What are the projected sales and market share?
As stated earlier, four DF-144 plants fully operational represent only a 0.4% market penetration in the U.S. market and represent $578 million annually at $1.20 per gallon
What are the specific targeted markets?
The principle market is anywhere that ethanol is already established as a feedstock. Primary emphasis is in making industry alliances and partnerships with pre-existing refineries where feedstocks, storage tanks and production infrastructure are already in place. From an economic standpoint, this allows Arcon to spend only $6.5 million per plant where a stand alone facility would increase the cost to $30 million each. In the short term, 21 states, principally in the Midwest are targeted.
What sales strategy will be used to reach these markets?
Approach ethanol blenders and end users to improve their profit margin.
How many locations are there totally at the present?
With regards to the octane division, the first large scale plant is currently being constructed in Victoria, Texas with its location scheduled for Houston, Texas. The plant was re-engineered and patented from a smaller, 100,000 gallon per day unit, constructed in Kentucky and shipped to Dallas, Texas
How many locations are scheduled in the future and the time frame?
We actually have a 15 year signed agreement to lease with Oiltanking out of Houston, with two five year renewable options. To give an insight as to the worth of the DF-144 Octane Enhancer, that facility is a $300 million site and they have leased to us 20 acres for $4,000 a month, which is incredible. The reason we affiliated with them is that they are the largest private tanking company in the world. From a capital point of view, we only have to construct a plant there for $6.5 million whereas if we were to construct one for ourselves with storage tanks for feedstocks and the like, the cost would escalate to roughly $30 million per plant.
Do you have product performance data?
Yes. From a compositional standpoint, we have had extensive testing of DF-144 by independent laboratories confirming its make-up, as well as Reid Vapor Pressure, Octane ratings, and blend values with various feedstocks. Also, the EPA has tested DF-144 blended gasolines for emissions and NOx levels.
Do you have the product economics and advantages?
Yes. An economic proforma has been made on the initial plants and is available for review. Product advantages are more fully covered in the questions concerning user benefits and competition. Simply put, DF-144 is environmentally friendly, is more versatile in its application, accomplishes higher octane blend values with less product required, and has a better pricing structure than its competition. It is derived from ethanol so that it is a renewable fuel, decreases dependence upon foreign oil, supports the U.S. agriculture segment, and has a 5.4 cents per gallon federal tax rebate for those gasolines that contain at least a 10% renewable fuel composition.
What is the present product status?
Both the process and the apparatus have world-wide patents in 134 countries, including the United States. The product has been extensively tested by independent laboratories and the EPA.
Just who is going to buy your products?
DF-144 is an octane enhancer. As such, refineries will purchase it to blend with their lower octane gasolines or it can be blended and sold as a finished product, gasoline to convenience stores, jobbers, gas station chains and the like.
What is your current selling methods?
Primary emphasis is to enter into alliances and partnerships with pre-existing refineries where the infrastructure is already in place and the product is pre-sold before construction of the plant ever begins.
What are the selling methods near-term?
Due to the size of the gasoline market, a continuation of the current method of industry alliances and partnerships is expected to continue. |
