Where are we? What to me is a big item missing in the quarterly report is a clear cut statement of where have we been for the past 8 months and where do we expect to be in the next 6 - 12 months.
The MD&A is definitely lacking in an explanation of why we went into a total shut down mode after the opening of a brand new manufacturing facility in China.
The opening was done to great fanfare and news announcements about how it would facilitate great opportunities for meeting growing demand for products in late 2018 and early 2019. And then -- nothing -- for at least 8 months and possibly a year.
News release from September, 2018: VANCOUVER, Sept. 4, 2018 /CNW/ - Zecotek Photonics Inc. ("Zecotek" or the "Company") (TSX-V: ZMS) (Frankfurt: W1I) (OTCPK: ZMSPF), a developer of leading-edge photonics technologies for healthcare, industrial and scientific markets, is pleased to provide an update to the corporate activities undertaken by the Company in China, following the successful opening of its LFS Crystal Production Facility in Shanghai. As expected the strategy of opening a crystal production facility has generated business and renewed interest from existing and new customers.
"Our new crystal growing facility in Shanghai, is a game changer for Zecotek Imaging as we now have full control of the production of our patented LFS scintillation crystals," said Dr. A.F. Zerrouk, Chairman, President, and CEO of Zecotek Photonics Inc. "During the month of July and at the official opening ceremony, several of our customers inspected the premises and were impressed by the new facility and the lab installation of crystal growing ovens. The recent shift in intellectual property rights by the healthcare industry presented an opportunity for Zecotek to open its own crystal production facility. By doing so, not only are we experiencing renewed interests from existing partners like EBO Optoelectronics and Hamamatsu Photonics, but we have also had new customers making significant orders and new investors investing at the divisional level. This is a very exciting time for our Company."
In late 2017 and early 2018, the medical scanning industry responded to recent patent litigation over scintillation crystals and other technologies incorporated into new high resolution medical scanning devices. With intellectual property rights being enforced around the world, including China, many PET OEMs are demanding that suppliers which produce a strategic product, own the underlying patent.
Due to the opening of the new LFS Crystal Production Facility in Shanghai, Zecotek is experiencing renewed interest in its patented LFS scintillation crystal from new and old customers. Zecotek Imaging China Ltd. is currently working with long standing customers including the EBO Optoelectronics Technology Company (EBO) and Hamamatsu Photonics to resume deliveries of Zecotek's patented LFS scintillation crystals. Recently announced LFS crystal orders are being processed using crystals from the Company's current inventory. Additional boules are grown in the new production facility in accordance with provincial environmental guidelines.
The new production strategy is attracting local investor interest. Earlier this year Zecotek sold equity interest in ZecotekImagingChina Ltd.for proceeds of $5 million, based on a value of Zecotek's patented LFS scintillation crystal technology of approximately $75 million. In July the same group of local Chinese investors paid $2 million to acquire a 2% interest in Zecotek Imaging Systems Pte. Ltd. based solely on the appraised pre-commercialized value of approximately $100 million. Ongoing discussions are taking place, based on offers for substantial government incentives for production facility expansion to manufacture all variants of LFS as well as different configurations, such as single crystal elements, different size arrays and assembly to corresponding electronics.
Zecotek Imaging China, a subsidiary of Zecotek Imaging Systems (Singapore), is commercializing patented LFS scintillation crystals through its new crystal production facility in Shanghai, China. Zecotek Imaging China is poised to become a leader in large-scale production, cutting and polishing of scintillation crystals grown by the Czochralski method in China. Using a proprietary manufacturing process, very large-diameter boules with uniform properties and without cracks are produced resulting in high element output with lower unit costs.
The ISO certified LFS Crystal Production Facility has sufficient capacity to meet the delivery schedule of our Tier 1 clients and will be expanded to meet growing demand in late 2018 and early 2019.