eSense-Lab Ltd (ASX:ESE) has initiated its expansion into the world’s largest consumer base for terpenes-based products globally with the appointment of US-based Blue Science Solutions LLC.
The new distributor will provide a cost-effective entry point to the US market via an established supply chain network, plus a viable solution logistically for entry of eSense’s terpenes-based products into the world’s largest consumer networks.
Blue Science, an approved supplier to the IBM Rapid Supplier Connect initiative, will receive an arm’s length standard commission on all sales.
Under the exclusive sales agency agreement, Blue Science has committed to sales of A$3 million in the first 12 months of the deal to maintain exclusivity.
Assuming the agreement is renewed after the initial 12-month term, Blue Science will source sales for a combined total of A$10 million of products through its network over the first five years of the deal.
If these minimum sales targets are not achieved, the agreement will automatically become non-exclusive.
Blue Science said it was aware that the minimum sales targets were “potentially ambitious targets” but added that Blue Science had generated more than US$2.5 million in revenue in the last financial year and had experienced increased demand in recent months as a result of a global shortage in sanitiser products.
CDIs to be issued
In exchange, eSense will issue 10 million CDIs in the company to Blue Science or its nominees.
The CDIs, which represent around 2% of the issued and outstanding CDIs, will have a deemed issue price of 1 cent each and will be issued from eSense’s existing placement capacity.
Blue Science is an established company that uses only natural ingredients to deliver non-toxic, cleaning and disinfecting solutions that has applications across a variety of industries.
It was formed in 2013 by Slade Smith, a registered professional industrial hygienist and an Institute of Inspection, Cleaning and Restoration Certification Master Restorer-accredited scientist with two decades of research and practical experience.
Part of IBM program
As an approved supplier to the IBM Rapid Supplier Connect initiative, Blue Science intends to introduce future products for sale through its supply chains.
This IBM network is designed to provide support for supplier identity using blockchain technology and aims to help buyers in the US and Canadian healthcare and government sectors find supplies and services in an unconventional marketplace with greater efficiency.
In order to be accepted into the IBM network, Blue Science needed to demonstrate to IBM that it recorded revenue in its prior financial year of over US$2.5 million.
Certain products targeted
The agreement covers all terpenes-based products to be developed by eSense, both in conjunction with Blue Science and with other third parties, in the cleaning and disinfecting solutions market.
It is still finalising product formulations which are expected to take two to three months to complete. It expects its first product, a terpenes-based sanitiser product to be ready for manufacture in the next four to six months.
The product is expected to require only a basic FDA registration as a no-rinse hand decontaminating solution. Other products are expected to be finalised for manufacture as and when the R&D team finalises product formulations.
Experience in North American markets
In addition, Blue Science is the exclusive holder/licensee and applicant of several patents for sanitisation and disinfection products for the US Food and Drugs Administration and Environmental Protection Agency (EPA) regulated industries.
Blue Science plans to utilise its experience in the North American markets to define the most suitable sales and distribution channels, as well as act as the exclusive local agent for the products in the US. It plans to introduce future products for sale through its supply chains.
The exclusive sales agency agreement offers eSense access to a team of experienced scientists with a proven track record of developing commercially viable products, including registered industrial professional hygienists, enzyme and organic chemists, and intellectual property attorneys, among others.