Investment Proposal: Summary

An initial investment of $360,000 is required to get the board through the Australian Building standards. This is essentially coupon development of the four basic streams of product, in order to find the best integration of Impact, Fire, Water and Vermin resistance. This cost to date has been met by Michael Wallace.

Coupons are 300 x 300 mm and of varying thickness, as required by the CSIRO.

These are tested at the CSIRO in a special kiln that is in effect a fire tunnel. The coupon is slowly drawn towards a heat source that radiates 800 Degree Centigrade. At every stage measurements are taken for heat evolvement, degradation of the panel, smoke evolvement and spread of flame.

In a UNIQUEST (University of QLD) test in the same apparatus there was ZERO on all tests parameters other than a minimal smoke evolvement.

The unique chemical locking of the various compounds under heat and pressure create a compound that is stable to over 1800 degrees centigrade and which is highly impact resistant.

It will take approximately $2,000,000 to move the board from a coupon stage to a commercially viable stage. We are looking towards Government Grants to assist in the development of the necessary machinery, and potential participation programs with study institutions.

Commercial Viability means that the product can be produced in significant volume at a competitive price point in the marketplace. It also means that the general processes and formulas are refined to the point where specialist plant can be built and the panel mass produced anywhere in the world.

The combination of right formulation, right price and economically viable production is what determines the natural level of Commercial Viability and where the product can be placed in the market.

We are aiming at a board that

1. cost less than Plaster Board to produce,
2. costs less to set up as far as plant goes, and
3. which has leverage into the market through attractive attributes such as impact resistance, etc.

The simple dynamics of production and of the product itself are defined at this stage. It must be stressed that the dynamic properties can alter dramatically when we move from a coupon to a full length board. The essential physical property that can only be discovered in a full size board is lateral stability. This is the quality that means the board stays flat under variations of temperature, situations of transport and carriage and over periods of time. From what we presently understand, this is not a concern, but it is yet to be proven.

Other dynamic properties can vary, such as integration of the chemical compounds over the full length of the board in a production environment. While this is not seen to be a significant concern, these details need physical testing at every stage, and a production facility such at the University of Technology is required.

This stage where we go into setting up plant in order to launch onto the market is to be expected to be at least 18 months away, and likely to be 3 years away.

Ideally, an interim product such as the fire resistant, bullet resistant external panel can be the lead in to the market. This can be a higher priced, specialty panel that justifies the investment into a largerer plant.

This is the area where all the production ‘wrinkles’ can be ironed out. A proposal worth considering is to set up this specialty plant in a third world country such as India or the Philippines.

This has the advantage of being outside the watchful eye of the large multi-nationals while the transformation from ideal into reality is accomplished.

Alternatively, this stage can be funded through a stock market float. It is to be realistically expected that some $100 Million would be raised in Australia to this end, however, obviously this also opens the door to competitors to buy into a voting block within the company.

This is all as yet future possibilities, and the nature of the board after commercial viability is established will determine of itself the best way to proceed. However, it is wise to consider the reaction the last time this product began to emerge, and to take precautions accordingly.

Obviously if the end product is superior in all respects (price, stability, natural attributes, etc.) to the opposition a large negative reaction from competitors can be expected. This will come as either a buy out offer, or court actions to suppress, as was the case in the past. Right from the outset, we need to be insulated against either or both of these options.

In this regard, the initial Directors will need to have a managerial responsibility that is not subject to rotation. Whilst stopping short of a Governing Directorship, a Managerial Directorship can give certain and specific authorities in regards establishing extraordinary general meetings, etc. Of particular importance is the right to expand share capital.

My personal view is that the core Directors have a ratio agreement in regards share capital set into the company constitution, and that investment be locked away from the primary company where the rights to Intellectual Property reside.

I include the proposed Constitution in the primary inspection documentation.

ENQUIRIES: Michael Wallace: 07 3206 8606  Email: info@pythagorus.org.uk 

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   Last modified: August 27, 2004