Helicopter view of today’s news

On a day like today, when Smol­tek’s press releases are full of details expressed in num­bers and fin­an­cial jar­gon, it is hard to see the forest for the trees. But there is a solu­tion! Let’s rise above the tree­tops to get a heli­copter view of it all. So hop into my chop­per, and let’s go up.

Tender process

In yesterday’s blog post, Håkan Persson, CEO of Smol­tek, explains that Smol­tek is a deep tech incub­at­or or deep tech ven­ture studio.

Let’s unpack that a bit.

Deep tech is a term used to describe com­pan­ies that tackle com­plex chal­lenges by push­ing the bound­ar­ies of cur­rent tech­no­logy through cut­ting-edge research and devel­op­ment. A key char­ac­ter­ist­ic of deep-tech com­pan­ies is that they require sig­ni­fic­ant cap­it­al from per­sist­ent investors, as it takes long time  to turn advanced research into com­mer­cially viable products.

A deep-tech incub­at­or or deep-tech ven­ture stu­dio is a deep-tech com­pany that uses the intel­lec­tu­al prop­erty developed through its R&D to build a port­fo­lio of com­pan­ies that will even­tu­ally be spun off. The deep-tech com­pany provides the ini­tial team, stra­tegic dir­ec­tion, and cap­it­al to get each new ven­ture off the ground. Smol­tek Semi and Smol­tek Hydro­gen are such star­tups. They are part of the port­fo­lio of Smol­tek Nan­o­tech­no­logy Hold­ing AB.

Even­tu­ally, every port­fo­lio busi­ness will be spun-off, par­tially or in its entirety, and sold to an indus­tri­al part­ner or investor. That’s the goal of an incub­at­or or  a ven­ture studio.

For Smol­tek, this has an import­ant twist. The spin-off com­pan­ies will typ­ic­ally pay roy­al­ties for the license to use our tech­no­logy and pur­chase our ser­vices. Thus, Smol­tek receives com­pens­a­tion not only in the form of a pur­chase price, but also in the form of an ongo­ing rev­en­ue stream.

The nego­ti­ated license and ser­vice agree­ment with YAGEO is an example of this. Now that YAGEO has sus­pen­ded the final­iz­a­tion of it, Smol­tek wants to find a new part­ner for Smol­tek Semi.

Smol­tek Hydro­gen is also approach­ing the point where it is rel­ev­ant to sell all or part of their busi­ness to an indus­tri­al part­ner or fin­an­ci­er. They have come a long way with their tech­no­logy devel­op­ment and will soon take the next step.

Against this back­ground, Smol­tek Nan­o­tech­no­logy Hold­ing AB plans to ini­ti­ate a sys­tem­at­ic pro­cess to find buy­ers for all or parts of one or both of the com­pan­ies. This is expec­ted to take 6–12 months.

This was the main mes­sage of the press release on the bid­ding  pro­cess.

How Smoltek will be funded

As men­tioned in yesterday’s blog post, the plan was to use the rev­en­ue from the license and ser­vice agree­ment with YAGEO to fund Smol­tek’s oper­a­tions and growth. Now that the agree­ment is on hold, Smol­tek must find anoth­er way to fund the busi­ness while work con­tin­ues to find a new buy­er as described above.

Against this back­ground, the Board of Dir­ect­ors of Smol­tek has decided to issue up to 57,685,506 new shares of SEK 0.45 each. Exist­ing share­hold­ers will have pref­er­en­tial sub­scrip­tion rights.

Smol­tek’s four largest share­hold­ers, Board mem­bers and the CEO, among oth­ers, have com­mit­ted to sub­scribe for approx­im­ately 20.4 per­cent of the shares. In addi­tion, Jin­der­man & Part­ners AB, UBB Con­sult­ing AB, JEQ Cap­it­al AB, among oth­ers, guar­an­tee 30.6 per­cent of all shares. Both com­mit­ments are sub­ject to the con­di­tion that at least an addi­tion­al 29 per­cent of all issued shares are sub­scribed for. This means that at least 80 per­cent of the shares will be sub­scribed, rais­ing between SEK 20.8 mil­lion and SEK 26.0 mil­lion before the costs of the rights issue (approx­im­ately SEK 1.5 million).

The raised money will be used

• to carry out pos­sible the sales of all or part of one or both of Smol­tek Semi and Smol­tek Hydro­gen, or only the con­cepts and intel­lec­tu­al prop­erty rights owned by each subsidiary.
• to con­tin­ue value-adding tech­no­logy devel­op­ment with­in Smol­tek Semi and Smol­tek Hydrogen
• to pay for ongo­ing costs in addi­tion bey­ond tech­no­logy development

This was the main mes­sage of the press release on the new issue of shares.

Future direction

On June 4, Håkan Persson, CEO of Smol­tek, will hold a webin­ar on the future dir­ec­tion of Smol­tek. There will be an oppor­tun­ity to ask ques­tions. Do not miss it. Sign up today!