Tag Archives: KolourOptik™ technology

Nanotech Security Corp. stock declining but Cantor Fitzgerald Canada analyst Ralph Garcea gives the stock a buy rating

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Linda Rogers has written a Feb. 29, 2016 article about a Vancouver-based company rather perturbingly titled ‘What’s Propelling Nanotech Security Corp to Decline So Much?‘ for Small Cap Wired,

The stock of Nanotech Security Corp (CVE:NTS) is a huge mover today! The stock is down 3.23% or $0.04 after the news [Nanotech Security announced its first quarter fiscal 2016 results in a Feb. 29, 2016 news release], hitting $1.2 per share. … The move comes after 7 months negative chart setup for the $68.48M company. It was reported on Feb, 29 [2016] by Barchart.com. We have $1.06 PT which if reached, will make CVE:NTS worth $8.22 million less.

The Feb. 29, 2016 Nanotech Security news release (summary version) highlights the good news first,

  • Revenue of $1.5 million consistent with the same period last year.  Security Features contributed revenues of $569,000 largely from development contracts and Surveillance delivered $940,000.
  • Gross margin improved to 50% up from 34% in the same period last year.  The improvement reflects the increased mix of higher margin Security Features revenue.
  • Renewed a $1.0 million banknote security feature development contract. The Company successfully renewed the third and final phase of a banknote development contract with a top ten issuing authority to develop a unique Optically Variable Device (“OVD”) security feature for incorporation into future banknotes.  The final phase is expected to generate revenues of approximately $1.0 million.
  • Signed new $3.0 million KolourOptik™ banknote development contract. The Company signed a new three phase development contract to use the KolourOptik™ nanotechnology to develop a unique OVD security features with another G8 country for incorporation into future banknotes.
  • Strategic meetings with large international banknote issuing authority.  The Company continues to work with a large international banknote issuing authority to deliver a significant volume of colour shifting Optical Thin Film (“OTF”), and partner with our KolourOptik™ technology.  Management continues to devote a significant amount of time and resources in advancing these opportunities.
  • Signed a Memorandum of Understanding (“MOU”) with Hueck Folien, a European manufacturer to supply OTF to the banknote market.  The MOU contemplates an operational agreement to collaborate in the volume production of a colour shifting OTF security feature.  The OTF product is anticipated to initially be used in banknotes as threads and then expand into other markets in the future.

Doug Blakeway, Nanotech’s Chairman and CEO commented, “These two development contracts are material achievements.  Issuing authorities are paying us – something not common in the industry – to design unique banknote security features with our OTF and KolourOptik™ technologies.”  He further added, “Nanotech’s team has scaled the Hueck Folien production facility to where we believe together we can provide the initial volumes demanded by a top-ten issuing authority.  Our relationship with Hueck Folien continues to funnel security feature opportunities to Nanotech.”

The company’s sadder news can be found in their seven-page Feb. 29, 2016 news release (PDF). Their net earnings for the final quarter of 2015 and 2014 were both losses but in 2014 their loss was (931,271) and in 2015 it was (1,746,335). Still, the company’s gross profit from revenue for the same time periods was 50% in 2015 as opposed to 34% in 2014 despite slightly less revenue in 2015.

Assuming I’ve read this information correctly, Nanotech Security does seem to be in a fragile situation but that can change. After all, IBM was in serious trouble for a number of years during the 1990s when there was even talk the company might go bankrupt. As far as I’m aware, IBM is no longer in imminent danger of disappearing from the scene. *ETA March 9, 2016: It seems I used the wrong example if Robert X. Cringley’s March 9, 2016 article ‘What’s happening at IBM? (It’s dying)‘ for Beta News is to be believed.)* Getting back to my point, companies do go through cycles and it can be difficult to determine exactly what’s happening at some of the earlier stages.

Certainly, Cantor Fitzgerald Canada analyst Ralph Garcea has an optimistic view of Nanotech Security’s prospects according to a March 1, 2016 article by Nick Waddell for cantech letter,

Nanotech Security (TSXV:NTS) offers a better and more secure solution in multiple market segments that together are worth billions of dollars per year, says Cantor Fitzgerald Canada analyst Ralph Garcea.

This morning [March 1, 2016], Garcea initiated coverage of Nanotech with a “Buy” rating and a one-year price target of $2.50, implying a return of 110 per cent at the time of publication.

…

Garcea notes that Nanotech has already created solutions for the consumer electronics, brand identification and currency segments. He points out that one of the company’s biggest differentiators is that its solution can be embedded onto almost any material. This is important, he says, because it means that security can be embedded into places it previously could not go, such as directly onto a pharmaceutical pill.

…

Shares of Nanotech Security closed today [March 1, 2016] up 2.5 per cent to $1.22.

I have written about Nanotech Security frequently and believe the most recent is a Dec. 29, 2015 posting. For those unfamiliar with the company’s technology, it’s based on the structures found on the blue morpho butterfly. The holes in the butterfly’s wings lend it certain optical properties which the company mimics for its anti-counterfeiting technology.

One final comment, I am not endorsing the company or any of the analysis of the company’s financial situation and prospects.

Vancouver (Canada) -based NanoTech Security and its tireless self-promotion

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First featured here in a January 17, 2011 posting about proposed anti-counterfeiting measures based on the structures present on the Blue Morpho butterfly’s wings, NanoTech Security is the subject of a profile in the Vancouver (Canada) Sun’s Dec. 28, 2015 Technology article by Randy Shore.

They’ve managed to get themselves into the newspaper without having any kind of real news, research or business, to share. As is so often the case, timing is everything. This is a low news period (between Christmas and New Year) and the folks at NanoTech Security got lucky with a reporter who doesn’t know much about the company or the technology. When you add in low public awareness about the company and its products (you couldn’t do this with a company specializing in a well established technology, e.g., smartphones), there’s an opportunity.

Getting back to Shore’s Dec. 28, 2015 Technology article in the Vancouver Sun,

Landrock [Clint Landrock], the chief technology officer at Burnaby-based [Burnaby is a municipality in what’s known as Metro Vancouver] Nanotech Security Corp., has spun off his SFU [Simon Fraser University] research to found the firm, which is developing nano-optics for the global battle against counterfeiters.

Colour-shifting holographic images, used as counterfeit protection on many banknotes, use technology that has been around for more than 35 years and they are increasingly easy to reproduce. Talented hobbyists can duplicate simple holographic features and organized criminals with deeper pockets can reproduce more sophisticated features with the right equipment.

…

Nanotech Security hopes to take a quantum leap ahead of forgers.

The detail and colour reproduction possible in Nanotech’s KolourOptick are dramatically better than the holographic images used on banknotes.

“We can improve a lot on those, by making the image a lot brighter, have a lot more detail and make it easy to view,” said Landrock. “When you try to fake that, it’s much more difficult to do and when you see a fake it looks fake.”

“Right now, the fake holograms often look better than the real thing,” he said.

Tiny structuresWhat [sic] Landrock found on the wings of the Blue Morpho was a lattice of tiny treelike structures that interact with light, selecting certain wavelengths to create a bright blue hue without pigments.

This ‘origins’ story includes a business mastermind, Doug Blakeway, and the researcher (Bozena Kaminska) under whose supervision Landrock did his work. Blakeway provides a somewhat puzzling quote for Shore’s story,

“I love nanotechnology, but I really have not seen a commercialization of it that can make you money in the near term, [emphasis mine]” said Blakeway. “When this was initially presented to me by Bozena and Clint, I immediately saw their vision and they were only after one application — creating anti-counterfeiting features for banknotes.”

The three formed a private company and licensed the patents from SFU, which receives a three per cent royalty on sales of the technology created under its roof. …

I am perplexed by Blakeway’s ” … I really have not seen a commercialization of it that can make you money in the near term” comment. There are many nanotechnology-enabled products on the market ranging from coatings for superhydrophobic waterproofing products to carbon fibre-enhanced golf clubs to nanoscale chips for computers and components for phones to athletic materials impregnated with silver nanoparticles for their antibacterial properties (clothes you don’t have to wash as often) to cosmetics and beauty products, e.g., nano sunscreens, and there are more.

NanoTech Security’s recently released some information about their financial status. They must feel encouraged by their gains and other business developments (from a Dec. 17, 2015 NanoTech Security news release),

Nanotech Security Corp. (TSXV: NTS) (OTCQX: NTSFF), (“Nanotech” or the “Company”) today released its financial results for the fourth quarter and year ended September 30, 2015.

Strategic Highlights from 2015

Revenue increased to $5.2 million a 131% increase over 2014. Security Features contributed revenues of $3.1 million.
Gross margin improved to 43% up from 34% in the same period last year. The improvement reflects the increased mix of higher margin Security Features revenue.
Signed two banknote security feature development contracts. The contracts are with top ten issuing authorities to develop unique optically-variable security features for incorporation into future banknotes.
Strategic meetings with large international banknote issuing authority. The Company has been approached by a large international banknote issuing authority to deliver a large volume of Optical Thin Film (“OTF”), and partner with our KolourOptik™ technology. Management continues to devote a significant amount of time and resources in advancing these opportunities.
Private Placement. The Company completed a non-brokered private placement financing of $2.6 million in equity units at $1.00 each.
Signed an amending agreement related to the 2014 Fortress Optical purchase agreement. The amendment provides that 1.5 million of the 3.0 million shares held in escrow, pending certain sales milestones were released from escrow and the remaining 1.5 million shares were returned to the treasury. The overall effect of the amendment resulted in a gain of $1.5 million and cancellation of 1.5 million shares.
Demonstrated KolourOptik™ security feature on metal coins. The Company successfully applied nanotechnology images to metal coins in a production environment at an issuing mint.
Granted five new patents expanding the growing IP portfolio. Three patents relate to the Company’s next generation nanotechnology authentication features, and two provide increased protection for OTF.

I’m curious as to how much of their revenue is derived from sales as opposed to research funding and just how much money does a 43% increase in gross margins represent? (Or, perhaps I just need to get better at reading news about *companies* and their finances.) In any event, signing two contracts and gaining interest in applying the technology to metal coins must have been exciting.

This story goes to show that if you understand news cycles, have a little luck and/or know someone, and have a relatively unknown technology or product, it’s possible to get media coverage.

*’company’s’ corrected to ‘companies’.