SERSTECH AB

Half-year report 1 January – 30 June 2020 - Seite 2

The combination of significantly reduced cost and the reopening of some tenders makes us cautiously optimistic that the market will start to normalize in the third or fourth quarter. We expect to be able to maintain a very low cost level until at least the end of the year, partially due to the ongoing reduction in working hours for the Swedish team. Since we do not use our own resources or cash for sourcing and production, our fixed costs will not automatically increase when the volumes start to go up again. We therefore expect to see improvements in our cash flow the coming quarters.  

In April, we announced the new instruments Serstech Arx and Arx+, which are intended for the security and pharmaceutical industry, respectively. The differences between the two instruments are that the Arx+ contains a barcode reader and complies with FDA’s regulations governing the pharmaceutical production industry. Both instruments have our patented autofocus solution, built-in Wi-Fi, next generation analysis algorithms and a completely redesigned hardware and user interface. The new products have created a lot of buzz in the market and positive response from partners and endcustomers. We expect the products to generate initial sales already in Q4 this year, even though the volumes are hard to predict, due to the current market situation.

For most of this year, we have reduced capacity in R&D due to the reduction of the team size and reduced working hours for the remaining team. Nevertheless, we plan to launch ChemDash 2.0 in September and reshape and significantly improve our software offering. The new ChemDash platform, rewritten from scratch, will be introduced in three dif ferent versions – ChemDash Lite, ChemDash Pro and ChemDash Pro+. ChemDash Lite is free and is included with any Serstech instrument and has limited functionality. ChemDash Pro is our first premium software and will be sold with subscription and perpetual license options. ChemDash Pro+ is like Pro but complies with the FDA regulations for the pharmaceutical market. The new ChemDash platform introduces a licensing mechanism, which in the future will allow us to sell subscriptions to updates of our substance libraries. At the moment, the security market does not accept the subscription business model, but we expect that to gradually change over the coming years.