The company has been around for some time, predominately as an R&D entity. They’ve developed some impressive patented technologies but struggled to commercialise these due capabilities of past management. They simply didn’t have the skills or experience to create and market their own products.
In 2014, their breakthrough appeared to occur when they signed a deal with Proctor & Gamble to license their technologies in SK-II and then later Olay products. The share priced rocketed to 13 cents (from 3 cents) and we had a market cap of over $200m. Many thought that the deal would bring in $5-10m+ per year and as a royalty based business we would have been very profitable quickly. At least that was what was believed by many and management at the time did little to quell expectations. In fact, they elevated them only to sell at 10 cents. What shareholders learned over years was the commercial deal with P&G was very poor and showed desperation to get the technology commercialised. OBJ yielded 1% of $180m in Olay/SK-II sales over a number of years. It saw the SP drop from 10 cents back to below 2 cents as many realised how bad the deal was.
In 2018, Steven Schapera joined the board. He had come with good experience having sold his own start up company called Becca for over $250m to Este Lauder. He moved quickly and with the assistance from a number of shareholders removed our chairman at the time. He then brought in a number of people from his time at Becca including our current Chairman, Tony Varano.
They established a vision to create a wellness company using OBJ’s patented technology with pillars including Beauty, Nutrition, Licensing etc
In 2019 they brought Paul Peros to head up our Device division. Paul has since become our CEO across the entire company. Paul joined having lead a start up called Foreo turning over less than $1m in 2013 to a company now turning over approximately $180m per year.
As part of the Wellness vision, they looked to acquire a health/nutrition business called Nutrition Systems for $85m in November 2019 to form one of the pillars. It was considered a reverse take over of sorts and got voted through easily by shareholders. Then Covid-19 hit and the world went pear shaped. The deal was put off due to the complexities facing many of the investors. The result was the company were in suspension from November to August, which understandably frustrated many. Prior to being suspended we had a MC of $27m and over 1.9B shares.
In May this year, while still suspended, and with Paul leading the charge, they launched www.reduit.com. A sustainable beauty brand with Swiss design and engineering. It is early days, but they’ve already confirmed international retailers coming into the key selling season.
Tight for cash off the back of many years being fed a trickle from P&G and setting up Reduit, they carried out a cap raise, successfully raising over $4m with the Board securing large positions, our CEO the largest as well as a number of significant new investors of note. The share base was consolidated with a 20-1 ratio.
As we sit today, we have a Market Cap of $26m with 146m shares on issue valued at 18 cents.
The future appears filled with opportunity including the expansion of Reduit, the launch of Hygiene products very soon, the launch of Body Guard patches (Ibuprofen patches) early next year and expanding licensing arrangements with P&G, fortunately, with much better commercial terms (which were renegotiated by the new board).
Many believe the Nutrition Systems deal is temporarily on hold and will be re-visited. In fact, the founder and owner of that company has taken a significant position in the company as part of the recent raise.
Time will tell where it heads to from here, but we have an experienced team whom have each had success building start ups from scratch to become multi-million dollar entities. Can they repeat it? That’s what many long and new to OBJ are hoping.
Good luck to all old and new holders.
OBJ Price at posting:
18.0¢ Sentiment: Buy Disclosure: Held
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