Remote Monitored Systems plc (LON:RMS) has announced a trading update for the period to 30 April 2021. The three primary drivers over the recent months have been to (i) strengthen the manufacturing and supply chain for RMS’s main subsidiary Pharm 2 Farm Limited, (ii) develop P2F’s sales pipeline and (iii) complete a strategic review of the Company and its subsidiaries; P2F, Gyrometric Systems Ltd and Cloudveil Ltd.
Manufacturing and Supply Chain
Prior to establishing sales channels, it was important to first secure the production pipeline for P2F’s ProLarva mask and to clear a few quality-control issues, for which the assistance of Egremont Capital was contracted. As previously reported, the performance of the Lemu mask-making machine has encountered various problems from the outset and the combined teams from P2F and Lemu have been working hard to remedy these issues. The majority of the mechanical concerns have been resolved although issues with the software means the machine is still running significantly below the expected rate. A number of possible solutions have been identified and further progress is expected over the next few weeks.
In order to be able to meet potential demand, P2F sought to outsource some of its manufacturing through an agreement with Volz Filters (“Volz”). Heads of terms have been agreed by both companies, which will move to a more formal agreement once the sales pipeline is firmed up. In the meantime, Volz is manufacturing anti-viral masks for P2F on an order-by-order basis. Discussions have also progressed with the manufacturer of the alpha-virion layer (the specific layer containing P2F’s nano-particles) and P2F is confident that it now has a smooth running, high-quality supply chain; from the in-house production of nano-particles to the outsourced production of the alpha-virion layer to both the in-house and outsourced production of the P2F mask itself.
Sales Pipeline
With the manufacturing chain falling into place, P2F is now in a position to increase its sales and marketing efforts. As prices of imported generic masks that do not contain P2F’s patented anti-viral layer have fallen significantly over the last year, P2F is focusing more on specific sectors where demand is less price sensitive and more concerned with the unique utility and value of P2F’s ProLarva MHRA approved, anti-viral mask. The Company is pleased to announce that it has entered into a distribution agreement with Numed Holdings Limited (www.numed.co.uk), who will supply the P2F mask into GP, dental and veterinary surgeries, opticians and care homes across the UK and Ireland. Although the strong interest displayed in 2020 in P2F’s anti-viral technology has yet to translate into significant sales of the ProLarva mask in 2021, P2F is currently in discussions with several potential large customers both in the UK and overseas and hopes to be able to announce some significant orders in the near future.
The agreement with Francis McIntyre Limited, as announced on 4 March 2021, has experienced administrative delays in meeting the listing criteria of the e-commerce platform and in registering the product’s ProLarva brand name. The former is expected to be complete shortly although the latter may take another couple of months to work through the UK’s Intellectual Property Office. The result is that Francis McIntyre Limited has not been in a position to place any further orders beyond the initial 100,000 masks. However, this is expected to change once the listing criteria has been approved.
Strategic Review
The third element was to conduct a strategic review of RMS and its three very disparate subsidiaries. The Board’s initial findings are that the value of P2F, as the Company’s largest and most significant subsidiary, resides principally in its intellectual property and the expertise of its scientific team, led by Dr Gareth Cave. The original inclusion of copper nano-particles in a non-woven layer for the P2F masks has led to the development of two other products, also utilising the natural anti-viral properties of copper, with significant long-term target markets. Whilst there is no guarantee of success as these products are still in the development phase, the team are confident given the progress to date. P2F is also continuing to develop products in its original core field of expertise of agriculture, where increasing the bioavailability of key elements by supplying them as a nano-particle can solve a number of major problems. To these areas can be added the potential for nano-particles in the broader fields of human health and nutrition and also in advanced materials. The Board believes that the long-term value of P2F lies in exploiting these opportunities through the team’s ability to produce consistently sized and shaped nano-particles and incorporating them in innovative products.
With the future direction and strategy for P2F now much clearer, the Company is commencing the search for a new Chief Executive Officer.
In the meantime, the immediate focus is on continuing to grow the mask sales and completing the development of a couple of new products in P2F, alongside finalising the consolidated accounts for the RMS Group, which the Company plans to issue around the end of May ahead of holding an AGM around the end of June.
Antony Legge, Executive Chairman, commented; “At the start of last year, prior to the pandemic, P2F was a small research driven business with a unique way of manufacturing nano-materials such that the size and shape could be tightly controlled, which was developing products for the agricultural sector that utilised the properties of nano-particles to be more easily and quickly absorbed by both plants and animals.
“With arrival of the pandemic, the team realised that they were in a position to assist society by embedding copper nano-particles, which have proven anti-bacterial and viricidal properties, into face masks. The commercial and technical challenges along that route should not be underestimated and the team deserved to be congratulated for all that has been achieved to date. In addition, the work on the mask has led to the development of other, and potentially more exciting, products.
“While the team had hoped to be in a position to secure larger orders sooner for P2F’s ProLarva mask, it is only recently that supply chain issues have been resolved such that P2F has the capability to meet any large orders and we look forward to announcing further sales progress in due course.
“Long term, the Board is committed to building up the research and development side of the business, marketing the ability of nano-materials and out-sourcing the manufacturing to third parties.”
