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  • 1. Polyshield Technologies Stock symbol: SHPR Total Shares Outstanding: 187.84m Stock price 07/23/13: $.29 Exchange: OTCBB 52-week price range: $.08-$1.01 Equity market capitalization: $21.8mm Recent News Stock Price & Chart SEC Filings Summary Polyshield Technologies, led by CEO Rasmus Norling, the world’s foremost expert on emission abatement technologies, is primed to become a major player in a 750 billion dollar marine emission industry. Their DSOX-15 scrubber is cheaper, smaller and easier to install than the other options in the industry. Upcoming government regulations should force ship to consider options like the ones Polyshield is offering. Recent Developments  Agreement with LMS Ship management Inc. of Mobile, Alabama for multiple installations of the DSOX-15 Fuel Purification System, July 24…read more  Polyshield Technologies schedules cruise ship survey…read more  Polyshield Technologies Inc. has completed the inspection portion of a two ship survey…read more  Polyshield Technologies Inc. schedule multiple ship surveys for DSOX-15…read more  Polyshield Technologies Inc. enters into negotiations with two Maritime companies…read more Introduction  The sulfur content of ships’ emissions needs to be reduced from 1% to 0.1% by 2015 in the Emission Controlled Areas; and to 0.5% by 2020 worldwide;
  • 2. Polyshield Technologies Stock Symbol : SHPR 2  Three options for ships: change from Heavy Fuel Oil to Marine Gas Oil, use scrubbers, or choose Liquefied Natural Gas. Market Growth Drivers  Regulation for ECA zones in northern Europe and the United States go into effect in 2015, thereby forcing ships to change their emission standards.  The international regulations going into effect in 2020 for all ships regardless of location should cement emission abatement as a quarter of a trillion dollar industry.  Currently five companies can produce roughly 50 scrubbers per year, however; with 65,000 ships worldwide, demand will outpace supply.  With size and cost being primary problems in the current scrubber industry, a new solution is needed.  Rising fuel costs will eventually force ships to search for alternate solutions to Marine Gas Oil. With the global economy beginning to recover, shipping, a highly elastic industry in certain regards, is beginning to come around. However, new regulations from the International Maritime Organization will change the way ships deal with carbon emissions permanently. The sulfur content needs to be limited to .1% (down from 1% which was only recently instituted in 2012) by 2015 in all ECA zones, which are primarily around the Nordic countries and the United States, and to .5% worldwide by 2020. Since the shipping industry currently operates on Heavy Fuel Oil (HFO), which does not meet the requirements, they will have to make considerable changes to comply with the new rules. As of today, there are a few realistic options. Ships can shift to the more efficient Marine Gas Oil, they can install some kind of scrubber (whether fuel or exhaust), or they can switch to Liquefied Natural Gas (LNG). Each approach has its benefits and caveats, which we will explore over the course of this report. After examining the current state of the industry, we will delve into the unique fuel scrubbing technology that Polyshield is currently working on. We will attempt to establish whether this is the most viable option for the shipping industry moving forward.
  • 3. Polyshield Technologies Stock Symbol : SHPR 3 In order to offer the most robust research possible, we will be using an ECA cost calculator provided by Intertanko and proprietary statistical and Monte Carlo Models from the Equities Group Research Team. Current Emission Regulations  ECAs are pockets of water located within 200 miles of the coasts of the United States, Canada, and Northern Europe;  The new regulation is compulsory; ships that are in violation of these laws are subject to detainment. On July 15, 2011 the International Maritime Organization (IMO), a subsidiary of the United Nations formed in 1948 with 167 member countries to ensure maritime safety, made a seismic change in environmental protocols moving forward. The International Convention for the Prevention of Pollution from Ships (MARPOL) instituted the North American Emission Control Area (ECA) on August 1st , 2012. The ECAs are pockets of water located within 200 miles of the coasts of the United States, Canada, and Northern Europe. Within these ECAs, the IMO dictates that the SOx content of fuel oil can be no more than 1.00% (10,000 parts per million). Starting January 1st , 2015, this number drops down to 0.1% (1). In contrast, outside of the ECA zones, the number is 3.5%. However, this number will be reduced to 0.5% on January 1st , 2020 meaning that the entire world will essentially become one large ECA zone with an emission requirement of 0.5% except for the previously mentioned areas around the U.S., Canada, and Europe which will still have a 0.1% emission limit for Sulphur (3). Through these emission standards, the IMO is making a concentrated effort to reduce toxic pollutants including not just SOx, but also NOx and PM. It seems like a difficult task to enforce all the ships in the world to comply with these regulations in less than 8 years, but ships will face stiff penalties if they do not comply. Upon docking at any port, vessels will be inspected by either the coast guards of that particular state or the Port State Control (PSC). Both the Coast Guard and PSC ensure that the arriving vessel is in compliance with all international maritime laws. Ships that are in violation of these laws are subject to detainment
  • 4. Polyshield Technologies Stock Symbol : SHPR 4 until the vessel’s problems can be fixed to be in accord with international law. For more information see the IMO website here. Emission Abatement Options  MGO is only a viable solution when the ships age is beyond the payback period of an alternative solution, and the cost remains at a realistic level.  Infrastructure is inadequate for wide use of LNG; conversion into LNG is too costly, LNG vessels will likely be in the form of new builds.  Exhaust gas scrubbers have long installation periods and are very large; the cost can be insurmountable for ships with multiple engines. Simply switching to MGO is a viable option for many companies. Currently the spread between HFO and MGO is roughly $290.00, so the expenses can become significant but only if the ship sails a large portion of its route in ECA controlled waters. In addition, the cost of an exhaust scrubber can be upwards of $5,000,000.00 and requires in some cases a month of dry dock and costly space to install. MGO is a viable solution for ships that do not sail in ECA waters on a regular basis (we have defined regular basis as upwards of 15% of their time), have a older fleet with less than 10 years average life left, and can adjust their costs elsewhere to make up for the increased fuel price. An example of the last reason would be a cargo ship that can simply increase the cost of its cargo by a small amount. It is the opinion of this report that this category of ships are unlikely to change to LNG or a scrubber solution. If we assume that payback period for a new fuel solution must be at least less than the remaining life of the ship, then a $6,000,000.00 cost (assuming 330 days at sea, 9% hurdle rate, 25% or more in ECA waters, 50 tons of fuel/day, current HFO cost and a $250.00 spread) would only interest ships with at least 12 years of remaining life. It is important to note that for the purposes of this paper, a $250.00 spread is being used, the actual spread is closer to $300.00 as of late July. A basis zone at $250.00 will give us an excellent comparative number as it seems to be a mean reverting statistic. However, the average age of the worlds cargo carrying fleet is 19 years old (6), and the average age of cruise ships is only 12, and less than 5% are over 20 years. Due to the boom in
  • 5. Polyshield Technologies Stock Symbol : SHPR 5 production during the 2004-2007 range, the shipping fleet is quite young (average ships have a lifespan of 30 years or more). In addition, the current spread on fuel consumption is not likely to continue. As MGO becomes more in demand due to the forced change, the spread will likely rise towards 400 or 500. If we shift our assumption to a spread of 450, then a ship only needs a remaining life of 4.5 years to achieve ROI. For the 8% of the worlds cargo fleet that spends virtually 100% of their time in ECA controlled waters, MGO is simply not a cost effective option. A scrubber solution pays back in less than a year for a 100% ECA ship and a $450.00 spread on HFO-MGO and 1.7 years for the current $250.00 spread. Since the average time spent in the ECA for merchant/cargo ships is 18% (translates to more than a 20 year payback period), MGO will still be a dominant option for a bulk of the cargo fleet, but if the fuel spread rises above 500 to 600 (not an unrealistic assumption), the scrubber/LNG option becomes palatable at a roughly 5 year payback period.
  • 6. Polyshield Technologies Stock Symbol : SHPR 6 The LNG option has been talked about for many years in the shipping industry. Not only is the price roughly $300.00 cheaper than HFO and some $550.00 cheaper than MGO, it provides a much cleaner alternative by reducing total emissions more than 90%. What is strongly debated about the option is the price, both monetary and economic. Initially, ECO LNG ships are much more expensive to build, with costs rising more than 10%. In addition, assuming that they are built, there is still the question of where to get fuel. Currently there is a stalemate going on between LNG providers and users. Shipping companies do not want to purchase LNG ships because they are skeptical of the infrastructure, and LNG infrastructure is skeptical about the demand. Government intervention could possibly break the stalemate, but there is nothing planned at this time. Maritime Cleantech Market group MEC Intelligence estimates that more than 5% of the world fleet will be LNG powered by 2020, but we have been unable to verify these findings or find another estimate in that range. While LNG might be the fuel of the future, it does not seem to have the infrastructure to support a short term revolution. Small pockets of the industry are likely to adopt it, but it will be a slow process without significant government support. In addition, conversion to LNG is simply too costly, the only LNG ships will likely be in the form of new builds. Scrubbers are the final option we will discuss. Since the Polyshield fuel scrubber is so unique, we will leave its discussion for the next section and focus on the more widely used exhaust scrubbers. Effectively, an exhaust scrubber is the equivalent to a large sieve, it extracts sulfur
  • 7. Polyshield Technologies Stock Symbol : SHPR 7 directly from the emissions released from the ship. The ship is then allowed to use traditional HFO fuel, and is compliant with emission regulations when it decides to turn the scrubber on. There are however, significant issues with the current line of exhaust scrubbers. The first is the applicability. Since the exhaust scrubber needs to be placed on every engine, it has effectively eliminated the multiple engine cruise ships. The cost can go from $5,000,000.00 for one scrubber to more than $20,000,000.00. The second is the scrubbers installation costs both monetarily and economically. While different estimates exist as to how long it would take to fully install, most agree that a six month period is fair. Over the course of that time, the ship is dry docked, cannot earn revenue, and is bleeding money in the form of installation costs. Also, even if the ship has successfully placed a scrubber on board, it needs to still carry MGO fuel in case the scrubber malfunctions. This adds to the already exacerbated problem of space with the scrubber, it is extremely large. The issue of an exhaust scrubber is not just technical though, there are considerations that go beyond how much money the industry may or may not save. The installation of an exhaust scrubber is a large project, one that takes time and a tremendous amount of labor and capital. Even if a ship has an estimated lifespan of 10 years, and the exhaust scrubber has a payback period of 9, the ship may not install it. While this seems to go against basic economics, the question of legal regulations offers some explanation. The current maritime emissions requirements set to go into effect in 2015 are likely set in stone, the shipping industry has been preparing for quite some time, but; the regulations for worldwide emissions set to go into effect in 2020 are not looked upon with nearly as much certainty.
  • 8. Polyshield Technologies Stock Symbol : SHPR 8 According to the IMO, if the shipping industry is deemed “not ready” by 2018, the regulation can be pushed back another five years to 2025. The .5% sulfur requirement by 2020 would bring widespread applications to the “alternative emissions” industry, effectively every ship would now be on an emission regulated route. So if the shipping industry believes that they may have five extra years to make a decision, it would change their prospects for future spending. They may either wait until 2018 to make a decision about an exhaust scrubber, or convert to LNG early to become effectively “regulation proof”. When government regulation is in question, cost benefit analysis is unfortunately rarely an exact science. Polyshield Technologies Background  A new solution: the DSOX-15 fuel purification system, aims to capture 25% of a market in the next five years.  The DSOX-15 is cheaper, smaller and easier to install than traditional scrubbers. Polyshield Technologies aims to lock up 50 contracts by the end of the year.  The CEO of Polyshield, Rasmus Norling, was the head of Research Development at Royal Caribbean Cruise Lines and is currently the world’s foremost expert on marine emission abatement technologies. Polyshield Technologies operates as a research and development company that provides a cost- efficient, environmental solution to the new maritime protocols set to take place in January 2015. Their solution is a fuel purification system: one that washes the ship’s fuels of harmful Sulphur Oxide (SOx). Led by their new CEO Rasmus Norling, Polyshield Technologies, within the next five years, aims to capture 25% of a market consisting of 65,000 ships worldwide all of which will be affected by the new emission standards. Mr. Norling, who joined Polyshield Technologies in February 2013, brings with him a wealth of expertise. Formerly the manager of Research & Development for Marine Technical Services at Royal Caribbean Cruise Lines, Mr. Norling is considered the world’s foremost expert on marine- emissions treatment-systems for the removal of SOx, NOx, and CO2. (13) While at Royal Caribbean, Mr. Norling invented the first fuel scrubber: designed to remove sodium from fuel before it entered the gas turbine.
  • 9. Polyshield Technologies Stock Symbol : SHPR 9 The initial fuel scrubber undoubtedly gave way to his newest invention with Polyshield Technologies: the DSOX-15 fuel purification system which removes sulfur from the fuel. Polyshield Technologies aims to lock up 50 contracts with an array of vessels by the end of the year. (4) DSOX-15 Fuel Purification System  The DSOX-15 provides a tremendous advantage to ships with multiple engines.  The fuel scrubber only needs 1 month to install, comparing to 6 months or more for the traditional scrubber.  Small Enough to transport in a box. Let’s begin to discuss the DSOX-15 fuel purification system that Polyshield Technologies is purporting. Initially, the CEO Rasmus Norling developed a sodium scrubber for Royal Caribbean cruise liners. The scrubber was the solution to a problem of engine wear. Over time, that evolved in the bio fuel scrubber we have today. While most scrubbers deal with the exhaust that comes out of the ship, the DSOX-15 deals with the fuel before it gets to the engine. There are significant advantages to this approach. The first is based on cost. The Polyshield DSOX-15 costs around $6,000,000.00 according to an interview transcript with Mr. Norling, and the exhaust scrubbers are roughly the same. However, the exhaust scrubber needs to be installed multiple times for a ship that has multiple engines, the DSOX-15 needs to be installed once regardless of the number of engines. This advantage is more pronounced in the cruise ship industry where the typical vessel has upwards of 4-5 engines. Let’s use the Oasis of the Sea, currently one of the largest cruise ship, as an extreme example. She has six engines, consumes 672 tons of fuel per day, and spends around 210 days per year in the ocean (30 trips per year *average trip length of 7 days). In addition we will assume the standard 9% hurdle rate, current HFO costs and a spread of $250.00. With an exhaust scrubber cost of $24,000,000.00 ($4,000,000.00 per scrubber multiplied by six engines, a very conservative estimate), and the average 20% time spent in the ECA, the payback
  • 10. Polyshield Technologies Stock Symbol : SHPR 10 period is 5.2 years. If we now compare that to the DSOX-15 cost of $6,000,000.00 keeping all other assumptions the same, we have a payback period of 1 year. The second advantage of the DSOX-15 is the initial set up. We mentioned the difficulty regarding exhaust scrubbers. Not only are they very large (which for a shipping vessel costs them money in the form of space for cargo), but they can take up to a year to fully install. In addition, while the scrubber is being installed, the ship must wait in dry dock, and large amounts of money must be spent on labor. The cost is thus increased by whatever lost profits the ship would have made over the installation period. The DSOX-15 on the other hand is not only small enough to fit in a box, but it can be installed over a period of 30 days. The savings here can become very significant if the ship is larger and the installation is more complex.
  • 11. Polyshield Technologies Stock Symbol : SHPR 11 Competition  While Polyshield Technologies does have a unique advantage, other companies like Alfa Laval, EcoSpec, Wartsila, and Dupont, have developed exhaust scrubbers.  Alfa Laval o Distributes a hybrid exhaust scrubber capable of 98% removal of SOx from fuel (“Exhaust Gas Cleaning, Pure SOx”). o Scrubber has been successfully tested on cargo ships and uses 1.5% of the engine power in the ship (“Exhaust Gas Cleaning, Pure SOx”).  EcoSpec o Scrubber is a 3 in 1 emission abatement system that reduces levels of SOx, NOx, and CO2 (“CSNOX”). o Tested on a cargo ship in 2008, removal of sulfur was 93%, which is less than competing products, which remove 98% or 99% of the SOx in the emissions (“CSNOX”).  Wartsila o Produces a hybrid exhaust gas scrubber specializing in the removal of SOx (“Wartsila Hybrid Scrubber System”). o Also has a separate machine that specializes in the removal of NOx o (“Wartsila Hybrid Scrubber System”). o Closed loop scrubber was installed on a cargo ship in 2011 (“Wartsila Hybrid Scrubber System”).  Dupont o Scrubber can operate for many years uninterrupted so there are no concerns with maintenance shutdowns while at sea (“Dupont Belco…”). o High efficiency pollutant removal that meets all IMO regulations (“Dupont Belco…”). o The product is yet to be installed on any vessel (“Dupont Belco…”).
  • 12. Polyshield Technologies Stock Symbol : SHPR 12 Investment Risks  The Technology isn’t yet compliant with ECA emissions, expected to be ready by Q1 2014.  The 0.5% sulphur emission regulation for the world may not go into effect until 2025.  The government can help fund the building of LNG bunkering, good for the LNG alternative. The risks involved with Polyshield are more qualitative than quantitative. The technology developed by Mr. Norling is proprietary, however; according to an interview transcript, it is not completely compliant with current ECA emission standards. While the technology is expected to be ready by Q1 2014, and it is being developed by a man with an excellent reputation in the industry, the final result as always remains to be seen. The main risk is in the government regulation. While the 2015 regulations are likely already set in stone, the 2020 global emission requirements could be delayed five years. This creates uncertainty in the shipping industry and may prevent many companies from making any large decisions. The profitability and payback period of the scrubber solution depends significantly on the time spent in ECA waters and the spread on HFO-MGO. While neither are likely to change significantly from current trends over the next 10 years, there is always a risk. Lastly, although LNG does not currently have the infrastructure to sustain a major change, larger governments could always fund the building of LNG bunkering to create the change. This is not a likely scenario, but one to consider nonetheless. Management  CEO: Rasmus Norling, the former Manager of Research and Development for Marine Technical Services at Royal Caribbean. Mr. Norling is widely accepted to be the current foremost opinion on marine emission abatement systems.  CFO: John da Costa currently serves on the board of more than five companies and brings a wealth of experience to Polyshield.  Director: Mitchell Reed Miller has been in the financial services industry since 2001 and is currently the director of Polyshield Technologies. He is a co-founder of Hermosa Capital Management LLC and received his B.A. from UCLA in 1995.
  • 13. Polyshield Technologies Stock Symbol : SHPR 13 Company Information Address: Polyshield Technologies, Inc. Boca Raton, FL 33432 Telephone: 800-648-4287 CEO: Rasmus Norling Web Site: State or other jurisdiction of incorporation or organization: Florida Transfer Agent: Pacific Stock Transfer Company, Las Vegas, NV Investor contact: 800-648-4287 Report Authors Francis Gaskins Nicholas Bhandari Director of Research Quantitative Research Analyst (310) 576-2422 (310) 576-2422 References: [1] "Designation of Emission Control Area to Reduce Emissions From Ships in the U.S. Caribbean." Environmental Protection Agency, July 2011. Web. 11 July 2013. <>. [2] Aagesen, Jesper. "Lloyd's Register LNG Bunkering Infrastructure Study." Lloyd's Register, Feb. 2012. Web. 11 July 2013. < 237162.pdf>. [3] ”Global Trade and Fuels Assessment—Additional ECA Modeling Scenarios.” Environmental Protection Agency, May 2009. Web. 11 July 2013. <>
  • 14. Polyshield Technologies Stock Symbol : SHPR 14 [4] Eckenweiler, Brad, and Rasmus Norling. "Polyshield Technology 30 Minute Interview." Telephone interview. 9 July 2013. [5] ”Price of U.S. Natural Gas LNG imports.” U.S. Energy Information Administration. 28 June 2013. Web. 11 July 2013. <>“; Rotterdam Bunker Prices.” Ship & Bunker. 2013. 23 July 2013. Web. 23 July 2013. <> [6] “International Shipping Facts and Figures –Information Resources on Trade, Safety, Security, Environment.” International Marine Organization, Maritime Knowledge Centre, March 6 2012. Web. 11 July 2013. < portanceofInternationalShipping/Documents/International%20Shipping%20- %20Facts%20and%20Figures.pdf> [7] “North American Cruise Statistical Snapshot.” U.S. Department of Transportation Maritime Administration, March 2012. Web. 11 July 2013. < pshot.pdf> [8] Bull, Yves. "Machinery Concepts and LNG for Meeting IMO Tier III Rules." Wartsila Technical Journal (2011): n. pag. Web. 18 July 2013. [9] Andersen, Mads, Niels Clausen, and Pierre Sames, Dr. "Costs and Benefits of LNG as Ship Fuel for Container Vessels." Germanischer Lloyd, 2011. Web. 11 July 2013. <>. [10] Rob Almeida. “Do Eco-Ships Make Sense?” gCaptain, March 25 2013. Web. 18 July 2013. <> [11] “More than 5 Pct of the World Fleet to Adopt LNG Propulsion by 2020”, World Maritime News, October 17 2011. Web. 11 July 2013. < adopt-lng-propulsion-by-2020/> [12] “Sulphur oxides (SOx) – Regulation 14” International Maritime Organization. Web. 11 July 2013.
  • 15. Polyshield Technologies Stock Symbol : SHPR 15 < ur-oxides-(sox)-%E2%80%93-regulation-14.aspx> [13] “Fuel Bio-Scrubber Systems.” PolyShield Technologies Product Presentation, 2013. Print. [14] “MS Oasis of the Seas”, Wikipedia. Web. 11 July 2013. <> [15] "Exhaust Gas Cleaning, Pure SOx." Alfa Laval, n.d. Web. 23 July 2013. <>. [16]"CSNOX." EcoSpec Global Technology, n.d. Web. 23 July 2013. <>. [17]"Wartsila Hybrid Scrubber System." Wartsila, n.d. Web. 23 July 2013. < hamworthy/hybrid-scrubber>. [18] DuPont Belco Marine Scrubbing Systems. N.p.: n.p., 2009. DuPont Technologies. Web. 23 July 2013. < technologies/articles/belco-marine-gas-scrubbing.html>. [19] "GEA Westfalia Separator." GEA Mechanical Equipment USA, n.d. Web. 23 July 2013. <>. Statements contained in this document, including those pertaining to estimates and related plans, potential mergers and acquisitions, estimates, growth, establishing new markets, expansion into new markets and related plans other than statements of historical fact, are forward-looking statements subject to a number of uncertainties that could cause actual results to differ materially from statements made. provides no assurance as to the subject company's plans or ability to effect any planned and/or proposed actions. has no first-hand knowledge of management and therefore cannot comment on its capabilities, intent, resources, nor experience and makes no attempt to do so. Statistical information, dollar amounts, and market size data was provided by the subject company or its agent and related
  • 16. Polyshield Technologies Stock Symbol : SHPR 16 sources believed by to be reliable, but provides no assurance, and none is given, as to the accuracy and completeness of this information. DISCLAIMER: The information, opinions and analysis contained herein are based on sources believed to be reliable but no representation, expressed or implied, is made as to its accuracy, completeness or correctness. Past performance is no guarantee of future results. This report is a paid advertisement and is for information purposes only and should not be used as the basis for any investment decision. has been compensated in the form of a debt write down from a third party or the company for preparation and posting of this report, audio interview, virtual road show and other advertising services. This constitutes a conflict of interest as to ability to remain objective in its communication regarding the subject company. Analysts, principals, associates and employees of do not currently own or trade equities under coverage. For detailed disclosure as required by Rule 17b of the Securities Act of 1933/1934 contact, 501 Colorado ave, #170, Santa Monica, CA 90401. is not an investment advisor and this report is not investment advice. This information is neither a solicitation to buy nor an offer to sell securities but is a paid advertisement. Information contained herein contains forward-looking statements and is subject to significant risks and uncertainties, which will affect the results. The opinions contained herein reflect our current judgment and are subject to change without notice. We encourage our readers to invest carefully and read the investor information available at the web sites of the U.S. Securities and Exchange Commission (SEC) at and the National Association of Securities Dealers (NASD) at The NASD has published information on how to invest carefully at its web site. Readers can review all public filings by companies at the SEC's EDGAR page.