As companies rush to list on the ASX, looking for a capital boost and a higher profile, one Australian-based developer has listed through the backdoor. And its sights are set on securing its future as a major player in the intelligent security market.
Secure ID-Net, or SID for short, started its life a little differently than most technology companies. Director Francis Galbally saw an opportunity in a little-known fingerprint encryption technology developed by American company Vtel. Acquiring the rights to purchase the technology, he set about bringing it to market.
"We needed a vehicle to get the technology out into the marketplace," Galbally said. "So we felt the best way to fast-track the commercialisation of this technology was to acquire an ASX-listed company."
Galbally said he and fellow (non-executive) director Peter Cook looked at nearly two dozen companies. Diamin Resources, a struggling Victorian mining company, became the obvious choice. "It was going nowhere - the share price was down to something like 6 cents. It owed creditors $375,000. Basically it had run out of steam," said Galbally.
On the board of the Service Provider Industry Association, Cook was involved throughout the incubation period of SID, with the company eager to have the skill sets of a man who's launched three successful telco startups.
After acquiring 15 per cent of Diamin earlier this year, Galbally and Cook set about paying off debts. Soon gaining control of the company, they started to sell off assets including the company's biggest asset, a processing plant in Victoria.
Looking to rid all mining assets by October, Galbally claimed these moves were welcomed by Diamin's weary shareholders, with 99 per cent agreeing to the radical change in company direction.
With nearly $2 million in the bank, SID then relisted on the ASX last week. Despite being forced to list under the original listed name of Diamin Resources in the mining sector, share prices immediately responded, rising to as much as 40 cents within a week.
Meanwhile, SID has been busily undergoing the process of patenting the technology in the US. "The most inhibiting factor for e-commerce is the fear of credit card information being misused," said Galbally. "And with 6 per cent of transactions in the US reporting some form of misuse, the fear is very real as well as perceived."
The technology developed by SID tackles authentication at the user level, rather than at the data level or company level where information can still be hacked into, Galbally said.
It works by randomly selecting a portion of a person's fingerprint and sending that information to a central hub. The hub reads the portion of the fingerprint, date stamps it so if the data is intercepted it can't be stored and later reused, and identifies who the fingerprint belongs to.
He said the technology has a number of applications from e-commerce, banking and financial institutions, secure Web sites and government.
Initially, Cook and Galbally are looking to target the financial and banking vertical market with SID's fingerprint encryption technology, but both directors realise the real future of SID lies overseas. "At the end of the day, America is the centre of the universe," said Galbally.
With fingerprint scanners gaining widespread adoption, Galbally forecasts that scanners will be on mice, desktops and/or credit cards in the near future as authentication security becomes paramount.
The company is set to relist as Secure ID-Net this week on the ASX and has just announced the acquisition of a 50.1 per cent stake in Melbourne-based software developer AID4's associated entities - ePIL Pty and Worldof.Com.
The announcement signals SID's aggressive strategy to align new technologies and products with SID's Internet-based security offerings through acquisitions. SID is looking to float ePIL within 18 months.
Unable to elaborate in much detail, Galbally said the company would ultimately be looking to have a dual business structure including technology development based around the current security offerings as well as investing in other IT companies as a venture capitalist.
"There's very little money in the industry for companies to bring technology to the market so that's where we'll fit in. But the company has to have something complementary to offer SID's technology," said Galbally.
As the real value of Internet and technology company shares come under the microscope, Cook is well aware of the responsibilities they have as directors to build a sound, profitable business.
"There's a lot of hype at the moment and you can't stop that. But we want to be seen as going beyond that and just being a good company," said Cook.