Can this tiny company, literally become part of many global brands?

Haggai Alon, is the Founder and CEO of a company, few people have ever heard of.

And, frankly I don't think the Haggai Alon, cares one bit.

In fact the Israeli based, Australian listed company, Security Matters (ASX:SMX), will almost certainly never go close to being a household name, but it's technology could literally become part of some of the biggest brands in the world, at least at a molecular level.

Tommy Hilfiger brand aims to use post-consumer recycled textile fibres in at least 70% of its business divisions “with the ambition to increase the recycled content year on year”

According to Security Matters, it's technology allows users to tag, at a molecular level, anything from diamonds, to seeds, to fibres used in the fashion industry.

It uses a hidden

chemical-based ‘barcode’ to permanently and irrevocably ‘mark’ any object, be it solid, liquid or gas.

The barcode is read using the company’s unique ‘reader’ to access the corresponding stored data, recorded and protected, using blockchain technology.

This ensures brand protection, and supply chain integrity, even after the product is recycled.

Consumers are increasingly concerned about the purity of products and the impact industries like food, fashion and farming have on our health and the environment.

Using the fashion industry as an example, global brands like Zara and Tommy Hilfiger have started major recycling initiatives.

The World Wildlife Fund estimates it requires 20 thousand litres of water to grow one just kilogram of cotton.

The Zara business, worth an estimated 18 billion dollars, is considered one of the most efficient global supply chain operators in the world.

Its supply chain efficiency, not so much its fashion, is often considered the real reason behind its commercial success.

But if you watch the video below, lifted from Zara's website, you start to appreciate how large, time consuming and expensive, a task like sorting and recycling at scale, is even for a Zara.

Imagine how much faster, cheaper and more transparent the process would be, if a raw material, like cotton, could be tagged at a molecular level in the seeds, when it is planted?

This would mean that scanned, returned clothing, could be identified, down to the fibres. These could be reconstituted and remade into new clothing and the consumer could see the entire story of the items creation, by checking the blockchain to tell where, when and how it was made.

While few customers may ever actually do the check, the fact that they can, and will eventually learn that it is a reliable trace system, would be a valuable differentiation for companies in numerous industries.

Security Matters says it is targeting the following verticals at this stage:

• Fashion

• Diamonds

• Animal feed stock

• Plastics

• Electronics

The latest financials on Security Matters show:

• A positive cash flow of $2.94m for quarter ended 30 June 2019.

• It's operating cash flow for the period was $(963,000).

• Investing cash flow was $(240,000). Financing cash flow was $4.15m.

• Cash in hand at the end of the quarter was $4.23m.

I recently spoke with Haggai Alon, Founder and CEO of Security Matters, to get a better idea of how their technology works, and just how they intend to become a global player.

The latest financials on Security Matters:

• A positive cash flow of $2.94m for quarter ended 30 June 2019.

• It's operating cash flow for the period was $(963,000).

• Investing cash flow was $(240,000). Financing cash flow was $4.15m.

• Cash in hand at quarter end was $4.23m.

The InsideMarket Private Fund does not own shares in Security Matters at the time of publishing this post. We also have not received any payment from the company for this coverage. Disruptive technology stocks should be considered very speculative, high-risk, and extremely volatile. There are significant risks inherent in developing new technologies that are not discussed here. You should always seek professional advice before considering any share purchase or sale. Please read our full disclaimer.