EFG America Investor Newsletter
EFG America Corporate Office - Mesa AZ
EFG America,LLC:NEWS RELEASE:EFG NR 17-02
Mesa AZ May 20, 2017: As previously announced, commencing January 1, 2017 our future information distributions will typically take the form of a News Release and will conform to the typical standards of the news releases of publicly traded companies.
1.Customer Update: The company is pleased to advise that our technical team completed production line testing of EFG-rMB 10-400, our whole truck tire material, in conjunction with the technical staff of DongYing Jinzheng Tire Company Limited. The testing was completed at two levels of inclusion in their largest volume application, mining tire tread compound; 4.5% and 9.0%. The resulting tread compound was fully conforming with the physical and chemical requirements specified by the customer.
2.Customer Request: As a result of this success, the customer has requested testing to determine if they can add 25% or 30% of our material to their mining tire tread compound and still meet their minimum specifications. Our technical consultant has completed the lab testing and has determined that with 25% we are fully conforming and that we can add 30% within their minimum specifications by making a minor adjustment to their curing package. The adjustment to these levels of inclusion will require a further production line test and (due to the large ratio of inclusion), a special production run of 50 tires that will be subjected to a 90 day road test. This data will provide excellent marketing material for EFG.
3.Qingdao Niceway International Trading Co. Ltd.: As per our previous News Release, Qingdao Niceway is a licensed Import/Export company with whom we have executed a Product Sales Agreement and through whom sales to DongYing JinZheng Tire and others will be processed. Pursuant to the final approval referenced above we are now working out the logistics with Qingdao Niceway and have determined that the most effective process involves shipping through the Tianjin Free Trade Zone. Accordingly, we are currently in the process of registering EFG Trading (Tianjin) Company Limited and we will be leasing offices and warehousing in the Tianjin Free Trade zone. EFG will ship product to our Tianjin subsidiary and will maintain inventory in Tianjin rather than at our production sites. We are currently restructuring our Product Sales Agreement and Purchase Order documentation to accommodate this change and to incorporate additional terms and conditions suggested by Qingdao Niceway and our legal advisers. This revised structure reduces shipping documentation and complexity as we will be shipping to ourselves. This also lowers our risk as we will get paid in full for product as it leaves our Tianjin warehouse. Domestic shipping and handling within China will be the responsibility of the Customer.
4.Shipping Schedule: Shipping of product will commence as soon as the registration of the Tianjin company is complete which is expected to be within two to three weeks.
5.EFG Production Upgrade: The company is in the process of upgrading Line 1 and integrating it with Line 2. In consultation with our manufacturing and engineering staff we have elected to make more extensive changes to Line 1 and to replace our current chemical mixing system to have more control over quality. In addition, we are replacing our process control system with a more robust and standard PLC based on ABB technology. This will also be compatible with the ABB systems existing in the Bay City Gasification plant. These changes have delayed the commencement of regular production from Line 1 by several months but the line will be more reliable and will produce higher volume to help meet customer demand.
6.Packaging Modification: Our Chinese Customers have continued to request packaging of our product as slab rather than granular material. The company has previously resisted this change due to the milling and handling normally required to produce rubber in slab form. However, the company has designed a new packaging technology that will produce 10 kg blocks wrapped in low melt plastic (without milling) and will reduce cost, stack better, max out container weight and reduce handling during manufacture.
Authorized: D Elroy Fimrite, President
For Additional Information Contact:
Mark Boyd: 480-238-4934 or Don Carroll: 480-570-9315
DongYIng Jinzheng Tire Co. Ltd. Rubber Lab in China
Happy customer, Yan Jiansheng, owner of DongYing Jinzheng Tire Co. holding EFG rubber compound after tests