The agreement means that all of Zortrax’s assets will be transferred to Corelens, which in exchange, will issue 97 percent of its shares to Zortrax shareholders. As well as enabling Zortrax to expand on the medical applications of its systems, the merger will see it become publicly-listed on the NewConnect stock exchange, at a value of (PLN) 150 million zł or $39.6 million.
“Our clear development strategy and favorable market environment allow us to look to the future with optimism and assume a dynamic growth in sales of solutions for various sectors,” said Mariusz Babula, VP of the Management Board of Zortrax. “We commissioned a valuation of Zortrax, which determined the value of our company at PLN 150 million zł.”
“This is another step required by law to bring Zortrax closer to obtaining the status of a public company.”
Zortrax’s medical merger opportunity
Based in Olsztyn, Poland, Zortrax specializes in manufacturing desktop 3D printers, but it also offers a variety of post-processing, materials and software solutions to its clients. The company markets its products through a network of over 130 partners operating in 90 countries, in industries ranging from automotive and architecture to the textile sector.
For instance, in July 2019, the Zortrax prototyped numerous parts for Falectra, Poland’s first electric motorbike brand. In a completely different application of the firm’s 3D printing technology, German company Lightning Cosplay, is using Zortrax M200 systems to fabricate video-game inspired costumes.
Elsewhere, the company has developed a range of biocompatible resins for its Inkspire range of systems, in an effort to take advantage of the growing popularity of medical desktop 3D printing. Other additive firms have also identified this trend, and one of its competitors, Formlabs, recently announced the upcoming launch of a new bio-resin-based desktop 3BL machine.
In order to capitalize on this growth in demand, and enhance the medical compatibility of its printers, Zortrax has now opted to merge with the clinical firm Corelens. As an added benefit of the deal, the company could stand to raise a significant amount of funding by floating its shares on the stock exchange, depending on its financials and the confidence of investors.
The details behind Zortrax’s reverse merger deal
The reverse merger itself will see Corelens issuing Zortrax’s investors with at least 111,937,500 shares, or the equivalent of 97 percent of its business, at a set price of 1.34 zł. In exchange for each Zortrax share, 15 new Corelens shares will be issued to the company’s shareholders, ensuring that they retain the same proportion of the company as they had before.
Critically, by choosing to enact the deal as a reverse merger, Zortrax will effectively be listed as a public company on the NewConnect, a Polish exchange. As part of its preparations to go public, Zortrax has commissioned a valuation of its assets, which has estimated its value at around 150m zł or $39.6m.
According to Zortrax, the deal allows it to boost its sales within the “broadly understood” medical 3D printing market, and work more closely with Corelens’ clinically-experienced team. However, despite the opportunities presented by the merger, the move also comes at an inopportune time for Zortrax, which reported a revenue decline of 16 percent in its most recent financials.
An opportune time to go public?
Although the company isn’t yet publicly-listed and isn’t obliged to publish its figures in full, it has reported revenue of 20.4 million zł for the first seven months of 2020. This figure represents a 3.9 million zł decline on the 24.3m zł in revenue generated over the same period in 2019.
Zortrax’s financials were also negatively affected by a number of one-off write-offs necessitated by a merger with Corelens, that has been in the planning stages for a number of months. For instance, the deal required the formal dissolution of Zortrax’s tax assets, which cost the firm around 2.9 million zł on its balance sheet but didn’t affect its available cash flow.
Overall, in the financial year up to July 31st, 2020, Zortrax reported a net loss of 6.1 million zł, 2.8 million zł less than the -3.3 million zł published in the same period of 2019. Despite this, the company had slightly more cash available than the same period last year, with 3.4 million zł as opposed to 2.8 million zł.
According to Babula, the COVID-19 pandemic had a disproportionately high impact on its Chinese-based contractors, which were forced to close earlier this year. “One of the main suppliers of the company are contractors from China, which were temporarily obliged to suspend the production of components dedicated to 3D printers.”
“This, in turn, resulted in the inability to fulfill all orders by Zortrax and the decrease in sales,” added Babula. “Currently, the epidemic situation does not affect the activities of Zortrax, and cooperation with partners from Asia is proceeding smoothly.”
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