Steve Jobs, the late founder of Apple, was described as the “CEO of war” taking into account his fierce fights over intellectual property. In 2011, he famously threatened to “spend every penny” of the company’s US$40 billion to “go thermonuclear war” to beat Samsung Electronics and other Android smartphone makers. Apple too had legal entanglements with Nokia, HTC, and even Singapore’s homegrown Creative Technologies.
But even before this clash of the titans, a similar, albeit smaller, chain of events was playing out at Trek 2000 International, a homegrown tech company. Trek 2000 may not be a global name, but the thumb drive, which was created by the company, is certainly well known. As suggested by the name, the thumb drive is no bigger than a thumb. Also known as the flash drive or USB stick, it marries the ubiquitous USB interface with a tiny memory chip to store a much bigger volume of data than CDs, floppy discs and other forms of preceding portable storage media.
Thanks to its usefulness and design, the thumb drive was quickly copied around the world. Wayne Tan, Trek 2000’s president and executive director, recalls how his father Henn, who was heading the company then, tried to enforce its intellectual property rights through the courts. However, this was a much more costly process as legal fees ate into the company’s funds and resources that could have been channelled into R&D to generate new growth instead.
In February this year, the company went through another rough patch. The elder Tan was convicted of two charges under the Securities and Futures Act for not disclosing some US$10.5 million worth of transactions. He was fined $80,000. He also faces several other pending charges, mostly for falsification of accounts relating to Trek 2000’s financial statements.
The fallout was keenly felt. “Credit lines were reviewed and we had to rebuild our relationship with creditors and vendors from scratch” when the case was brought to light, recalls Tan. However, “based on what we know, there has been no misappropriation of funds in the company, no malicious intent, no losses incurred to our shareholders and the company, but we do admit it was a foolish mistake on the part of the past management”, he stresses.
In an interview with The Edge Singapore, Tan acknowledges that the company came up short in its internal control processes and corporate governance. “Nobody, no company is perfect or infallible, we have looked into it, we have improved. We have complied with what the authorities want us to do, and we continue to look into how we can strengthen our internal process and corporate governance to prevent future incidents from happening again.”
New management team
Under his watch, Tan is taking steps to steady the ship and improvements can be seen. Trek 2000 was taken off SGX’s Watch-list for troubled Mainboard companies last June. And while the company is still in the red, the losses are now smaller. For the most recent FY2020 ended December 2020, Trek 2000 reported a loss of US$1.27 million ($1.7 million), a slight improvement from losses of US$1.36 million incurred for FY2019, and from a US$3.72 million loss in FY2018. Revenue for FY2020 was US$25.4 million, up slightly by 1.3% from FY2019.
As at Dec 31, 2020, the company’s net asset value was 12.52 US cents, down slightly from 12.77 US cents as at Dec 31, 2019. Besides cash and equivalent of US$7.94 million, a significant chunk of Trek 2000’s book value is in the form of investments of some US$7.4 million. There is an even bigger chunk of more than US$23 million in quoted and unquoted investments held for trading. The bulk of the investments are with Credit Suisse to ensure the funds are “safeguarded” and “worked”, explains Tan.
Shareholders of Trek 2000 might have also noticed the very consistent share buybacks made by the company over the past year or so, even as its share price climbed steadily from 5 cents a year ago to 13.5 cents as of April 13, which values the company at $44.09 million. The most recent share buyback was made on April 9, with 20,000 shares bought at prices ranging between 10.5 cents and 12.6 cents. Under the current share buyback mandate, Trek 2000 has bought back a total of nearly 5.2 million shares. Besides lending support to its share price, Trek 2000 has also spent to sharpen its technological chops. Last year, it spent nearly US$1.3 million, equivalent to around 5% of its total sales, on R&D.
At its core, Tan says Trek 2000 is still an “R&D company” that specialises in creating customised solutions for its customers instead of trying to sell them mass-produced wares. “I am not a Uniqlo”, he says, referring to the Japanese casual wear designer. “Instead, I’m a bespoke tailor, who can customise whatever you want on your shirt, be it a pocket or polka dots.”
The company has signed a series of agreements with customers such as Fujifilm and Shofu from Japan. For the latter, which is a dental company, Trek 2000 is supplying its proprietary Flucard into smart dental cameras. The Flucard is an SD card that stores photos taken by the dental camera and wirelessly transmits them to a secure WiFi-enabled device, saving time for dentists as they no longer need to manually transfer files. It also has won a US$10 million contract to sell IoT modules to Starsway, a Shenzhen-based digital storage device maker.
Recognising that data security can be more critical than just storage, Trek 2000 has developed a solution, named Chez, for secured thumb drives used by government linked agencies. Some of these thumb drives are equipped with fingerprint readers and built-in hardware encryption systems.
Chez can also help detect whether authorised or unauthorised devices are being used within an organisation. Essentially, it prevents intrusion by unauthorised devices. All data downloaded into the encrypted thumb drive has its metadata recorded in the server for tracking purposes. All this is aimed at giving its partnering institutions “peace of mind”, Tan explains.
Tan is not afraid to stretch his imagination when it comes to conceptualising new products. Drawing inspiration from the self-destructing communication devices featured in the various Mission Impossible movies, Tan plans to design a thumb drive that can be remotely accessed and physically destroyed by corrupting the drive beyond repair, preventing any data leaks as a result.
Another one of Trek’s data storage devices is the iSSD, a solid state drive that comes with its own self-contained Wifi capabilities that enable users to connect the drive to their phones and access files within it, including watching videos straight from the disk and viewing Word files. And it doubles up as a wireless charger too.
Other products include the T-Cam, a torchlight integrated camera, targeting law enforcement agencies who use body cameras. The T-Cam can record and immediately upload footage into the cloud or a secure server, depending on the customer’s needs. Furthermore, it features gyroscopic stabilisation which means the image will remain upright no matter how the camera is turned.
Tackling IP infringements
Clearly, with all these innovations, Trek 2000 knows there is a need to protect the IP driving these products. Tan says Trek 2000 should not go after other companies that breach its IP as the first course of action. Instead, he is prepared to work with partners to leverage their capabilities in bringing better solutions to market.
“Trek will reach out to the companies concerned to communicate with them and work out a win-win approach. Cogent proposals in collaboration, outsourcing, licensing or cross-licensing are a few ways forward,” he says. “Business is done today by seeing how we can tap on each other’s strengths for significant growth and lower cost, rather than by applying legal assertion.”
Tan is confident that by doing so, coupled with the constant pipeline of new products designed for new market segments, Trek 2000 can continue growing.
While the company’s core expertise lies with data storage and connectivity solutions, Tan is looking at new growth areas including green energy and AI. One such new product is a smart electricity meter for homes that can regulate energy usage. “Today, there is a dumb meter in your house. What you see is how much electricity you are using, and how much SP is charging you. That’s about it. With a smart meter, you’ll know how much electricity you use, what type of electricity you’re using, whether it is generated from green energy, solar, or LNG,” says Tan.
The aforementioned T-Cam is also getting an AI-powered boost in its next iteration. It will come with embedded AI for facial and object recognition, and build on the first generation’s continuous audio and visual recording without interruption by adding more wireless features. For a start, the T-Cam Gen 2 will serve the security sector well due to its multitude of practical surveillance applications.
Instead of selling all these new products to other business users, Tan is pushing for some to be sold directly to consumers. A check on e-commerce platforms shows that the iSSD is sold on Lazada, while its thumb drives are being sold on Shopee.
“We are seriously considering building our Trek brand on top of white labelling our solutions. Trek’s efforts towards e-commerce is also one of our top priorities, and we look forward to sharing some of these new developments down the road,” says Tan.
