New Agreements Build Future Business

Message from the CEO

During the second quarter, we made significant progress in the implementation of Serstech's renewed strategy. The focus was and remains on building the foundation for indirect, repeat sales and we signed several important agreements during the quarter. As previously communicated, sales remain low during at least the first half of 2018 and the quarter's net sales ended at just under SEK 1.6 million.

Serstech signed its first two OEM agreements in April and May - one in the US and one in Europe. The US agreement has so far resulted in two smaller transactions, with the US Coast Guard and Hungary. The European agreement includes rather extensive product customization, which will be completed in August, and the products will be ready for launch by our partner at the end of September. The development work is financed by the partner and will be invoiced during the third and fourth quarters of this year.

During the quarter further discussions were initiated with future OEM partners, and we expect significant and recurring business through the OEM channel in the future. The difference to selling through resellers is important as the scalability through the OEM channel is unlimited, with minimal recurrent input from Serstech and a geographic and industry coverage that Serstech could not have achieved on its own.

The reseller channel remains important for the company and during the quarter we have concluded agreements with partners in Malaysia, China, Indonesia, Myanmar, UK, Singapore, Thailand and Vietnam. We have also terminated several agreements with previous partners that do not meet our requirements for experience, capacity and competence. During the third and fourth quarter, Serstech will participate in several tradeshows worldwide and it is our intention to sign a large number of additional distribution agreements in the coming quarters and years. We expect revenues from the renewed reseller channel to materialize in the fourth quarter of this year and to continue to increase through 2019 and onwards.

During the quarter, an agreement was signed with Finnish company Environics, which has long and extensive experience in both military and civil security applications. Environics develops products that can identify and detect gases and radioactivity, but lack the ability to identify liquid and solid chemicals. During the summer, a bundled solution that identifies solid, liquid and gaseous substances has been marketed in the US to evaluate demand. The initial feedback has been positive, and the intention is to launch the joint solution in the first half of  2019 through both Environics' and Serstech's channels.

Serstech continues to recruit, and during the second quarter four positions have been filled - two development engineers, an R&D manager and a sales person. All four will start their employment on September 3, and we expect to have 13 employees by the end of the year, which is in line with 2017.

In April, Serstech's patent application for handling autofocus in Raman Instruments was approved. The solution means that we can increase the performance of the instrument without introducing any moving parts, thus maintaining essential operational reliability and robustness.

The second quarter represented a decisive and successful take-off of our new strategy. With a renewed and expanding reseller channel, with global OEM partners and with an optimized organization, we are confident and very optimistic about the future.

Stefan Sandor, CEO, Serstech AB (publ) 

For further information, please contact:

For further information please contact:
Stefan Sandor,
CEO, Serstech AB
phone +46 739 606067
e-mail: ss@serstech.com

Sophie Persson, 
Chair of the board Serstech AB
phone: +46 733 865660
e-mail: sp@serstech.com
or visit www.serstech.com

Serstech AB (Publ.) Is required to publish the information in this press release under the EU Market Abuse Regulation. The information was submitted for publication on August 16, 2018 at 08.45:00 AMM.

Västra Hamnen Corporate Finance are certified avisors to Serstech AB

About Serstech AB
Serstech delivers solutions for chemical identifications and has customers across the world, mainly in the safety and security industry. Typical customers are customs, police authorities, security organisations and, since recently also United Nations. The solutions and technology are however not limited to security applications and potentially any industry using chemicals of some kind could be addressed by Serstech's solution. Serstech is traded at Nasdaq First North and you find more information about the company at: www.serstech.com