Integral Technologies, Inc. (OTC: ITKG)
By Marla Backer
Integral’s growing financial and operating momentum is illustrated, we believe, by ramping revenue, a strengthening balance sheet, new commercial agreements and the company’s steps to uplist ITKG shares to the Nasdaq. Fiscal 2013 results underscore the strides the company has made to monetize ElectriPlast, in our view, and subsequent announcements reflect continued advancements towards this goal. For example, earlier this month, Integral announced that it had engaged a Beijing based agent to assist with its efforts in China, a key target market for ElectriPlast, we believe. The company also relocated Integral Technologies Asia to Seoul, Korea where partner Hanwha is headquartered.
ElectriPlast is a resin-based, electrically-conductive material that can be molded into a wide variety of shapes and sizes, is non-corrosive and isroughly 40-60% lighter than metal. Over the past 18 months Integral has made significant strides towards monetizing ElectriPlast, in our opinion. The company has put key personnel in place to support and facilitate its expected growth, including an industry veteran with more than 34 years of experience in advanced engineering and a CFO with public company experience.
To expedite the commercial launch of ElectriPlast, Integral has sought development and commercialization partnerships with companies that are well-capitalized and have extensive customer relationships. Over the past year and a half,Integral has signed important agreements with Hanwha, Delphi andBASF Corporation. Management believes these could be the first of many potential liaisons with suppliers, Tier1 manufacturers and OEMs. For example, recently the company signed an agreement with Pennsylvania based East Penn, whichproduces lead-acid batteries and wire and cable for the telecommunication, automotive and other sectors.
We believe licensing revenue from Hanwha and anticipated FY15 revenue from East Penn offer proof of concept that the company’s business model – to generate revenue from licensing, engineering and sales of ElectriPlast – is valid. Moreover, we also anticipate that revenue streams are likely to ramp substantially, as the company makes further strides to extract value from ElectriPlast.
The company aspires to a Nasdaq uplisting. Integral is fully reporting and earlier this year, hired a new CFO who has public company experience and changed its auditors from a relatively small firm to a top-12 domestic accounting and advisory company. . A prospectiveNasdaq uplisting could be a catalyst for the shares, in our view.
While it is still early days for ElectriPlast, we are impressed with the alliances Integral has already formed and believe that it reflects well on ElectriPlast’s commercial viability. Delphi Automotive, BASF and Hanwha are large, publically traded multinational companies that have access to multiple products that potentially could incorporate ElectriPlast and to a myriad of customers.We are optimistic about the Delphi and BASF relationships in the medium term. Nearer-term, Hanwha has already opened a manufacturing line dedicated to ElectriPlast and management believes that Hanwha could bring ElectriPlast products to market within the next 12-18 months.
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