As many of you know, we have recently embarked upon a new initiative for 3DIcon: The pending merger with Coretec Industries LLC. As announced in June, the goal of this collaboration is to continue development of our proprietary CSpace® volumetric display technology and to move forward in exploiting Coretec’s underlying technology and existing IP portfolio in new and emerging markets.
One of the key conditions of the merger was the signing of a licensing agreement between Coretec and the North Dakota State University Research Foundation, which would afford 3DIcon access to an IP portfolio of silicon-based materials, with potential applications in energy storage, solar power, semiconductors, and printable electronics. We were pleased to announce last week that the license agreement has been signed, moving both 3DIcon and Coretec one step closer to closing the merger, now expected on or before July 15, 2016.
During our shareholder call on June 1, we provided the opportunity for shareholders to ask questions about the merger and the future of the company, which were answered live during the call. Since that time, we have received additional questions that we address in the following Q&A. If you have any further questions, please continue to send them to email@example.com.
Victor Keen, CEO
Question: As it relates to the short term plans to secure a manufacturer and produce what was referred to as product line #1, perhaps in 2016, what is the product?
Answer: Coretec’s underlying technology is based on the efficient production of a high value liquid silicon precursor, cyclohexasilane (“CHS”). A key advantage of CHS is that it is a liquid at room temperature and does not convert to a gas until heated above 400F. This compares to materials commonly used for manufacturing silicon-based semiconductors and solar cells (silane and trichlorosilane) that have much lower boiling points (-170F and 90F, respectively) which leads to higher cost handling and shipping. Another key advantage of CHS, when compared to materials commonly used for manufacturing silicon-based semiconductors and solar cells, is that the production rate of the silicon forming step can be increased by a factor of six, leading to additional cost savings. Based on these competitive advantages and inquiries from potential users, Coretec anticipates that CHS will first be used as an alternative to silane or trichlorosilane in silicon-based semiconductor and solar cell manufacturing.
Q: I wasn’t able to find the listing for Coretec Industries LLC. What is its symbol and on what market does it trade?
A: Coretec Industries LLC is a privately held company, not publicly traded. You can learn more about Coretec at its website, www.coretecindustries.com. When the Share Exchange Agreement is closed, estimated to be mid-July, Coretec will become a wholly-owned subsidiary of 3DIcon, thus effectively merged with 3DIcon and reported under the TDCP listing.
Q: It was indicated in the presentation that certain shareholders had “lock-ups.” Can you please explain what a “lock-up” means for shareholders?
A: As part of the merger agreement certain parties, including all of the shareholders of Coretec and certain affiliates of 3DIcon, will not be able to sell any shares of the company for a period of one year, other than a “leak out” provision that would allow sales of 1% of the issued and outstanding shares of the company in any quarter after the first six months. The parties to the Share Exchange Agreement decided to provide the lock-up so as to protect shareholders from a possible decline in the stock price that might follow a large sale of shares by "insiders" and further to incentivize management to focus on creating long-term value for all shareholders.
Q: When do we get to see a balance sheet on Coretec industries?
A: After the Share Exchange Agreement is closed, 3DIcon will own all of the shares of Coretec Industries, LLC. At that time, certain filings will be made with the SEC. These will include, among other items, the audited financial statements of Coretec, as well as the pro-forma consolidated financials of the combined companies.