Take AIM: Dragon's Den helps Oxonica turn Turkey

Nanomaterials group Oxonica is involved with improving fuel combustion, providing ultra violet screening in sun care products and tagging objects used in security identification.

For those that may not know, nano is a Latin word meaning small, in a modern sense a one thousand millionth part.

It was being small, if not nano-sized that gave AIM-listed Oxonica (OXN) the biggest problem in its history earlier this year, forcing its shares to be suspended and triggering a hunt for new capital.

One of its best known products is Envirox, a fuel catalyst that improves consumption and reduces emissions. It was tested by transport group Stagecoach in London before it sold that part of its bus operations to the Australian group Macquarie.

Oxonica's energy division had a contract with Petrol Ofisi, Turkey's leading oil company. Most of Turkey's fuel comes from Russia and tends to have a high, and environmentally undesirable, sulphur content that was hitting Petrol Ofisi's market share. It was thought that these disadvantages could be reduced by Envirox.

Tests were done and the benefits measured. But for a science-based company like Oxonica, which spun out of Oxford University in 1999, there were too many variables: different vehicles on sometimes dubious road surfaces with different drivers in a range of environments and weather conditions.

Although there was plenty of positive anecdotal evidence, Petrol Ofisi felt it insufficiently hard for it to promote the treated fuel as aggressively as planned. The results were dismissed as inconclusive and Oxonica fired.

The size of the deal and the initial uncertainties associated with its loss gave the board no option but to suspend the shares at 117.5p on 27 April. They had been pushed up to 150p when the Petrol Ofisi contract was landed in August 2006 and on 24 October peaked at 172.5p.

Oxonica clarified its position with Petrol Ofisi, tried to rebuild the trial programme and took drastic steps to reduce costs. But when the share suspension was lifted on 5 June, Oxonica's shares plunged to 34p and bottomed on 15 June at 30.5p.

'We did all the things you would expect as well as initiating a detailed strategic review of the business the conclusion of which was to raise additional funds,' chief executive Kevin Matthews told Citywire.