Company Overview

Alkane Inc. (ALKN) has developed and begun marketing a patent-pending fuel additive that boosts diesel fuel energy and power while reducing consumption by as much as 15% and eliminating engine knock and cold starting problems. In June 2009, the Company signed an agreement with WorldVest Equity to form a joint venture for its proprietary “Monster Fuel” technologies. In return, WorldVest Equity has agreed to provide the joint venture with up to $15 million in growth financing, strategic financial management and access to a full suite of strategic services. ALKN, based in Lutherville, Maryland, became a public company through a reverse merger with Chanaral Resources in April 2009.

The Company introduced its first commercial product, Monster Diesel™ in April 2009. Monster Diesel is a patent-pending total fuel additive that boosts diesel fuel to premium levels and improves power and fuel efficiency, thereby reducing overall fuel costs for truckers, boaters, farmers, fleet operators and residential heating applications. Adding a quart of concentrated Monster Diesel to an 18-wheeler’s two tanks (250 gallons) of regular diesel boosts the Cetane number (the diesel equivalent of Octane) by 12.5%, reduces fuel consumption by as much as 15%, lowers overall fuel emissions by 21%, and delivers 125 times the anti-knock property of diesel.   

The Company has applied for a patent on the principal component of Monster Diesel - a family of molecules known as Nitro-Alkanes. These molecules have an energy density far greater than hydrocarbon-based fuels. ALKN plans to develop additional products based on its patent-pending technology such fuels that  address the $400 billion emerging global market for synthetic and bio-fuels.

Investment Highlights

Diesel fuel consumption is rising

The U.S. market for diesel fuel is large and growing. It currently consists of more than 10 million diesel powered trucks, buses and boats, which together consume more than 24 billion gallons of fuel costing $50 billion annually. Diesel-powered passenger cars are expected to grow from 3.6% of the U.S. vehicle market currently to about 9% by 2013 . The Energy Information Administration (EIA), projects domestic diesel fuel consumption will increase from 3.47million barrels per day (mbpd) in 2008 to 4.91 mbpd in 2030.

Specialty fuel additives will be a $1.2 billion market by 2012

The U.S. market for specialty fuel additives is projected to expand 2.2% annually and reach $1.2 billion in 2012, with volume demand of more than 750 million pounds. Demand for diesel fuel additives is forecast to grow faster than the overall fuel additive market because of an increase in the number of diesel- powered vehicles on the road, environment concerns and demands for better fuel efficiency. Environment concerns have resulted in the Environmental Protection Agency (EPA) promoting Ultra Low Sulfur Diesel (ULSD) and biodiesel as cleaner alternatives to regular diesel. Fuel additives must typically be added as a supplement for ULSD because of this fuel’s low lubricity. Additives are also needed to prevent gelling in biodiesel, which generally has poorer cold flow properties than conventional diesel.

Monster Diesel™ reduces fuel consumption

ALKN’s first commercial product, Monster Diesel™ is a patent-pending diesel fuel additive that boosts diesel fuel to premium levels by increasing diesel fuel energy by 10% for greater power and miles per gallon, reducing diesel consumption by as much as 15%, lowering engine wear by as much as 40%, and eliminating engine knock. In addition, it reduces overall fuel emissions by 23%, replaces lubricity absent in low and ultra low sulfur diesel, provides corrosion resistance, winterizes diesel fuel to improve cold weather operation, and changes black exhaust to white by maintaining fuel injection systems more completely. Monster Fuel is so powerful that, when diluted with 250 gallons of diesel, it boosts the Cetane number by 12.5%, which is twice the boost of premium gasoline as compared to regular.

Strategic partnerships enhance visibility and growth

The Company is creating visibility for its product by partnering with the Maryland Motor Truck Association (MMTA) as the Title Sponsor of the 2009 Maryland State Truck Driving Championships. ALKN also exhibited at the 2009 National Biodiesel Conference & Expo, recently held in San Francisco, where it won rave reviews for its product. In addition, the Company is partnering with Tilghman Oil, which is blending Monster Fuel with its oil and fuel products distributed to residential and business customers. Through a joint venture agreement with WorldVest Equity, ALKN gains access to strategic services and up to $15 million in growth financing. This financing commitment provides ALKN with the capital it needs to implement its business plan.

Alkane Introduces Monster Diesel Additive

ALKN introduced its first commercial product, Monster Diesel™ in April 2009. This patent-pending diesel fuel additive is designed to significantly increase engine power and miles per gallon, while eliminating engine knock and reducing engine wear and harmful emissions. Monster Diesel is a portable, powerful concentrate. One quart, added to two 18-wheeler tanks of regular diesel, provides the energy equivalent of 25 gallons of diesel fuel. Monster Diesel increases engine life and power and provides the following specific benefits:

• Reduces diesel consumption by as much as 15%
  
• Boosts diesel fuel’s energy by 10% for increased power and mileage per gallon
  
• Cuts metal-to-metal engine wear and friction by as much as 40% while reducing downtime
  
• Winterizes diesel fuel to allow low temperature operation, preventing gelling and eliminating the need for expensive grades and supplements
  
• Is highly powerful so that, when diluted with 250 gallons of diesel, it boosts the Cetane Number, the diesel equivalent to octane number for gasoline, by 12.5% (twice the boost of premium gas over regular)
  
• Minimizes engine knock and cold starting problems
  
• Provides corrosion control in the fuel system
  
• Supplements fuel to replace loss in lubricity that occurs when using ultra low sulfur diesel fuel.

Monster Diesel also provides significant environmental benefits by reducing harmful emissions. Specifically, this diesel fuel additive:

• Lowers emissions by 23%
  
• Decreases soot by 38%
  
• Cuts raw hydrocarbons by 10.2%
  
• Reduces NOX levels
  
• Improves combustion efficiencies in year- round operations
  
• Changes black exhaust to white by establishing and maintaining the engine’s original fuel injection pattern to burn fuel more completely.

Monster Diesel may provide sizable economic benefits to businesses and consumers in terms of improved mileage and cost and fuel savings. Fuel costs are already a major expense for most businesses and consumers, and the Energy Information Administration (EIA) estimates the world’s energy requirements will increase another 50% by 2030. Rising energy demand will likely result in climbing fuel costs for businesses and consumers worldwide.

Growing U.S. Fuel Additives Market

The global market for oil, gas and consumable fuels grew 25.8% annually between 2004 and 2008 to $10,021 billion in 2008. The U.S. continues to be the largest fuel consumer, accounting for 32.3% of the global market in 2008. The U.S. has a huge appetite for energy and spends more than $500 billion annually on energy bills. Due to rising fuel demand, increasing fuel costs and demands for better fuel economy, many fuel additives have been introduced in the U.S. market for purposes such as meeting stricter emissions standards and boosting fuel and engine efficiency.

Diesel fuel has traditionally been used only in heavy duty trucks and marine vehicles, but in recent years has found increasing use in passenger vehicles. Diesel fuels have undergone major improvements over the last decade in terms of fuel quality, and upgrades to diesel engines are changing consumer perceptions of diesel-powered cars as dirty and noisy. As a result, the number of diesel-powered vehicles on the road is increasing, which in turn is increasing demand for diesel fuel and fuel additives.

Growth drivers for the diesel fuel additive market

The U.S. market for specialty fuel additives is forecast to grow 2.2% annually to $1.2 billion in 2012, creating volume demand of more than 750 million pounds. Demand for diesel fuel additives is expected to rise faster than the overall fuel additive market as a result of the following:

Increasing diesel fuel consumption

In the U.S., there are already more than 10 million diesel-powered trucks, buses and boats, which together consume more than 24 billion gallons of fuel costing $50 billion annually. According to J.D. Power and Associates, diesel-powered passenger cars are expected to grow from 3.6% of the U.S. market currently to around 9% by 2013.

According to the Energy Information Administration (EIA), domestic diesel fuel consumption is forecast to rise from 3.47million barrels per day in 2008 to 4.91 million barrels per day in 2030. Growing diesel fuel consumption will also spur demand for diesel fuel additives.

Pollution creates demand for additives to boost fuel efficiency

Cars and trucks are a huge source of the pollution that is contributing to global warming. According to the U.S. Department of Transportation, domestic autos emit more than 333 million tons of carbon dioxide each year, which is more than one-fifth of the nation's total carbon dioxide emissions. Compared to the rest of the world, U.S. auto emissions are remarkably high. With only 5% of the world's population and 30% of the world's automobiles, the U.S. contributes 48% of global automotive CO2 emissions. Highway vehicles are a major contributor to air pollution in the U.S., producing 26%-62% of the key chemicals (Carbon monoxide (CO) - 62%, Nitrogen oxides (NOx) - 36% and Hydrocarbons - 26%) that cause smog and health problems.
In May 2009, the Obama administration announced revised auto emission and fuel economy standards. Obama’s plan requires cars and light trucks to average 35.5 miles per gallon by 2016. The plan raises the standard set by the 2007 Energy Act, which required cars and light trucks to deliver, on average, 35 miles per gallon by 2020.

The plan requires improvements in fuel economy by mandating reductions in vehicle greenhouse gas emissions based on vehicle size. By 2016, cars must average 39 miles per gallon (mpg) and light trucks must average 30 mpg. The Environmental Protection Agency established a goal for vehicle fleets of tailpipe emissions reduced to 250 grams of carbon per mile traveled by 2016. Fuel additives are a tool being used already by fleet operators and consumers to improve fuel efficiency, lower hydrocarbon emissions and reduce other pollutants.

Fuel additives needed to boost USLD and biodiesel fuels

The E.P.A. proposed ultra-low sulfur diesel fuel as the new standard for reduced sulfur content in on-road diesel fuel in 2006. Sulfur is a major contributor to environmental issues such as acid rain. Continued emphasis on reducing the sulfur content of diesel fuels has resulted in the creation of a new class of diesel fuels called Ultra Low Sulfur Diesel (ULSD). By mid-2006, nearly 80% of the ULSD fuels were limited to a maximum sulfur content of 15 parts-per-million (ppm). Fuel additives became necessary to replace the naturally lubricating properties of sulfur.

Federal Renewable Fuel Standards (expanded in 2007) and state renewable fuel requirements are also spurring demand for clean-burning biodiesel. However, biodiesel has poor cold flow properties relative to conventional diesel, and requires additives as a supplement to prevent cold weather fuel gelling.

Diesel fuel additives address various performance issues

At present, a variety of diesel fuel additives are marketed. These products address one or more issues common to diesel-powered engines, i.e. fuel mileage, engine power, gelling, de-icing and engine wear.

Because of rising demand for diesel fuels, diesel fuel additives are an attractive business with desirable structural characteristics. Volumes and margins for additive manufacturers are expected to rise as the use of low sulfur diesel and biodiesel grows and the performance requirements for conventional diesel fuels are increased.

Recent ALKN News:

June 10 - Monster DieselTM Announces Sponsorship of the 2009 Maryland Motor Truck Association's Truck Driving Championships

Monster Diesel’s parent company, Alkane, Inc. “Alkane” (PINK SHEETS: ALKN), announced recently its partnership with the Maryland Motor Truck Association (MMTA) as the Title Sponsor of the 2009 Maryland State Truck Driving Championships.

This year marks the 62nd anniversary of the Championships, which will take place on Saturday, June 13 at the Maryland State Fairgrounds in Timonium. The MMTA’s Safety Management Council developed the awards in 1947 to highlight and celebrate the skills of Maryland’s finest truck drivers. MMTA is a nonprofit member driven trade organization that has been serving Maryland's commercial trucking industry since 1935. Today, MMTA is one of the largest trucking associations in the country, representing over 1,000 member companies.

Alkane develops, manufactures, and distributes superior fuel additives. The company’s flagship product, Monster Diesel™, is a crude oil free, multipurpose diesel fuel additive which increases mileage per gallon by as much as 15% for both on-road and off-road diesel engines. A quart of Monster Diesel™, when added to an 18-wheeler’s two tanks of regular diesel, creates what is essentially a premium grade fuel. Benefits of Monster Diesel™ include:

• Instant impact – Turns black smoke to white
• Incredibly powerful – One quart has the energy of 25 gallons of diesel
• Less down time – Metal to metal wear reduced by almost 40%
• All year fuel – Subzero operation without plugging filters
• Price not dependent upon volatile crude – Made from U.S. sourced materials rather than crude oil

“We feel privileged to be affiliated with the Maryland Motor Truck Association,” said Mathew Zuckerman, Ph.D., CEO and President of Alkane. “The fact that last week President Barack Obama announced his intent to nominate MMTA President, Anne Ferro, to be the next Federal Motor Carrier Safety Administrator speaks to the quality of work she and the association do,” he continued. “We are pleased to be the Title Sponsor of the 2009 Maryland State Truck Driving Championships.”

Alkane Inc.
2205 York Road
Suite 14
Lutherville, MD 21093
Phone: 410-MONSTER
Fax: 410-666-0306
http://www.monsterdiesel.com