On September 30, 2016, 3DIcon Corp. (the “Company”) consummated a share exchange agreement with the owners of Coretec Industries, LLC (“Coretec”), as a result of which Coretec became wholly owned by the Company (the “Merger”). The Company was initially drawn to Coretec based upon the prospect that its patented, silicon-based technology could contribute to solving the chamber material issues being encountered in pursuing the commercialization of our 3-D display technology, CSpace. In assessing the possibility that Coretec’s technology could be of assistance in improving CSpace, we came to understand and appreciate other exciting opportunities presented by Coretec’s technology, so much so that ultimately we acquired Coretec.
As has been reported to you in press releases and Blog posts on our website, much has happened since the Coretec acquisition six months ago and much is planned for the next six months. Among the plans, as previously announced, is a Reverse Split of the Company’s shares of Common Stock. This letter will serve to summarize for you those developments and plans and to announce that we will be hosting a Shareholder Conference Call to further discuss those plans and to respond to shareholder questions.
New Company Name
To reflect the significant realignment of the Company’s focus occasioned by the Merger, from the relatively narrow, albeit continuing to be highly promising, volumetric 3D display space to now include the multiple opportunities inherent in the Coretec technologies, the Board has determined to change our company name to “The Coretec Group, Inc.” The new company name is effective as of the date of this letter. In addition, we now have a new trading symbol, which is CRTG.
To further indicate that we are a “new” company, i.e., a combination of 3DIcon and Coretec in effect operating as a single entity, we have released a new website “www.thecoretecgroup.com” that reflects the histories, assets, operations, news, etc., of the combined companies.
New Company CEO
Doug Freitag. Since the time of the Merger, and before, we have been fortunate to have had serving as our Chief Executive Officer, Doug Freitag, who had worked with the Company in connection with our Joint Venture with Schott Defense in pursuing CSpace. Later, it was Doug who, having previously worked with Coretec, introduced us to Coretec. The Board determined that Doug would be an ideal CEO for us after the Merger, given his knowledge and experience with both the pre-merger 3DIcon and Coretec. Doug has served us with distinction. However, as of March 31 Doug has elected to return to his former role serving as the Vice President of Technology, thus assuring continuity in our CSpace R&D efforts as well as assisting in the commercialization of CHS.
Michael Kraft. As we announced on March 27, our successful search for Doug’s replacement resulted in our engaging Michael Kraft as our new CEO. Michael has been CEO or president of a number of tech/scientific companies, from start-up to $300 million in revenue, and has deep experience in IP, marketing of technical products, and fundraising, all talents and experience closely correlated to the current needs of the Company.
Supply Agreement with Gelest
As we have previously announced, Coretec’s patent-protected, silicon-based technology cyclohexisilane Si6H12 (sometimes referred to as “CHS”) potentially has a number of commercial applications, the most immediate of which is in the area of the extension of the battery life of electric cars, computers, cell phones, etc., but also in the fields of solar energy and printable electronics. We have entered into a Supply Agreement with a major producer of specialty chemicals, Gelest, Inc., under which Gelest will manufacture and partner with the Company in manufacturing CHS to provide entities in the relevant spaces for testing and evaluation. We anticipate that initial sales will occur in the third or fourth quarter of 2017 and that sales could be as much as $500,000 within a year. To lead the team in the marketing of CHS, the Company has engaged Ragnar Avery as Vice president of CHS Marketing and Sales. Ragnar is a silicon materials expert, having spent 33 years at Dow Corning Corporation specializing in that and related fields. Ragnar has started to identify and contact potential customers for the material with a current list of over 60 candidates. To support sales and marketing we have also started to present at major conferences. One example is the recent presentation at FLEX2017. The presentation was well received and resulted in interest expressed by leading suppliers of material solutions to the semiconductor, flat panel display and solar industries.
In addition to the above relating to advancing our CHS technology in the areas described above, we continue to seek opportunities to overcome the challenge that remains for CSpace, i.e., a scalable image chamber material. We are currently looking at two approaches, a newly developed glass in Australia and a lighter weight polymer than contains finely distributed light emitting particles involving Coretec technology. We have signed an NDA with the interested party in Australia which will allow us to have more thorough discussions. Other discussions are being held with companies in the fields of microelectronics, batteries and specialty chemical suppliers to these markets.
Reverse Stock Split
At the time of the Merger, we announced that we would effect a capital stock restructuring to accommodate the issuance of Convertible Preferred Stock to the owners of Coretec and that such restructuring might include a Reverse Split of our shares of our Common Stock. This month we filed with the SEC a document confirming the decision of the Company’s Board to implement a 300:1 Reverse Split, i.e., for each 300 shares outstanding, post-Reverse Split there will be one share outstanding, representing the same proportionate interest in the company as did the 300 shares. Information on the process for exchanging shares can be found on the CEO Insights page of the new website.
The Reverse Split is effective as of the date of this letter.
Since we announced that there was a possibility of a Reverse Split, we have had many questions from shareholders. The discussion below and a scheduled Shareholder Conference Call (described below) are designed to address those questions, among others.
At this point we are moving forward rapidly in pursuing the Coretec opportunities involving the exploitation of its exciting patent-protected silicone-based technology and the commercialization of CSpace. We have been advised that future funding of those opportunities will be adversely affected by having a sub-penny stock price. Many funding sources, including some venture capital firms, hedge funds and private equity groups and have restrictions in their funding options regarding sub-penny stocks. In addition, any funding secured at the current stock levels would be highly dilutive to our shareholders. Ultimately, the Company hopes to move to NASDAQ or NYSE Exchange listing. The Reverse Split could be a first step in that direction.
We cannot predict how the stock market will react to our Reverse Split. However, your Board believes that a Reverse Split at this point in the Company’s history is in the best interests of the Company and its shareholders.
Shareholder Conference Call
As indicated above, we will be hosting a Shareholder Conference Call to answer any questions relating to the Merger, our future plans, the Reverse Split and any other questions you may have. The call is tentatively set for July 14, 2017 at 11 AM Eastern Daylight Time. Further details will be posted on our website.
Yours very truly,
Victor F. Keen
Board Co-Chair, The Coretec Group Inc.
Board Co-Chair, The Coretec Group Inc.