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After two withdrawn initial public offering (IPO) attempts in 2018 and 2022, an Australian company whose electrical shark deterrent technology has received global attention over the course of decades is currently in voluntary administration, but hopes are high this won't be its fin-ish.
Quartz Advisory founder Olga Litosh, who was appointed as the administrator of Shark Shield and its holding company Ocean Guardian on 24 May, tells Business News Australia there are ongoing discussions with several interested parties to secure the group's future amidst an urgent expressions of interest campaign (EOI) that will close on 10 July.
Two days before Litosh's appointment, Andrew Quinn of Mackay Goodwin was appointed receiver to the group.
"Since 2001, the Shark Shield technology has been designed with the objective of protecting ocean users and preventing the unnecessary killing of marine life by environmentally destructive shark nets, drumlines, and culls," Litosh explains.
"Independently proven and tested, Ocean Guardian’s Shark Shield Technology has been backed by multiple peer-reviewed published research papers."
Originally developed by South African inventors Graeme Charter, Sherman Ripley and Norman Starkey, at the turn of the Millennium the technology was licensed to Ocean Guardian's South Australia-based predecessor SeaChange Technology, which created its own iterations and patents.
Shark Shield, trading as Ocean Guardian since 2018 and now based in Sydney's Northern Beaches, works by emitting an electric signal that is unpleasant to the sensitive 'ampullae of Lorenzini' receptors that sharks have on their snouts, causing muscular spasms.
The deterrent can not repel sharks in all situations, but modelling from Flinders University showed that its proper use would be effective in preventing future death and injuries, potentially saving more than a thousand lives in Australia over half a century.
The Western Australian Government has embraced the promise of Ocean Guardian, and provides a $200 consumer rebate on two of Ocean Guardian’s shark deterrent devices, the FREEDOM 7 for divers and the Freedom +Surf attachment that can be put on boards.
"The rebate is available to Western Australian residents and is applied by the retailer at the point of sale. The Department of Primary Industries and Regional Development administers the rebate program through the Shark Response Unit of the Western Australia government," Litosh says.
"I understand that prior to my appointment, discussions were held with the Queensland and New South Wales governments to implement similar programs."
The potential of these products to save lives and reduce the need for shark nets that kill marine life has been covered across a wide range of international media outlets from the BBC to the New York Times, and just two years ago research into the product with Flinders University was showcased in a National Geographic episode with actor Chris Hemsworth.
But the company has struggled to secure the financing required to achieve its ambitions. In 2018 its owners withdrew from a planned $5 million Australian Stock Exchange (ASX) float after deciding to focus on rolling out new products and building a stronger order book in pursuit of a better valuation.
The administrator reveals that Ocean Guardian embarked on another IPO process in 2022 with its broker Morgans to develop and commercialise the "Shark Barrier" range for large-scale deployment.
"The directors advised that the IPO was deferred when it became apparent that there would be a low likelihood of a successful listing due to the difficult market conditions, deemed “the worst market conditions in over ten years”," Litosh says.
She notes the group recorded a net loss of $1.2 million in FY23 as pre-IPO funding was allocated to preparing for a listing and building the Shark Barrier sales pipeline.
"Ocean Guardian forecasted a smaller loss in FY24 than in FY23, assuming capital could be found to enable the purchase of inventory to meet demand, specifically for the dive, boat, and fish products," she says.
"In December 2023, YTD (year-to-date) sales were down compared to the same period in the previous year due to no inventory of boat/fish products for the full period and no dive inventory during the peak summer selling season.
"The dive product represents approximately 60 per cent of the total revenue. Working capital was required to build dive inventory at the factory and complete the boat/fish production, with manufacturing recently transferred to Australia."
She says that without sufficient working and growth capital, the venture was unable to operate and scale.
"On 24 May 2024, after having considered available options, the board of directors resolved to place the companies into voluntary administration, and I was appointed voluntary administrator," she says.
"We are progressively engaging with various parties to recapitalise and/or sell assets, IP, and core business of Ocean Guardian, currently in a holding position.
"We have held discussions with key stakeholders, including major suppliers, customers, experienced key staff, and the management of Ocean Guardian with a view to assessing their level of support. We have received reassurance from key stakeholders."
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