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We receive from Evanesce and we are pleased to publish the following update and path forward to commercialization for StarFybr™ ” update and path forward to commercialization for StarFybr™ with a bit of background on how we got here. This will be a pivotal year ahead and we are excited for Evanesce’s future. Evanesce has laid the foundation for commercialization of it’s unique StarFybr™ platform technology over the last several years, demonstrating to some of the largest global companies the ability for StarFybr Products to be produced cost competitively anywhere in the world (even in North America). The StarFybr products are not only the lowest cost sustainable alternatives to plastic and Styrofoam in the market, they have superior performance in rigidity and insulation while providing additional benefits of being oven, microwave and freezer safe and being able to achieve HOME COMPOSTABLE certification under the TUV standard as well as passing the ASTM 6868 certification required by BPI. Background In order to reach this milestone, Evanesce, firstly perfected and patented the StarFybr formulations using low-cost food processing wastes, of primarily starch and some fibre. Waste starch is a byproduct from processing potatoes, rice, corn, tapioca and peas and any of those sourced starches can be combined with waste fibre from corn husks and cobs, rice hulls, wheat chaff and shaft, pea pods and even wood cellulose. Most of these ingredients are available at little to no cost from the large food processors everywhere in the world. Patents on our commercialization innovation have been filed in 20 countries with 75% in final examination phases or having been issued to date. This is in addition to issued patents held by the Evanesce group on the base technology, coatings and manufacturing methodology. Having achieved formulation perfection and protection Evanesces next milestone was to prove manufacturing at scale. Because StarFybr base materials of starch and fibre are mixed into precision doughs the company was able to move completely away from existing high capex manufacturing processes used in the packaging industry. Instead Evanesce repurposed equipment from the food manufacturing process, utilizing techniques similar to thermo forming (waffle irons) to press and cook dough into exact shapes with no seams and no trimming required. The process has also been patented widely creating a wide moat of protection. Combined with the low-cost ingredients this technique enabled Evanesce to produce products incredibly cost effectively creating substantial margins for ourselves and our licensing partners which again is revolutionary in the traditionally low margin packaging space. Current Positioning Evanesce has built out several first generation (Gen1) production units currently operational in its Chinese equipment suppliers’ facility, where the company has produced thousands of finished products in multiple sku’s including cups, bowls, 5 compartment meal trays, meat trays, plates and a host of other products through the development process. These products have been used for in-store and packing plant tests with some of the largest accounts on the planet who are ready to move to supply agreements. The Evanesce business model is predominantly a Licensing and Royalty model to build a global production platform using established packaging partners who will use the StarFybr technology to provide new age solutions to their existing customers and distributors. However, the StarFybr product margins are compelling enough that Evanesce will also produce some specific products for existing clients and develop new products from its South Carolina manufacturing facility. Evanesce has two separate streams to commence production. We mentioned above the Gen1 production lines in China. The company has arranged for shipment of the first of the Gen1 line to be delivered to South Carolina in late May. This unit is not automated but can support up to 3 presses for significant production and will be used for development and pilot projects as customers continue to bring new product opportunities regularly. The other Gen1 lines will continue to be available in China to supplement this and produce larger runs of product samples for in market testing and soft product launches. The much bigger development is the design and engineering of the high speed fully automated dual line Gen2 machines. This unit is what all potential License partners are anticipating and expecting for delivery. The Gen2 lines have completed engineering specification and will be built at our manufacturing partner Parasons’ plant in India. Each line costs under $1 Million, including secondary processes, and will produce up to 60 million units per year, depending on the item, delivering an average of $5 million in revenue. |
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Gen2 – Generation 2 Production Line Imminent Major Milestones 1. The first Gen1 production unit will be shipped to South Carolina enabling Evanesce to start fulfilling orders for 5 compartment meal trays. The company has received a verbal order from Fort Jackson Army Base and has a long list of interested parties as soon as product is available. The Fort Jackson initial order is 500,000 units which equates to about 2 million units annually but is expected to grow. This will open the door to many other bases and government opportunities, as well as schools. In fact, Evanesce has already also had introductory discussions with officials at Parris Island the largest Marines training base in the US and a number of school boards that have indicated a keen interest in our StarFybr trays. 2. Evanesce expects to receive the first signed order for two Gen2 production lines from its first production partner and Licensee Genpak. These lines are expected to be ready to produce initial product runs in Q3 which will be run in Parasons’ facility in India to ensure quality control and throughput. We intend to sell these products commercially as we perfect the process. Genpak is expected to have delivery in late Q4 setting up the first Royalty Revenues for Evanesce. Genpak has verbalized their intent to outfit 2 manufacturing facilities in the USA and expect to ramp to 10 production lines in each facility over the next few years. Top line target is $100 million/annum. Genpak has also opened discussion with their Canadian sister company which is looking at additional production capacity in Montreal or the GTA. Of course, Genpak was originally brought to the table as the converter partner for Cargill meat trays. We do not have visibility on exact timing for first lines for Cargill but we do know the first facility will require about 350 million units requiring 7 production lines. Cargil has over 50 meat processing facilities in the USA. We are scheduling a meeting for early June to create the plan forward to production. 3. The McDonalds hot cup program continues to progress with product being produced this month from the remaining Gen1 machines in China. We have utilized a coating that has already been tested and approved by TMS and the certification bodies at TMS’s request to move the process forward more quickly. These cups will be circulated for final approval and submitted for certification. We expect the first in store programs later this year. 4. Evanesce is in final discussion with two additional Licensees which we are expecting to close on at least 1 in May/June. We have a seasoned packaging Licensee in discussion for production in the middle east. In addition, there is a Master License being negotiated for parts of Central and South America which will encompass the right to bring and manage 5 additional Licensees within the territory. Opening orders should be for 3-4 production lines with follow on growth of 12 to 15 Lines minimum. 5. Corning has delivered specifications for multiple glassware trays and Evanesce expects to deliver additional customized samples to Corning for further review. There are an estimated 10 sku’s now identified for development with Corning and they have a dedicated team in place to manage the project. These are high value high margin medical grade products that will create a great entry into this market. 6. National Restaurant Show is happening mid May and the Evanesce team will be showcasing and taking orders for Cups, Plates, Meal Trays and Meat Trays. Note on Tariffs The chaos created with ever expanding and changing tariffs has created immediate effects both negative and positive. The first impact for Evanesce will be the potential tariff on delivering the Gen1 equipment to South Carolina if changes do not occur prior to end of May. Fortunately, all Gen2 machines will originate in India or Brazil where Tariffs are low enough to not have a material impact for our customers who will be covering the tariff costs. However, as this may cause some short-term pain the longer-term benefits for Evanesce may be quite profound. The largest provider of packaging material for the US comes from Asia and tariffs whether they are 20% or 125% will have a dramatic impact on our competitors as they are shipping finished product which will either remove them from the market or drive their prices up substantially. The Evanesce advantage is that our technology is one of the only production platforms that can actually be set up to produce in the US due to extremely low capital and operating costs. We felt we had significant pricing advantage previously and if tariffs continue our competitive advantage will be blatantly obvious to the entire market. Evanesce continues to raise our commercialization capital under the terms of the Equity Royalty Units Offering with about $2 million remaining. A number of interested parties are at the table and we hope to complete the round shortly.” care of the redaction please follow us also on Instagram, user name: gio.vanni.acerbi |
