A Sweet Deal Turned Sour

Forbes Africa
Published 9 years ago
A Sweet Deal Turned Sour

It was a contract scribbled on a paper napkin that catapulted Barcelona’s footballer, Lionel Messi, to international stardom. History almost repeated itself when Ashley Uys signed a contract on a train to Frankfurt.

Ashley Uys and Andrew Smith*, his previous business partner, were on their way to Frankfurt airport to catch their plane home to South Africa after signing a deal with a German company. As the train rattled to the airport, Smith turned to Uys with what seemed to be a sweet deal. For Uys it turned into a rotten headache.

It had been a long journey to the railway car.

In 2006, Uys, a biotechnologist scientist, was working from the University of the Western Cape’s laboratories in South Africa, trying to run his own operation.

Two years later Smith, a businessman based in the United Kingdom, approached the Cape Town-based scientist with an interest in the type of work and research Uys was doing and a suggestion of starting a joint venture.

Smith knew of a German company that had been struggling for nearly two years to find a test developed for long-term alcohol consumption. The joint venture would develop a test that can detect alcohol consumption in urine. The German company wanted to sell the product to rehabilitation clinics.

Uys flew to Germany and within three days he had developed a prototype and it worked. It was a world first.

“I was like, ‘My word! My first big development,’” says Uys.

Smith and Uys had struck a deal in the German town of Gottingen and were on a train to Frankfurt to catch a flight to South Africa. Smith then proposed they go 50/50 on the test and split the profits.

“I said ‘We can’t go 50/50 on this test because my organization develops test kits. Our joint venture is a vehicle for drug testing services. Your company does hair testing. So obviously this component of work is my company,’” says Uys.

He proposed to Smith that he gets shares as he introduced Uys to the German company. Smith said he’d give him R6 million ($580,000) and suggested he set up his own operation, which Uys was in the process of doing.

“I said yes and signed with this guy. I finally got the break. I was over the moon. After all this hard work, after waiting a year for sales, all the studies and research, sacrifices and stress, lack of resources and money —I had finally made it,” says Uys.

A year later, Uys had still not received the R6 million ($580,000). He called Smith and asked for his money because he didn’t want to raise investment or lose equity to set up his operation.

“He told me there was no date on the contract and he can give the capital whenever he wanted,” remembers Uys.

Smith threatened to sue Uys if he went ahead with the product. The Germans phoned Uys saying they wanted him in their country to work on the product, while they negotiated with Smith on his behalf.

Uys went to Germany. Smith sued him and the court battles began. But the court favoured Smith and he won with costs. It, however, didn’t end there.

Smith didn’t know how to make the test after numerous trials, so the court ordered Uys to hand over his books to help Smith to develop the product.

“Even with the formulation, it is important to have the know-how. He struggled for a year. He eventually blackmailed me and said ‘I’m going to tarnish your name now’. He put the judgment on his website and actually paid ad words so it would appear on the first page if you Googled my name. He was trying to burn my name,” says Uys.

A few years later, Smith failed with the product. He showed up last year and settled for 2.5% for two years, short of the 50% he had proposed two years before.

“That was really nice for me because it showed who the culprit was and it was reported in a newspaper and people could see I was not a crook. I just made a big mistake by signing a contract. I was then being sued for my own product,” he says.

Now, after lying dormant for two years because of the legal disputes, Uys says they will continue with developments of the prototype. It could make him a fortune.

“I’m very happy I went through this experience. It was a learning curve. I was only 25 or 26 at the time and still naïve and excited. So I’ve learnt a lot from this court case and I’m really happy that it happened without damaging my reputation,” says Uys.

In 2010, he started Medical Diagnostech, developing around 1.5 million kits per year for HIV, pregnancy and ovulation or fertility tests. He employs around 20 people, three of whom are family.

The 30-year-old has made most of his money from the R4, three-step Malaria test kit, which has sold almost 600,000 units this year.

“We’re listing with the World Health Organization. They accepted us in their round five testing to become the preferred supplier. We also got accreditation now to operate on a global scale.”

Uys grew up in the Cape Flats, a neighborhood notorious for gang violence and drug abuse, in a country where most of the people live below the poverty line. Few can afford drug tests which often cost around $6 a piece.

Uys created the Oculus ID range, software that can test for drugs and impairment. He also developed the smartphone application, OculusMobi, and the OculusPro unit. They are used for facial recognition and to test for impairment. OculusLaw, a portable professional camera, takes a picture of the eye. If the eye does not react to the flash, the person could be on drugs. Drugs such as crystal meth and cocaine can enlarge the pupil, while heroin makes them smaller.

Uys is a man changing the world, one medical kit at a time, and has a current potential revenue of up to $12 million. But for now, the small company turns over around $500,000  a year.

He may not have received that $600,000 from Smith, but his reputation as a scientist remained intact and appears destined to make his fortune through his innovative projects.

It’s been a long journey since the train to Frankfurt and now Uys appears to be on track.

*Andrew Smith is not his real name