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Reactive liquid polymers commonly used in the thermoset resin industry are carboxyl terminated butadiene-acrylonitrile (CTBN) copolymers. In a continuous epoxy matrix CTBN will form a discontinuous secondary phase resulting in an elastomer toughened thermoset epoxy.1,2 A considerable amount of research has taken place in academia and industry over the years in the area of elastomer toughened thermoset resins designed for structural applications. The use of CTBN’s in coatings applications has been studied to a lesser degree3-7; and in powder coatings, even less. The scope of this project was to examine different grades of CTBN in two model formulations representing epoxy powder coatings for high performance, functional applications.