SurfaceTech, Inc. Releases Investment Opinion Report Issued by Empire Research Associates, Inc.

IRVINE, Calif.--Nov. 5, 2003--SurfaceTech, Inc. (PINK SHEETS:SFCI) today released the following report from William N. Walling, Jr., CFA, Chairman, Empire Associates, Inc., regarding a strong speculative buy, including a forecasted six-month target price of $0.50:

We recommend the common shares of SurfaceTech, Inc. ("Surface Tech," the "Company," or "SFCI") as a Strong Speculative Buy to aggressive, risk-tolerant equity purchasers. The principal appeal of SFCI lies in the Company's patented method to refurbish damaged alloy wheels on passenger cars, without removing them from the auto. This auto repair niche market is huge, numbering many millions of autos (while skewed somewhat toward more expensive cars purchased by affluent buyers), and even enjoys steady growth. Because Surface Tech's method is faster and more economical than alternative processes, the Company should experience growth thru market share penetration. The Company's business plan centers on a small organization which owns the intellectual property and which primarily licenses its use to others who have existing auto repair service organizations. This concept greatly reduces SurfaceTech's risks, capital requirements, and time to market; while still providing revenue/earnings potential via the 5% licensing fee. SurfaceTech's method will also soon be offered as part of a 4-in-1 service warranty program to auto dealers. The warranty has considerable potential to supplement the Company's revenue/earnings over the long term. Notable investor risks are present, including: the necessity to successfully commercialize SurfaceTech's patented method; the ever-present potential of competitive leapfrogging; meager financial resources; operating losses to date; and extreme price volatility of its Pink Sheet-traded shares. (SurfaceTech will seek OTCBB status as soon as possible.) There are 14 million shares outstanding (and no dilution), of which 2.5 million are free trading. SFCI'S price range since public trading began in January is $1.30-$0.06. Share trading volume during the first few months was minimal, but it has increased sharply during the last three months. During October, daily volume was still highly erratic, but averaged almost 50,000 shares. On balance, we like SurfaceTech's risk-return ratio as a spec, primarily on a conceptual basis: a tiny company with a good chance for a proprietary position in a huge market. And, SFCI even has some vague statistical appeal. It has a market cap of only $2.2 million; could earn a few cents in 2004; and is about 90% below its 12-month high of $1.30. These are meaningful considerations for a stock selling at only $0.16 per share.

The Company

SurfaceTech, Inc. was incorporated in July 2002, is domiciled in Nevada, and became a public company in January 2003 as a result of a reverse merger. Its sole product is a patented method to resurface alloy wheels without removing them from the passenger automobile. As a result, SurfaceTech's unique method is much faster and more economical than competitive processes. The patent was received Feb. 19, 2002. The year 2003 has great strategic significance for Surface Tech because, strengthened with its patent and new public-company status, it has launched an aggressive marketing program to expand use of its system. It has entered into exclusive licensing agreements with other firms who have existing auto repair organizations in place. SurfaceTech will provide trained Licensed Technicians, using its patented process, to these service distributors. As a result, Surface Tech receives immediate launch--and vault--of its marketing activities, and will receive a 5% royalty on gross billings of its licensees. In fact, SurfaceTech now provides its cost saving solutions to over 4,000 automobile dealerships, auction houses, and car rental companies as well as to private owners and lessees of new, or late model, cars. We estimate that SurfaceTech could receive royalty revenues of approximately $700,000 in 2004. Coupled with other revenues generated in-house by its 12 employees, and the lean cost structure of the firm, we believe SFCI could report a minimal profit in 2004, with room for material growth in the several years beyond. In addition, the Company plans to shortly start a separate marketing strategy whereby its alloy wheel refurbishing product will be included in a warranty service bundle to be offered by auto dealers on new cars. The service elements would provide repair of damage to wheels, paint and windshields. Each and all of these damages cause a disproportionate reduction in the turn-in/resale value of the auto--thereby providing an economic incentive to the consumer to have the repairs made. This warranty program has consumer appeal to our mind and could materially enhance the future economic returns generated by SurfaceTech's patented process, in our opinion.

Management/Directors/Ownership

Management

William C. (Chris) Pittman, Chairman/President/Director

He attended Orange Coast College in Southern California and thereafter started several small businesses. While working in the automotive dealer service industry, he recognized an economic need to repair alloy wheels while on the car. Subsequently, he developed a novel method to perform this function and received a patent for it Feb. 19, 2002. He then formed SurfaceTech, Inc. for the purpose of commercializing the now-patented process.

Nita Bhakta, Secretary/Treasurer

She is a member of the Bhakta Family, which collectively owns 2.6 million shares of SFCI (19%).

David T. (Tom) Laurance, Consultant

Although untitled as a corporate officer, and working as consultant without pay, Tom Laurance plays a key role in determining SFCI'S strategy and in executing it. He has diverse aptitudes, attended the University of Oregon, and is a member of Mensa (the high IQ society.) He has significant experience in operations management and new market development. In addition, he has managed seven public offerings, has a successful drilling record in the domestic oil business, and was Assistant to Jack Kent Cooke, the former owner of the Washington Redskins, Los Angeles Lakers, Los Angeles Kings and The Forum in Inglewood, Calif.

Directors

The company has five directors: Chris Pittman, Rajan Bhakta, Dr. Samuel Park, Daniel Chaves, and Timothy Quick, Esq.

Ownership

Presently, there are approximately 14.0 million common shares outstanding, of which some 2.5 million are free trading. The effective free trading float is presumptively well below 2.5 million. There are no dilutive securities. Ownership of SFCI shares is concentrated in officers and directors who collectively hold about 5.5 million shares, or 39% of total shares outstanding. In addition, several other parties who have had a long relationship with SurfaceTech collectively own an additional 5 million shares. Therefore, officers, directors, and other "friendly hands" hold almost 75% of total shares outstanding.

The Product

What It Does

Presently, and for the foreseeable future, SurfaceTech will offer a single product: a patented method for refurbishing an automotive wheel--without removing it from the auto. The implied risk is that SFCI has "all its eggs in one product basket."

The counter point is that if the method can become economically successful (which we think is likely), the corporate returns would be greater because of the product concentration.

The repair method currently utilized by wheel repair service providers initially requires the removal of the wheel assembly (wheel and tire) from the vehicle and the subsequent removal of the tire from the wheel. The wheel is then shipped to an offsite repair facility. The outer rim bead of the wheel is then machined with a lathe to blend the damaged section into the remainder of the outer rim bead, which is then painted and coated. The wheel would then be shipped back to the customer. The tire is then re-mounted to the wheel and the wheel assembly is then re-mounted to the vehicle. These are labor intensive and time consumptive procedures, typically 3-5 days. Typical prices charged to an auto dealer are $100-$150 for the repair, plus the labor cost of removing and re-installing the tire and the wheel. Shipping costs (and time and effort) are extra. And, a background factor tending to encourage wheel refurbishing as opposed to wheel replacement is that a new wheel costs from approximately $300 up to as much as $2,000 for some custom wheels.

In sharp contrast, SurfaceTech's on-site/on-the-vehicle wheel repair process eliminates these problems. It can be performed in 30-60 minutes, thus greatly reducing the time the car is out of service to the customer. The dealer price ranges from $50 to $85 (per wheel). Thus, the SurfaceTech method is much faster and costs the consumer less than slower, alternative systems. As such, it seems very likely to be able to obtain a market position and to increase it.

To become a commercial user of SurfaceTech's patented method, the workman attends a two-week training course held at the Company's Irvine, CA headquarters or at various other sites. The training includes how to use the method and its tools, as well as instruction in how to successfully operate this wheel repair business. Upon completion, one becomes a SurfaceTech Licensed Technician, and with it the right to use the Company's patented method.

The Patent

The patent is a "Method For Refurbishing An Automotive Wheel." The sole inventor is William C. (Chris) Pittman, the Founder of Surface Tech and its Chairman/President. The U.S. Patent number is 6,347,444. It was filed May 18, 2000 and granted Feb. 1, 20049, 2002.

The Abstract of this patent states the following: "A method of refurbishing a damaged section of the outer rim bead of an automotive wheel. The method comprises the initial step of contouring the outer rim bead via a first grinding process to create a feathered transition between the damaged section and the remainder of the outer rim bead. Thereafter, the damaged section is profiled via a second grinding process to generally conform the shape of the damaged section to the remainder of the outer rim bead. Finally, the damaged section is painted. The refurbishment steps may be completed on-site without removing the wheel from the vehicle and without removing the tire from the wheel."

Market Demand

Surface damage to automobile wheels is virtually inevitable for the average driver as the miles driven increase. The average U.S. auto has a physical life of about 10 years (from original sale to scrap) and amasses total mileage of some 120,000 miles. Causes of surface damage to the outside of an auto wheel include: contact with a curb while in motion, objects in the road which hit the wheel (stones, rocks, and metallic litter), rough street surfaces, potholes, and railroad crossings. Motor vehicles with steel wheels (including commercial trucks and passenger pick-up trucks) or with plastic hubcaps are far less susceptible to surface wheel damage. On the other hand, auto wheels made of alloys (typically aluminum or magnesium) are highly susceptible because these metals are softer and, therefore, less scratch or bump-resistant. And, alloy wheels have come to represent a high proportion of total new domestic car sales (16 million-17 million in recent years). Therefore, alloy wheels are also a growing proportion of the total population of passenger autos on the road -- now about 135 million cars.

Thus, by the third-fourth year of utilization, the alloy wheels on the average auto will have suffered discernible surface damage. Obviously, some operators will be indifferent to the appearance of their car or will lack the financial means to refurbish their wheel(s). Doubtless, wheel refurbishing can be postponed over the near-to-intermediate term to some extent: after all, the abrasions do not affect safety or vehicle operating costs. And, it is important to note that we believe there is an upscale skew to this market demand. The auto dealer receiving a trade-in or lease return is even more likely to want wheels repaired because the cost of refurbishing is even lower for them. The concern with aesthetic appearance on a car for sale is presumptively greater; and the cost of replacing a wheel on a luxury car is very high (as much as $2,000 on a Mercedes) relative to the cost of refurbishing. However, there is a vital dynamic at work in this market besides the subjective sensitivity/insensitivity of any given operator to wheel damage. This dynamic is the sense of economic value that subsequent buyers or interested parties will have in the condition of the prospective car of their interest. This dynamic is operative in a strong manner in several settings. Several buyers own the average auto over its physical life, typically being bought and resold by used car dealers. These professional intermediaries live or die on their markup and damaged wheels reduce the resale value of a car by a significant amount. The auto auction houses are subject to the same pressure, and, so is an individual who has leased a car from a dealer (now a large practice), whose lease contracts stipulate penalties for various damages (wheels, windshields, paint, etc.)

In short, we believe SurfaceTech's patented method faces a large potential demand for the following reasons:

1. We estimate the number of autos having alloy wheel damage potential approaches 100 million vehicles.

2. Further, the total population of domestic autos increases by several million each year because new car sales exceed autos scrapped, most of which have alloy wheels.

3. There can be one, two, three or four damaged wheels per car.

4. SFCI'S faster, more economical method can capture market share from existing competitors.

Financial Condition

Current

Inasmuch as SurfaceTech is not an S.E.C.-reporting company, the usual audited financial statements are not available. Management states that revenues (un-audited) for its Sept. 30 2003 fiscal year were close to $225,000. It further claims that SFCI has no short term or long-term debt, has liabilities in the mid-five figures (all owed to insiders), and has a net operating loss carry-forward in excess of $(200,000). While we can't verify these numbers as an external financial analyst, because of the non-reporting status of the Company, neither is there any specific reason to doubt them. In the aggregate, these values seem consistent with an upstart company in its early years, where the key asset is a patent, and which appears to be operating in a frugal manner. From the limited information at our disposal, coupled with our deductions, we do not believe that SurfaceTech's present meager financial position, in and of itself, is likely to prevent the Company from becoming successful. Rather, SurfaceTech's future success, or lack of it, will probably be determined by other factors - most notably, widespread product acceptance. On this note, we believe there is considerable cause for optimism.

Outlook

SurfaceTech's method is used both in-house (only 12 technicians) and by other parties (licensees) who have been using it since 1998. By the way, the Company itself refurbishes alloy wheels for the world's largest Toyota auto dealership and for the largest BMW and Mercedes Benz dealers in the U.S. Combined gross billings, internally and externally, exceeded $1 million in 2001 and $2 million in 2002. The Company has recently signed a licensing agreement with Alloy Wheel Repair Specialists (www.mobilewheelrepair.com), which has over 100 franchised wheel technicians. With the new technicians, the combined wheel repair billings should reach $7 million in 2003 and is expected to double in 2004. New franchises are being added at the rate of 3-5 per month.

If $14 million in gross billings materializes in 2004, Surface Tech would realize gross income of $700,000 (at the 5% royalty rate). Because of its patent and licensing arrangements, SurfaceTech has no cost of goods sold or marketing expenses. This leaves only corporate overhead expense, which the Company claims approximates $250,000 annually. These values would imply a pre-tax net income (there is an NOL) of some $450,000. On the 14 million shares presently outstanding, pro forma earnings would be $0.03 per share. Because of the futuristic assumptions and the leverage present in operating near break even, it must be stressed the $0.03 EPS should not be taken too literally. But, the key point is there could easily be black ink and in only the first full year of collaboration with Alloy Wheel Repairs. A growing population of SurfaceTech Licensed Technicians is planned. There are presently about 125, mainly in the United States (35 states) and in Canada (four provinces) and Australia. More Licensed Technicians recording productivity in line with existing operations should boost revenues while likely occasioning minimal incremental expenses. Thus, a growing profit wedge is a likely outcome for SurfaceTech.

The calculations above do not include any possible revenue/earnings contributions from the fledging warranty program. Inasmuch as there is no experience with it, unlike SurfaceTech's Licensed Technician format, we consider it premature for purposes of this report to theorize about its quantitative possibilities. Suffice it to say, considerable potential appears present in SurfaceTech's forthcoming warranty initiative.

About Empire Research Associates, Inc.

Empire Research Associates, Inc. ("Empire Research") is a NJ-based business consulting firm, specializing in economic, financial, investment, and management information system matters. Its three principals have over a century of experience in these fields. Empire Research is not a registered investment advisor or broker-dealer and it has not engaged in investment banking activities. William ("Bill") N. Walling, Jr., CFA, is founder and Chairman of Empire Research. He holds a BA and MBA and is a Chartered Financial Analyst. He has several decades of experience on the brokerage and fiduciary sides of the investment profession. Initially, he was Trust Investment Officer at Empire Trust Co. Subsequent positions include V.P. of Research at White, Weld; Shearson; and A. G. Becker Paribas; as well as Director of Research at Dominick & Dominick. He is a former four-time member of the Institutional Investor Magazine All-America Research Team. Heinz Jauch is President of Empire Research. He holds a Ph.D. in Economics and is a Chartered Financial Analyst. He was Portfolio Manager at Merrill Lynch before becoming V.P./Economist at Empire Trust Co. He was Professor of Finance at Pace University (NY), where he also founded its Graduate School of Management Science. He has also completed major consulting assignments, including ones for Bankers Trust Co. and the Port Authority of NY. Ronald E. Olsen is V.P. of Empire Research. His career has been in investment portfolio management. His previous positions include Trust Investment Officer at Empire Trust Co. and at Howard Savings Bank.

Neither the information nor any opinion expressed herein constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives, related to such securities. Empire Research Associates, Inc. and its affiliates may trade for their own accounts in any securities of the issue(s) or in related investments. A third party has paid the analyst 25,000 shares of SFCI for the preparation of this report. Empire Research does not accept liability for any loss resulting from an investor's use of, or reliance, on this report. Empire Research has obtained information from sources that are considered reliable but it is not guaranteed that this report is accurate or complete. Considerable reliance has been placed on information the Company has released to the public domain or provided. However, no representation or warranty is made as to the accuracy, reliability, or timeliness of the content. This report contains forward-looking statements, which involve risks and uncertainties, which could cause actual results to differ from those implied by these statements. It is intended that all forward-looking statements be covered by the "Safe Harbor" provisions of Section 21E of the Securities Exchange Act of 1934. Past performance is not necessarily a guide to future results. The opinions expressed are of this date and Empire Research assumes no obligation to update, modify, or amend this report.