Cientifica: A Graphene Investing Company?
In 2002, a company called Cientifica published the first edition of ‘The Nanotechnology Opportunity Report’, described by NASA as “the defining report in the field of nanotechnology.” Part of the report contained a 240-page directory volume profiling the 455 public and private companies that were said to be working on nanotechnology at that time. While nanotechnology as an investing thesis failed to live up to the hype, the promise of nanotechnology still exists today in many areas with graphene being one that is of particular interest to investors. Following this trend, Cientifica has evolved over time into a tiny publicly traded company on the London Stock Exchange looking at potential investment opportunities in graphene.
Cientifica started out as CMP Cientifica in Madrid in 1997 in order to meet the advanced analytical needs of the European Space Agency. By 2003, Cientifica was seen as the global leader in nanotechnology business information and consulting including the development of the widely acknowledged “Nanotechnology Opportunity Report”. The company’s founder, Tim Harper, is a leading expert in the economics and commercialization of nano- and other emerging technologies, and a respected science and technology communicator.
Moving forward to today, Cientifica has now redefined itself as an investment company that will “acquire and build businesses making use of emerging technologies and advanced materials”. In order to raise capital for their investments, Cientifica began trading on the London Stock Exchange and has a current market cap of just $826,000. Their interim results filed for the 6 months ended 20th September 2013 showed cash in the amount of $3,600 and no revenues.
A Graphene Investing Company?
While Cientifica casts a wide net when they refer to building businesses in “emerging technologies”, they seem primarily focused on graphene according to their most recent investor presentation. The Company needs to move rather quickly as well. If they wish to maintain their listing on the London Stock Exchange, they need to demonstrate that they are executing on their “investment strategy” by October 26 or the Company could face delisting. While Cientifica was looking to a short-term loan facility to secure their first investment deal, they were able to raise capital instead by selling shares. However, selling $167,000 worth of shares at a 20% discount does not seem like the sort of transaction that will allow the company to make meaningful investments in potential graphene startups. Just how much equity will $167 thousand buy?
The CEO of Cientifica, Tim Harper, made the following statement regarding Cientifica:
“The application of graphene in commercial products remains a significant opportunity for the UK and we believe that we have the contacts in place to exploit it”
This really seems to be all that you are buying when you acquire shares of Cientifica; contacts and a handful of subject matter experts. In their investor presentation, the Company lists 3 directors (including Mr. Harper), an advisory board consisting of 4 academics, and a network of 13 various universities and organizations that the company will use to enable them to make lucrative graphene investments. Over the past few years, Cientifica has been able to make some progress with their industry contacts:
- Recently announced a new industrial collaboration with Perpetuus to develop graphene-based products. UK Company, Perpetuus Carbon Group, claims to be the world’s largest producer of nano surface modified graphenes and says they can produce 100 tonnes per annum of graphenes from a single reactor in an area of less than 1000 sq ft.
- Signed an exclusivity agreement with London Graphene Ltd to jointly explore a number of applications of graphene in energy storage which expired April 2014. London Graphene describes itself as a company that “has an option on some patents from the Department of Materials at the University of Oxford on CVD graphene”.
Was granted three options under which it could subscribe for ordinary shares of a company called “Rainmaker Technologies Limited”. Rainbow does not seem to have a wesbite and the option expired in June 2014 with no further updates provided by Cientifica.
Aside from these events, it is an actual investment that’s needed in order to keep Cientifica’s shares from being delisted. It remains to be seen just what this first investment might be in. US investors who may want to invest in Cientifica should read our past article titled “How to Buy Foreign Stocks“.
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