1. Company Overview - EcoPro Polymers, Inc.
Innovating solutions for cleaner environment
Hugh Mandal, PhD
President/Founder

2. Introduction/Overview
EcoPro Polymers, Inc. is a green technology company and we will manufacture renewable, environmentally benign, formaldehyde-free bio-adhesives for particleboard and medium-density fiberboard industries.
We have been in existence since August, 2012.
We are located at Microproducts Breakthrough Institute in Corvallis with a home office in Salem, OR.
Notes: We registered with the State of Oregon in August, 2012 as Ecopolymerix, LLC. However, We did not get occupancy at MBI till December In October 2014, we changed our company name to EcoPro Polymers, Inc. and registered with the State of Oregon as EcoPro polymers.
Motivated by the increased regulatory restrictions on formaldehyde emissions from panel boards and increasing market demand for formaldehyde-free adhesives, we set out to look for greener alternatives to formaldehyde based adhesives a couple of years ago. Although polymeric methylene diphenyl diisocyanates (pMDI) is currently being used as formaldehyde-free adhesive in many of the particleboard and medium-density fiberboard mills today, it has its own health risks and performance issues which we will discuss in the later slides. Our criteria was to find green polymers that would have similar physical properties and reactivity as urea-formaldehyde resin which is still being used as formaldehyde-based resin in particleboard, medium-density fiberboard and hardwood plywood industries. After extensive research and laboratory work, we have embarked on a family of green polymers that is derived completely from renewable resources and which exhibit similar physical properties and reactivity as urea formaldehyde resins. More recently, we have been able to demonstrate that particleboard panels can be manufactured on a pilot scale by using our renewable adhesive in combination with a small amount of pMDI.

3. Problem/Market Opportunity
Most companies within the US are looking for formaldehyde-free options to offer California-compliant products throughout the domestic market place.
pMDI is the only formaldehyde-free alternative that has been
commercialized for particleboard and medium-density fiberboard
industries today.
Notes: Formaldehyde based resins, such as urea-formaldehyde had been widely used for composite wood products market primarily because they are inexpensive, provide colorless glue lines and physical/mechanical properties that meet or exceed the test criteria for these types of applications. The major drawback associated with these adhesives, however, is that they are known to hydrolyze and release formaldehyde into the atmosphere over time. Formaldehyde vapor is potentially carcinogenic and is hazardous to human health, causing eye and throat irritations as well as respiratory discomfort. Because the composite wood panels manufactured with this adhesive are used primarily in the interior of the house, it has a significant impact on interior air quality.
Formaldehyde has been classified by the International Agency for Research on Cancer (IARC) as a known human carcinogen. In June 2011, US department of health and human services added formaldehyde to its report on carcinogens. Implementation of California Air Resources Board (CARB) Phase II, which is the toughest standard in the world on formaldehyde emissions, was completed in July Implementation of CARB PII applies to composite wood products that are manufactured, distributed, imported, assembled or offered for sale in California. In order to be sold in California, composite wood product manufacturers must certify that they are CARB compliant for formaldehyde emissions and label their products accordingly. From the EPA website “the EPA’s second proposal establishes a third-party certification framework designed to ensure that manufacturers of composite wood products meet the Toxic Substance Control Act (TSCA) formaldehyde emission standards by having their composite wood products certified though an accredited third-party certifier. Under this rule, third-party certifiers would audit composite wood panel producers and verify compliance with formaldehyde emissions standards for their products.” Therefore, it can be assumed that implementation of certifications nationwide will be an added cost to producers that continue to run urea formaldehyde/melamine urea formaldehyde resin and may drive manufacturers to seek formaldehyde-free alternatives like pMDI, representing an upside for EcoPro Polymers nationwide. So, the demand for formaldehyde-free adhesives is primarily driven by regulatory restrictions on formaldehyde emissions from composite wood products.

4. Industry Problem: Today’s Challenges
The major drawback associated with pMDI usage is listed as follows.
Exposure to pMDI on wood dust as well as pMDI aerosol can cause health issues such as increased risk of developing respiratory sensitization to workers if they do not use appropriate personal protective equipment (PPE).
pMDI does not provide any tack properties. More than 50% of PB/MDF plants that have continuous lines cannot use pMDI because it does not have any tack.
pMDI sticks tenaciously to metal surfaces and causes clean up issues. This contributes to production downtimes and lost revenues.
Notes: pMDI is petroleum based and therefore dependent on foreign oil. It is attractive to PB/MDF manufacturers because it is 100% solids and therefore it makes the transportation cost cheaper. In addition, PB/MDF manufacturers that use pMDI do not need to do additional laboratory testing and 3rd party certification to report formaldehyde emissions. Tack is a very important property which helps mat consolidation for transporting mat to the hot presses where the final wood panels are being manufactured. PB/MDF manufacturers that are using pMDI today are required to use expensive release agents on the platen surfaces because of sticking issue with pMDI. Even with the release agent usage, there are reports of wood particles build up on the platens and they need to be cleaned. This causes production downtimes. This is an added cost associated with pMDI usage. In addition, because pMDI does not have any tack property, it can not be used in PB/MDF mills that use continuous lines.

5. EcoPro Polymers - Value Proposition
We are proposing a significantly reduced pMDI in the adhesive mix by substituting it with our unique, renewable and environmentally benign adhesive.
Our proprietary adhesive formulations would minimize/eliminate platen sticking issues associated with pMDI usage.
Our proprietary adhesives would provide tack which is essential for holding the wood particles together in continuous lines.
We will provide a lower cost solutions by significantly reducing pMDI in the hybrid adhesive mix.
Our bio-adhesives would offer lower environmental impact over their entire life-cycle than petroleum based adhesives.
Notes: Our business model is based on reducing the usage of pMDI by 70-80% from its current usage level by substituting it with our renewable, environmentally benign adhesive in the PB/MDF mills that are using pMDI today. Alternatively, we could partner with pMDI producers and target PB/MDF mills that are currently using formaldehyde based adhesives to provide our hybrid formaldehyde-free technology offering.
Raw Materials : The fundamental ingredients of the EcoPro Polymers adhesive are plant-based polymers extracted from renewable agricultural sources such as corn, wheat, rice, potatoes, etc. Use of this renewable bio-adhesive system will reduce the use of petroleum-derived pMDI for the composite panel application by as much as 80%.
Intended use: During composite product manufacture, pMDI reacts with moisture in the wood to form polyureas and releases carbon dioxide as a byproduct . In fact, when one mole of pMDI reacts with one mole of water, it generates a mole of carbon dioxide and a mole of urea. Therefore, by reducing pMDI content from 100% to 20%, EcoPro Polymer’s bio-adhesive system reduces this carbon dioxide byproduct so that the total is 5 times less CO2 than that of pMDI used alone.
Disposal: Disposal of unused EcoPro Polymers adhesive or PB/MDF panels made with the proposed EcoPro Polymers system have been shown to be stable over time and not release any toxic or regulated chemicals when disposed. The end of life options means that our bio-adhesive in PB/MDF can be recycled or someday be composted back into farms. Neither disposal option exists for current formaldehyde or pMDI containing PB/MDF.
Our bio-adhesive development would ultimately create new jobs in the green technology sector in Oregon. In terms of broader societal impact, by providing formaldehyde-free adhesives we would contribute to improved health and safety of products both in manufacture and in long term use. Societal benefits on a large scale can also be won throughout North America if the results lead to an increased share of wood-based materials used in the construction sector. This would directly impact sustainability of society by shifting toward a renewable resource which would help reduce carbon dioxide release to the atmosphere.

6. Market Opportunity PB/MDF Market Size in North America
Notes: Potential domestic customers for EcoPro Polymers in the Northwest include particleboard and medium-density fiberboard manufacturers. The total market size for PB/MDF in North America is ~3.7 Billion lbs/year(~$1.3 Billion based on amino resin cost). The market size for Northwest is ~1.6 Billion lbs/year (~$560 Million based on amino resin cost) . There are 7 PB manufacturers in NW totaling ~900 MM lbs of liquid adhesive/year. There are 6 MDF manufacturers in NW totaling ~700 MM lbs of liquid adhesive/year. Both particleboard and medium-density fiberboard industry are directly related to new housing constructions in the US. The adhesive volume is expected to grow steadily in the next 5 years because of more new housing due to increased population growth. Because of high volume adhesive usage in the particleboard industry and their concern about formaldehyde based adhesive, this group of customers is critical to the success of EcoPro Polymers. Medium-density fiberboard manufacturers are the 2nd most important group of composite wood products manufacturer that is pivotal to the success of EcoPro Polymers since they are equally concerned about the usage of formaldehyde based adhesive in their panel products. Approximately 40% of PB/MDF manufacturers in the Northwest have already converted to pMDI as the formaldehyde-free alternative and it is predicted that the formaldehyde-free adhesives are gradually going to take major market share in the composite wood products market. So, there is a clear and compelling need for formaldehyde-free adhesives dictated by government regulatory agencies, in composite wood products market in the year 2015 and beyond.
pMDI Market Share in the Northwest

7. ✔ Competitive Landscape Hexion/GP Solenis BASF/Huntsman Our product
Urea-formaldehyde
BASF/Huntsman
pMDI
Solenis
Soy adhesive
Our product
Formaldehyde-
Free
(no emissions testing
required) ✔
Provide tack
Notes: pMDI is mostly used to manufacture rigid polyurethane foams which are widely used as insulators in construction, consumer appliances, industrial applications, packaging and other applications. Interior wood products is not the primary focus of either BASF or Huntsman. Historically, these suppliers have been the source of pMDI for Oriented Strand Board (OSB) market. However, since the crash of housing sector, lack of pMDI demand in the OSB market and stringent regulatory restrictions on formaldehyde emissions from interior wood products, they have been able to penetrate a portion of the PB/MDF market.
Again, with a good start in the housing market, there would potentially be an increased demand for pMDI in the OSB market. Consequently, there will not be enough pMDI available for PB/MDF market. This will drive the price of pMDI higher and make it less competitive price wise.
Solenis’s formaldehyde-free Soyad® technology using soy/kymene system has been a huge success in the hardwood/plywood market since its introduction of PureBond® products in This technology works for the hardwood/plywood market because the glue is applied on the veneer by roll coaters. So, the higher viscosity of soy/kymene system is not an issue. In addition, the glue cost in the HWPW panels is only 5% of the panel manufacturing cost as opposed to 30% for PB/MDF panels. Therefore, the higher cost of soy/kymene system is compensated for by its less resin loading per 1000 sq. ft. of panel area.
Solenis has made modifications to its Soyad® technology to make the adhesive less viscous so that it is sprayable. Solenis has been running trials in PB/MDF mills since However, we are not aware of any particleboard or medium-density fiberboard mills in the northwest that has converted to Soyad® technology as a formaldehyde-free alternative. Soy flour/soy hydrolyzate is cost-competitive, however, kymene which is being used as a crosslinker is fairly expensive and the maximum solids content of kymene is only 30%. To achieve any acceptable strength properties kymene needs to be added at a fairly high concentration which makes the mixed adhesive system significantly more expensive than pMDI. Another huge challenge with Soyad® technology is its lower solids content. To maintain a sprayable viscosity binder for PB/MDF mills the solids content of soy adhesives cannot be higher than 50%. In addition, because of lower solids content of kymene, the mixed adhesive has significantly lower solids. This brings a lot of moisture to the wood furnish during hot pressing which creates excessive steam pressure build-up and panel delamination when the press opens. This in turn can create significant downtime for the PB/MDF mills. Typical urea-formaldehyde resin has 65% solids content. Our prototype adhesive also has 65% solids content and we did not observe any mat fracture or delamination during hot pressing on a pilot scale. Therefore, having 65% or higher solids in the adhesive formulation is one of the key criteria for commercialization in PB/MDF arena. The major obstacle with Soyad® technology to date is its slow curing characteristics, lower adhesive solids and cost-competitiveness. In addition, kymene is not considered environmentally benign.
None of these competitors in addition to formaldehyde based adhesive suppliers have been able to provide any viable technical solutions to the tack or sticking issues associated with pMDI. Using pMDI with urea-formaldehyde resin would perhaps provide more tack, however, it will not be categorized as formaldehyde-free solution. EcoPro Polymers sees competition failure as a major opportunity to exploit the market.
Minimize/
eliminate
sticking issue

8. EcoPro Polymers Team
Dr. Hugh Mandal, President/Founder of EcoPro Polymers, has a PhD degree in polymer chemistry and 19 years of experience in the construction, transportation and automotive sectors of Adhesives and Sealants Industry.
Dr. Mandal has been actively involved in new adhesive development for particleboard/medium-density fiberboard, hardwood/plywood, insulation binders, truck flooring, glue laminated beams and I-joist industries for the past 15 years in the US.
Ms. Alanna Mandal, Co-Founder, manages logistics and procurement. She has several years of management experience. She founded a small business specializing in the interior and exterior design in the construction of luxury yachts in Vancouver, B.C., Canada.
Notes: Dr. Mandal holds one non-provisional US and world patent and three provisional patents on novel adhesives for composite wood products in addition to several important publications in reputed polymer journals.
Initially, our plan is to hire sales people on a 5% commission based on total sales. In 2017, we plan to hire a few additional personnel, specially if sales reach or exceed $1.0 million. Payroll costs will be high from the beginning, due to the need for highly trained, highly skilled labor. In order to continue growth into the future and provide innovative, formaldehyde-free adhesives into the wood products market and other areas in the construction sector, these are positions essential to company growth and the jobs that should be well compensated.
We are highly motivated to make significant contributions to a cleaner environment for the present and future generations.