KUCHING: Smartag Solutions Bhd is seeking approval from its shareholders on a proposed private placement that would raise RM4.54mil to fund the group’s overseas business expansion.
The company will table the proposal to place out up to 45.4 million new ordinary shares of 10 sen each, representing 20% of the existing issued and paid-up capital to company directors and investors at an extraordinary general meeting (EGM) on April 28.
Under the proposed exercise, 17.5 million new shares or 38.55% will be placed out to third party investors.
Company chairman Datuk Amar Abdul Hamed Sepawi (pic) will subscribe 10.4 million placement shares, or 22.9%, while three other directors — Datuk Sri Mohamed Khalid Yusuf @ Yusup, Datuk SeriChia Kwang Chye and Dr Lim Boh Soon — will each subscribe 2.5 million shares, or 5.51%.
Another 10 million shares (22.02%) will be picked up by company chief executive officer Yow Lock Sen.
The issue price of the placement shares is 10 sen apiece.
In a circular to shareholders, Abdul Hamed said RM2.8mil raised from the exercise would be used to finance the development of an international cross border food traceability platform, RM900,000 for radio-frequency identification (RFID) community projects, RM640,000 for marketing expenses and the balance RM200,000 to pay for the estimated expenses of the placement exercise.
“The food traceability platform which is currently at an early stage of development, via its existing EPCIS core platform, will be linking similar food traceability portal in various countries to facilitate cross border tracking and tracing on food supply and distribution chain.
“The platform will have the ability to trace food, feed producing animal or substance that will be used for consumption, through all stages of production, processing and distribution.
“The other section of the project is to develop a business to consumer e-Commerce portal to provide for business to consumer transaction process, including payment processing, logistic flow and information flow and to market product with traceability information and provide authentication services,” he added.
The food traceability platform functions as a data repository in collecting and gathering information uploaded by various stakeholders in the food chain.
According to Abdul Hamed, Smartag would generate revenue from the food traceability platform through sales of hardware, customised solution software and system to enterprises, co-sharing of revenue with telecommunication companies for usage of data and fees charged to enterprises for issuance of encrypted and secured traceability numbers.
Consumers may be charged a fee for the information or product authentication service while enterprises that participate in the traceability programme can also market their products through the portal and command a premium.
The group plans to expand the food traceability platform into Hong Kong, China and/or the Middle East via the setting up of subsidiaries and/or joint venture companies.
“The platform is expected to be completed and commercialised in around 12 months from the date of listing of the placement shares,” said Abdul Hamed.
He said the group had developed a swiftlet nest tracking and traceability system on nest production from Malaysia to China, Japan and Taiwan.
The tracking platform is ready for deployment and is awaiting approval from China for the import of edible bird nest from Malaysia.
Abdul Hamed said Smartag was negotiating contracts with several bird’s nest producers to provide RFID tracking system for swiftlet nest production.
On the RFID community projects, he said the group had submitted tenders to two property developers to provide residential developments with RFID enabled security, access and monitoring which were expected to be finalised in the first six months of this year.
The RFID equipment will be installed in the entire residential development, comprising individual residential unit security access and intercommunication system, security office, parking areas and entrance/exit point.
Abdul Hamed said as the group needed to raise money fast via the proposed private placement as it had incurred continual losses in the past several years.
The group, he added, was facing the risk of insufficient cash flow to fund its operations and business expansion which might lead to loss of business opportunities.
The group’s net loss widened to RM17.1mil for the financial year 2013 from loss of RM2.7mil in 2012 due mainly to impairment of property, plant and equipment related to a container tracking project and software amounting to RM6mil and RM3.54mil respectively.
At the EGM, Smartag is also seeking the approval from its shareholders on the proposal to change its name to SMTrack Bhd.