FROM A POST ON SI(sorry lost the source)
If you are looking for a company that has enormous potential in the nanotech field and apparantly little competition, and already has significant customers (BMW, Toyota, Lexus..), go to www.datadotdna.com to read up on Datadots. They can put asset identification on tiny nanoparticles, and even embedded within the molecular structure of the product itself--ink, cement, wood, plastic, etc.. The potential uses are huge (deter theft, counterfeiting, quality, pollution and inventory control) and apply to virtually any asset. They can be bought on the pinks under DADTF, which reflects the Australian value of DDT.AX. Check out this .pdf file that explains the many usses of their new DATATRACEDNA product:
asx.com.au
Top 70% of shares is owned by 20 entities. These guys appear to have the ability to make the connections for success.
DataDot Technology – Car Thieves Beware!
23/06/2006 By: egoli
DDT has developed a technology that prints identification code as microdots to protect assets from theft. The immediate opportunity is in the motor vehicle industry where introduction of the product has shown substantial reductions in the incidence of stolen vehicles.
Understandably, insurers, the police and the wider community are endorsing this technology as a means of deterring theft of cars and other assets. The potential for DDT to expand the product internationally is huge and early interest overseas is very encouraging.
DDT is at a crucial point now with the government grant assisted development of a robotic applicator and the need to partner with a major manufacturer to transform the process from manual to assembly line capability.
DDT has a joint venture business with the CSIRO with equally large opportunity. DataTrace can be used to mark bulk materials for authenticity and consistency of product. This would be a significant way to reduce remediation work and authenticating the origin and content of many different materials.
Key Points
• DDT manufactures microdots imprinted with identification code. DataDotDNA has proven to be a significant factor in reducing vehicle theft. The increased security for vehicles has major implications for insurers and premiums.
• DDT has been awarded a $1.5m government grant to develop a robotic applicator for motor vehicle assembly lines.
• DataDotDNA can be marketed as a retail application for use in homes and with almost any asset that requires identification.
• DataTraceDNA is a joint venture business with the CSIRO. It has developed a luminescent marker for bulk materials (concrete, ink, paper, explosives etc) that can authenticate product brands and thereby reduce counterfeiting.
• Due to the early marketing stage, DDT has a higher risk profile than the market and is speculative.
Company Description
DDT makes laser-etched microdots for identification of assets such as motor vehicles.
More broadly, it is an asset identification and authentication technology that assists in proving ownership and acts as a deterrent to thieves.
The technology has many applications, but the most obvious and immediate opportunity is in the global motor vehicle industry.
DDT has patented its technology and has received a government grant to commercialise a robotic applicator for use in motor vehicle assembly.
DDT also has a joint venture company with the CSIRO, DataTraceDNA, which has developed a luminescent marker with applications in a diverse array of industries. The technology enables the authentication of product brands as well as proving homogeneity in bulk products.
DDT listed in January 2005 via a $10m IPO (40m shares at $0.25). The proceeds were applied to debt reduction ($4.4m) and working capital ($3.9m).
DataDot Technology
What is it?
DDT uses laser etching to print a vehicle’s identification number (VIN) onto 1mm microdots. Up to 10,000 dots per vehicle can then be sprayed on the underbody of the vehicle to identify all major components of the vehicle. The dots are detectable and readable using simple, low cost readers for identifying vehicles and parts. In this way, thieves cannot find and remove all the dots, thus providing a significant deterrent to stealing such a marked vehicle and diverting their interest to unmarked vehicles instead. Those that are stolen can be easily identified creating a further disincentive.
Robotic Applicator
Currently, the dots must be manually sprayed on a vehicle, which takes roughly 7-8 minutes per vehicle. For the process to be used on a vehicle assembly line, this process must be reduced to within 40 seconds. DDT has developed a robotic applicator that will meet these demands. Significantly, DDT has been awarded a government grant of $1.5 million to finalise the development of the robotic applicator cell and to assist in the subsidisation of the installation to a manufacturer’s assembly line. Under the terms of the grant, DDT will contribute a matching amount over the 18 month term of the project to bring the applicator to production-ready capability.
Manufacturer required to participate in assembly line trial
The next critical step will be to secure the participation of an Australian vehicle manufacturer. Both Ford and GM Holden have worked with DDT for some time on the technology with their top performance FPV and HSV vehicles. With the government grant, DDT will be able to offer $800,000 of its own funds to defray a partnering manufacturer’s costs, which is in addition to $500,000 pledged by the National Motor Vehicle Theft Reduction Council (NMVTRC), which has endorsed the technology.
Dotting mandatory in NZ from 2007
The New Zealand government has recently decided to make whole-of-vehicle marking mandatory on every new and used vehicle (up to 15 years old) sold from 1 January, 2007. DDT is currently well positioned to provide the product and service for this initiative. The estimated total market in New Zealand is 250,000 vehicles per annum. DDT could be set up and operating within 4-6 weeks at a cost of around $1m. All four Australian car manufacturers export vehicles to New Zealand creating additional reasons for one or all of them to partner with DDT.
Aftermarket is important
DDT’s technology is clearly not limited to the new vehicle market. The company has developed an aerosol applicator that can be sold as a retail product. The single biggest difference is that the dots are etched with a PIN number instead of the vehicle VIN number. Each application, however, still has its own unique number that can be registered on a centralised database, thereby providing all the same benefits of asset identification.
Not just for cars
The retail package (marketed as “Pressure Pak”) has been modified and will be marketed for a range of other applications such as marine, home and motorcycles. The potential becomes even greater when considering the ease of use and the likely increase in deterrent against theft for virtually any asset that requires protection. Current discussions and pre-orders have come from 2 insurers, 1 commercial lessor, Telstra (who will mark equipment in 10,000 vans), indigenous art owners (prevention of counterfeiting), a motorcycle manufacturer and vehicle dealer networks.
Not just for Australia
The US aftermarket is already providing opportunities for the technology. Theft warranty insurance has been supplied by motor vehicle dealers for some time, but each policy requires a security feature to be fitted to the vehicle. To date, window acid etching has been used at an enormous mark-up from the $2 cost to the $200 price of application. One of the US’s largest dealerships, Jim Moran & Associates, has been promoting micro-dotting and incentivising dealers to sell it. This is not whole-of-vehicle marking but the success it is having with specific vehicles in reducing theft of parts, such as headlights, will inevitably catch the eye of larger industry players. The development of DDT’s robotic applicator may become even more valuable in this context over time.
Global momentum towards vehicle marking, but still early days
Other countries and manufacturers are showing increasing interest in the technology. In South Africa, DDT is spraying 30,000 vehicles annually, including the South African Police Service. A distribution company in Brazil is close to agreeing a minimum 50,000 units per annum deal. Similar negotiations are underway in Mexico. In Indonesia, the Honda Motor Company is using DataDot labels for authentication of components and parts and is considering expanding this to its motorcycle manufacturing plants. In Taiwan, Honda is applying DataDotDNA (whole of vehicle marking) to all 30,000 vehicles made in, and imported to, Taiwan. Negotiations are underway in China for a deal that may escalate to 120,000 vehicles per month after two trial stages. DDT is actively pursuing deals in central and eastern Europe, and Russia where the government has endorsed DataDot’s technology. The EU is also drafting directives with submissions due in April this year.
Motor Vehicle Industry Perspective
83,000 stolen vehicles in Australia in 2005
Almost 83,000 vehicles were stolen in Australia in the year to 30 June 2005. This had an estimated cost to the community in excess of $500 million. The NMVTRC was formed in 1999 by the government and Australian insurance industry to coordinate stakeholder interests and has overseen a reduction in vehicle theft of over 120,000 vehicles.
Dotting vehicles reduces rate of theft
Vehicle theft in Australia is in decline with rates almost halving over the last four years. This is in large part due to developments in technology such as whole-of-vehicle marking, which is endorsed by the NMVTRC. BMW, HSV and Subaru vehicles have demonstrated reductions of between 65% and 93% in the incidence of non-recovered stolen vehicles.
The CEO of NMVTRC, Ray Carroll, recently said the widespread adoption (of microdot technology) in a production line setting is likely to produce considerable benefits in terms of reduced vehicle theft, insurance premiums and a more efficient use of police manpower.
Insurance Industry Perspective
Dotting will lower insurance premiums
The insurance industry has a substantial interest in the effectiveness of theft reduction, with obvious implications for premiums. Insurance Australia Group have said that whole-of-vehicle marking has reduced their claims loss ratio up to 18% on certain models. There are, therefore, significant profit implications as well as premium reductions possible should micro-dotting become prevalent in the motor vehicle industry.
Insurance Australia Group has included a new vehicle identification category in its formulation of premiums. Under this new category, only vehicles fitted with DataDotDNA can earn premium reductions of up to 15%. The category earns higher “points” than that for engine immobilisers. QBE and Allianz are offering flat reductions of 10% and 4% respectively.
DataTraceDNA
JV with CSIRO
When DDT listed in January 2005, the company had a joint research agreement with the CSIRO for the development of an identifier product. The result of that research is a product now known as DataTraceDNA (DTDNA). Two patent applications are also pending.
Bulk material identifier
DataTraceDNA identifies materials either by applying to the surface or adding into the composition of the material itself, a unique barcode that can be read by a scanning device. It allows the identity of materials, especially bulk products (including specific batches of product) to be verified at any point of the supply chain. The verification is instant, non-invasive and does not involve any chemical reaction with the material.
In essence, DataTraceDNA is a hidden marker that can assist with product authentication and hence is a highly useful tool in preventing counterfeiting, ingredient substitution, and confirmation of processes where the correct mixing of ingredients is critical.
The relationship with the CSIRO has progressed to a formal joint venture agreement on 31 October 2005 as follows:
• CSIRO agreed to pay $1 for 50% of the issued capital in DTDNA.
• CSIRO granted DTDNA an exclusive, royalty free, worldwide licence to commercialise DataTraceDNA in microdots, cement, cosmetics, timber, explosives, adhesives, paint, packaging, polymers, chemicals, food and pharmaceuticals, lacquers and coatings, paper, glass, textiles and wool.
• Intellectual Property (IP) agreement under which CSIRO has granted DTDNA an exclusive first right of refusal over any interest in DataTraceDNA IP in specified fields, and DTDNA has granted the CSIRO an exclusive first right of refusal over further research and development for DTDNA.
• An R&D agreement under which DTDNA has appointed CSIRO as its research contractor.
• A management services agreement under which DDT provides management services to DTDNA.
$10m China agreement
DTDNA has already announced a distribution agreement for DataTraceDNA in China. Of the $10 million licence fee, $1m has been received to date, with the balance payable on or before September 2007. The 10-year agreement (plus 10-year optional extension) includes the jv’s right to retain all intellectual property.
Since then, DTDNA has concluded a commercial agreement with an Australian customer for polymer (plastic) authentication.
Further proof of concept testing has extended the range of products and solutions to which DataTraceDNA can be applied. Metal marking, fibre authentication, explosives identification and control of mixing concrete are among them.
Concrete Industry
Correct mixing of concrete is crucial
In the concrete industry, the importance of correctly mixing the ingredients is critical to structural integrity. When it is not correctly and thoroughly mixed, it results in reduced strength and longevity and massive remediation bills. DataTraceDNA provides a solution to the industry that can non-invasively test the concrete in a wet or dry state, and even after 10 years it will still be possible to verify both the origin and quality of the mix.
RTA a potential big customer
In Australia, around 50 million cubic metres of concrete is produced each year. About 30% of that volume is the potential market for DataTraceDNA. In NSW, The RTA budget for remediation work is over $600 million indicating the potential savings for the industry if even a portion of this amount could be prevented.
Other Applications
Paint
DataTraceDNA can be used in the paint industry to eliminate illegal warranty claims. There is a high occurrence of illegal substitution of ingredients. Also, as with concrete, the importance of correct mixing cannot be overstated. DataTraceDNA can be incorporated in the mixture allowing the manufacturer to determine both the authenticity of constituents and the uniformity of mixing.
Plastics
The polymer (plastics) industry is also subject to counterfeiting. Molecular authentication of products can be verified at any point in the supply chain and at any time during the life of the product.
Paper and Packaging
In paper and packaging, DataTraceDNA is useful by printing a small amount of invisible ink to authenticate a package and its contents.
Fibre
Even the fibre industry can use DataTraceDNA. Mills and garment makers can incorporate the product into fabrics and garments for authentication purposes. Again, counterfeiting is the target.
Digital Reader
Simple reading device
A crucial part of DataTraceDNA’s appeal is the ability to simply and accurately “read” the marker in a product. DTDNA has developed a hand held reader that can be used in the field and will deliver the required information in an easy and efficient manner.
Earnings
Outlook and Strategy
The short-term catalyst for DDT is the participation of one (or more) of the major vehicle manufacturers in Australia for the robotic applicator. The government grant is an important endorsement of the technology and the firm support of the insurance industry and the police lends significant credibility to DDT’s business. The prospect of advancing DataDotDNA to a commercially viable assembly line component for motor vehicles appears high.
Should the participation of a manufacturer be followed by a successful 18-month trial, DDT will have created a snowball effect that will be highly attractive to overseas vehicle manufacturers and other industries. DDT is already making headway with overseas vehicle manufacturers, most notably in South Africa, Taiwan, China, India, Mexico, Brazil, Germany and New Zealand.
In the USA, while legislation remains a barrier to OEM application, the sheer size of the aftermarket provides ample potential. Here again, progress has been highly promising.
There does not appear to be any direct and obvious competition for DataDotDNA. Engine immobilisers and GPS systems are fundamentally different, requiring expensive initial equipment and instalment costs followed by on-going monitoring. No other company appears to have an equivalent marking technology with DDT’s track record.
The technology has a lot of promise. That potential now faces the reality of convincing manufacturers of its benefit to consumers and the possibility of substantial preventative cost savings. Execution becomes the key risk at this stage of the company’s evolution.
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