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Epolin - selling specialty dyes
and rewarding shareholders for their faith
Basic Materials
Chemical Manufacturers
OTC:BB: EPLN
Epolin, Inc.
358-364 Adams Street
Newark, NJ 07105
Phone: 973-465-9495
Dr. Murry S. Cohen
Chairman and
Chief Executive Officer
Interview conducted by:
Walter Banks
Co-Publisher
CEOCFOinterviews.com
April 2002
Bio or CEO,
Dr. Murray S Cohen has served as Director and Chairman of the
Board of the Company since June 1984. Since May 1983, Dr. Cohen has been a principal in
Epolin, Inc a company engaged in the development and production of specialty chemicals.
From January 1978 through May 1983, Dr. Cohen was the Director of Research and Development
for Apollo Technologies Inc., a company engaged in the development of pollution control
procedures and devices. Dr. Cohen was employed as a Vice President and Technical Director
of Borg-Warner Chemicals from 1973 through January 1978, where his responsibilities
included the organization, project selection and project director of a 76 person technical
staff, which developed materials for a variety of plastic products.
From 1966 to 1972 Dr. Cohen was a Laboratory Director for Esson Research and Engineering
developing fuel additives. From 1953 to 1966 he was a department head at the Reaction
Motors Division of Thiokol developing advanced propellants and materials. Prior to this he
worked at Schenly Labs as a research chemist from 1952-1953.
In October 1988 Dr. Cohen received the New Jersey Commission on Science
and Technology’s Spirit of Enterprise Award. He received a Bachelor of Science Degree
from the University of Missouri in 1949 and a Ph.D. in Organic Chemistry from the same
institution in 1953.
Company Profile:
Epolin, Inc. develops, manufactures and sells near
infrared dyes. Applications for these dyes cover several markets that include: laser
protection, welding, sunglasses, optical filters, glazing and imaging. Epolin maintains an
inventory of more than 70 dyes (e.g. those that absorb at the neodymium YAG and laser
diode frequencies). Their dyes cover a wide range of properties, which includes:
absorptivity at a choice of frequencies, thermal stability, color, solubility and light
fastness. Some dyes have thermal stability suitable for injection molding of polycarbonate
and other engineering plastics. Other dyes have excellent solubility in organic solvents
and are recommended for coatings. Some dyes are very absorptive in the IR while providing
excellent transmission of visible light.
In response to customer demands for Infrared Absorbing dyes with greater thermal
stability, Epolin offers a new class of dyes with improved thermal and light stability.
These new dyes; Epolight V-63 through V-138 can be processed in extruded polycarbonate
sheet at temperatures in excess of 650°F. They also have sufficient "built in"
light stability to withstand exposure to UV light. The use of a UV Absorber to block UV
light is always recommended for prolonged exposure to UV Light. The spectra presented for
each dye in the V class were measured in Chloroform.
Other technologies now make use of near infrared dyes. For example, they are used in
printing plates, for coatings and in light filtration. Imaging applications are important
for the new printing plate technology where our dyes speed up image formation. This
technology has advantages over the wet silver emulsion process by offering the customer
lower costs and little or no pollution while, at the same
time, speeding up the setting of images.
All orders are filled within one or two working days. For special formulations, they
respond in one week. Their technical staff is always available for consultation. Orders of
a few grams to one hundred kilos, are waiting to be shipped.
Computer simulation of product performance:
Customers, who have a spectrum they want to duplicate with organic dyes, can send
them the spectrum and they will comb through their dye library and find the formulation
that duplicates it.
No sales restrictions:
Their dyes are available to all as pure powders and mixed dye formulations. They
do not require customers to purchase resin formulations or finished products such as
lenses and frames. They do not compete with our customers.
Dye-resin formulation samples:
They supply their customers with extruded pellets containing their dyes. These are
available for performance evaluation. Chips made by compression molding are also
available. If you do your own injection molding or extrusion, this data can move your
development along faster.
CEOCFOinterviews: Dr. Cohen, please give us a brief history of
Epolin.
Dr. Cohen: “Having
lived through it all, the history is very vivid in my mind. The company was started in
1984 by two synthetic/organic chemists who were close to retirement age and didn’t
want to play golf or go down to Florida. We considered what we really would like to do and
concluded it was organic synthesis. So, we set up a company to do custom organic synthesis
for other people in 1984. We led a hand-to-mouth existence mostly on government contracts,
particularly the SBIR (Small Business Innovative Research) programs. As a result, we got
involved in some new technology in expanding monomers. We went public in 1989 based upon
this technology; but it was not successful.
In 1989-92, we spent the two-and-a-half million dollars we raised in 1989 on salaries,
building up a facility and things like that, until we were almost on the verge of
bankruptcy by early 1992. At that time I informed our staff of thirteen people that I
wasn’t taking a salary, nor had I taken a salary for a number of months, and that I
didn’t expect them to. If they wanted to work, fine. If they didn’t, they could
leave. They all left and I was alone with two plant operators and a part-time secretary.
Almost immediately, instead of looking into an endless pit of debt, we went into positive
cash flow because there was enough residual business to sustain this small group.”
CEOCFOinterviews: How did
you get started with your current product focus?
Dr. Cohen: “During
our formative years, we got ourselves involved in this technology of infrared dyes through
one of our customers, American Optical. They had an interest in our expanding monomers,
unsuccessfully trying to develop a process to use them. Almost as an aside they said to
us, “You know, we are optics people, we are not organic synthesis people. We have a
dye that we make and use for our plastic lenses. Would you be interested in making the
dye”? Of course, I said yes, and we
started to work with them. We delivered dye to them, which they converted into coatings to
be used on lenses. The product line started to grow from there. In 1992, we started to
rebuild the personnel base. Jim Ivchenko our President, who came in willing to work for
peanuts, was brave enough to withstand the storm.
The company slowly grew from 1992 on so that by 1994 we paid off most of our debts. We
have been making money and expanding since 1993, mostly based upon the infrared dyes. We
sold a specialty dye to a specialty market in which people don’t have any difficulty
paying the price because a little bit of dye goes a long way and it does a job that
nothing else will do. This greatly improves the value added to customer’s
products”.
CEOCFOinterviews: Are you profitable as it stands right now?
Dr. Cohen: “We
are very profitable; we have broken all prior records of profitability. On the next
quarterly report, close of business on November 30, 2001 we stated our nine months sale at
two million, seventy-one thousand dollars, which exceeded sales for the same period in
2000, by 13.4%. The profitability for that period rose by about 30%. We have been
expanding sales and profitability since 1993, so the company has been quite
extraordinarily profitable."
CEOCFOinterviews: What
would you say is your most recent exciting news?
Dr. Cohen: What
we find gratifying most recently is that we can pay our shareholders a dividend. We paid a
7 cents dividend on a price that was bouncing around from about 30 cents a share to 70
cents a share during our fiscal 1992. 7 cents is a very healthy dividend and we still have
cash that we can use if we want to expand the company by acquiring others or buying new
equipment.”
CEOCFOinterviews: So
you have a very good cash and credit position right now?
Dr. Cohen: “We
do. We have never owed a penny after 1993. We cleaned up our debt completely. When we
raised money for the public offering, the stock was offered at 50 cents a share. We were able to deduct the carry forward stock
loss and our balance sheet looked a little better as a result of profitability. Because of
these losses, we didn’t have to pay taxes for a few years. We paid off our debt
completely by 1994 and we are now very big contributors to the federal government’s
tax collections. Since 1989, when we went public, we have had people holding on to the
stock. I am now getting letters from them telling me they wrote us off and they never
expected to see a penny. Now, here comes this
dividend in the mail. It is rather gratifying.”
CEOCFOinterviews: What
sets Epolin apart from your competition?
Dr. Cohen: “We
make these highly complex specialty dyes. It’s a niche market and we have very little
competition. There are two companies that can manufacture similar dyes. One of them
won’t sell it to you unless you buy a formulated product. In other words you have to
buy either a finished injection molded piece of plastic containing the dye or a formulated
pellet of plastic containing the dye. The other company, which makes one dye, will only
sell it to you if you buy their polycarbonate. We will offer the customer the dye, make it
in pellet form, compound it into polycarbonate; we will even develop coatings for them. We
do a lot of the work that the customer would normally do himself once he gets the dye but
we find that this is good business because it helps sell what we are offering.”
CEOCFOinterviews: Can you tell us about the market for your specialty dyes?
Dr. Cohen: “The
market is changing. Initially the market was primarily for laser-protective lenses, these
were lenses that were used by the military in the field to protect soldiers from the range
finders on tanks. Those range finders used a neodymium YAG laser. If you looked at them
for any length of time you could be blinded; in fact there is a lot of anecdotal evidence
that during the Iran/Iraq war, Iraq scanned the battle field with these lasers and blinded
about 5000 Iranians during combat. We know that there are much more powerful lasers out
there now and they need a lot more protection for them.
Lasers are now being developed not only as range finders but also as offensive weapons.
Therefore, the military is quite interested in our materials. We do sell to people who
make protective eyewear for the military but most of it goes into laser protection for
people who do R&D on lasers and work with lasers as a way of life. The other big area
is welding. There
is a lot of anecdotal evidence that people who are exposed to the welding flame long
enough, come down with pre-mature cataracts.”
CEOCFOinterviews: Are there
any new markets developing?
Dr. Cohen: “The
new areas that are most exciting are the security areas, security systems or security
inks. We manufacture a number of security inks. We offer five different color ink which
can be over-written by other colors. One cannot see the message underneath them without an
IR reader an ideal system for hidden bar codes. These inks are used in transparent credit
cards. The inks look like ordinary colored ink but if used in a money machine, they will
work as well as an opaque card. If you used a conventional colored dye, it wouldn’t
work because infrared light would be penetrating the card."
CEOCFOinterviews: What
are the advantages to using transparent over opaque dye?
Dr. Cohen: “One
of the advantages is aesthetic, the credit card people like to see these transparent,
dramatically different, types of cards. In England right now there are
many
transparent cards containing our dye. A counterfeiter who might want to counterfeit the
card and use a green dye instead of our near infrared dye can make the visually equivalent
but it will not work because it is not blocking the infrared.
One of the areas that we anticipate business growth is in ink for ‘labels’. The
large pharmaceutical firms are concerned about other people ripping off their products by
putting the logo of the company and the identity of the drugs on packaging but using cheap
counterfeit drugs. If they could get a quick scan of authenticity by looking at the label
and read it as either counterfeit or real, then they will know immediately that they have
a problem with those batches of material.”
CEOCFOinterviews: How
long have you been working on the security market?
Dr. Cohen: “We’ve
been working for about a year and we have had some penetration mostly in the area of
credit cards. We think that we can expand into things like personal identification cards,
labeling and official documents. "
CEOCFOinterviews: Do you see that as someday being just as beneficial to you as your
current markets?
Dr. Cohen: “Yes,
I think that market is growing. We are
potentially not a big company based upon laser protection and welding but with the advent
of these security features; we think that we can grow rather rapidly. We have gotten a
good beginning.”
CEOCFOinterviews: How
do you market your products?
Dr. Cohen: “We use some outside vendors for
specialty areas like imaging who sell our dyes. Most of the new business that comes in is
through the Internet. We have a website which pops up if any one types in the words
“infrared dyes”, “infrared absorption” or “infrared
problems”. The customer enters our website to see what we have to offer and they get
in touch with us to tell us what their problem is. We spend a good deal of time on the
phone with them and recommend possible solutions. "
CEOCFOinterviews: So the Internet
has become a key marketing tool.
Dr. Cohen:
“Yes, you could say that the Internet is a market development tool for us. Any one
that has an infrared problem will generally go to the Internet to see if someone is
available to help them. A large number of our customers come through the Internet and
we’ve never lost a customer. Every customer that we have started with and accumulated
is still with us.”
CEOCFOinterviews: Are your customers mostly manufacturing companies?
Dr. Cohen: “Yes,
we don’t really want to get into competition with a customer. We would rather sell
them the dye than do any manufacturing for them. We will do the formulation just to show
that our dye works, but then we will then turn it over to someone who specializes in
formulation and injection molding if there is a large amount of material to be made.”
CEOCFOinterviews: Where
can your customers be found?
Dr. Cohen: “We
have customers all over the world; in Taiwan, Japan, Switzerland, Germany, and the United
Kingdom, you name it; we are gong to be introducing some product down in Brazil soon. It
is remarkable how you can do global business with the email and the Internet.”
CEOCFOinterviews: What
is your next challenge?
Dr. Cohen: “We
are always sensitive to our current customers. We want to keep them but the new markets
will be coming through with the security applications. We worked in credit cards; we would
like to do some work in labeling and printing and even conductive plastics. We have the
capabilities to work with some of the phosphors that we could incorporate into our dyes as
well. We apply this to work on tracers. These are of value in the manufacture of massed
produced products like ammonium nitrate. For instance, small amounts of material can
identify the manufacturing source of ammonium nitrate; of great values if it was a found
to be a component of an explosive. All of those things that have to do directly or
indirectly with security are of interest to us.”
CEOCFOinterviews: So that is where your future growth will come from?
Dr. Cohen: “Yes.”
CEOCFOinterviews: Are the products that you sell created through R&D or
purchased?
Dr. Cohen: “All
of the products that we now sell were created with our own R&D. More recently we have
built up the R&D staff. We depend very heavily on our own R&D; on knowing the
literature and what’s going on, so if something ‘hot’ comes up we can jump
on it as well.”
CEOCFOinterviews: Are your products protected by patents?
Dr. Cohen: “It
is an interesting question. We debate that question all the time. We would rather keep
these things secret than reveal them in patents because a small company like us cannot
protect themselves from somebody who infringes on a patent. You have to go through a long
legal procedure; it is very costly. When we develop new dyes, we would prefer before we
sample them to a customer, to have the customer sign a non-analysis agreement so that he
cannot get an insight into the structure of the dye. All of our customers sign the
agreement. I suppose this policy will be reviewed from time to time, especially if a
significant development comes along which warrants protection.”
CEOCFOinterviews: Are there any other application for your dyes that we haven’t
covered?
Dr. Cohen: “There
are other application for these dyes, such as in computer to plate technology and
printing. If you take an image like a photograph and digitalize the information, feed it
into a computer, the computer then feeds it into a laser and then the laser scans a plate
on a printing press; the image comes onto the plate inside of about ten minutes. You dust
off the plate and start the flow of paper and ink. You can start printing 100 thousand
copies, without going through all of the liquid silver emulsion development work to make
printing plates. This is an interesting area, which has been around for a number of years
and is just now beginning to show evidence of life.”
CEOCFOinterviews: Is
that a field that is cost prohibited?
Dr. Cohen: “I
think that the dyes that we would sell into that field are inexpensive enough so that they
could be used widely. We are just waiting for them to catch up with us.
CEOCFOinterviews: In closing, what would you like to say to your shareholders as
well as potential investors?
Dr. Cohen:
“I would like to thank our shareholders for having the patience to hold on to
their stock and wait for the price to rebound. Back in 1992-93, the stock was down to a
couple of pennies a share and now it is up to 70-80 cents a share; it hit 94 cents not too
long ago. I think that we have reached another plateau and hopefully the price will
appreciate from there. Thank you stockholders for
sticking with us!
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