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The Opportunity
MIKOH Corporation Limited (ASX: MIK.AX) is a developer and patent holder of tamper detection and authentication technologies that protect the assets of governments, organisations and individuals.  With offices in Australia and the USA the company is now deploying its technologies in high-volume global markets where there are clear requirements and growing demand – in particular Automated Vehicle Identification (AVI) and Asset Protection, Tracking, and Management.  The products are deployed via its direct sales force and through global partners.

MIKOH requires additional funding to continue its planned rollout of these technologies. 

The Products
MIKOH has developed a series of technologies and products that provide tamper detection in both RFID (radio frequency identification) and non-RFID systems. The technologies are aimed at applications in which physical security is critical, and the compromise of sensitive or high-value assets would result in commercial loss or a security breach.  Included in the product range is a recently developed closure mechanism, incorporating technology licensed from the US National Security Agency (www.nsa.gov), which can be incorporated into any reusable plastic container. Through a relationship with US-based Pelican Products (www.pelican.com), MIKOH has developed SecureContainer closure designs and production tooling specifically for use with Pelican’s ruggedized cases, which are used extensively in the US Federal Government.  Applications for these technologies are broad and varied, and MIKOH has made substantial progress in two key areas - government asset security and vehicle identification.  

MIKOH’s key technologies and products, which are protected by a strong patent portfolio, include:-

• Smart&Secure™ Inform – Disables an RFID tag if it is tampered with or moved.
• Smart&Secure™ Insight – Leaves an RFID tag functional BUT alerts an RFID reader that tampering has occurred.
• SecureContainer™ - Container closure mechanism for use with reusable plastic containers to protect the integrity of the contents – specific designs have been developed for use with Pelican’s range of ruggedised cases.
• SubScribe™ - Sub-surface laser marking technology for non-RFID tamper-indicating security labels and seals.
• High Speed Inkjet Printers – Focused on security printing and print systems for high-volume commercial markets.

Value Proposition
MIKOH’s technologies provide security and certainty for end users, whether in the form of a tamper-indicating solution, an authentication solution, or an identification/tracking solution – or a combination. For instance, MIKOH’s Smart&Secure RFID tag technology ensures a 1:1 relationship between an RFID tag and the tagged item, so that detecting the tag ensures detection of the tagged item. This is not the case for standard RFID tags, which can be moved from one item to another, so that detection of a standard tag does not ensure the presence of the original tagged item. This security feature is critical in electronic vehicle registration systems, where an RFID windscreen tag is used to monitor a vehicle’s registration status, which is specific to the vehicle. Similarly, SecureContainer indicates whether a container’s contents have been tampered, and allows the container to be identified and tracked automatically via RFID technology. MIKOH’s latest digital print initiatives – including the use of DataDot technology in its SubScribe security seals – are aimed at providing high-security authentication that is easy to implement. The theme running through MIKOH’s technologies is affordable security and certainty – key requirements in today’s government and commercial operations.

Market Size
MIKOH’s technologies span several major global markets, so it is difficult to define the accessible market size in a simple manner. MIKOH does not regard itself as an RFID company, as its focus is on providing security and certainty. Nonetheless, some of the company’s technologies operate within the RFID industry, which according to IDTechEx is expected to grow from 2005 revenues of just under US$2BN to US$24BN by 2015. On the other hand, MIKOH’s solutions also apply to the problems of counterfeiting, piracy, tampering and theft – problems that are estimated to have led to global financial losses of US$610BN in 2006 (“The International Market for Brand Protection Solutions, 2nd Edition”, January 2008, Vandagraf International Limited). Looking at another facet of the accessible markets, MIKOH’s Smart&Secure vehicle tags are applicable in all AVI applications, and there are approximately 600M vehicles currently registered in the world. Through its partnerships MIKOH expects to be able to access a substantial proportion of this market. 

Competitive Landscape
Where possible, MIKOH relies on patents to protect its position in the market. The company has patent protection for its Smart&Secure technology, while the technology licensed from the NSA for use in SecureContainer is also patented. In addition, MIKOH has patent protection for some aspects of its inkjet print technology, and has patent applications pending for SecureContainer and for its latest authentication technology initiatives. Physical security for RFID tags is becoming a more prominent issue, and MIKOH is increasingly seeing other companies offering tamper-indication. To date, all other offerings of which MIKOH is aware have either been technically inferior or copies of MIKOH’s technology. MIKOH is taking appropriate legal steps to enforce its patent rights in those instances where infringement is believed to be occurring. The company is not aware of any companies offering a low cost container security/tracking solution that would compete with SecureContainer.

Go-to-market Strategy
MIKOH developes Intellectual Property and forms relationships with, value added resellers (VAR’s), commercialisation partners and licensees. As an example, the company supplied Smart&Secure™ tags for its partners to implement an Electronic Vehicle Registration (EVR) system for the Bermuda Transport Control Department – a world first that in 2008 was announced by the Bermuda government to be a success. Since then, Smart&Secure has been and is being implemented in AVI applications in other countries that are adopting Electronic Vehicle Registration and Automated Vehicle Identification systems.  For this market, MIKOH entered into a collaboration agreement with Sirit, Inc. (www.sirit.com) to produce and distribute Smart&Secure for vehicle applications.  Under the relationship with Sirit, MIKOH receives a royalty for every Smart&Secure RFID tag applied to a windscreen. These tags are replaced on average every 2-4 years.  For the SecureContainer™ product, MIKOH collaborates with its partners to provide solutions for government and commercial applications.  Again, like EVR, this is a recurring revenue model in which MIKOH receives revenue every time a case is sealed. Similarly, the company has developed a relationship with US-based Sun Chemical – the world’s largest producer of printing inks and pigments, and part of the Dainippon Ink & Chemicals group. In addition to supplying key chemical formulations for MIKOH’s Smart&Secure products, Sun has an active security group focused on providing brand protection solutions to consumer markets globally. MIKOH and Sun entered into an that is aimed at Sun marketing and selling MIKOH’s security and authentication technologies into high-volume commercial markets where Sun already has a strong presence. MIKOH continues to develop relationships with other manufacturers and integrators worldwide to deploy its products and technology. Although the global downturn has slowed MIKOH’s commercialisation progress, the company remains confident this is the most efficient, and only feasible, strategy for rolling its technologies out into high-volume global markets.

 

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