VOL. 125 | NO. 44 | Friday, March 5, 2010
Snowflake Technologies Breaks Away
By Tom Wilemon
“When I left (Luminetx), we had a prototype. It was receiving national attention. It was very exciting. I hated to see after I left that they had mothballed it.”– Former Luminetx CEO Jim Phillips
Snowflake Technologies Corp. has emerged from the ashes of Luminetx.
The former subsidiary of Luminetx Corp., which was not part of the deal when Christie Digital Systems Inc. acquired the company in December, is now a free-standing company with its own board of directors.
Shareholders this week elected the first three board members and learned about efforts to secure investment capital. The intention is for Snowflake to put a biometric identification product on the market using vein-viewing technology.
Jim Phillips, who served as chief executive officer of Luminetx and led the company through its successful early years, is back in the picture with Snowflake.
“We have already identified capital to restart the engines,” Phillips said. “In a week or two or three, we will announce who the complete board is and where some of the capital will be coming from.”
The three board members elected Wednesday are Herb Zeman, the inventor of the vein-viewing technology; Brad Silver, a former Luminetx executive who served under Phillips; and John Dayani, a Nashville entrepreneur and founder of health care companies.
Zeman and Phillips, who left Luminetx in 2007, butted heads in the past, but this time around they are on the same team.
“We’re working together,” Zeman said. “I think we both are very interested in seeing value created for the shareholders of Snowflake. Jim obviously is going to be involved in raising money. I’m going to be involved in technology.
“The idea is to create value, to make a company that can be successful and that can bring value to the shareholders.”
Corporate infighting continued after Phillips’s departure. Zeman wound up being fired by the company he founded. The company was hurt by management turnover, boardroom conflicts, the downfall of one of its major investors, Stanford Financial Group, and legal fights with a new competitor.
Luminetx was running out of operating cash and was losing money when shareholders approved its acquisition. Christie, which had already loaned Luminetx $1.5 million, paid $15 million for the company and forgave the loan.
That worked out to about 74 cents a share.
However, Luminetx shareholders retained the company’s Snowflake subsidiary. They received one share of Snowflake for every share of Luminetx they had.
Phillips has a successful history of raising investment capital.
During his tenure, he secured millions of dollars in investment, which resulted in the price of the stock tripling from $1 to $3.
“It’s exciting that Snowflake will get a chance,” Phillips said. “When I left the company, we had a prototype. It was receiving national attention. It was very exciting. I hated to see after I left that they mothballed it.”
Christie now owns the patent for the vein-viewing technology that Zeman invented. Christie plans to use the technology for medical products. However, Snowflake has a license to use it for biometric identification purposes, Zeman said.
Zeman and the two other board members will take the next steps with Snowflake, Phillips said.
“They will need to appoint a president and a secretary pretty quickly,” Phillips said.
The board can also nominate other board members, he said.