We have the pleasure of providing an update to you on our operations and activities since the AGM in Dec 2022.
We have been working furiously to build tangible value in our company, deliver first revenues and progress our commercialisation opportunities across our portfolio of technologies. All of this is to bring the company closer to the IPO that we understand many of you have been eagerly anticipating.
Work at our Mt Waverley production facility has continued apace with the employment of a second process operator to manufacture large scale quantities of our X3 materials for use in sensing applications. In what is very exciting news, we are pleased to report that we have dispatched our first shipment of sensing geotextiles which represent the company’s first revenues. This is a huge milestone in any startup company, and to achieve this in a field as complex as advanced materials for large scale sensing is a major milestone in the company’s development. We are now in the process of scaling up production further to meet our customer’s demand for tonnage quantities over the next 8 months.
Our work on our energy storage and supercapacitors has continued and we have scaled up production of our electrode materials from grams per week to over 1kg / week. This represents an enormous improvement and will accelerate our testing and device design and prototyping work with CapXX. Our relationship with CapXX has continued to mature and we are regularly exchanging samples and conducting joint meetings as we work toward commercial examples of supercapacitor devices.
Earlier this year we signed a Collaboration Framework Agreement (SmartFlooring) with the world’s largest flooring manufacturer, US-based Mohawk Industries for the development, marketing and sales of smart flooring products. The first stage of this work is a detailed market analysis that will drive the design parameters for the products we develop jointly with them. The agreement provides for the establishment of a Joint Venture to manufacture and sell smart flooring products into global markets. This collaboration represents an extraordinary commitment to Ionic’s sensing technologies and one which demonstrates the confidence of some of the world’s largest companies in the potential for graphene technologies.
On other sensing applications, we have also started a joint development project with one of the world’s largest rubber and automotive products manufacturers, German company Continental AG. The project involves development of advanced rubber products incorporating Ionic’s sensing graphene surfaces to create“smart” products, which can actively detect wear and tear in rela time by measure strain and heat. As with Mohawk, this collaboration demonstrates a clear pathway to market for our technologies and carries critical validation for the technologies and the way they can be incorporated into real-world, large-scale applications.
Following our acquisition of Imagine Intelligent Materials in early 2022, we have been working tirelessly to incorporate those technologies into our own story and technology development pathway. This has taken a bit longer than we anticipated, audit requirements and corporate administration hurdles proving to be greater than we had anticipated. However, we are pleased to report that we are now nearing the end of that process and look forward to getting back on track with our designs on an IPO.
Ionic’s Board has identified significantly better opportunities in overseas markets for companies like Ionic, and have decided to target a listing on the Toronto Ventures Exchange (TSXV). We have the fortunate example of another Australian company, Graphene Manufacturing Group (GMG) to help guide us in this endeavour – GMG is an early revenue, Brisbane-based company with a portfolio of technologies focused on energy storage and thermally conductive coatings. Their degree of technology readiness is similar to Ionic’s and we believe serves as an excellent point for comparison for Ionic. GMG’s market capitalisation is currently over $170 million, and it previously traded at over $500 million in 2021. This compares to ASX-listed Australian graphene companies which generally hover between $30-120 million. So, based on this comparison, we aim to achieve significantly better return for our investors by listing the company overseas. We do not envisage manufacturing or operations relocating. To date, we have progressed our preparations as far as appointing legal counsel and seeking corporate advisory services in Canada. We will shortly begin preparations for presentations and roadshow to Canadian parties, in parallel with plans to prepare everything in Australia that we will need to support the process.
As part of this corporate development, we are also keen to ensure that we cater to our existing shareholder base who may be interested in participating in any capital raising associated with the IPO preparation. To that end, we will be making an announcement about an opportunity for existing shareholders in the coming weeks, so please stay tuned. Our Executive Chairman, Peter Armitage provides more detail on this in the letter below addressing the state of your company and the forthcoming opportunity.
Letter from the Ionic Chairman
I write to you to inform you of our impending small capital raise prior to our proposed listing on the Toronto Stock Exchange Venture Exchange (TSXV) later in the year.
Ready to list
Your directors have, for some time, resisted the urge to list the Company based on self-interest but have preferred to seek some maturity of the business so that its foundation is solid, proven and has a demonstratable future. In 2021 we sold our water filtration IP to Clean Teq Water for $2m which was commercial validation of our graphene technology. In March this year we issued our first invoice (revenue) for using our own proprietary X3 graphene coating technology to create sensing geotextiles for leak detection in infrastructure projects such as dams and water tanks.
We also own 25 Patentsand a raft of technical know-how and trade secrets that underpin our technologies such that they cannot be replicated, and we can use them to support our ongoing commercialisation partnerships.
These two important achievements – the commercial validation and the scientific exclusivity of the IP – prepare the Company for listing and are seen as the first step in derisking and setting a foundation for growth.
The reason for the capital raise
Our last capital raise was in 2020 when we raised $2m which is a considerable time ago when you consider the history of most startup companies. Of course, we have been assisted by the sale of the water filtration IP and by various government grants and incentives. Prior to our proposed listing in Canada, we would like to give an opportunity to all shareholders to increase their holding by way of a Shareholder Purchase Plan (SPP). The SPP will be announced soon, by personal notification. You will have a right to subscribe for shares up to a value of $30,000 with a minimum of $2,000.
The reason for the price
For moderately young, unlisted companies such as us it is quite difficult to assess a value of our shares and usually a value is agreed through bargaining with a broker or other capital raiser and is arrived at after considering several factors. These can be market conditions, perception of our sector (graphene), desperation of the company, judgement of management ability, “gut feel” etc.
In selecting a price of 0.03 cents per share plus one free option we have given a notional value tothe Company of $40m. This compares with Graphene Manufacturing Group Ltd (GMG) $170m in Canada and a couple of small graphene companies on ASX with about $50m capitalisation.
The reason for the choice of TSXV
Your board of directors researched the various world stock exchanges to find the most appropriate for Ionic to give it the best opportunity for growth in its next phase and to give it international recognition for its leading-edge technology. It was decided that Canada was the first choice for two compelling reasons. The first being that Canada attracts interest from home, USA, and Europe and the second being that we would be following GMG which is an Australian graphene company that has successfully listed on TSXV. This experience was to take an enterprise value of $44m on listing April 2021 to a market capitalisation ofnearly $500m six months later. While there is no guarantee that Ionic will beable to emulate this experience the best chance will be to follow in their footsteps.
The state of theCompany – future
We have come a long way since 2014 and the Company is a leader in graphene technology validated by the quality of our partners. We have a new factory, new and independent laboratory with world leading scientists. We have first revenues with a backlog of orders. We are ready for listing and have appointed Canadian lawyers and advisors familiar with the successful GMG float.
And finally, we would like to thank you, investors, for your patience during our maturity stage and hope that you will participate in the SPP and support us in an exciting future.
Regards,
Peter Armitage
Executive Chairman