Integral Technologies Inc. (fka ITKG)

[sumo tsunami]

From the company Conductive Blog.
It covers questions many of us have had concerning the PolyOne license agreement very well. This is very exciting to see, this is a great deal.
http://ir.electriplast.com/conductive

Answers to Recent Questions

We are not able to answer all questions in this format, but we will attempt to answer all that we can as thoroughly as we are able. Below are several of the questions we have received since the announcement of the PolyOne license agreement.


(Q)-Where do I find specific details of the PolyOne/Integral license agreement?
The agreement can be found in our 8k filing dated 2.26.2018. The following is a link to the agreement; https://ir.electriplast.com/all-sec-filings/content/0001437749-18-003319/0001437749-18-003319.pdf The entire agreement is included with exception to our current customers which is not available for public viewing due to privacy and competitive reasons. Also, the royalty is not available for public view, it is typically something that a licensee wishes to remain private.

(Q)-Did Integral receive any upfront money as part of the license agreement?
Yes. All financial terms can be found in the agreement. The payment terms can be found in the agreement in Article 6.1 and Schedule 6.1
Article 6.1 reads as follows:
6.1 Upfront Fee. PolyOne shall pay to Integral, no later than ten (10) business days after full execution of this Agreement, an upfront fee as specified on Schedule 6.1 by wire transfer to a bank account to be designated in writing by Integral (“Upfront Fee”). The Upfront Fee is not refundable and is in addition to any Royalty Fees.
Schedule 6.1 reads as follows:
Schedule 6.1 “Upfront Fee” The Upfront Fee shall be One Million United States Dollars ($1,000,000 USD).

(Q)-Why did Integral license to PolyOne?
We have long sought a global partner capable of supporting and the expansion of our shielding business. This became more necessary after being awarded the two automotive programs last year. These programs and the potential expansion of those programs requires a tremendous amount of global infrastructure, resources and capacity. PolyOne has all those capabilities.

(Q)-How long until PolyOne is capable of supplying?
Immediately. One of the reasons for joining forces with PolyOne was because of their Long Fiber Technology(LFT) manufacturing capabilities. Prior to signing the agreement, the appropriate manufacturing, testing, etc. was completed.

(Q)-Did PolyOne license all of Integral’s IP?
No. The license was for shielding as defined in the agreement under Article 1.11.
Article 1.11 reads as follows:
1.11 “Field” means any application (a) intended for any market, and (b) in which the Licensed Material is used to provide shielding against electromagnetic interference (which includes but is not limited to radio frequency interference); which, for sake of clarity, excludes applications for bipolar plates for batteries.

(Q)-How many patents were included in the license?

10(ten)The patents that were licensed can be found in Schedule 1.23 of the agreement.

(Q)-What is not included?
All things that are not for shielding. For example, antennas, heated devices, fuses as well as our low conductive material used for electro static discharge(ESD)

(Q)-How is the royalty payment determined?
Details can be found in Article 6.2.1 and Article 1.20.
Article 6.2.1 reads as follows:
6.2.1 Royalty Percentage. PolyOne shall pay to Integral a percentage as set forth on Schedule 6.2 of the Net Sales of all Licensed Materials sold in the Field during the Term by PolyOne, any of PolyOne’s Affiliates, or any Other Sublicensees (collectively, the “Royalty Fees”).
Article 1.20 reads as follows:
1.20 “Net Sales” means (i) gross amount of invoiced sales less the sum of any (a) discounts actually applied in amounts customary in the trade which shall not exceed ten percent (10%) of the gross amount, (b) sales or use taxes directly resulting from the particular sales, (c) outbound transportation costs actually paid, and (d) amounts actually credited on returns, calculated in accordance with generally accepted accounting principles consistently applied in the United States based, or valued as if based on, bona fide arms’ length transactions and not on any bundled, loss-leading, or other blended or artificial selling or transfer price, or (ii) with respect to transactions or dispositions without consideration or with nominal consideration other than providing samples in the ordinary course of business, the average selling price at which products performing substantially similar functions, sold in similar quantities and similar locations, are then currently being offered for sale by other manufacturers.

(Q)-How does this effect our battery technology?
The agreement does not involve the battery technology.
Specifically stated in Article 1.11. Article 1.11 reads as follows:
1.11 “Field” means any application (a) intended for any market, and (b) in which the Licensed Material is used to provide shielding against electromagnetic interference (which includes but is not limited to radio frequency interference); which, for sake of clarity, excludes applications for bipolar plates for batteries.

(Q)-What happens to the recent automotive orders?
We will work in conjunction with PolyOne with these customers to support them and the expansion of the existing business. This process is already in process. This is addressed in Article 4.2. Article 4.2 reads:
4.2 Referral to PolyOne. Promptly after the Effective Date, Integral shall inform all Existing Purchasers that PolyOne is authorized by Integral to manufacture and supply Licensed Materials for use in the Field, and, during the Term, Integral shall refer solely and exclusively to PolyOne all orders, requests, or other inquiries from any Existing Purchasers concerning Licensed Materials for use in the Field (“Referred Business”). During the Term, PolyOne shall use commercially reasonable efforts to address the Referred Business.

(Q)-Is Integral ever going to file financials again?
Yes. It has certainly taken much longer than anticipated but we are working towards becoming current with our SEC filings.

(Q)-When is the next conference call?
We plan on scheduling a call at some point after the filing of our financials.