Singapore-listed Trek 2000 Interntational suffered a tough 2012 and its stock price has slumped. But it still counts among just a small number of Singapore companies that have produced inventions that are mass-adopted globally. Its FluCard (now marketed as FlashAir by Toshiba), is gaining ground. And Trek chairman Henn Tan, in the recently-published 2012 annual report, hints of strategic partnerships to come. We reproduce excerpts from his message in the annual report which yields insights into the prospects for 2013. For the full-blown annual report, click here.
Henn Tan, Chairman & CEO of Trek 2000:
While sales of our FluCard® continue to increase year-on-year, our FY2012 performance was adversely affected by three unanticipated factors:• Our topline performance was less-than-ideal due to a 6.7% decrease in revenue to US$80.4 million mainly due to lower contributions from original equipment manufacturing sales.
• We had a design flaw in one of our ASIC chip projects and this resulted in one-time write-offs of US$1.63 million in inventory and US$1.0 million in development expenses. The design flaw has since been rectified.
• As part of our risk management review of our Intellectual Property and intangible assets and in the light of rapid technological changes, we considered it prudent to record a US$4.1 million impairment of these assets.
As such, we reported net loss after tax of US$5.1 million for FY2012 versus a profit of US$2.0 million previously. To increase our resilience against the volatile operating environment, we continue to emphasize on strengthening our cashflow and balance sheet.
Outlook & Strategy
Going forward, we expect that business conditions will continue to be challenging. Notwithstanding our challenges, we will continue to pursue R&D activities so as to introduce new innovations to the market, particularly for new variants of our FlashAir Pro in terms of functionality as well as userfriendly mobile applications.As part of our strategy to introduce more recurring streams of revenue, we have already developed a set of FluCard® mobile applications and made available the software development kit with developers in Japan and India. In time to come, we expect to generate greater consumer interest and to build an ecosystem around the FlashAir Pro.
We have already entered into a white label manufacturing agreement with our strategic partner, Toshiba, who has launched their FlashAir card to overwhelmingly positive reviews at the Consumer Electronics Show in January 2012.
As such, we anticipate financial contributions from this business partnership for FY2013 on the back of increasing consumer awareness of our disruptive and revolutionary technology.
We will also continue to develop our core Mobile Media Solutions segment to achieve greater growth. We are also in advanced stages of exploring tie-ups with strategic partners.Another notable point is our growing success in safeguarding and monetizing the intellectual property (IP) rights behind our full range of products. In FY2012, our licensing revenue totalled US$1.6 million (FY 2011: US$1.5 million).
Licensing revenue is contributed by our existing 3rd party licensing customers’ sales and we will continue to enforce the IP rights of our growing patent and product portfolio. Barring any unforeseen circumstances, the Group expects to be profitable in FY 2013.
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