Optical technology maker Equitech adds subsidiary, settles licensing dispute

Mullica Hill, N.J.-based Equitech International Corp. is growing physically and geographically through the acquisition of a majority stake in CompSOL USA and the resolution of a licensing dispute with Berlin-based ColVisTec AG.

Founded in 1995, Equitech focuses on optical technology to run continuous quality control in-line and in real time as opposed to taking samples to a laboratory every few hours.

Over the years, the company invented and developed an industrial process spectrophotometer (IPS) called EquiSpec IPS that uses the UV-Vis region of the electromagnetic spectrum as well as fiber-optic probes to continuously measure color and chemical concentration in real time on the production line. The system can withstand the noise, vibration, dust, humidity and changes in temperature common in manufacturing operations.

To expand its product line with opto-electronic devices, Equitech acquired an 81 percent stake in Charlotte, N.C.-based CompSOL USA in August.

Then, to extend its reach, Equitech settled a licensing dispute that will let it market its EquiSpec IPS and new products in Europe and the Middle East, according to Equitech CEO Jaime Gómez.

"The future of Equitech is bright," Gómez said in an email. "We have a great product that helps the industry cut costs and avoid waste, and we will be launching two new products in 2022."

Equitech officials also signed an agreement with Aguilar & Pineda Asociados SL to distribute Equitech products in Europe and establish its European headquarters in Barcelona.

In addition, Equitech set up a global OEM sales program so the manufacturers of extruders, feeders and other processing equipment can work with Equitech experts to integrate optical technology into their control and process management systems.

Next, the company is seeking $4.2 million from investors to finalize the development of two new products geared toward the semiconductor and the automotive industries, primarily, and to advance its current in-line spectroscopy systems.

The next-generation EquiSpec IPS is said to capture real-time analytical information so processors reduce or even eliminate "off-spec" products and the associated waste.

Equitech officials are seeking investors to advance its technology "towards a full self-correcting production line," according to an online request for backers, who in exchange would receive 442,105 shares of common stock, resulting in a 17.09 percent ownership interest in the company.

For an individual investor, the exchange would create the largest single shareholder position in the company.

Last month, Equitech was the one acquiring shares, obtaining an 81 percent share of CompSOL USA, a fast-growing engineering development company founded in 2013, through a stock swap with its executives. CompSOL's capabilities are related to optical, electronics and software engineering as well as manufacturing printed circuit boards and sophisticated opto-electronic devices.

"This acquisition added vital strength to the company, providing engineering capabilities we did not have before," Gómez said. "The companies are now working on two new and revolutionary products that should be in the market in 2022."

CompSOL officials retained 19 percent of that company. The parties also formed a "keiretsu," or affiliated group, where Equitech is the parent company and CompSOL a subsidiary.

"The keiretsu concept will allow Equitech to buy other companies and move them as subsidiaries," Gómez said, adding tax advantages also are expected.

In the meantime, Equitech has moved its manufacturing facility to Charlotte, where it shares a 25,000-square-foot manufacturing facility with CompSOL and its affiliated partners M&M Technology and Optoniks.

"In the keiretsu formation it made more sense to be all under one roof for synergy and cost savings," Gómez said, adding that the site also is near the Charlotte campus of the University of North Carolina, which he said has one of the finest metrology departments in the nation.

In addition, the Polymer Center of Excellence in Charlotte is located only 15 minutes away by car from Equitech's facility. Gómez said Equitech signed a consignment agreement with the PCE and will be moving a system there at the end of this month.

"Companies wishing to try Equitech's technology have two options: Rent a system and its respective probe from Equitech, or go to the Polymer Center of Excellence and try it there," he added.

CompSOL CEO Majid Babaie said company officials are pleased to be part of the Equitech family, where he is now the chief operating officer.

"CompSOL has been working on the modernization of Equitech's UV-Vis spectroscopy products and will be commercializing several new products for in-line, real-time measurement of process variables through the Equitech brand," Babaie said in a news release.

Both companies are hiring to bolster their teams. Equitech currently has four employees and CompSOL has eight.

With the cancellation of the licensing agreement, Equitech will be able to introduce new products to Europe next year.

Back in 2010, when Equitech was looking for investors, ColVisTec licensed Equitech technology and obtained the rights to manufacture and sell it in Europe and the Middle East. Each company took ownership in the other company by swapping shares and later entered into a manufacturing supply agreement that allowed ColVisTec to become the sole manufacturer of the technology.

But the business relationship grew strained. In 2016, ColVisTec asserted that the licensing agreement was terminated because Equitech had an unpaid debt with them.

ColVisTec officials pointed to a clause in the agreement stating if any of the companies became insolvent, the other company would be free of the geographical restrictions and be able to sell all over the world.

However, Gómez said Equitech was never insolvent. The company countered every legal claim made by ColVisTec before finally negotiating the termination of the licensing agreement.

"We implemented a global resolution whereby each company divested its interests in the other company, becoming true competitors in the market," Gómez said. "Each can sell all over the world."

Entering a new geography needs to be done carefully, he added. Sales can be built relatively fast by partnering with companies like Aguilar & Pineda. The prime candidates for doing it "in-line and in real time" are processors that make quality control measurements in the laboratory.

"We don't sell thermometers or check valves," Gómez said. "The technology is very sophisticated and as such, it has a steep learning curve. But once a company gains experience with the technology and can analyze the return on investment they receive, they move fast to adopt it."

To increase its worldwide sales and marketing efforts, fund completion of two new products and improve its EquiSpec IPS, Equitech officials are planning to raise $4.2 million dollars.

The company is working with CompSOL on two "revolutionary" products that should be in the market in 2022, Gómez said.

"These technologies have been developed over several years of R&D and bring significant savings to the semiconductor and automotive industries," Babaie added. "We need additional resources to begin manufacturing and commercializing the systems."

Equitech recently published a private placement memorandum for accredited investors.