FROM MMTIF SEDAR FILING YESTERDAy.....READ BETWEEN THE LINES REVENUE SOON
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CHEVRON:
1. Update of Product Development Activity at July 31, 2016 Chevron: We began working with Chevron in 2013 and at that time announced a substantial JPDA. The proposed development work in that JPDA specified a series of milestones in keeping with our standard development process as described above. The initial thrust of the work was to develop and test fluorescent magnetic nanoparticles in the application of interwell tracers. We successfully completed the proof of concept and prototype phases. This work progressed in 2014 and the go forward thrust of our development work was to develop a well head real time detection platform for the detection of existing interwell tracer chemicals to measurement levels as low as 300 parts per trillion. By October 31, 2014, Chevron had funded approximately $175,000 of the development costs we had incurred to that point of time. In 2015, this work was significantly advanced. We worked extensively with key subcontractors building towards a lab demonstration late in the calendar year designed to differentiate between 8-9 interwell tracers simultaneously. These tests provided positive results in the demonstrations with Chevron. The next phase of the development program was expected to commence in early 2016. However, the official approval to proceed along with the purchase order and invoice was only received from Chevron in August 2016. That work has now commenced. We will require additional financing in order to continue the development activity moving forward. In 2015, Chevron funded our development activity in the amount of approximately $1.6 million. In the current fiscal year, we have received additional funding of $193,901 through July 31, 2016 and additional funding of $200,000 subsequent to July 31, 2016. In 2015 we executed a Technology Cooperation Agreement with Chevron relating to the development of a cement integrity sensor platform. Initial work has been completed in the proof of concept phase of development activity. The overall value of that contract is estimated at in excess of $8 million if we are successful in the first stages of product development. The continued development activity on these projects and the ultimate commercialization of the technology are in part dependent on having our subcontractors continue to work with the Company while it continues to attempt to resolve its working capital requirements.
Castrol:
We signed a JPDA with Castrol in December 2014. The development project is to develop a MEMS solution for real time detection of wear elements in lubricating fluids for deployment initially in non-automotive markets and, thereafter, for the automotive market. Over the course of calendar 2015 we were successful in completing the initial phases of that agreement whereby we have now provided the initial prototypes to Castrol and these have been accepted. In turn we have to date received $488,500 as payment from Castrol as of October 31, 2015 and an additional $250,000 in the current fiscal year. Castrol has commissioned us to produce initial field units for testing. These units are larger than the ultimate product intended for the automotive market. We anticipate that we will penetrate this market in 2016 while development work will continue on miniaturizing the technology for the automotive market by 2017. To date we have funded the development work with our subcontractors according to schedule and are awaiting a current purchase order and next invoice approval from Castrol which we expect imminently. We will require additional financing in order to continue the development activity moving forward. The continued development activity on these projects and the ultimate commercialization of the technology are in part dependent on having our subcontractors continue to work with the Company while it continues to attempt to resolve its working capital requirements.
Flextronics:
In 2014 we executed a JPDA with Flextronics to test, manufacture and, ultimately, to commercialize the Company’s patented automotive oil pan plug sensor suite for automotive OEMS. This JPDA developed at that time after we had spent several years pursuing a proof of concept with General Motors. Flextronics has indicated that the initial field development in automobile testing will commence by the end of calendar 2016 and that scale production could begin in 2017. A royalty stream thereafter has been estimated at approximately $18 million.
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