Thursday, August 8, 2019

News: Xeros continues move to licensing business model


Rotherham-based Xeros has signed two agreements to sell the majority of its US commercial laundry customer portfolio of leased machines as it moves to a full licensing business model.

Based on the Advanced Manufacturing Park (AMP), Xeros is a Leeds University spin-out that has developed a patented system using a unique method of special polymer beads rather than the usual large amounts of fresh water to clean clothes.

Called, Hydrofinity, the US commercial laundry customer portfolio of leased machines will be sold to Eastern Laundry Systems (ELS) and Wash IQ previously known as Viking Services.

Hydrofinity will receive an up-front payment of $109,000 in cash and on-going license fees for the provision of Xeros' polymer beads, known as XOrbs, to ELS and Wash IQ. The proceeds from the transaction will fund on-going Hydrofinity working capital.

In 2018, these lease contracts generated an adjusted gross loss of $376,000. The commercial washing machines and associated lease contracts had no value on the group's balance sheet, the value having been written down during 2018 following the invention and patenting of Xeros' new XDrum design for commercial washing machines.


164 commercial washing machines installed with Hydrofinity customers and their corresponding lease contracts have been sold to ELS and WIQ. As previously announced in November 2018, ELS already held exclusive rights to take over the servicing of Hydrofinity customers in nine states across the East Coast of the United States. Since December 2018, Wash IQ held the same exclusive rights for servicing of Hydrofinity customers in California and Arizona.

The agreement reflects the Hydrofinity strategy to reduce its physical presence in markets and to move to a full licensing model. The Group expects further sales of smaller portfolios to similar regional distributors in the US over the coming months.

Mark Nichols, CEO of Xeros, said: "As part of our strategy to implement a licensing model for all our applications, we completed the transfer of sales and service to our channel partners in the US earlier this year in order to improve customer service and reduce our costs.

"This sale of the majority of our existing Hydrofinity lease agreements in the US to channel partners means we will be paid ongoing fees for the use of XOrbs by customers, providing a high margin return on our technology without any physical involvement in the supply chain.

"The approach is consistent with our license agreements signed with the largest commercial laundry equipment companies in China and India."

Xeros is moving to a IP rich and asset light business model with the majority of revenue derived from high margin licensing agreements. The strategy sees the licensing of technologies to market incumbents and receiving a proportion of the value created by means of royalties.

Xeros website

Images: Xeros


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