Laminera Flow Optimization Ltd. (LMFO) has filed to raise an undisclosed amount in an IPO of units consisting of ordinary shares and warrants, according to an F-1 registration statement.
The firm is developing technologies to improve the flow of liquids through pipelines.
Laminera is still at a pre-revenue stage of development, so the IPO would be very high risk.
I’ll provide a final opinion when we learn more information about the IPO from management.
Netanya, Israel-based Laminera was founded to develop its low-frequency pressure waves to reduce hydrodynamic resistance and smooth the flow of liquids through pipelines.
Management is headed by Chief Executive Officer Yair Volovitz, who has been with the firm since January 2022 and was previously a business development manager at biotech firm Kaiima Bio-Agritech.
The firm's active flow device, called PWG, promises to improve pipeline flow for oil, natural gas and water.
The system consists of four elements:
Pressure wave generator [PWG]
Automatic control and optimization program
Laminera has booked fair market value investment of $2.6 million as of December 31, 2021 from investors including Tamrid Ltd., Medigus Ltd., L.I.A. Pure Capital Ltd. and various individuals.
The firm does not currently have any paying customers, but upon completion of development of its latest prototype device, the company will seek customers across the primary industries of water transport and oil & gas pipeline operators.
Laminera currently is in extended beta test development with prominent Israel-based water supply company Mekorot, which provides more than 1.5 billion cubic meters of water annually to homes and businesses in Israel annually.
In return for its collaboration with Laminera, Mekorot also has warrant rights to purchase stock as well as most-favored customer status for seven years after Laminera begins selling its products.
According to a 2022 market research report by IMARC Group, the global market for pipeline monitoring (as a proxy for the firm's pipeline-related technologies) was an estimated $13.7 billion in 2021 and is forecast to reach $20.6 billion by 2027.
This represents a forecast CAGR of 6.7% from 2022 to 2027.
The main drivers for this expected growth are an increasing frequency of pipeline leaks and breaks resulting in the loss of pipeline liquids and potential environmental degradation.
Also, various countries are stiffening pipeline operational standards, further incentivizing operators to reduce spills while improving throughput to compensate for higher operating costs.
Major competitive or other industry participants include Rix Industries and Industrial Research Ltd.
The company’s recent financial results can be summarized as pre-revenue, with some R&D and G&A expenses associated with its product development efforts.
Below are relevant financial results derived from the firm’s registration statement:
As of December 31, 2021, Laminera had $331,998 in cash and $159,849 in total liabilities.
Free cash flow during the twelve months ended December 31, 2021, was negative ($38,481).
Laminera intends to raise an undisclosed amount in gross proceeds from an IPO of units consisting of ordinary shares and warrants.
No existing shareholders have indicated an interest to purchase shares at the IPO price.
Management says it will use the net proceeds from the IPO as follows:
for product development, product testing in beta sites for the purpose of examining our product’s performance and its compliance with certain predefined specifications;
for research and development, including completion of our existing systems and continued development of new products;
for marketing, advertising and pre-commercialization activities; and
the remainder for working capital and general corporate purposes and possible future acquisitions.
(Source - SEC)
Management’s presentation of the company roadshow is not available.
Regarding outstanding legal proceedings, management says the company is "not currently a party to any material legal proceedings."
The sole listed bookrunner of the IPO is Aegis Capital Corp.
LMFO is seeking U.S. capital market investment to fund its further product development, testing and commercialization requirements.
The company’s financials have shown no revenue and a small amount of R&D and G&A expenses related to its product development efforts.
Free cash flow for the twelve months ended December 31, 2021, was negative ($38,481).
The firm currently plans to pay no dividends for the foreseeable future and the Israeli Companies Law "imposes further restrictions" on the company's discretion to pay dividends.
The market opportunity for improving pipeline flow is likely large and growing, as pipelines are used to transport energy and water, two fundamental resources needed worldwide.
Aegis Capital Corp. is the sole underwriter and IPOs led by the firm over the last 12-month period have generated an average return of negative (74.2%) since their IPO. This is a bottom-tier performance for all major underwriters during the period.
The primary risk to the company’s outlook is its tiny size and thin capitalization.
The firm has a strategic relationship with Mekorot, which is a strong positive in terms of product development and potential new business development relationships.
When we learn more information about management’s proposed pricing and valuation assumptions, I’ll provide an update.
Expected IPO Pricing Date: To be announced.
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