Perth will be home to Australia’s only listed specialist toy company after inventor Alex Aguero floats his company Brainytoys.com Pty Ltd.
Perth will be home to Australia’s only listed specialist toy company after inventor Alex Aguero floats his company Brainytoys.com Pty Ltd.
Mr Aguero is planning a back door listing on the Australian Stock Exchange through shell company Auto Enterprises, formerly known as Speedy Wheels.
He will receive cash and scrip valuing his business at $2.5 million and will emerge as the largest shareholder in Auto Enterprises, which is likely to change its name.
The float is conditional on Auto Enterprises being recapitalised by raising just over $2 million of new equity.
Mr Aguero has been developing a wide range of toy concepts for the past five years and is aiming to rapidly commercialise some of his concepts after the float.
“This is a very dynamic market and we want to move aggressively into it,” he told WA Business News.
Mr Aguero achieved a measure of commercial success several years ago when he launched the FlipX hand-held electronic game, but his product was swamped by the success of a competing product.
He is confident Brainytoys will be more successful this time around.
“I’m not walking into this blind, I’ve trialled every aspect of it right down to retail,” Mr Aguero said.
He said technology advances, particularly the emergence of three- dimensional printers, would make a big difference, as they allow for rapid production of high-quality prototypes.
Another big difference is the massive production capacity in South-East Asia, for everything from microchips to plastic moulds, and the potential to form partnerships with manufacturers.
“There are no barriers to entry. Your entry to this market is your creativity and your ability to deliver [the product],” Mr Aguero said.
Brainytoys will be targeting a range of linked product categories, such as hand-held electronic games, remote controlled robotic toys, die-cast vehicles, board games, collectible characters, animation, construction kits and educational toys.
Mr Aguero said this encompassed very low-tech and very high-tech applications.
“We are looking at animation in its broadest range and that can extend to multi media and computer games,” he said.
Brainytoys may also pursue a variety of selling channels, including licensing of products and partnering with distributors, which Mr Aguero said would mitigate the financial and commercial risk.
The transaction has been brokered by Lothbury director Charles Mackinnon, who is a former company secretary of Auto Enterprises.
Mr Aguero will be paid $75,000 cash and 60.9 million Auto Enterprises shares.
In addition, he will be issued with 12.5 million options, enabling him to buy additional Auto Enterprises shares at 25 cents per share.
Mr Aguero will also receive a royalty equal to 1 per cent of the annual sales generated by the company.
The acquisition is subject to Auto Enterprises raising $833,000 of seed capital from ‘sophisticated’ investors (at three cents per share) and $1.25 million through a prospectus issue (at four cents per share).
Auto Enterprises will also complete a five-for-one capital reconstruction so that its ordinary shares are valued at 20 cents.
Sydney-based Auto Enterprises, formerly known as Speedy Wheels, has a chequered history.
It has been a shell company since 1999 when it sold its loss-making wheel supply business.
In 2000 it announced plans to buy Sydney security business Halion International.
However, it subsequently discovered that representatives of Halion, which later went into liquidation, had transferred money out of its bank account.
Mr Mackinnon ceased being company secretary in June 2001 when Auto Enterprises transferred its registered office from Perth to Sydney. Its latest accounts reveal the company has net assets of $188,000, equating to 1.4 cents per share.