Heater for Space Heating

An Ultra High Efficiency water heater composed of a PercomaxTM Direct-Contact water heater and a water vapor pump. This arrangement results in an appliance which will operate at high efficiencies (94%) even when used for space heating requirements, where return water temperatures are as high as 150 F (66 C). Hot water is produced at temperatures as high as 190 F (88 C).

The UHE Percomax™ is designed for new construction where energy efficiency is a priority such as in projects seeking LEED certification. A UHE Percomax™ can be used to retrofit and replace an aging boiler in an existing boiler room. The UHE Percomax™ is used mainly for hydronic heating mainly of buildings. No constant supervision is required. It is not classified as a pressure vessel, so no explosion-proof room needs to be built. Maintenance is minimal compared to an indirect contact boiler, and this unit can be even more efficient than a standard direct-contact water heater. It offers rapid start-up with instantaneous hot water production. In regard to pollutants and green house gas emissions (GHG’s), the UHE Percomax™ is of particular interest because it reduces production of nitrogen oxide (NOX).

Sofame Steam PumpTM - Flue Gas Economizer for Industrial Boilers

The Sofame Steam Pump™ is a patent pending direct contact stack economizer which can be added to an existing hot water heater or steam boiler.

The Sofame Steam Pump™ is mainly used for hydronic heating mainly of buildings. No constant supervision is required. It is not classified as a pressure vessel, so no explosion-proof room needs to be built for it. Maintenance is minimal compared to an indirect contact boiler, and this unit can be even more efficient than a standard direct-contact water heater. It offers rapid start-up with instantaneous hot water production. In regard to pollutants and green house gas emissions (GHG’s), the Sofame Steam Pump™ is of particular interest because it reduces production of nitrogen oxide (NOX).

Sofame Finance & Carbon

Sofame Finance

These products involve a long sales cycle, and the Sales Funnel for the Company is growing steadily ($41 Million at September 30, 2008). Growth in confirmed purchase orders and increasing shipments in 2009 ending September 30th are expected to achieve positive cash flow for the Company. Sofame has recently opened discussions with groups of financiers who have offered to establish and operate Sofame Finance on behalf of Sofame Technologies. The role of Sofame Finance is to act as an independent funding channel with the exclusive mandate to examine Sofame’s turn-key projects where end-users have requested a project financing proposal. The cash flow from a Sofame-funded Turn-key project is the expected reduction in natural gas costs resulting from design and installation of a Sofame system solution.

The term of the savings contract is typically ten years. Payback of capital and interest at current natural gas prices for a typical installation takes from five to seven years. Most customers realize the value of energy savings is sensitive to natural gas prices which fluctuate, and could rise significantly over the next decade. Nevertheless, they are still reluctant to commit capital funds to energy saving, green investments. The customers are willing to let Sofame assume the risks as well as the possibility of windfall gains several years into the future.

To make the proposal easier for customers to sign, Sofame is in a position of knowing the value of the energy savings which are typically significant, ranging from a few hundred thousand dollars per year to over a million dollars per year in some cases. Sofame is willing to agree to share the savings with the customer in year one, guaranteeing minimum positive cash flow. A chance to cut costs and generate cash for the end-user without investing any funds is a rare opportunity for most managers.

Sofame Carbon

Sofame Carbon is a fourth arm of Sofame Technologies now being created, and which would not have seen the light of day without the assistance of carbon trading insiders and exchange experts. Carbon regulations are taking shape in North America following the elections in the USA and Canada. Sofame is one of the rare businesses in the industrial energy and construction markets which as its core business designs and manufactures a product that directly reduces greenhouse gas emissions in quantifiable and predictable ratios. Sofame Finance also gives Sofame a unique opportunity to keep ownership of carbon credits. Other contractual arrangements with end-users will allow Sofame to benefit from helping customers to engineer, certify and monetize the carbon credits resulting from a Sofame equipment sale.

In the United States, Sofame has been working with Carbon Green LLC of Chicago to package Sofame’s direct-contact technology with other efficiency programs as Carbon Green offers energy savings and carbon reduction to its customers in the bio-fuels industry. In addition to establishing and managing a Certified Carbon Credit program through the Chicago Climate Exchange, Carbon Green seeks to introduce its clients to new energy efficient technologies as they emerge.

A typical Sofame project creates about 5,000 tons per year of GHG reduction for a $1 million machine. Sofame is proposing to share the savings with the customer in year one, guaranteeing minimum positive cash flow to the customer from Sofame Carbon in exchange for joining the agreement.

The Sofame Carbon Model can be referred to as a Repetitive Revenue Model. Compared to the Manufacture-and-Ship model, it is obvious that for every such sale, in addition to supplying the equipment, Sofame would also negotiate the carbon credits.

Projects

• Industrial, commercial and institutional
• AIRPORTS: Montreal International Airport, Edmonton Airport, Winnipeg Airport
• UNIVERSITIES: Toronto, British Coumbia, Concordia, University of Montreal.
• FOOD PLANTS: Parmalat, Fleishman, Maple Lodge Farms
• TEXTILES: Cookshire Tex
• HOSPITALS: Sacre-Coeur, Jewish General, Maisonneuve-Rosemont, Royal Vic
• MINES: Xstrata Brunswick
• POWER PLANTS: Central Heat, Montoir de Bretagne
• PAPER MILLS: Cascades

Michel Brisson, CEO

Michel Brisson joined Sofame in 2009 to build out the sales force and the network of manufacturer’s representatives. Mr. Brisson has over twenty-five years of upwardly mobile experience in the complex arena of Business-to-Business management and sales. He first learned his trade in the field of industrial selling as a successful Sales Professional for Rolph Clark Stone, Genpak and GE Plastics.

From 1996 to 1999 he was VP Sales for SAP France and then SAP Canada where he built complete sales organizations from the ground up, increasing revenues at SAP France by 100% and in Canada by 90%. In 1999, Michel became Strategic Consultant for SAP instituting sales performance initiatives in Japan, Finland and Sweden. In 2002, he became President and CEO of SAP Canada and grew revenues to over $200 million by installing a sales management process and overseeing efforts to build and implement systems for developing relationships and maintaining customer satisfaction.

Previously, Michel managed and delivered Sales Training as a Sales Performance Consultant with Holden Corporation, including Sales Management Training for upper level executives, deal making and strategic sales plan development, at the world’s top 100 IT and Telecom companies. He was also Managing Director for TNP Inc. where he was responsible for the organization of large-scale marketing and revenue generation seminars. He was also Sales Director for Bell Mobility (Montreal) and in 1985 was charged with building a new sales organization and resellers to capture mobile phone market share for from the competition.

John Gocek, COO

John Gocek is a proven C-level executive with over twenty years of hands-on experience in financial management and manufacturing operations, particularly in the HVAC industry. Mr. Gocek brings a diverse background in general management, accounting, manufacturing operations, banking, treasury management, IS/IT and management consulting. His education in honors economics at McGill University in Montreal (’82), Management Associate training on Wall Street (’85), and years of professional development have led to roles of increasing responsibility in finance, budgeting, business strategy, and executive management, including as CEO of a public company and co-founder and CFO in a multinational SOX-regulated manufacturing corporation. He is an advocate of performance-based metrics and web-based management systems, and a mentor, skilled at coaching others to understand the organization’s needs and to act constructively.

Robert Deslandes, Vice President CFO

Robert Deslandes is a senior executive with over 25 years of diversified experience in corporate finance and general management within manufacturing, distribution and services companies. Robert has worked in areas of acquisition, start-up, restructuring, strategic planning and business development. He has served for many years as Vice President of Finance and CFO of large international public companies. Robert is an effective negotiator, creative manager and proven operations strategist. He has previously served as CFO in the food industry for Canadian public company with revenues over $400 million, as well as President of a banking equipment manufacturing and service corporation. Robert is a graduate of University of Quebec in Montreal in Finance, and holds a Masters Degree in Business Management and is a Certified Management Accountant as well as a member of the Financial Executives Institute.

Luc Mandeville, Eng., Vice President CTO

Luc Mandeville is co-founder of Sofame and served as its President for over 20 years. He has been involved in every patent creation developed by Sofame. He is an owner in every one of these patents. Graduated from “École Polytechnique” of Montreal in 1973 in Industrial Engineering, he worked for 10 years in the water treatment field for Degremont before starting Sofame. Mr. Mandeville has developed markets in North America and Europe for Sofame products since the Company’s founding in 1984. He has over 25 years of experience in the energy field.

Richard T. Groome, Chairman

Richard T. Groome is Managing Partner of Notre-Dame Capital Inc. His expertise stems from financing small and mid-size emerging growth companies. Prior to starting this business in October 2005, he was Senior Vice-President of Strategic Capital from January 2003 through September 2005 and Senior Vice-President of Institutional Equity Sales from August 2001 to January 2003 at Desjardins Securities, a Quebec-based firm. Richard has been in the financial industry for more than 20 years at such firms as Groome Capital (his own firm), Marleau Lemire Securities, Sprott Securities and Levesque Beaubien Geoffrion. He has a BA in Economics from McGill University. Mr. Groome has actively managed or participated in over 400 financings representing some $4 billion of small cap financings. Mr. Groome is very active in numerous philanthropic projects, most notably underprivileged children in Montreal and Peru in addition to the World Wildlife Fund.

Robert Presser, Director

Mr. Robert Presser is the Vice President of Acme Engineering Products Ltd., where he is responsible for the recruitment, training and support for Acme’s worldwide network of over 100 manufacturer’s representatives. Mr. Presser holds an MBA from the Richard Ivey School of Business at the University of Western Ontario and a bachelor’s degree in business from l’École des Hautes Études Commerciales at the University of Montreal. Prior to returning to Acme in 1993, he was a management consultant working on corporate governance and merger and acquisition mandates for large Canadian corporations. In 2007 Robert was appointed to the Board of Directors of Defense Construction Canada and became Chairman of the Board in June, 2008. Defense Construction Canada is a crown corporation that provides project management and administration services for all infrastructure projects required by Canada’s Department of National Defense. Mr. Presser is an experienced project manager, covering mechanical, electrical and electronic engineering disciplines for Acme’s contracts with international engineering firms like SNC Lavalin and Bechtel, and has presented papers and seminars on Acme’s process technologies at technical conferences in Europe and North America.

Hubert R. Marleau, Director

Mr. Hubert R. Marleau is President, Founder and Director of Palos Capital Corporation. With over 40 years of experience in the business and financial community, Mr. Marleau has raised funds privately and publicly for hundreds of emerging and mature companies, structured many mergers and acquisitions as well as designed and created numerous financial deals in Canada. Mr. Marleau has worked at the executive level of several large investment banks notably, Nesbitt Thomson Inc., Levesque Beaubien Inc. as well as his own firm, Marleau, Lemire Inc. Throughout his career, Mr. Marleau has been a governor of the Toronto Stock Exchange, the Montreal Stock Exchange, and the Vancouver Stock Exchange, has been a director of the Investment Dealer Association of Canada, and has been a Board member for a multitude of publicly traded companies. He is a Director and Chairman of Notre Dame Capital. Mr. Marleau holds a Bachelor of Science in Economics from the University of Ottawa.

Fahim Samaha, P.Eng., Director

Mr. Samaha is the Chairman and CEO of the SOFFIMAT SA, which is a Paris-based private corporation active in energy conversion and power generation in Europe for the past 20 years. Mr. Samaha is an electrical engineer trained at AUB and Berkeley, and co-founded Soffimat in 1988. Soffimat has participated as either contractor, operator, owner or promoter in power projects representing over 1.4 gigawatts of installed capacity of different energy technologies, including gas turbines, gas and diesel engines, microturbines and thermal energy recovery systems. Since 1998, Mr. Samaha has been actively developing Soffimat’s strategic focus on renewable energy and innovative concepts to save energy and increase fuel efficiency. He has personally championed the development of over one hundred megawatts of biogas and biomass power plants as well as environmental friendly public transport vehicles, including an electric car called Bi-Scot, the first electric vehicle certified roadworthy in France. Mr. Samaha has also concluded the acquisition of over two dozen businesses and has built an extensive business network across Europe in the energy field.

Kébir Ratnani, Engineer, M.Sc, Director

Kébir Ratnani has over 30 years experience in the natural gas, electricity, windmill and energy sectors. He owns 13 patents related to natural gas, petrochemical and environment technologies and has concluded numerous cooperation agreements with different governments among Algeria, Cameroun, Gabon, Kenya, Tunisia, Senegal, Libya, Gambia, Burkina Faso, Ivory Coast, Egypt, Lebanon, Morocco, Syria, Saudi Arabia and Kuwait, Malaysia, Vietnam as well as, Pakistan and France. In 1991 he directed the setting up of the Natural Gas Technologies Centre, a research organization associated with Gaz Métropolitain, Gaz de France, Brooklyn Union Gas, and Osaka Gas. Since 2000 he was directing Business Development at SNC-Lavalin for Africa and the Middle East and was responsible for all water, power and infrastructure projects including ports, airports and roads.

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