CLIFTON AS

GAAS — ALTERNATIVE TO SIIN POWERELECTRONICSCLIFTON ASGeneral IntroductionNovember 2006© 2006 AS Clifton

CLIFTONAS• Is a semiconductor industry start-up producing and selling discrete elementsfor power electronics applications in all major industries∇∇Is utilizing its own advanced technology applied to alternative to dominating Si(silicon) material — GaAs (gallium arsenide)˫Is to challenge Si dominated multibillion dollar power electronics devices’ marketwith GaAs ones, which have superior, compared to Si, performancecharacteristics, while producing and selling its GaAs products at near Si prices∇Has highly motivated team consisting of financiers, industrialists and scientists, andenjoys a marketing agreement with a high-profile aerospace and military industrysupplier∇ Sales (p-i-n chips) starting in 2007∇ Product family extension (Schottky structures) in 2007∇Ambition to become an important player in its niche© 2006 AS Clifton

CLIFTONTODAYClifton’s s business idea… is to challenge Si (Silicon) dominated power electronics devices with alternative GaAs(Gallium Arsenide) ones, which have superior, compared to Si, performance characteristics,while producing and marketing those GaAs products at near Si pricesFounded in 2000, € 4.0 million in cash invested into pilot plant in Estonia. Result andowner driven teamThe Products — mainstream semiconductor structures and chips for power electronics,immediate market € 500 million, totally € 15 billion and growingOwn proprietary patentable know-howTechnology not revolutionary but know-how heavy and industrial employment verydemanding. Achieved technological compliance for industrial output and control overentire production value chainProduct development and joint marketing with a high profile military and aerospace supplierSemelab Plc., United Kingdom (www.semelab.com)˫© 2006 AS Clifton

˫POWERELECTRONICS&GALLIUMARSENIDETECHNOLOGYPower ElectronicsHigh voltage, high circuit, high powerTechnology generations in power electronics last long, 20+ years — Moore’s law does not applyGallium Arsenide (GaAs) vis-à-vis Silicon (Si)˫Alternative to Si compound semiconductor materialGaAs is more expensive than Si but entertains critical higher temperature tolerance and switchingspeed compared to SiBetter performance of GaAs means:– less weight, less size, less pollution– more energy, more savings, more reliabilityLeading edge technology∇ Initial source and early development — former Soviet military labClifton’s products have no match in the world today in terms of performance characteristics∇ Clifton’s competitive advantage:– is unmatched success in implementation of unique industrially challenging liquid phase epitaxy(LPE)-based technology, and– advanced proprietary know-how in the LPE processing technology∇ Cost-effective production of GaAs devices for power electronics would replace Silicon (Si) in manyapplications — industry preference© 2006 AS Clifton

THEPRODUCTPower ElectronicsHigh voltage, high circuit, high powerRODUCT & M& MARKETClifton’s products are applied everywhere where transformation of energy athigh levels of current and voltages is needed:inverters, frequency and current converters, rectifiers, amplifiers, thermo and radiation sensors, UPS,etc.Market size of power diodes and other discrete semiconductor devices in power electronics —more than EUR 6 billion/year and growing, vast majority Si-based∇ Immediate Market for Clifton’s products —EUR 0.5 billion/year and growing∇ Power electronics is dominated by the USand Asian producers, 20-30 big and200-300 smaller companiesMARKET STRUCTUREUSA45%Competitionother(mostlyAsia)25%No major player has been able to industrialize LPE technology for GaAs in large scaleSimilar but not as advanced to Clifton’s technology is performed by an Israeli companyEurope30%© 2006 AS Clifton

APPLICATIONS OF CHIPS© 2006 AS Clifton

THETEAMViktor Voitovitch (47)Roland Pärn P(42)Lembit Dalberg (41)Olev Schults (43)PhD, R&D Director, Chairman of the Supervisory Board,author of the technology, remarkable scientific and industryexperience in the field, diploma and PhD in physics,founder of CliftonSenior Advisor to the Board, diploma in physics, founder ofCliftonCEO, entrepreneur, diploma in mathematics, founder ofCliftonCFO, investment banker and VC, diploma in electronics,founder of CliftonProven experience in producing limited (1000 – 2000) serial output of GaAs chipsProven experience in electronics component productionProven R&D capabilities in the GaAs liquid phase epitaxyHigh corporate moral and discipline© 2006 AS Clifton

VC Investments & CasesInvestment CriteriaClifton Case© 2006 AS Clifton

Cresco’s Investment Criteria in High-TechλλλλλλEarly and very early stageIndustry not service – production, assets (real balance sheet), peopleGlobal street or industrial customerThe idea/knowledge/people carry a long-term (10+ years) academic backgroundPatents not important but unique explicit technological advantage isGovernance — may-be not understanding but accepting the rules brought withcapitalWhat Kind of Capital? · www.cresco.ee ·MoneyClub4U, 15 May 2007

Clifton• Founded in 2000 by physicists and vc – true entrepreneurs• Discrete semiconductor elements for power electronics• GaAs to challenge dominant Si• Unique sensitive technology, LPEHISTORICAL HIGHLIGHTS1974 Research of GaAs diodes started in militarylaboratory in Tallinn, EstoniaMid 80’sLate 80’sViktor Voitovich and the team achieved controlof LPE (Liquid Phase Epitaxy). Soviet patent wasgranted to the teamTeam of scientists and developers headed by Ashkinazy andVoitovich gets excellent performance characteristics, limited serialoutput1989 The group dissolutes — Ashkinazy leaves for Israel, Voitovich tries to startproduction in UkraineWhat Kind of Capital? · www.cresco.ee ·MoneyClub4U, 15 May 2007

Clifton, cont.1997 Voitovich together with local entrepreneurs starts venture in Estonia– Clifton Electronics. Financial and corporate failure2000 Foundation of AS Clifton, investment banking and venture capitalfirm Cresco invests in Clifton, significant but notsufficient funding, EAS2003 Contract between Clifton and SemelabPlc., companies co-ordinate productdevelopment, more funds from Cresco2006 Ambient Sound Investment, Skypeco-founders invest in Clifton,big funds to ready production2007 After additional financing Clifton readyfor full capacity industrial productionand sales, new R&D products inthe pipelineClifton is still a start-up!What Kind of Capital? · www.cresco.ee ·MoneyClub4U, 15 May 2007

Pre-Clifton historyWhat Kind of Capital? · www.cresco.ee ·MoneyClub4U, 15 May 2007

Early stage CliftonWhat Kind of Capital? · www.cresco.ee ·MoneyClub4U, 15 May 2007

Early stage CliftonWhat Kind of Capital? · www.cresco.ee ·MoneyClub4U, 15 May 2007

Clifton todayWhat Kind of Capital? · www.cresco.ee ·MoneyClub4U, 15 May 2007

PartnershipTeam’s personal managerial capacity(+ scientific and research skills)˫MANAGEMENT(+ scientists /developers)˫VENTURE CAPITALMoney, strategic advice,recruiting or management skillsThe partnership should be driven by common/commercial sense.This, in reality, turns out to be not very common thing!What Kind of Capital? · www.cresco.ee ·MoneyClub4U, 15 May 2007