Tanning business spun-out to management team

26 September 2019

Xeros Technology Group plc

Tanning business spun-out to Qualus management team

Xeros Technology Group plc (AIM: XSG, 'the Group', 'Xeros'), the developer and provider of water saving and filtration technologies with multiple commercial applications, has spun out its Qualus tanning business operations to its management team in exchange for an exclusive worldwide licensing and royalty agreement.

The Qualus management team has formed a new company, ESTR Limited ('ESTR'), which has acquired the physical assets associated with the business, its contracts including the LEFARC agreement and the brand "Qualus".

Xeros has provided ESTR with a capped convertible loan facility in order to fund the business until the end of December 2019. The management team plan to raise further financing to fully commercialise the business.

ESTR has the exclusive rights for the use of Xeros' patents in the tanning market and will pay the Group a royalty on its worldwide income in respect of these patents. Royalty levels, which are subject to contractual minimums from 2022 onwards, are in line with Xeros' expectations for this application.

This spin-out will reduce the Group's cost base beyond December 2019 as part of the previously communicated intention to be a pure play licensing company with a monthly cash burn rate of £0.6m per month from January 2020.

In the event that ESTR does not meet its contractual obligations, the licensing rights revert back to Xeros.

Mark Nichols, Chief Executive of Xeros, said:

"This agreement is another milestone in the migration of Xeros to a pure-play licensing and royalty business and will further reduce our cost base.

"ESTR is best placed to commercialise our tanning patents. The team has the expertise and credibility both to execute existing and future contracts and to raise the finance required to take the business forward."

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Notes to Editors

Xeros Technology Group plc (LN: XSG) is a platform technology Group that is reinventing water intensive industrial and commercial processes.

Xeros' patented XOrb^TM technologies significantly reduce the amount of water used in a number of major applications with the remaining water becoming far more efficient in either affixing or removing molecules from substrates such as fabrics and garments. The result being significant improvements in economic, operational, product and sustainability outcomes. The Group is applying its technology in the fields of cleaning, tanning and textiles.

Xeros' XDrum^TM technology is used to apply XOrbs in world scale commercial and domestic markets and has signed multiple agreements to license its products.

XFiltra^TM is Xeros' in machine filtration technology which enables major reductions in the amount of microfibres being released from washing machines into the marine environment.