The agreement establishes the framework under which the two companies plan to test and commercialize FSC cigarettes using Ecology Coatings' unique paper coating technology. Milestone payments will be made to Ecology Coatings as predefined development and testing milestones are met. If those payments are met, royalty payments will commence with market introduction and product sales.
"The goal of our collaboration with this tobacco company is to meet government requirements for FSC cigarettes while at the same time allowing the manufacturer to produce at full production speeds," said Ecology Coatings CEO Bob Crockett. "Our solution has the potential to allow manufacturers to be self-reliant and eliminate the need for specialty paper. Our uniqueness resides in our ability to cure UV coatings at high speeds at substantial cost savings."
Crockett continued, "This application is an outgrowth of our patented disruptive paper barrier coating technologies. By designing the solution as part of the manufacturing process, manufacturers can reduce their costs. We believe this is an exciting opportunity that could be very rewarding to our company and its shareholders."
The Coalition for Fire-Safe Cigarettes reports that approximately 40 states in the U.S. and Washington, D.C., have passed legislation calling for the production of FSC cigarettes (http://firesafecigarettes.org/). The Coalition's goal is to save lives and prevent injuries due to cigarette-induced fires. The Coalition reports that 99.8 percent of the U.S. population is now or soon will be governed by state fire-safe cigarette legislation.
(1)The source of this information is the U.S. Department of Agriculture.