Here's another way to look at Lenox Polymers:
What would you think of a startup company that had patented a process for producing a material that is:
1) superior in performance to the alternatives,
2) reduces costs to those who use it,
3) is produced from what are currently waste materials,
4) is completely benign on the environment while the alternatives are toxic,
5) unlike the alternatives, is produced from renewable resources, while moreover
6) current inferior materials have a market in the MANY billions of pounds worldwide annually?
More info:
Lenox Polymers is, from what I understand, about to break
even, has a factory up and running, and has signed a number of deals with large companies already. Moreover, it's currently trading at its lowest level of the year (not for long, I think). Down from over $3/share to about $2/share. About
4.5M shares issued, 37% closely held, float of only about 1.8M.
Here are some more of the details.
First: to get info yourself, call 810-364-3774, or fax 810-364-4286.
Sales last year: $100,000. Sales first Q of 96: $95,000
Q2 '96: sales $126,000 vs. 2nd Q '95: nil
Q2 '96 loss: $ 10,000 vs Q2 '95 loss: $106,000
For 6 months
'96: sales $220,000 vs '95: nil
'96 loss: $ 23,000 vs '95: $185,000
'96 loss/share $.006.
CASH FLOW, was positive for both the first and second quarters.
Q1 cash flow was $19,000, Q2 cash flow was $16,000. Their break-even point for positive cash flow is about $105,000 in sales per quarter.
Debt: NONE. They have cash in the bank, equivalent to about $.075/share, as of Feb. 29.
The STORY:
The material is lignin, which is the "glue" that holds plants together. In paper processing, the desired material from a tree is the fiber, which is separated from the lignin. The lignin is called "black liquor" and is regarded as a waste product.
It's usually burned or landfilled. LXPYF has a process for purifying the waste black liquor into a resin that's superior to petroleum-based resins in a huge variety of applications. Also, Lenox's process is applicable to the lignin not only in trees, but also to that in other plants, such as in rice or wheat chaff or sugar cane .... I regard this as important because so many parts of the world are short on trees, having cleared forests for farming. (I'm a bit of an environmentalist.)
The product then, is a natural resin, non-petroleum based. It is entirely environmentally benign: in particular, there are no aldehydes or free phenols or other toxic components that are given off in either the use of the resin in manufacturing or in
the resulting products made with the resin.
Some of the uses that have been identified for this resin:
1) The foundry industry goes through a lot of resin in the molds/cores it uses. Lenox resin is a superior replacement for the petro-based resins currently used. Moreover, the levels of toxic emissions of formaldehyde from petroleum-based resins
in foundries is a huge problem. Foundries are the 6th largest industry in the U.S. Lenox resins are used already in molds/cores used to produce parts for the Humvee. Among the parts that can be produced using Lenox resins: transmission housings,
steam pipe fittings, air motor castings, governor housings, various engine component cores. The major worldwide auto manufacturers have yet to sign on. Lenox has an
agreement with Foseco to develop and supply lignin-based foundry resins.
2) Building materials. Lenox resins make superior particle board and plywood, reduce production costs, and are nontoxic.
3) Molded wood products, such as chair seats. Once again, superior products produced at lower cost, and environmentally safe. Among the cost benefits: less resin is required, less energy is required, and less time per unit of production is needed.
4) Improvements/replacements for various molded plastic, fiberglass, kevlar applications. I don't know all the details here. But, Sawyer Composite Products (makers of the Sawyer canoes) are starting to use Lenox-based products in their canoes. Moreover, Lenox has signed a deal with an "undisclosed leading plastic supplier to the automobile industry with revenues of over $300M", to form a joint venture to make products to replace many of the current plastic parts in autos.
5) There's an aerosol spray, marketed by Prestone, introduced in Canada last year, that you spray onto your tires and it increases traction on ice and snow. (Believe it or not!) My understanding is that this is going to be introduced into the US
this winter, and the revenue for this use for this coming winter season could be $2-$3M.
Other deals:
A licensing agreement with Polymer Systems International to develop and market new Lenox plastic polymer products worldwide. PSI is to make royalty payments to Lenox
as a percentage of sales. Lenox to receive a minimum of $2.75M over 10 years. My understanding is that PSI is closely connected with Sawyer. PSI is owned by Dann Deaver, who pioneered ABS Thermoplastic, which became a multi-billion dollar market.
The potential market here looks much bigger, I think.
A partnering/licensing deal with Bakelite AG. Bakelite has patented a process using Lenox lignin resin to make a lignin-based textile felt that has superior sound-deadening properties. Bakelite is marketing the product to car manufacturers, especially luxury car mfrs., as European luxury cars contain more than 100 pounds of these sound and vibration suppression felts per vehicle. In its annual report Lenox says it may begin receiving royalties from this source in fy '97.
Just announced, a deal with a consortium including the LARGEST foundry in Japan.
LENP (on the Canadian Dealer Network), LXPYF on the OTC bulletin board. If I screwed this up in any of the original posts, sorry!
(Obviously, I own a few shares myself.)
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