Dotz Nano builds sales momentum for authentication security with recent commercial agreements

Dotz Nano Ltd (ASX:DTZ) has built strong growth momentum this year by signing several commercial contracts for its authentic security technology. As an advanced technology company, Dotz is engaged in the business of developing, manufacturing and commercialising tagging, tracing and verification solutions. Since January this year, the company has signed several contracts totalling $4.3 million, including a $2.2 million contract with TT Medical for PPE authentication across eight countries and a $1.53 million deal with Universal Exports Group to authenticate up to 100 million face masks. “Strong momentum” Chairman Bernie Brookes AM said: “The impact of COVID-19 has brought to the fore the need for companies to authenticate and secure their products and supply chains. “Dotz has had a strong start to 2020 with signed commercial agreements of $4.3 million (US$3.1 million) to date and several additional pipeline opportunities being progressed. “These contracts, together with our growing sales pipeline, provide strong momentum for future sales growth. “Alongside this, while PPE is a current focus, we continue to progress negotiations with potential customers within the broader anti-counterfeiting, product liability and oil and gas markets.” PPE authentication sales The prevailing COVID-19 situation boosted the demand for authenticating Personal Protective Equipment (PPE) kits across the world and Dotz responded to the opportunity by developing a two-factor authentication solution. In Q2 2020, Dotz signed a US$1 million (A$1.53 million) commercial agreement with Hong Kong-based Universal Exports Group (UEG) to mark up to 100 million medical face masks with its newly developed PPE authentication solution. Phase one of this agreement has been completed with Dotz authenticating 30 million face masks in May. The remaining 70 million masks will be authenticated under the second phase of the agreement, subject to customer demand. Dotz CEO Uzi Breier said: “Our focus on providing solutions for PPE authentication has been successful and is rapidly gaining momentum. “This builds on our end-to-end technology enabling product verification throughout the supply chain, providing quality assurance to essential healthcare and frontline workers globally who rely on good quality products to perform at high standards, as well as the general public.” Order from plastic compounder During Q1 of 2020, the company signed a two-year US$100,000 (A$166,000) frame purchase order with a leading Switzerland-based plastic compounder, with an advance payment of US$10,000 already made. The compounder will sell Dotz’s ValiDotz™ security markers to its customers as an anti-counterfeiting solution inserted during the plastic compounding process. Its non-toxic security markers can be cost-effectively embedded directly into polymers during the compounding or injection moulding process and do not affect the properties or appearance of the plastic. Clinical trials and pilots During H1 2020, Dotz secured Letters of Intent for in-hospital clinical trials of its portable and real-time virus detection technology on confirmed COVID-19 patients. The clinical trial will be carried out in partnership with the globally recognised Sheba Medical Centre in Israel and Brazilian genetic and analytics company FullDNA. Similar to a roadside drug test, Dotz’s virus detection technology is less invasive and, if successful, will be a major step towards enabling detection of viruses in real-time and on-site. A pilot program to verify effective surface sanitation is also underway with Israel’s largest manufacturer, supplier and developer of detergent intermediates and cleaning products -Zohar-Dalia Cooperative Agricultural Association. Under this program, Dotz’s ValiDotz™ markers are being inserted into 1,000 litres of disinfectant materials to trace and verify the proper spread of disinfectant on surfaces in real-time. Deal with TT Medical Turkey Last month, the company signed a US$1.6 million (A$2.2 million) sales agreement with Turkey-based TT Medical for supplying its anti-counterfeiting and tracing capabilities for face masks and other PPE equipment in eight countries within Europe, the Middle East and Africa. TT Medical has placed an initial US$250,000 order to be delivered in Q4 FY20 and a follow-up order of US$450,000 due in Q1 FY21. The remaining value of the contract is subject to customer demand. V2Tech sales deal As part of a $528,000 two-year agreement with V2Tech, Dotz will initially authenticate 30 million medical face masks for the Australian health sector, government, and retailers. During the two-year period, V2Tech will be the sole distributor of Dotz’s ‘Secured by Dotz’ PPE authentication solution in Australia provided annual sales targets are met. Board restructuring During H1 2020, Dotz restructured its board by appointing highly experienced Bernie Brookes AM as chairman and Doron Eldar as a non-executive director to the board. To minimise the impact of COVID-19 on the business, non-executive directors Ashley Krongold and John Bullwinkel resigned from their positions. Positive outlook Dotz remains focused on executing its growth strategy, increasing sales of its industry-leading end-to-end track-and-trace technology within its key markets of anti-counterfeiting, product liability and oil and gas. The company is in advanced stage of negotiations with several potential customers and is confident of converting these negotiations into contracts and recurring sales before the end of this year.