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Q&A on future directions of Smoltek

Did you miss the Q&A session at the end of the webinar with Smoltek's CEO, Håkan Persson, where he talked about Smoltek's future direction? Then, you should read this account of each question and Håkan Persson's answers. You won't regret it.

On June 4, Smol­tek held a webin­ar on the company’s future. After the present­a­tion by Håkan Persson, CEO of Smol­tek, he answered ques­tions from the audi­ence and mod­er­at­or Albin Kjell­berg. Here are the ques­tions and answers, slightly edited for readability.

Albin Kjell­berg: How long will the money from the issue last?

If you look at it in isol­a­tion, the money should take us well into 2025.

We also have the bid­ding pro­cess under­way; if it is suc­cess­ful, the money will last longer. In addi­tion, we are involved in a num­ber of EU-related pro­jects; we have sub­mit­ted one applic­a­tion and will sub­mit sev­er­al. If we are suc­cess­ful, it will mean that we will receive addi­tion­al cap­it­al in the first half of next year.

Mikael Johans­son: What is meant by” disruptive”?

The tech­no­logy is totally dif­fer­ent. Nobody else is doing what we are doing. We can solve the prob­lem dif­fer­ently. Let’s com­pare it to sil­ic­on deep trench, where you etch into the mater­i­al. We do the oppos­ite and build on top of the mater­i­al to cre­ate more sur­face area on the sub­strate. This gives you bet­ter per­form­ance and a more robust engin­eer­ing solu­tion. And this is what makes Smol­tek unique. We are the only ones using car­bon nan­ofiber to build this solu­tion and solve mater­i­al tech­no­logy prob­lems. Nobody else is doing it.

That is why the play­ers are also inter­ested in what we are doing and are work­ing with us to make this tech­no­logy a reality.

Mikael Johans­son: If the tech­no­logy is so good, why are there no part­ners to co-fund it?

We have ongo­ing pro­cesses and dis­cus­sions with dif­fer­ent types of part­ners. We were very close to get­ting YAGEO on board. Now, giv­en their intern­al pri­or­it­ies, they had to make oth­er decisions. But this is the path we are work­ing on, and this is what we have to do.

As I have said for many years, this is not a quick fix. It is a con­tinu­ous devel­op­ment pro­cess, and soon­er or later, we will break through and involve our part­ners in this pro­cess. That’s what the whole bid­ding pro­cess is about: just accel­er­at­ing that development.

Albin Kjell­berg: Is it chal­len­ging to explain to the mar­ket and poten­tial part­ners what Smol­tek has and where the poten­tial lies?

Yes, it is. But it’s also an advant­age because it makes us unique and rel­ev­ant, and the mar­ket needs our expertise.

For example, YAGEO is a world lead­er in pass­ive com­pon­ents. Still, they do not have the expert­ise that we have to solve their future problems.

That is why we are rel­ev­ant. That is what we bring. At the same time, the sales pro­cess and the pro­jects we do take a long time. That is the nature of the busi­ness; what we are doing is not a quick fix, but we are cre­at­ing new ways to take the next step in two excit­ing busi­nesses: hydro­gen and semiconductors.

That’s what’s dis­rupt­ive. We’re doing things in a dif­fer­ent way to solve a prob­lem that the industry is strug­gling to solve today.

Bengt Nord­ström: Hur är det med konkurrensen ?

Of course, there are com­pet­ing solutions.

In semi­con­duct­ors, we have Sil­ic­on Deep Trenches, a col­lab­or­a­tion between TSMC and Apple. How­ever, it has many lim­it­a­tions, both in terms of pat­ents and pro­cess technology.

With hydro­gen, there are com­pet­ing tech­no­lo­gies that try to reduce the amount of iridi­um. But most of them work with the ink. That is not the solu­tion. The solu­tion is to work with the sub­strate. That’s where we can add value with our car­bon nan­ofiber technology.

Albin Kjell­berg: After semi­con­duct­ors and hydro­gen, what is the most likely application?

Some things are very sim­il­ar to what we do. Let’s take hydro­gen as an example. Fuel cells are very close. Fuel cells are really a mir­ror image of what we do for elec­tro­lyz­ers. So the part­ner in the auto­mot­ive industry that’s test­ing our mater­i­al has a dual interest here; they’re doing elec­tro­lyz­ers, but they’re also doing fuel cells.

How­ever, we are not stand­ing still; we are an incub­at­or, and we have a long list of oppor­tun­it­ies that we are mov­ing through the incub­at­or pro­cess to eval­u­ate. These include night vis­ion sensors, auto­mot­ive radar, and med­ic­al applications.

One example is an ongo­ing col­lab­or­a­tion with a dent­al tech­no­logy com­pany that man­u­fac­tures x‑ray equip­ment. Our tech­no­logy is vir­tu­ally the only way for them to imple­ment their tech­no­logy. It’s a smal­ler pro­ject that has flown under the radar, but we’re work­ing on it.

There are a lot of things that we can do. It is import­ant for us to have a struc­tured pro­cess for eval­u­at­ing oppor­tun­it­ies so that we see not only the tech­nic­al oppor­tun­ity but also its com­mer­cial rel­ev­ance. We should not throw tech­no­logy at pro­jects that we can­not mon­et­ize. That is why we are using an incub­at­or pro­cess to assess their rel­ev­ance to us and our shareholders.

Mikael Johans­son: What is Håkan’s inter­pret­a­tion that the mar­ket does not have con­fid­ence in Smol­tek at the moment?

Of course, it is a liab­il­ity for us. Every­body knows that we are a devel­op­ment com­pany; there­fore, there is no dir­ect rev­en­ue. We have to find part­ners to help us fin­ance devel­op­ment, indus­tri­al­iz­a­tion, and com­mer­cial­iz­a­tion. That’s what we’ve been pur­su­ing for quite some time. We’re very close to get­ting there, thanks to the tech­no­lo­gic­al advances that have put us in a much bet­ter pos­i­tion. And I think that is not reflec­ted in the market’s con­fid­ence in our stock. That’s why we’re going out in these bid­ding pro­cesses – to make that value vis­ible. It is cent­ral to us.

Albin Kjell­berg: What mater­i­al tech­no­logy is most sim­il­ar to Smoltek’s in com­mer­cial use today?

In the semi­con­duct­or industry, it is the sil­ic­on deep trench. In the hydro­gen industry, it is the iridi­um ink.

Jac­ob John­son: What is the rela­tion­ship with YAGEO? Could they be a poten­tial bidder?

YAGEO could be one of the bidders.

We have an ongo­ing rela­tion­ship with YAGEO. Our CTO, Far­z­an Ghavanini, and YAGEO’s CTO, Phil Less­ner, are in reg­u­lar con­tact and have monthly coordin­a­tion meet­ings. We also provide them with samples for test­ing and eval­u­ation. This is great for us: On the one hand, we keep them informed about where we are and how we are devel­op­ing tech­nic­ally. On the oth­er hand, it also saves a lot of time and money; they have entirely dif­fer­ent resources for test equip­ment and the activ­it­ies we bene­fit from.

I would say that the con­tin­ued cooper­a­tion is proof of what Bob says: It wasn’t a lack of con­fid­ence in the tech­no­logy and the pos­sib­il­it­ies of the tech­no­logy that caused YAGEO to walk away from the nego­ti­ations, but oth­er pri­or­it­ies that they have to take into account. But they are still fol­low­ing us, and I think there is a good chance they will return.

But since our con­tracts were ter­min­ated, YAGEO no longer has exclus­iv­ity. This allows us to approach oth­ers. We know exactly who they are, and they know exactly who we are; we have been in con­tact with them before and, in many cases, togeth­er with YAGEO. We are, of course, pick­ing up those threads.

And if we do what we need to do accord­ing to the plan that we are execut­ing, we will show that the tech­no­logy is evolving, and there­fore I see good pro­spects to have a very inter­est­ing dis­cus­sion at the end of the year. Not just with YAGEO, but with YAGEO and oth­ers, and then maybe we will have an auc­tion pro­cess on the tech­no­logy. That in itself is a value-cre­ation oppor­tun­ity for us in this pro­cess that we are going through.

Albin Kjell­berg: Can you elab­or­ate on the news that a world-lead­ing auto­mot­ive man­u­fac­turer has recently star­ted test­ing a cus­tom-made cell mater­i­al from Smoltek?

It is a company—I can­not name it now—that is inter­ested in both vehicle and elec­tro­lyz­er man­u­fac­tur­ing. They are inter­ested in our cell mater­i­al for elec­tro­lyz­ers and fuel cells; it is basic­ally the same tech­no­logy. They will be test­ing our mater­i­al for both purposes.

Albin Kjell­berg: Vad mer behöver komma på plats för att nå slut­må­let om 0,1 mil­li­gram per kvad­rat­cen­ti­meter cellmaterial?

We have already achieved this in the half-cell format. So, we have the anode side done. We have to assemble it into an entire cell and then do the same thou­sand-hour test that we did for 0.2 mil­li­grams per square cen­ti­meter. We are pre­par­ing for that right now.

Albin Kjell­berg: Were poten­tial part­ners dis­cour­aged by the break with YAGEO?

They have not been dis­cour­aged. We are in the pro­cess of dis­cuss­ing the bid­ding pro­cess, and every­one we are in con­tact with shows the same interest in the tech­no­logy because they know what it can do. The need is there; we get proof of that in every con­tact we have. The semi­con­duct­or and hydro­gen indus­tries have real prob­lems that need to be solved. Our part­ners have not lost con­fid­ence that we can help them.

We are in a situ­ation where the plan we were sup­posed to execute is not hap­pen­ing. That’s why we need to cla­ri­fy the value of what we’re actu­ally doing and raise addi­tion­al money to move forward.

Albin Kjell­berg: How has intern­al con­fid­ence in tech­no­logy been affected by recent events?

It has not changed at all; on the con­trary, we have made much tech­no­lo­gic­al pro­gress in the hydro­gen area and the semi­con­duct­or side, so the motiv­a­tion remains high.

But we feel, and I feel myself, the frus­tra­tion that what we are doing is not reflec­ted in the stock mar­ket. That’s one of the prob­lems of being a devel­op­ment com­pany; we have to make the value vis­ible. And that’s why we’re going into these pro­cesses now.

So, the motiv­a­tion is high. We know what is needed out there. We know what we can do, and that is what we are going to do. That’s extremely import­ant because if we stop execut­ing our plans, we stop cre­at­ing value, and we become irrel­ev­ant over time. That’s why we must raise money to keep doing what we do.

Oliv­er Winchester: What busi­ness areas could Smol­tek estab­lish after the bid­ding pro­cess is completed?

We have a long list of poten­tial applic­a­tions run­ning through the incub­at­or pro­cess. For example, there are fuel cells. Bat­ter­ies are also a hot area where we can con­trib­ute. On the semi­con­duct­or side, for example integ­rated cir­cuits, there is what we call IC-CNF-MIM, which will con­trib­ute to the kind of chip archi­tec­ture of the future. So, there are many things we can look at and are look­ing at.

But the focus right now is on nail­ing down the exist­ing busi­nesses and using them as a plat­form to gen­er­ate rev­en­ue, cre­ate prof­it­ab­il­ity, and fund what we do. That’s what enables new areas and innov­a­tion. That is the found­a­tion of this company—to cap­it­al­ize on the car­bon fiber tech­no­logy that we have.

missko1962: It sounds like hydro­gen has a faster route to mar­ket than semi; what is Håkan’s opinion?

It’s about how fast we can get to an indus­tri­al­ized product that we can man­u­fac­ture in volume. Hydro­gen is an industry that is explod­ing, while the semi­con­duct­or side is a more mature industry. But I would say the time hori­zon for both is about the same. We have the ambi­tion to start sales and also volume pro­duc­tion in 2025–2027.

Albin Kjell­berg: What are you most excited about for the rest of 2024?

It’s fas­cin­at­ing to go out into the mar­ket, make con­tacts, and be open and expli­cit about the fact that we’re look­ing for part­ners. We have worked with industry play­ers before, but it was not as clearly stated as it is now. And I think that also gives us a whole dif­fer­ent level of vis­ib­il­ity for our value. So I think that’s going to be very excit­ing. Of course, this aligns with the tech­no­lo­gic­al devel­op­ment we are pur­su­ing because it cre­ates the con­di­tions and res­ults neces­sary for this pro­cess to be successful.

So it’s a very excit­ing time, and I really hope that we can con­tin­ue on this path. That is what will cre­ate and max­im­ize share­hold­er value over the next 6–12 months.

Albin Kjell­berg: There is nev­er a dull moment being CEO of Smoltek?

No, it keeps you busy. But at the same time, it’s a hell of much fun.

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