EarthShell warns of funding problems

May not meet payroll, Lutherville firm says

December 14, 2006|By Paul Adams | Paul Adams,Sun reporter

EarthShell Corp., a Lutherville-based maker of biodegradable plates and bowls, said yesterday that it might not be able to meet payroll or pay other bills after tomorrow unless the company can secure more funding from investors.

The 14-year-old company said last summer that it was close to turning a corner as a result of new deals with major retailers, but lack of funding has continued to hamper its plans to become self-sustaining by the end of next year.

EarthShell said in a statement that it continues to pursue potential investors but does not have funding commitments to carry it past week's end. The company has about 10 employees.

The news comes just months after Vincent J. Truant, EarthShell's chairman and chief executive officer, expressed optimism that the company was about to make a breakthrough after spending more than a decade and hundreds of millions of dollars trying to establish a niche product. The company makes compostable, throwaway dishes, which are made from potatoes, corn and ground limestone.

A variety of retailers recently committed to carrying Earth- Shell's products, including Wal-Mart Stores Inc. and upscale grocer Wegmans. It also was in merger talks recently with its manufacturer, Lebanon, Mo.-based ReNewable Products Inc., and had retained an investment banker to help it raise more capital.

A spokeswoman for the company could not be reached late yesterday.

The company said that when Truant took over as chief executive officer in September last year, he and the board had "been assured" that long-term funding would be available to accomplish a turnaround plan. However, the funding never materialized, and executives committed personal funds to maintain operations, starting Dec. 1.

"We are in active discussions regarding potential funding opportunities to enable us to complete the successful turnaround and workout for the company," Truant said yesterday.

The company's business plan included distributing its products through its two licensees, ReNewable Products Inc. and EarthShell Hidalgo. The company said those manufacturers would continue to sell EarthShell plates and bowls under a master license agreement if EarthShell is unable to sustain operations.

EarthShell has come close to success over the years, only to see major deals fall apart despite strong interest from environmentally conscious consumers.

In one high-profile disappointment, the company began working in 1997 with McDonald's to manufacture foam clamshells for the Big Mac. But the deal fell apart in 2003 after EarthShell's manufacturing partner, Sweetheart Cup Co., was sold.

An agreement with a replacement manufacturer also later dissolved. It also was hampered over the years by management changes.

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