Raisebook

Next Generation Anti-Counterfeit Solution. Source IP in Use by the State of Israel.
Security Matters
Security Matters
ASX:SMX
  • Security Matters is the next generation solution to address the anti-counterfeit, brand protection, client liability and track and trace markets.
  • The Source IP is proven and is already in use by the State of Israel
  • Highly aligned board, management team and development team with extensive commercial and technical experience
  • The technology team is comprised of five full time PhDs in chemistry and physics with expertise in the fields of nuclear physics and applied chemistry of more than 20 years, as well as engineers with experience in the plastics and electronics industries.
  • Raisebook is accepting maximum bids of $10,000 per entity
  • Funds raised will allow the company to advance development of its technology and pursue its strategy
Raise Amount
$5,000,000
Offer Price
$0.2000
Closes
Sep 4, 2018

Security Matters has developed a suite of integrated solutions to solve both authentication and track and trace challenges in order to uphold supply chain integrity, and provide quality assurance and brand accountability to producers of goods.

It provides these solutions through the commercialisation of the initial technology of tracking and tracing materials by observing and identifying Markers (the Source IP).

The Source IP initiated from the Soreq Nuclear Research Center (Soreq), an Israeli Government research and development institute for nuclear and photonic technologies under the Israeli Atomic Energy Commission.

The Company implants an ‘embedded marker’ within raw materials or finished goods and uses a unique reader in order to identify that marker.

This allows the Company to track and trace the authenticity of materials in any medium (solids, liquids or gases) throughout an entire production process.

The company’s technology is compatible for many industries, and it is in the midst of pilot programs, early stage trials and negotiations with several industry leaders across multiple industries for the adoption of a company developed solution.

The company believes that there is a real market need for a product authentication, supply chain integrity, brand accountability and quality assurance technology used in authentication and track and trace processes that cannot be removed or discovered by third parties.

The Offer

RM Corporate Finance is the Lead Manager for the IPO of Security Matters Limited (ACN 626 192 998).

Security Matters Limited is an Australian company which was incorporated on 16 May 2018.

The Company intends to settle the acquisition for all of the shares in Security Matters Israel immediately prior to completion of the offer. Immediately prior to completion of the offer, Security Matters Israel will become a wholly owned subsidiary of the company.

The Company is undertaking an Offer of 25,000,000 (and up to 32,500,000 shares) at $0.20 per Share to raise $5 million with the capacity to go up to $6.5 million before costs.

Raisebook is accepting bids of between $2,000 (minimum) and $10,000 (maximum) per entity.

The offer of the securities are made in the Disclosure Document, a copy of this document can be obtained by clicking on the "ACCESS DISCLOSURE DOCUMENT" button on this page.

Anyone who wants to acquire the securities will need to complete the application form that will be in or will accompany the Disclosure Document.

There are risks associated with an investment in the Company. Security Matters Israel’s business operations are still relatively early stage and its future prospects are uncertain.

Before making an investment decision, potential investors should read the Disclosure Document entirely, and seek professional financial advice.

Key Offer Details

Min. Subscription ($5M) Max. Subscription ($6.5M)
Offer Price per Share $0.20 $0.20
Shares on issue before the Offer 55,500,041 55,500,041
Shares available under the Offer 25,000,000 32,500,000
Performance Options to be issued to executive Directors under Share Option Plan 15,000,000 15,000,000
Other Options allocated under Share Option Plan 8,805,864 8,805,864
Options to be issued to the Lead Manager 5,227,541 5,602,541
Options to be issued to certain Existing Shareholders 4,000,000 4,000,000
Shares to be issued to Noteholders 11,999,959 11,999,959
Gross Proceeds from the Offer $5 million $6.5 million

At completion of the Offer:

Min. Subscription ($5M) Max. Subscription ($6.5M)
Total number of Shares on issue 92,500,000 100,000,000
Total number of Options (including Options to Existing Shareholders and Performance Options) on issue at Completion of the Offer 33,071,157 33,446,157
Total number of securities on issue at Completion of the Offer 125,571,157 133,446,157
Indicative market cap of the Company at the Offer Price $18,500,00 $20,000,000

Important Dates

Closing Date: 4 September 2018
Expected Allotment Date of Shares: 11 September 2018
Shares expected to trade on ASX (on a normal settlement basis): 18 September 2018

Key Strengths

Innovative Technology

  • The company's technology is proven for the marking and identification of products.
  • Can serve various manufacturers' needs: brand protection, authentication, track and trace for supply chain integrity and quality assurance.
  • Has the potential to disrupt several industries and enable manufacturers and brand owners to truly protect their products.

Growing market segment and large addressable market

  • Counterfeit products and materials are a constant concern to brand owners — US$1.77 trillion is the estimated value of global trade in counterfeit and pirated goods in 2015, according to the OECD.
  • Accordingly, the anti-counterfeiting industry is growing as corporates and governments invest resources in protecting goods and intellectual property.
  • The global spend by governments and corporate entities combating counterfeit products and materials is expected to reach US$284 billion by 2020.

Experienced development tech team

  • The company's technology team is an experienced team of professionals, with a proven track record in the industrial sector and governmental agencies.
  • The technology team is comprised of five full time PhDs in chemistry and physics with expertise in the fields of nuclear physics and applied chemistry of more than 20 years, as well as engineers with experience in the plastics and electronics industries.

Experienced Board & Management

  • The Board is comprised of Directors with a strong understanding of the company's technology, experience leading emerging technology companies from start-up to large scale profitable companies and two directors with ASX board experience
  • Head of Advisory Board, Major General Ami Shafran provides technology and business development experience, and is the Chairman of Elsight (ASX: ELS), a successful Israeli technology company listed on the ASX.

Cross segment activity

The company's technology is applicable for several industries and the company is currently active or in negotiations with corporates in the following markets: plastics, electronics, precious metals, raw materials, access control, and agriculture.

The growth potential of the company is derived from the ability to provide an adapted solution for many market segments, based on a unified technology solution. This feature also serves to mitigate the risk of slow adoption or competition in one of the sectors.

Collaborative relationships with companies

The company's strategy is to create strategic partnerships with market leaders across its main segments of activity. It is in advanced negotiations with several market leaders for collaboration agreements.

Karift Industries

In July 2017, Security Matters Israel entered into a collaboration agreement with Kafrit Industries, a leading global plastic compound and Masterbatch manufacturer. Through this partnership the company has access to sell to leading packaging and the plastic products manufacturers.

BASF

Security Matters Israel is informally engaged in the examination of several applications with the Performance Chemicals division of BASF, is a leading chemical company with more than 115,000 employees globally.

The innovation team of BASF’s Performance Chemicals division is evaluating different use cases in which Security Matters’ technology could bring value to BASF and the parties are currently investigating these use cases to choose the first proof-of-concept.

Perth Mint

In May 2018, Security Matters Israel entered into a Memorandum of Understanding with The Perth Mint for the mutual development of a marking and reading solution for the gold mining and refining sector incorporating the Company’s technology.

The next stage in the process is for the parties to enter into a legally binding agreement.

Intellectual Property

In January 2015, Security Matters Israel entered a licence agreement with Isorad Ltd (a company wholly owned by the State of Israel with rights to exclusively commercialise the Soreq Research Center technology for civilian uses) to license the Source IP and commercialise and develop the technology further.

In addition to trade secrets, the company has protection over its products and technology, underpinned by a combination of Patent Applications and trademarks.

Security Matters Israel has submitted Patent Applications in key markets, affording certain competitive protections. Security Matters Israel has filed 12 Patent Applications which are at different stages (three independently and nine together with Soreq).

The company, through its team and accumulated work, holds the know-how for end to end brand protection solution: from leading chemists for the marking phase, through to experienced physicists for the identification technology and algorithm specialists. The three elements combined, provide a stronger protection for the technology and the solution provided to customers.

Please note, whilst the above lists the key strengths of the company, there are also key risks of an investment in the Company. There is no guarantee the Company will enter into binding agreements with The Perth Mint and BASF. For a detailed explanation of risks, please refer to Sections 1.3 and 5 of the Disclosure Document.

Company’s Business Activities & Model

Security Matters provides a turnkey solution to solve both authentication and track and trace challenges in production and post-production processes, while at the same time striving to uphold supply chain integrity and provide quality assurance and brand accountability to producers of goods.

The company has commercial arrangements in place in Australia, US, Canada and Europe, and ultimately plans to provide its services to the global marketplace.

The company targets leading brands and manufacturers (instead of targeting direct consumers) in order to create a new market standard for brand authentication and supply chain integrity.

The company has two main features of its business model:

  1. The company as a business to business company; and
  2. The company offering a ‘white label’ solution.

The company’s pricing is based on the perceived value proposition of the company’s solution for the customers. This generally includes three stages to the pricing model:

  1. set up fee (for initial consultations);
  2. marker implementation fee (typically on a per item or per kg basis); and
  3. service fee (for reading, blockchain services and other support services)

Industry Overview

Market size of authentication technology

The global spend by governments and corporate combating counterfeit is expected to reach US$284 billion by 2020. The worldwide market for authentication technology is a major share of such expenditure.

Of the total market for authentication technology, the worldwide market for security printing by way of barcodes, holograms and special inks is expected to grow from US$20.5 billion in 2010 to US$36.6 billion by 2020. The market is expected to grow by a Compound Annual Growth Rate (CAGR) of approximately 5.9% during the period from 2015 to 2020.

Market size of track and trace technology

In 2015, the marketplace for passive and active RFID tags was approximately US$10.1 billion. The market for RFID tags is the fastest growing market and is expected to grow at a CAGR of 16%.

The greatest industry that is affected by RFID tags is the pharmaceuticals and healthcare industry, which is projected to be the fastest-growing end-use sector in the next five years.

This industry is impacted the greatest, mainly due to regulation requiring complete transparency as to the source of every drug sold in the US.

Use of Funds

The funds raised will be used for business development and sales in order to drive revenue growth for the existing solutions provided by the company’s wholly owned subsidiary, Security Matters Israel.

Funds raised will also be used to continue the commercialisation of the company’s technology through developing a new proprietary Reader, bank of Markers and a blockchain platform.

The Directors believe that the Company’s current cash reserves plus the net proceeds of the Offer will be sufficient to fund the Company’s key objectives as set out in the Disclosure Document through to August 2020.

This deal closed on September 04, 2018