Transense Technologies (AIM: TRT) is one of many microcap companies listed on AIM with interesting technology but limited revenues. The company has trials running and some products in the field with very large international customers. As is common in these cases though, timeframes are very long and subject to delays.
The company’s core technology surrounds Surface Acoustic Wave (SAW) sensing. It has developed two distinct SAW sensors, one measures torque (rotational force) and the other temperature and pressure. Wave frequency along the surface of a material is altered by changes in these forces allowing their accurate measurement. There’s a video explanation of the technicalities available from Transense here.
Temperature and pressure sensing lends itself to monitoring the performance of mining truck tyres. These operate in extreme conditions and are very expensive bits of kit, so Transense’s iTrack 24/7 surveillance system improves mine efficiency and helps optimise utilisation of the trucks. Version two was launched last year and is in 12 trials with mining companies and tyre service providers, with the real time sensor data being is analysed in a new dedicated control room. Management admit the ordering process is a long and bureaucratic journey, but at least the sector is in recovery mode after a lengthy recession. Inventories have been built to support the sales effort and profitability will require 1,000 trucks to take the service.
Torque sensing is being used in industrial drives and there’s an important collaboration with GE who have licensed the technology. A milestone payment has just been made but the value of the deal lies in commercial royalties. The GE unit undertook rigorous testing of the sensor and while royalties from them might be some year’s away, there’s scope for earlier revenue streams from other potential customers, both within GE and elsewhere.
There was £3.3 million cash in the December balance sheet but this is likely to fall to £2 million by June. With a market cap of just £8 million it’s worth keeping your eyes open for contract news.