REG - Deepverge PLC - Update; Manuf'g Service Agreement with Microsaic

DeepvergeAnnouncement

19/04/2022 07:00

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RNS Number : 4959I  Deepverge PLC  19 April 2022

19 April 2022

 

DeepVerge PLC

 

("DeepVerge" or "the Company" or "the Group")

Trading Update - Q1 2022 Sales up 84% to £2.38m (Q1 2021: £1.29m)

DeepVerge signs manufacturing services framework with Microsaic Systems plc

Post covid market and sales activity intensifies across all international
markets

 

 

DeepVerge plc (AIM: DVRG), is pleased to announce increased sales (unaudited)
across all divisions delivering £2.38m (Q1 2021: £1.29m unaudited) in the
best first quarter in the history of the Company. Post-covid
marketing and sales activity has been intensified across all
international markets with existing solutions as well as high profile R&D
projects progressing on all fronts, generating enquiries and deep engagement
from large corporate entities that are both potential partners and customers.

 

Manufacturing Services Framework Agreement:

In addition, DeepVerge's subsidiary Innovenn UK Limited has signed a
Manufacturing Service Framework Agreement ("MSFA") with Microsaic Systems plc
("Microsaic") to further develop Modern Water's scientific instruments range.
These include the optofluidic based Microtox(®)PD for wastewater and
Microtox(®)BT Breath Test solutions., the Microtox (®)LX and (®)FX
photosensitivity range for toxicity detection and the voltammetry based
Microtrace range for heavy metals detection.

 

Fin Murray, DeepVerge COO, commented:

"The combined skillset of chemists, physicists and engineers within Microsaic
that has delivered a complex and world beating mass spectroscopy range of
equipment will advance the ambitious Modern Water development programme to
create a last mile solution of interconnected sensors to detect a
comprehensive range of bad actors in water from toxins to pathogens to PFAS in
real time and to take detection to population centres with miniaturised and
ruggedised mobile units. This agreement also progresses our supply chain
strategy of working with local trusted partners to create certainty over
developments and deliveries in an uncertain world"

 

Gerard Brandon CEO DeepVerge plc, commented:

"This quarter has been the best first quarter in the history of the DeepVerge
Group with new products and services delivering increased sales across every
division. Growth remains on track to achieve triple digit percentage revenue
growth year-on-year, similar to the last 3 and a half years."

 

The MSFA sets out the terms and conditions for Microsaic to improve and
manufacture these complex instruments and to provide the design, assembly,
quality, and project management functions necessary to produce and ship
equipment based on DeepVerge approved specifications, design, and quality
requirements.

 

The MSFA extends the parties' existing relationship which was formalised in
the 3-year framework agreement announced on 24 March 2021 i  (#_edn1) , under
which Microsaic supplies its own miniaturised mass spectrometry equipment and
services on a non-exclusive basis across DeepVerge's global sales, marketing
and distribution channels, for healthcare diagnostic and environmental health
applications.

 

Further manufacturing services contracts with Microsaic may follow under the
new MSFA, subject to satisfactory execution of the initial contract and mutual
agreement.

 

The mutual goals under the MSFA include ensuring the timely availability of
quality products, in the desired quantities, as well as meeting high
workmanship and quality standards and ensuring delivery needs are met.
Furthermore, DeepVerge and Microsaic will jointly strive to achieve value
pricing consistent with prudent practices to balance costs and the
availability of services materials.

 

The MSFA has a one year term, and shall automatically renew for successive one
year increments, unless either party requests within 90 days prior to the
anniversary its intention not to renew.

 

An initial order of £400,000 has been placed for multi-sensor upgrades of the
Microtox PD and Microtox BT ranges which are Modern Water's optofluidic based
sensors designed to identify pathogens in realtime.

 

Additional disclosure is made below in relation to AIM Rule 13.

 

Other Partner Project Development:

A recent framework agreement with Abingdon Health plc adds further scientific
knowledge especially in the area of Lateral Flow Tests ("LFT") specifically
involving the integration of the use of LFTs into the Modern Water
optofluidic units to increase the volume of recurring consumable
tests each piece of equipment can do.

 

Commercial Update:

On the marketing front, two years of being unable to demonstrate
divisional capabilities and engage
face to face with stakeholders is now being made up with attendances
at multiple international cosmetic, beauty and environmental events with shows
on the west coast of America, in particular San Diego and San Francisco.

 

Skin Trust Club sparks interest of Silicon Valley:

Skin Trust Club with its mix of microbiology, microbiome data and AI delivered
via the Skin Trust Club app with the capability of addressing a mass worldwide
skincare market has resonated in Silicon Valley. Large US cosmetics retailers
consider Skin Trust Club as the next level of science based skin product
recommendations and have expressed interest in a minimum test
order of 5,000 units to be trialled online and through retail outlets
across the USA and Europe. Multiple global skin care organisations have
invited Skin Trust Club to engage with their innovation teams both in the US
and Europe. Discussions with Tier 1 cosmetic brands to add their product lines
to the Skin Trust Club App product recommendations are underway. Collaboration
discussions are also underway with multiple Silicon Valley VC backed skin care
organisations. Health executives from top 3 Nasdaq internet corporations who
attended Skin Trust Club presentations on AI have indicated a desire for
follow up meetings. Multiple high tech and high end beauty journalists that
cover 'next wave' technologies have expressed interest and have interviewed
senior DeepVerge scientists, AI and technology specialists.

 

Labskin expansion in US

Labskin has successfully demonstrated its sales growth capabilities as well as
exhibiting new products and service developments at conferences in San Diego,
San Francisco, London and Paris. Major existing and a number of Tier 1
customers are urging the Labskin division to expand laboratories in the
USA for skin testing services. As part of the expansion plans, the life
science division is discussing order guarantees for new business in the US
market. While discussions are underway on a framework agreement outlining
terms for R&D, exclusivities and revenues, no guarantees are given as to
the outcome of these negotiations. Labskin also unveiled new products and
services including a new scalp model and has received demand for a very strong
pipeline of new business across the hair care and shampoo sector.

 

Engagement with US cities for pathogen detection

Modern Water is at the forefront of the British Government's Sentinel
wastewater project and is now engaging at US local and national government
programme levels after showcasing the Microtox(®)PD optofluidics offering
at the Cincinnati, Ohio, USA, Wastewater Conference. A number of US
cities including existing Modern Water customers are engaging for first
trials of the solution.

 

Medium Ticket (£1m+) installations bids:

On the sales front Modern Water is bidding for multiple medium ticket
(potential order size of £1m plus) deals for site
installations in the Middle East and South Asia. These are consortium
projects where local companies lead and Modern Water provides equipment
and support as part of bigger solutions. Should any of these bids be
successful, the main obstacle to these deals completing is supply chain
issues, primarily with China, where other consortium members are experiencing
delay roll-outs due to a shortfall of key components for their parts of the
projects.

 

Supply Chain Management:

To the extent Modern Water can control its own supply chain in this
environment, it is working closely with partners and recent acquisitions
to internalise as much as its supply chain as it can. The agreement
announced with Microsaic is part of this. In addition, the Glanaco site in
Ireland is up and running and producing equipment including the fitting out
of the
first mobile laboratories to showcase the extent of the real time water tests
the Group can offer. The recent Glanaco acquisition has also  increased
capacity as a logistics hub with both equipment and reagents for Europe and
the Rest of the World now being carried out from this site.

 

Related Party Transaction:

As set out above, Innovenn UK Limited, a wholly-owned subsidiary of DeepVerge,
has entered into the MSFA, and an initial work order for £400,000 has been
placed in accordance with the terms of the MSFA under an agreed statement of
work covering the specified supply of services and product.

 

The MSFA and associated work order constitute a related party transaction for
the Company under AIM Rule 13, as DeepVerge directors Gerard Brandon (CEO) and
Nigel Burton (Non-executive Director) are also Acting Executive Chairman and
non-executive director, respectively, of Microsaic. The directors of DeepVerge
who have considered the related party transaction are Ross Andrews, Camillus
Glover and Fionan Murray ("Independent Directors").

 

The MSFA includes provisions requiring each party to comply with their
respective obligations under AIM Rule 13 and 16 which includes future work
orders under the MSFA.

 

The Independent Directors of DeepVerge consider, having consulted with SPARK
Advisory Partners Limited, the Company's nominated adviser, that the terms of
the MSFA and associated work order are fair and reasonable insofar as
shareholders are concerned.

 

 DeepVerge plc                                   Gerard Brandon, CEO         +44 (0) 7340 055 648

 SPARK Advisory Partners Limited                 Neil Baldwin/Andrew Emmott  +44 (0) 113 370 8974

 (Nominated Adviser)

 Turner Pope Investments (TPI) Limited (Broker)  Andy Thacker/James Pope     +44 (0) 20 3657 0050

 

 

Market Abuse Regulation (MAR) Disclosure

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER
THE UK VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF
ENGLISH LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL) ACT 2018, AS AMENDED.  ON
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

About DeepVerge plc (www.deepverge.com)

DeepVerge is an environmental and life science group of companies that
develops and applies AI and IoT technology to analytical instruments for the
analysis and identification of bacteria, virus and toxins; Utilising
artificial intelligent data analytics to scientifically prove the impact of
skincare product claims on skin.

 

 i  (#_ednref1)
https://www.londonstockexchange.com/news-article/DVRG/3-year-technology-comm-l-agreem-t-with-microsaic/14911231

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