Structural Monitoring Systems (SMS) is engaged in the development and commercialisation of “Comparative Vacuum Monitoring” (CVM) used in testing and monitoring the structural integrity of materials that are subject to operational stress and fatigue primarily in aircraft.
SMS was established and listed on the Australian Stock Exchange in 2004. From highs of $2.54 in November 2004 and $2.49 in March 2007, the share price gradually declined over a period of four years to a low of two cents.
Mac Equity Partners became aware of SMS in 2010. Our extensive due diligence into the company revealed some of the reasons why the share price had collapsed so dramatically. The company was based in Perth with a large number of directors and engineering professionals. Payroll costs were acting as a significant drain on the company’s balance sheet and hindered the allocation of capital towards commercialising the technology. Additionally, consistent capital raisings diluted the value of shares on issue and limited the company’s ability to maintain a tight register.
MEP took control of the company in mid 2010 by conducting a $500,000 placement exclusively to MEP clients. We subsequently restructured the board with industry and commercialisation professionals, appointing an experienced US based CEO to head up the companies operations, which were strategically moved to the US. In order to provide the company with sufficient working capital for commercialisation of the CVM technology, MEP undertook a second placement to MEP clients raising $500,000. In five years since MEP’s intervention, SMS has gained approval from the Federal Aviation Authority in the US and has been one of the best performing stocks on the ASX in 2015, with a share price high of $1.98. The Company is now in the process of signing commercial agreements with a number of major airlines including Boeing and Delta in order to complete the commercialisation of CVM technology.