Shares plummet 35% after technology business reveals funding need

Shares in cleaning technology business Xeros plunged 35% this morning after the company revealed it will need additional funding after pushing back its break-even date by a year.

The Rotherham-headquartered firm has warned it is no longer likely to reach month-on-month EBITDA profitability and cash breakeven in the first quarter of 2023 and only expects to reach that position in early 2024.

Xeros has developed technologies which reduce the amount of water and energy required in commercial and domestic washing machines.

It has today told shareholders it “is actively evaluating several funding options to secure the remaining investment required”.

It says its overseas activities have been hit by the pandemic, with China in particular experiencing a significant increase in major lockdowns.

The company’s board says it is “continuously reviewing the Group’s forward projections in light of these uncertain circumstances.”

Xeros’s shares were down 35% in early trading to an all-time low. Its shares had already lost two-thirds of their value since last April before today’s update.

The firm’s update today added: “As of 28 February the Group’s cash balance was £6.2m. These funds are sufficient to fund the delivery of major growth milestones through the remainder of 2022 and into the first quarter of 2023.

Xeros says that since January, commercial discussions with major international organisations for the licensing of its XFiltra filtration technology have progressed in line with expectations and it is now in detailed commercial negotiations which it expects to conclude in the near term.

The Group adds it continues to see increasing levels of commercial interest in XFiltra, as a result of legislative developments for microfibre filtration devices in washing machines and growing consumer awareness of the microfibre pollution problem.

Xeros expects to receive XFiltra revenues from late 2023 onwards.

Mark Nichols, chief executive, said: “Since our update in January, with the exception of China, the levels of activity by our existing partners have continued to be strong as has our engagement with prospective licensees.

“Our expectations are that multiple agreements will be signed this year with some fairly near term. This is against a background of increasing levels of interest from global brands in our ability to help them meet their major global environmental imperatives.”