The Chiquita-to-Go® banana program continues to grow and it is a higher margin program for Chiquita. In connection with renewing the agreement for an additional five years, the companies agreed to add the use of our BreatheWay® technology for creating an optimal atmosphere within shipping containers in the field of global transport of bananas. Chiquita has a sizable shipping container technology business that fits well with Landec’s long-term interest in using modified atmosphere technology for preserving produce during global transport. Chiquita began purchasing membranes for shipping containers in the third quarter of fiscal year 2012. However, it should be noted that the container program collaboration is still in its early commercial testing phase.
For the avocado program, while Landec’s BreatheWay packaging has performed as designed, the Fresh & Ready® avocado program has not progressed due to operational difficulties experienced by Chiquita. Therefore, Chiquita has decided to take a different approach in order to exploit our BreatheWay technology for avocadoes. Chiquita is exploring a partner/licensee approach to continue the Fresh & Ready avocado program. With the right partner, likely one who already operates in the avocado industry, Chiquita believes it will be able to again offer consistent ready-to-eat avocados to retail and foodservice customers.
8) Can you remind us of the details surrounding your sale of Landec Ag to INCOTEC? What are the future plans concerning the use of your Intellicoat® coatings for seeds?
On June 24, 2012, Landec entered into three agreements with INCOTEC ® Coating and Seed Technology Companies, a leading provider of seed and coating technology products and services to the seed industry.In the first agreement, we sold Landec Ag to INCOTEC for $600,000, which will result in a gain of approximately $450,000, a majority of which will be recognized over the seven-year life of the Pollinator Plus® license agreement. In the second agreement, Landec entered into a seven-year exclusive technology license and polymer supply agreement with INCOTEC for the use of Landec’s Intellicoat seed coating technology for male inbred corn which is sold under the Pollinator Plus ® label. Landec will be the exclusive supplier of Pollinator Plus polymers to INCOTEC during the term of the license agreement and will receive a royalty equal to 20% of the revenues realized by INCOTEC from the sale or sublicense of Pollinator Plus coatings during the first four years of the agreement and 10% for the last three years of the agreement. In the third agreement, Landec entered into a five-year exclusive technology license and polymer supply agreement with INCOTEC for the joint development of new polymer and unique coatings for use in seed treatment formulations. In this agreement, Landec will receive a value share which will be mutually agreed to by both parties prior to each application being developed. These licenses do not include the use of Intellicoat for the controlled release of an active ingredient for agricultural applications which is being retained by Landec so that in the future we can explore opportunities to enter into an agreement(s) with one or more seed companies to exploit potential commercial application of this technology. 9) Are you still considering new investments or acquisition initiatives?