PetroAlgae: Overview

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PetroAlgae: Overview

Since 2011, PetroAlgae evolved its business to become a leading technology provider of systems that can support the production of sustainable, natural, cost-effective ingredients. Since 2011, they have worked to evolve their business model, and have continued to develop partnerships, generate venture capital funding, and invest to drive innovation. The history from 2012 to date for PetroAlgae (now, Parabel) is found below.

2012

Company Operations

  • In 2012, PetroAlgae stated their strategic objective was to license the use of their technology solutions to production locations which offer suitable climates for the profitable growth and harvesting of 'micro-crops', offering new sources of food and fuel. The company would offer management support of production facilities for clients in the agriculture and energy sectors.
  • In February 2012, PetroAlgae changed their name to Parabel to reflect their accelerated commercialization efforts. This followed a series of strategic changes, which were intended to allow the company to scale their technology globally.
  • Licensees would be able to build their production facilities quickly and efficiently, based on a modular growth capability allowing for phased construction.
  • The company's revenue generation model would be based on licensing fees and royalties from these clients, as well as investment groups.
  • At the time, the technology was supported for use in animal feed, fish meals, and alfalfa. The company felt it would eventually be viable as a fertilizer, and with additional product development and support from third-party partners, could eventually be viable for human food and as feedstock for renewable fuels.
  • In April 2012, the company entered into a master framework with CECEP in China, following the pilot phase. The agreement would involve the build out of 10 commercial-scale units (5,000 hectares each).
  • In May 2012, the company entered into a license agreement with Lemma Asia in Malaysia. In August 2012, Parabel entered into a license agreement with FertiGreen S.A., in Ecuador.
  • Syed Naqvi was hired as CFO in 2012. John Scott, PetroAlgae's founder, stepped down in June 2011, with Anthony Tiarks, CEO, taking on his role as Chairman of the Board.

Financial Implications

  • Despite the evolution of its strategy and a few pilot production facility partnerships (Salim Group in Indonesia and China Energy Conservation and Environmental Protection Group), Parabel had not to date (Q1 2012) generated revenue or built a production facility on a commercial scale. There remained ongoing concerns about the viability of the business.
  • The company had stated losses of $148.3MM as of December 2012.
  • After and IPO filing in 2011, the company's IPO was still the queue in 2012.
  • In December 2012, PA LLC, which was formed by the XL Tech Group in 2006 to develop technology to grow and harvest micro-crops to develop new sources of food and fuel in 2006, formed a wholly owned subsidiary, Parabel Ltd., under the laws of the Cayman Islands.

2013

Company Operations

  • In January 2013, an investor unaffiliated with PA LLC, Dahbi Cayman One Ltd., provided $15MM in funding to Parabel, Ltd. Anthony Tiarks, Chairman and CEO at the time, commented about the investment, "I am delighted to confirm this substantial injection of funds into Parabel, and I am excited about the opportunity to work closely with our partner in Abu Dhabi to enable the company to achieve its significant commercial potential."
  • Goals for Parabel in 2013 included global commercial implementation of its technology, which include additional commercial licensing agreements and building out of their customer pipeline.
  • On March 25, 2013, Parabel USA was formed under the rules of Delaware as a wholly-owned subsidiary of Parabel, Ltd.
  • As of April 2013, the company felt they held a competitive advantage due to their patents, proprietary technology, and limited competition. However, there were still concerns about the company as a viable entity, with the company expecting losses and negative cash flow through the end of 2013.
  • In July 2013, the company finalized a licensing agreement with Worldwide Strategic Investment Group for a production facility in Colombia.
  • In October 2013, the Parabel completed the first phase of a $7MM investment in a production facility in Uganda. At the time, the technology was recognized as a solution to an ongoing food security crisis, as well as offering local work opportunities.
  • Marcus Kenny was hired as VP, Product Development Group, in October 2013 as the company continued its evolution to provide end-to-end global feed and food production solutions. Upon his appointment, Kenny stated, "Parabel is involved in a novel and exciting area of sustainable food solutions. The product development group is a vital part of Parabel’s future plans to provide high quality ingredients to the global food and feed sectors."

Financial Implications

  • As of September 2013, PA LLC owned 100% of the 50 million outstanding shares of Parabel, Ltd.
  • As of September 2013, Parabel had an aggregate accumulated deficit of $163.8MM and anticipated continuing to operate at a loss through 2013 and 2014.

2014

Company Operations

  • As of early 2014, Parabel noted it had entered into licensing agreements to enable the development of global commercial scale units with an order book value of roughly $3 billion. Their messaging to potential licensees cited the 'compelling investment opportunity', scalability of the units, sustainability benefits, and support. They continued to place a strong emphasis on their support services, focused on pre-planning, construction and operations management, equipment procurement, and supply chain management.
  • The company continued to evolve its position toward food production, with its 2014 website messaging focusing on Parabel's 'unique micro-crop technology to address the global demand for feed and food.'
  • In February 2014, the company dismissed Grant Thornton, LLP as their independent auditor, and engaged Marcum LLP. In May 2014, Parabel filed for a delay in financial filings due to the change in auditor.
  • In 2014, Peter Sherlock resigned as Chief Operating Officer. His unvested options were terminated, leaving him with 149,137 vested options. However, he continues as Chief Technology Officer through the present day.

2015

  • In 2015, Parabel announced the development of proprietary technology which allows the extraction of Lentein, a soy-, gluten-, non-GMO, and lactose-free protein that would be harvested in one of Parabel's licensed production fields in Uganda. The protein would be reliable protein source that could be used by food manufacturers.
  • In 2015, Parabel had become recognized for this 100% sustainable innovation, winning multiple awards, including the 2015 IFT Food Expo Innovation Award, and the 2015 American Food Technology and Innovation Summit "Future Ingredients and Showcase Award".
  • In November 2015, Parabel announced they would be building a $10MM commercial production facility in the United States to continue the development of Lentein.

Financial Implications

  • In December 2015, Parabel announced a seed round of funding, from Polar Light Ventures (not the primary investor), for an undisclosed amount.

2016

Company Operations

  • By early 2016, Parabel had continued to position itself as "sustainable and economic solution to food security."
  • In April 2016, Parabel announced it had partnered with Barentz, a global ingredients distributor, to represent and distribute Parabel's plant-based food, feed, and personal care ingredients.

Financial Implications

2017

Company Operations

  • As of early 2017, Algae-protein was identified as a future trend in alternative protein, with a key benefit of water conservation, requiring less than 1% of the water needed to grow similar proteins.
  • Parabel received press in August 2017, when a superfood supplement, Clean Green Machine, launched with Lentein, and Parabel was identified as supplier.

Financial Implications

  • Parabel, along with GS EnviroServices, Inc., and IPO World had their SEC registrations revoked on October 3, 2017, for repeated non-filing of financial reports with the SEC.

2018

Company Operations

  • Parabel signed a distribution agreement for Lentein with Stauber USA to commercialize Lentein in the United States.
  • With a capacity of 300 tons of plant protein as of 2018, the company was expected to expand this capacity to 3000 tons over the next year, opening several facilities to meet growing demand. Anthony Tiarks, Parabel's CEO commented, "This agreement underlines our commitment to address market needs in the USA. The shared vision of Parabel and Stauber is to introduce an environmentally sustainable, Non-GMO and allergen-free plant protein to the US Market".

2019

Company Operations

2020

Company Operations

  • As of 2020, Parabel's partners include Country Life, Real Source, CanPrev Premium Natural Health Products, Patriot Health Alliance, Clean Machine, Stauber, CK Nutraceuticals, and Barentz.
  • Their current message emphasizes their proprietary technologies used to develop sustainable agricultural products and the products they have developed with their partners.

XL Tech Group and Ownership Evolution

  • PA LLC is the operating subsidy of PetroAlgae, which was formed by XL Tech Group, who had a controlling stake in the business at the time of the formation of the LLC.
  • In 2009, PetroTech Holdings owned 92% of PetroAlgae. Several investors, including Valens, U.S., Green Alternative Energy, UBS AG, and Green Science Energy, were also issued common stock, which helped the company raise working capital.
  • John Scott, who founded XL Tech Group in 2002, and was operating as Chairman of the Board of PetroAlgae since December 2008, was named CEO of PetroAlgae in August 2009.
  • In 2010, PetroAlgae reorganized its management structure in preparation for the 2011 IPO. David Szostak, formerly a director of XL Tech Holdings (identified in the 10-K report as an 'inactive holding company controlled by certain principals of PetroAlgae'), and CFO of PA LLC, was named CFO of PetroAlgae in August 2010.
  • In 2011, John Scott stepped down as CEO, which, along with the name change to Paribel, appeared to limit the involvement of XL TechGroup in the future of the company. Following in 2013, PA LLC formed Cayman Island-based Parabol Ltd. John Scott did engineer the hiring of the current CEO, Anthony Tiarks, in 2011.

Research Strategy

We leveraged financial reports, PetroAlgae's (which transitioned to Paribel in 2012) and Paribel's websites, and numerous external expert publications to develop an evolution of PetroAlgae's business after 2011. We were able to identify some reports of venture capital financing, financial results, investors, corporate leadership changes, innovation, strategic direction changes, and partnerships. Between 2011 and 2014, there were a number of legal entity filings and restructurings with respect to the business. Leaders from XL Tech Group were involved heavily throughout the entity changes, until 2011, when John Scott stepped down as CEO and when PA LLC formed Cayman Island-based Parabol Ltd in 2013. Given the evolution of the business, it is unclear the extent of XL Tech Group's involvement at this point, and the degree to which, if at all, they influence the current variation of Parabel.



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