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Report

Teaser, summary, work performed and final results

Periodic Reporting for period 1 - FELTWOOD (The advanced eco-technology manufacturing of materials as a way of competitiveness for Europe\'s industrial business)

Teaser

Summary

WHAT IS THE PROBLEM/ISSUE BEING ADDRESSED?
The globalization of the economy resulted in EU imports exceeding â‚¬10 billion last year, two-thirds of it coming from China. Two Asian suppliers also held second and third positions: Vietnam and Indonesia. Increasing furniture imports from Asia, with the recent crisis further accelerating the process, is a matter of fact. In some European countries, even large markets, it has become an established phenomenon and in others, where the price of Asian products is lower, penetration is still marginal in terms of value but increasing. To retrieve and retain added value in Europe, to improve our efficiency is a must (Market challenge).
Within this framework, being our duty to maintain the competitiveness of the furniture industry, the European industry knows that the main factors to keep up with external threads are innovative production technology and improved quality along with a focus on production costs and price fluctuations control on raw materials.
Feltwood has found a business opportunity on reducing the prices of raw material by substituting Wood-based materials for a cheaper ecological material. A quick overview of a materials composition of a piece of furniture shows us that 57% of the furniture is made of wood resulting on a relevant business opportunity even though, as pioneers on this new technology, there are important risks involved.

WHY IS IT IMPORTANT FOR SOCIETY?
EU producers compete at global level with foreign manufacturers that are not subject to equally stringent requirements; this penalizes competitiveness of European companies both outside and within our borders. It is important for the welfare of European society to have a strong economy, and for it to be strong it is necessary to defend the European productive fabric of external agents.

WHAT ARE THE OVERALL OBJECTIVES?
An innovative SME, Feltwood Ecomateriales, S.L., has developed an advanced technological process that imitates how nature itself builds trees. The objective is to supply European furniture companies with a novel material, substitute of wood, to increase their market competitiveness, because of a remarkable reduction on raw material costs. ItÂ´s widely recognized that new technologies, that can economically transform biomass resources into commercially, advanced and viable raw materials, are both needed and looked for.

Work performed

The specific objectives to perform during Phase I were:

1. To prepare a technical feasibility study to optimize the mass production of FELTWOOD and a risk evaluation.
2. To elaborate a commercial feasibility study including a business plan and a Freedom-to-Operate analysis.
3. To carry out a work plan including the economic projections and financing strategy.

Work performed from the folllowing points of view have been:

1. TECHNICAL FEASIBILITY STUDY

- Feltwood has been able to design, develop and implement, from a teoretical point of view, a massive production process, thatÂ´s divided into different phases able to convert organic agricultural residues into the new feltwoodÂ´s material ( substitute of Wood !!). Feltwood has goaled this technical milestone with the collaboration of a partner called Domen Ingenieriam ,SL (https://www.dolmeningenieria.com/) and own workers.

- Feltwood has defined a technical risk assessment that lists a forecast of mishaps during the development of our business, as well we have established the probability of these occurred and a contingency plan to mitigate the effects of them.
The results of the risk assessment are included in the feasibility study report, which also describes measures to prevent and mitigate potential negative impacts and contingency plans.

2. COMMERCIAL FEASIBILITY STUDY

- Feltwood has been able to study thorouhhly the market size and growth-rate from a general point of view and in particular, we have focussed initially on France, Germany, Italy and Spain, that are our potential markets when we are to invest.
We have tried to define a list of leading competitors from a general point of view, focussing on our particular market segments in our geographical region. There are no comparable solutions to FeltwoodÂ´s solution in Europe and neither the rest of the world. None of the global existing alternatives that Feltwood have better technical. properties

- We have defined a pricing strategy that would be the result of balancing three key commercial objectives and therefore these are the incomes of our business.
- We have defined main customers will be regional manufacturers located in Europe and South America.
- We have developed a SWOT analysis that identifies an feltwood\'s strengths, weaknesses, opportunities and threats.
- With the aim of understanding the level of competition within our targeted segment of the wood industry, we have developed the Porterâ€™s Five Forces Analysis.
- We have developed a list of barriers which can edinfies if itÂ´s easy to enter in the market, for would-be new players in this market.
- During this period Feltwood has created a stakeholders network such as SAT Hermanos MenÃ©, SL, Primaflor, SL, Grupo RiberEbro, sl.
- Feltwood has designed the main actions to implement our penetration strategy will be: (1) Pilot trial (2) First batch of ecological material for manufacturers (3) Dissemination and communication.
- We have prepared a preliminary Commercial Plan covering the first five years after the launch of the FELTWOOD industrial process-
- The IPR strategy has been defined and the first result has been got, Feltwood has got the patent for the industrial process yet and so itÂ´s freedom to operate all over the world.
- Finally, We have performed an accurate expansion timeline indicating a route-to-market, penetration/marketing strategy, market inception, and full-scale commercialization.

3. ECONOMIC-FINANCIAL FEASIBILITY STUDY
- We have defined a Pricing table talking with our potential clients (Wood panel manufacturers)
- We have defined a costs study for installing our industrial process in potential clients.
- We have developed a five years sales forecast thatt includes an estimation of fixed cost, variable cost, sales, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and Return of Investment (ROI) rate. We have considered for this calculation two different scenarios related to the idea of:

1. Feltwo

Final results

\"There are three principal goals got during the executing of this Project.

1. We have been able to defined the industrial proceess to convert agricultural residues into the new FeltwoodÂ´s material subtitutes of Wood. ItÂ´s demostrated with the proposal of patent (nÂº reference: ) that Feltwood has got.
2. We have established a comercial network with our future clients, who have told us the need for this new material inmediately to substitute wood panel. Nowadays this raw material is being using to produce piece of furniture, so can you image in the following years to substitute wood for our material? The social impact will be impressive in the proper sector and end-users in the society.
3. We have much more commercial information about the potential regions where Feltwood prentend to start to commercialite our solution in a couple of years. This \"\"race\"\" allows Feltwood to consolidate 6 employments (direct Jobs) and to hire another 3 in the year 2019. We have not calculated indirect Jobs, but we know itÂ´s creating new ones because we are receiving feedbak information from our future suppliers, collaborators and clients that it is.\"