Introduction:At present, Industrial Nanotech revolves around its flagship product of Nansulate, a brand-named line of 13 coatings or wrappings that offer superior insulation capability utilizing the advancements of nanotechnology. The majority of the manufactured products specialize as an ultra-thin coating (like paint) offering solutions to the needs of not just
thermal insulation, but also
corrosion-prevention, mold-resistance, and lead abatement in the form of a one-stop comprehensive product.
1-Year Chart
Industrial Nanotech, Inc. -- INTK.pk ($0.18)
~165 million o/s
250 million a/s
~ 42 million share float
[note:
2407 Shareholders of Record as of 5/11/2007]
Patent InformationIt has been a little more than 2 weeks past a year since I first discovered Industrial Nanotech, having bought my first shares at a near-bottom of $0.07 before graciously being rewarded a 200% return in too short a time. I properly flipped at 4 cents shy of the high in September '06 and rebought back in at 18 down through 13 cents and have held tightly since. Even in light of its drops, I knew that this was a company that fit precisely into my business model based on the technology's comparative advantages alone.
Remember that here at Investing Pennies, we seek long-term investments of companies that have the capability to survive the market conditions of the lower exchanges and that offer distinct comparative advantages that allow it to be a significant competitor in its respective industry.
Comparative Advantages (of the company):1) Superior product that addresses an untapped market (
READ this section -
IMPORTANT)
2) Diversified Industry Demand
3)
GLOBAL distribution network
4) Highly developed Research Facility Partnerships
Notes for each comparative advantage:
1) Whereas most nanotechnology companies are still venturing through their R&D phase, INTK offers a nanotechnology product (rather 13 specialized products) that in essence tackles a boring, but essential product used throughout the economy – Insulation. In particular, it addresses a relatively untapped market of “corrosion-under-insulation” (CUI), a global problem that has accounted for literally hundreds of $billions of dollars in damages alone. Normal insulation actually induces corrosion by trapping water inside of the protected surface. Recall the recent Alaskan oil pipeline disaster? Thank CUI for that. But before you disbelieve that INTK could ever play a role in addressing such a problem, consider its current $5.8 million contract with the world’s 8th largest Oil & Gas player, PetroBras S.A. As of a very recently released press release, PetroBras has asked INTK to come to the company's HQ in August to talk of additional projects (likely to be much bigger than the current project).
So what’s the big deal?
Nansulate’s superior advantage lies it its thickness (hence the nanotech relevance), or rather lack of. The ultra-thin attribute of Nansulate is critical to its application on surfaces previously untouched by insulation, allowing it to be a more efficient and flexible form of insulation than its modern counterparts. Aside from this, Nansulate is non-toxic (safe enough to receive a certificate that allows it to be in contact wit food products) and is so versatile that is can be sprayed on an applied surface during its application process. Going even further, Nansulate is translucent, allowing for structural damage to be seen without having to first tear apart the insulate or use an ultra-sound device (as is currently used by the oil & gas industry) to peer beneath the layer on the outside. Most importantly, Nansulate is able to provide comparable (and tests have even suggested much superior) thermal insulation capabilities at a FRACTION of the thickness of modern products. As a double threat, Nansulate is also hydrophobic which allows for the corrosion & mold resistance. As of today, there is no product in the world that is able to compete with Nansulate. Due to its superior advantage of being ultra-thin, and there are also very few products that can address CUI as Nansulate could. Most of those other "solutions" make it very difficult to reach the structure surface after being applied (think of a caulking material & the like) and are much more difficult to use.
2) Industrial versatility & flexibility is another KEY to INTK’s future success.
While the Oil & Gas sector is major player right now, understand it is not the ONLY player. Nansulate has already developed interest or contracts with companies varying in the following industrial sectors: Food, Furniture, Refrigerated Trucking, Textile, Construction, Alternative Energy, Paint, Military, Shipping, and my personal favorites…. Electronics, and Automobiles (Toyota).
Why are the last two important? Because they illustrate the niche market capability that INTK brings to the industry– EXPANDING THE USE OF INSULATION IN WAYS THAT WERE PREVIOUSLY IMPOSSIBLE. The ultra-thin characteristic of nansulate allows it to be used in places previously unfit for insulation. Insulation on engine parts? Unheard of! But Toyota’s NASCAR team has been using it, and INTK was quick to create Nanoboost for the consumer to save energy & maximize horsepower. How about electronics? We know nothing about this yet, but I can only imagine. Does the cell phone get hot in your hand? Nansulate could probably solve that. Computer system cooling problem? Nansulate.
3) The Global Distribution network is the cherry on top of the cake! Nansulate has started at the very top, opening its doors to the world rather than restraining itself to the US exclusively. As the word continues to spread, this will snowball very fast because of this. Most of our announced projects have come outside of the US. A manufacturing facility is being created in Italy (in order to reduce shipping costs around the world). We have distributorship contracts in a good chunk of the world. Here’s a map listing all the current agreements (blue are the agreements, green are negotiations, red is interest) that was given to me by the company several months ago:
4)
I’m going to be brief on this.
Our research is conducted in the U.S. Government’s Center for Integrated Nanotechnologies (CINT).
However, on top of this, we are now working (according to the Feb 1. 2007 PR) with the Battelle Institute – the world’s largest independent research and development organization (w/ 120 locations worldwide).
Battelle conducts $3.7 billion in R&D each year.
Concerns:
I only have one concern for this company. Dilution. The company has been diluting at a steady rate in order to raise funds for continued operations. The current O/S is approximately 165 million shares, however the degree of the dilution has been suspect seeing how it could jump from 75 million to 136 million from 2005 to 2006. How long will this last? I would say not very much longer given the immense decline in the rate and in light of revenues beginning to really take off. 2006 revealed a mere $400,000 in revenues resulting in a net loss of $2.9M….. the Petrobras contract alone will reveal $5.2 million in revenue bringing in cash flows that were likely near non-existent the year prior.
Conclusion:
Taking a VERY conservative position of assuming 200M o/s, the current market cap is a mere $36 million. At full dilution of 250M o/s, the current market cap is $45 million. Be mindful that there is a relatively low float at 42 million shares. It is impossible from our standpoint to know what the earnings will be in the near future due to the start-up nature of this company. However, when considering progress that could easily reveal $20-50 million in revenues by the end of next year… the rapid growth rate ought to give way to a high multiple, even on the PK’s. Simultaneously consider the current sideways charting trend of this company thereby illustrating a high resistance to PK market gravity. With high’s that exceed $0.30/share on news alone, INTK remains undervalued at its current $0.18 price tag.
Personally, I plan to buy more in intervals when/if the stock drops below $0.17.
As of right now, this company is entirely news-based. There are several possible contracts in negotiation that we are aware of. I am not suggesting you buy now on the possibility of those announcements coming out soon (which will skyrocket the stock), but I am suggesting you find a base holding that you can hold long to for the next two years at a minimum.
This company is a true Penny Stock Investment.
