AAgraTech International, Inc., hereinafter also referred to as the Company or AgraTech, is focused on developing a biotech enterprise centered on chitosan, a biomaterial obtained from crustacean shells, such as shrimp, crawfish, and crab. The Company operates as a Research and Development enterprise that creates patentable processes and products. To maximize the profit potential of these intellectual properties, AgraTech functions as a holding company (parent) of manufacturing subsidiaries it controls and manages as well as a licensor of its patents to affiliated manufacturers.
Chitosan has been in use worldwide for decades. It is used in multiple products and by many industries. The demand for chitosan is growing rapidly and is expected to reach 42,950 metric tons by 2020. In the United States, industries that require chitosan for their products would prefer a consistently high-quality chitosan that is domestically produced. At present, however, there is no major commercial producer of high quality chitosan in the United States.
AgraTech had developed an efficient process, for which it holds a full patent, for producing consistently high quality industrial-grade chitosan. AgraTech is poised to become the sole domestic commercial supplier of high quality industrial-grade chitosan. For others, considerable barriers-to-entry now exist, clearing the way for AgraTech to capture significant market position. AgraTech intends to be a market disrupter, the industry leader, and the only major commercial producer of chitosan in the United States.
The Company’s primary focus will be on the development of new chitosan-based products and on gaining certification to produce medical-grade chitosan. Higher grades of chitosan are required by the food, medical and pharmaceutical industries and generate even greater profits than industrial-grade chitosan. Most Research and Development is conducted at the Company’s laboratory located at the University of Louisiana Experimental Farm, where AgraTech’s Chief Technology Officer works with university scientists, engineers and graduate students. Additional research takes place at other sites throughout the country and is conducted by Company associates – physicians, dentists and research scientists – in collaboration with the Chief Technology Officer.
Chitosan, a renewable natural resource, is a non-toxic, non-hazardous and biodegradable material that has many commercial applications. These include: wastewater treatment, water purification, food additives, medical/pharmaceutical materials, cosmetics and personal care products. Interest in green technology – no longer simply the wave of the future, but an essential requirement of the contemporary marketplace – has positioned chitosan as an irresistibly interesting replacement for synthetic, petroleum-based materials. Appendix B (Chitosan and End-use Products) provides a detailed list of chitosan applications.
Competition in the U.S. for chitosan comes from overseas, specifically Japan, China, India and Europe. Since competition involving domestically-produced chitosan is minimal, if existent at all, sales and marketing will focus on the domestic origin of the Company’s product. It will be sold and marketed KYTOSAN Brand Chitosan, not as a chemical commodity of inconsistent quality and purity, but as a brand with a registered trademark, attractive logo and copyrighted motto – “A Lift from Nature.” Industry buyers and consumers of their end-use products will recognize KYTOSAN Brand Chitosan as an environmentally-friendly product of consistently high quality and purity. Instructed in this manner, customers will readily recognize our products as being superior and desirable to the often inconsistent and poor-quality chitosan that is produced overseas. AgraTech will command the marketplace for chitosan and chitosan-based products.
The Company will be the leader in chitosan-based biotechnology, offering high-quality grades of chitosan. Through research and development, the Company will create innovative product technologies to enhance its revenue stream. The Company’s chitosan manufacturing will initially serve as the major profit center for AgraTech.
Every year, new uses for chitosan are discovered and patented. AgraTech has invented four new chitosan-based products and, through its intellectual property attorneys, has protected them by filing patent applications worldwide. As each product is made ready-for-market, the Company will either grant rights to a subsidiary AgraTech will control and manage or license the appropriate patents to an affiliated manufacturer. With this model, revenue will flow directly to the parent company as profits from the subsidiaries or in the form of licensing fees and royalties.
The Company has filed four standard patent applications with the U.S. Patent and Trademark Office. One application involving the chitosan manufacturing process has been approved, with the patent issued on November 27th, 2012 (patent number 8,318,913). Another issued on October 7th, 2014 (patent number 8,852,678) concerns a modified form of chitosan that creates a long-lasting hydrophobic (water repellant) coating for glass. The method patent will ensure the marketability and sale of chitosan (at premium prices) to the global chemical industry. The hydrophobic coating patent will enhance and add considerable value to glass products for use in the defense, automotive, transportation, and construction industries.
The third application (USA Serial Number 13/324,454) concerns a chitosan-based spray for the treatment of epistaxis (nose bleeds) and is currently in development. The technology treats bleeding below the surface of the mucus membrane in the nose, clotting the blood at the source, eliminating the need for packing or other external bleeding control methods. The spray is intended to take advantage of chitosan’s hemostatic properties and has potential for use in other areas of the body where submucosal bleeding occurs.
Utilizing similar technology, AgraTech is examining a sunscreen application that would penetrate the surface of the skin, preventing the sunscreen agent from being washed away. The sunscreen will take advantage of chitosan’s non-allergenic and biocompatible properties, and with the selection of appropriate UV sunscreen actives, the resulting product will be a natural, long-lasting shield against UV skin damage. The sunscreen technology is protected under the patent application for the hemostatic spray.
The fourth patent application filed November 21st, 2012, involves a resorbable dental surgical membrane and method of making (USA Serial Number 14/359,254). In oral surgery, bone graft material is used to fill holes in the jaw bone, such as when a tooth is removed during implant surgery. A membrane is placed over the bone graft material to prevent it from migrating out of the hole while allowing nutrients to pass through to the bone graft material. The membrane also prevents ingrowth of soft tissue surrounding the hole while allowing the soft tissue to grow over and cover the surgical site. The chitosan membrane resorbs over time, reducing the amount of surgery required and subsequently reducing the cost and morbidity of oral and implant surgery. Appendix E contains a pro forma income statement showing the potential of the dental membrane technology. Because the technology is in the early stages of development, the figures have not been included in the Financial Summary on page 18 or the Pro Forma Statements in Appendix C.
The Company intends to produce a commercially viable chitosan-based coating, which when applied on plant leaves, increases crop yields 30% or more. This technology requires only a small capital investment by the Company but will be of extraordinary value to farmers. Their crop yields will be enhanced on existing acreage with little or no additional equipment needed. Sales and marketing will initially focus on farmers in the Southeastern U.S. Success there will provide segue for national and international efforts.
AgraTech intends to manufacture the hydrophobic glass coating, the resorbable dental surgical membrane and the chitosan-based plant coating (see diagram on next page). Subsidiaries will be created to manufacture each product. The spray for epistaxis and the sunscreen product will be licensed to appropriate entities to generate revenue through royalties. For future technologies developed by AgraTech, the Company will determine whether direct manufacturing or licensing is the more advantageous strategy.
To maximize profit and to fully foster innovation, the AgraTech business model establishes AgraTech International, Inc. as the holding company which licenses most of its intellectual properties to subsidiaries that focus on production of its chitosan-based products.
A listing of patents is accessible here.