Are Technology based Small-cap Stocks with Commercial Potential on the Rise?

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Australian Economy

It is difficult to find small-cap stocks that demonstrate good commercial potential in the nascent stage itself. However, with technology build-ups and advancements, some groups are establishing their trajectory on the commercial potential of the products. Below are 2 stocks that look to be settling in the above category while risks do prevail.

Come May 2018, and this Graphene-focused small-cap tech stock is seen to grab some attention after a period of stillness. Dotz Nano Limited (ASX: DTZ) that comes under the micro-cap category of information technology sector, has witnessed a decent transformation in late 2017 with the establishment of infrastructure needed, to successfully transition to a commercial company. Dotz Nano, more precisely, the world’s premier manufacturer of Graphene Quantum Dots (GQDs), is looking for more and more opportunities to commercializing its high quality GQDs for use in a variety of applications.

Dotz Nano develops, manufactures, and commercializes graphene quantum dots (GQDs) in Australia. Its GQDs are used in display, bio imaging, anti-counterfeiting, pigment and dye, cosmetic, optoelectronic, and optical brightener applications. Currently trading at $0.100 at the ASX post a 23.529% rise noted on May 01, 2018 followed by a 4.7% fall on May 02, 2018, the group has now appointed Gleneagle as its Corporate Advisor in view of company’s aim to have a strategy that drives shareholder value. The group has otherwise ceased the contract with previous advisor, Otsana Capital. Further, the group has bagged a firm purchase order for 10 kilograms of its Validotz product, and this sets a stepping stone in its commercialization strategy for graphene applications across all industries. The key aspect to note is the technology that is based on alternative graphene-based dots developed to have good inherent properties and biocompatibility and photostability. The group’s loss for the year ended December 31, 2017 has also narrowed with decent revenue being reported. Net loss for the period was USD 4,363,757 against USD 8,358,796 for the same period of last year. Company’s cash position is now US$1.695 million, and it is on track to benefit from cost sharing grant funding from BIRD and SIIRD (US$ 962,000) available for the next couple of years.

Another diverse player is DroneShield Ltd (ASX: DRO) that has its in-house and distributor salesforce continuing to progress a number of opportunities, which include many governmental procurement processes. Its DroneGun Tactical is being evaluated by the French military lately, while ForcePro, one of the Company’s European distributors, has asked for an order for DroneSentinel product along with two DroneGun units. The group also launched RadarZero, a compact drone detection radar product having the size of a paperback book. Its DroneGun MKII has been approved for use by the Paraguayan military, under the US regulatory approval. Meanwhile, its products have been utilised by the Australian Defence Force for the protection of the ASEAN-Australia Special Summit 2018 in Sydney. DroneShield’s products were also lately utilised by the Texas State Department of Public Safety, for the protection of the 2018 Monster Energy NASCAR Cup Series at the Texas Motor Speedway. While the stock has been down 17% in last three months owing to volatility in the drone sector, the group seems to have good potential based on existing arrangements and orders.

While volatility prevails in the small-cap sector and risk is high, investors can keep an eye on such stocks to benefit from the emerging trends and commercial potential.


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