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Harris Technology enters US market with $2M Fstop Labs acquisition

Harris Technology enters US market with $2M Fstop Labs acquisition

Looks to boost e-commerce business with US business

Garrison Huang (Harris Technology)

Garrison Huang (Harris Technology)

Harris Technology has entered into the US presence by acquiring the American drone accessory supplier Fstop Lab for $2 million.

The Australian online tech retailer claimed it hopes to bring the business' products into the local market via its own platform and those of US giants such as Amazon and eBay. 

The move comes as part of an effort by the company to increase its consumer-facing focus, having closed down its business-to-business operation last year. 

Speaking to ARN, Harris managing director Garrison Huang said the acquisition would “enhance” its existing retailer business. 

“We, as a business, have only been focused on Australia, while Fstop is a business in the US with a big Amazon presence,” he said.

‘We want to utilise the platform we have in Australia in combination with Amazon, eBay and even Catch.com, and help expand Harris into the e-commerce space.”

Based in California, Fstop Labs supplies products such as drone landing gear legs, chargers, camera covers and cables, selling primarily on Amazon, eBay and its own website mostly in the US. 

The publicly-listed firm will pay $1.2 million in cash and $800,000 in shares for the company, with the maximum consideration paid if the accumulated profit over the next financial year reaches US$900,000.

The Fstop Labs business derived a pre-tax profit of US$1 million for the year ended 31 December 2018, which Harris expects will be replicated this year. 

Huang added that Harris would be “interested” in exploring selling the products in Asia at a later date, but added that the company currently did not have the current infrastructure to supply to the market at present.

The announcement comes as Harris terminates two existing joint venture agreements with suppliers in Hong Kong and China, which it signed to boost its manufacturer-to-consumer (M2C) business model.

The agreements, announced in May 2017 and January 2018, served as supply sources to bring goods over to Australia. However, in an update to shareholders on 13 June, Harris claimed neither was “trading satisfactorily”.

However, Huang added that the companies were “small” and that both terminations would not materially impact the business.

Harris’ increased focus on the M2C space started last August when it decided to sell its wholesale and distribution business Anyware Corporation to Leader Computers.

The decision followed a challenging FY18 for the company, whereby it accrued a net loss from continuing operations of $2.06 million and revenue of $45.9, a 10 per cent decline year-to-year.

Before selling Anyware, the company said it expected to make a number of redundancies, and has since reduced its headcount from 50 people to just 15.

At the end of the last half year, ending 31 December, Harris’ profit after tax fell by 17.5 per cent year-on-year, resulting in a $1.2 million loss.

FStop Labs meanwhile is the second acquisition Harris has made recently, coming six months after buying Lincd HQ, an Australian-based blockchain specialist.


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