BH: Kim, I'd like to change the focus the call for basically the remainder of the call, for the most part, to the business model. Please take a moment to update us on where you think the business model is headed.
KT: Our model is to partner with larger established companies in our target markets for product development, manufacturing and distribution. The first step has been to identify and begin discussions with appropriate potential partners. The pace of contact with potential partners has increased significantly, since the publication of the national academy of sciences article in January and also after the Textile World magazine article, also in the first quarter. Since those publications came out there has been a lot of interest in Monster Silk and we have been approached by a number of companies concerning the potential to use monster silk in their product lines, or to develop new products using monster silk.
During the first quarter we've entered into non disclosure and confidentiality agreements with a number of those companies. Those companies operate in markets ranging from sportswear and fashion to military and defense applications. These are primarily large companies. The largest has sales in the billions of dollars; the smallest has sales between 20 to 50 million dollars. We are exploring the potential of our products for their markets and how our monster silk can be integrated into their product lines. It is very exciting, but we are also at a relatively early stage in that process with each of these companies. We are continuing to make contact with companies that we feel will be suitable market development partners and we have a specific plan for that outreach.
And of course, from there perspective, I am sure it is not lost on them that not only do we have Monster Silk, we are in development of even more advanced materials, and the partners we chose to move forward with on monster silk are likely to have an inside track on our product pipeline.
BH: Do you believe that K BLB will remain a single entity, or will there be spinoffs?
KT: I am open to a spin off it if would be in the best interests of the shareholders, but I do not envision that happening in the immediately foreseeable future. We are still a small company, and we are stronger together than we would be broken apart.
BH: Kim, here's a three part question for you? What is the extent of input from the advisory board? How often do they meet? Are the members actively working on a day-to-day basis to help establish the best commercialization scenario for KBLB products?
KT: Every member of our advisory board has been selected because of some particular area of expertise. The advisory board does not meet as a group. Individual members have different areas of expertise that we call them on. When we need input or feedback, or constructive criticism, or when we are drawing up plans or implementing our strategy, I reach out to members of the board who have expertise in that particular area. Each of these persons are people with very significant lifetimes of accomplishment and they are engaged in other activities and other businesses, so they are most definitively not involved on a day-to-day basis.
I am very respectful of their time and I do take their advice and input very seriously. Just, frankly, within the last two weeks, we've had significant input from members of the advisory board, which have caused us to make adjustments, I think very positive adjustments to our business plan.
BH: What are the steps to commercialization?
KT: We talked about this a little bit earlier. To elaborate on what I said, the steps to commercialization establish commercial relationships with companies who have significant market share in our target markets and who see the value of integrating our technology with their product lines. We have entered into a number of non disclosures agreements, as I've mentioned, with such perspective companies and we are moving forward with all due diligence.
We only get once chance to do this right. It's more important that we form relationships with the right partners, from my perspective; than it is for us to sign deals so that we can announce that we have deals. We only get one chance to choose these partners, and we're going to be married to these partners for the foreseeable future. We have developed and are implementing an outreach plan for bringing additional potential market development partners to the table.
We are only looking for a small number of companies to work with us on commercialization, market and product development; each such perspective partner operating in separate niche. For example, of our thinking here, one Company might work with us on developing the market for a specific sportswear application where another company which weaves fabric for the defense industry might work with us on integrating Monster Silk into one or more of their product lines.
Frankly, we are already talking with more companies than we actually need or want, as marketing partners, according to our commercialization plan, but we are looking to form long term relationships, not one off sales. So the selection of the right partners is critical. We want to make sure that any prospective company that we would enter into a relationship with has; one, an ability to move significant volumes of product into the marketplace; two, has the necessary product and market expertise to work with us on successfully integrating monster silk and eventually generation 2 product into their product lines; and, three, that they also share our vision and, to some extent, passion for this breakthrough fiber.
Now, at the same time that we're doing this, we are going to significantly increase our recombinant spider silk production through our Monster Silk brand. The initial part of that ramp up has already taken place in the laboratory. We have significantly increased the number of monster silkworms and we have been successfully implementing a plan for accumulating, and essentially stockpiling, monster silkworm eggs in preparation for a significant expansion of production capacity. We will be increasing the pace of that ramp up in our new laboratory. All of this is being done as part of the necessary preparation for industrial scale production.
BH: Is Sigma-Aldrich going to be more deeply involved in production and/or distribution?
KT: I do not envision that at this time. They are working with us in terms of assisting us with Zinc Finger Nuclease fabrication and expertise, but, at this time, I really don't see their involvement in distribution and production.
BH: Kim, it's easy to get lost in all the sexiness of all the potential future spider silk uses, but aren't the initial agreements going to cover mundane silk uses, like sports apparel or s ilk ties and suits?
KT: Well, that is what we initially thought when we saw this material for the first time, but, since that time, we have been talking with companies, including defense contractors, who have approached us about applications for Monster Silk. In some cases, the companies who are contacting us have been educating us about the potential of Monster Silk for their particular applications; applications that that company knows about because of their particular product line. So, in short, the market for Monster silk may be broader than we first realized when the product was developed in the laboratory.
BH: Thanks Kim. Before we say our farewells, is there anything else you would like to add?
Yes, thank you Ben.
As the company grows and we increasingly interact with larger established companies in our target markets we need to grow internally as well as externally. I believe that we are on such a path of growth. We anticipate adding significant new corporate communications and investor relations support as part of our increasing public profile. Ben, over at Hansel Capital who is on the call with me, has been doing a great job of spearheading communications for us, but as we grow he can not be expected to shoulder that burden alone.
So, the message, in short, is one of growth. Our laboratory is physically growing as we move part of our R & D and production ramp up into a new lab. We are also accelerating our R&D on our next generation technology, the gen two technology. We are ramping up production of our Monster Silk product and we are reaching out to form new partnerships with the companies who have existing sales in our target markets. This is a very exciting time at Kraig Biocraft Laboratories. It is also a hectic time.
I want to thank the shareholders for supporting the company. Together we have accomplished what many thought was impossible. As we grow we will continue build on those accomplishments.
BH: Thank you Kim. Well, that wraps up today's call and I'd like to thank you, again, for listening in.
KT: Thank you, again, Ben, and thank you, again, to our shareholders.
It would seem that this textile gathering was as much for Kim to learn the market as it is for the general textile public to gather more awareness.
From the CC, it doesn't appear that Kim is in a hurry to make a deal, but this booth would be consistent with the stated intention to examine and make more contacts in the textile field so KBLB also can be educated on the many uses of their product.
