Metir (LSE:MET) — Investor Q&A

0:02 Good morning, ladies and gentlemen, and welcome to the MicroZeck Systems pre annual general meeting Q and A session. We do apologize as you may have had issues entering the meeting today. The platform is running a little bit slow, so which we do apologize for. The company may not be in a position to answer every question it receives during the meeting itself. Having the company review all questions submitted today and publish responses where appropriate to do so. I'd also like to remind you this presentation is being recorded. I would now like to hand you over to Glenn Tracy, CEO and Bevan Metcalf, CFO of MicroZeX Systems. Thank you.

0:46 Okay. Thank you very much, Paul, and, sorry I'm I'm not on your screen today. I'm I'm having access, issues. But, just a quick introduction, for those of you that don't know us. Microsaek is changing the dimension in which we see the world through our amazing, powerful, and miniaturized detection technology. This is enabling real time screening in human and environmental health. What that enables is immediate decision making, whether dealing with toxic chemicals in our rivers and oceans or monitoring highly sensitive manufacturing processes for growing break breaking therapies. Regardless, our aim is to make an impact on a global scale, and thus the demand for remote connected and real time monitoring is massively increasing.

1:34 We are very well placed to ride that wave. We recently pivoted our strategy to build on our products to include more of the workflow to be relevant to end users and their problems. And that means that we have sample extraction and and sample handling, separation, the detection itself, all wrapped in software, and we provide a service to the end user. And I just wanna say before we get into the q and a, you know, we are fully funded, we are fully committed, and we are ready to fly. We have an AGM on the tenth oh, sorry, on the June 17.

2:13 Obviously, normally, this would be done in person, but due to restrictions, this this isn't possible, hence, us using this platform. And I'll just hand over to Bevan. Thanks, everyone, for for joining us today.

2:29 As as Glenn said, this is pre pre AGM, the ability to for you to ask questions, and we've had some written questions in already. Can I just please ask a favor that after the meeting, shareholders vote for the resolutions?

2:48 Now if you've got a form of proxy, please please submit that today. If you don't and you have a nominee company, please give them a call today so that they can take your vote and send it in. It's gotta be in by 10AM on the fifteenth, and we wanna give everyone the opportunity to submit those proxies after you've heard the answers to some of your questions and whether you feel the answers are hitting the nail. So without further ado, I'll hand back to Paul to start to go through the

3:25 13, I think it is, written questions, and we've got the ability, as Paul said, to answer to ask questions as we we move along. Okay. Paul, over to you. Fantastic. Bevan, thank you very much. Thank you, Glenn. As you say, we did receive a number of pre submitted questions, for this q and a session. If I can start with the first one, please. Has the marketing agreement with Deep First realized third party sales?

3:51 Okay. So I'll I'll take that one, Paul. So, you know, I I think it's it's absolutely critical to say the agreement has enabled collaboration and key account discussions with a range of third party companies in a range of of geographic locations. I think one when one thinks of sales, perhaps one thinks of sort of, you know, onesie twosie sales, but, actually, the agreement is is focused on on chasing those

4:20 real real kind of strategic key account, multiple sites, installs, turnkey projects rather than simple one off sales. So those are in progress, and, you know, we'd like to be recording, you know, significant achievement in in h two. That's fantastic. Thank you very much indeed there, Glenn. The next question reads as follows. When do we expect to become cash positive from continuing business? And what are your cash requirements? And when do you, if you do, envisage raising more funds?

4:57 Devin here, Paul. I'll handle that. While we don't envisage raising more funds, our business plans show the company becoming cash positive in approximately two years' time. This is based on on achieving key objectives and milestones, which including the the recruitment of key staff, new product launches, and sales channels affected by COVID nineteen opening up. We see and hope the restrictions on international travel will will cease in in the third and fourth quarters. And I'm looking forward to that and getting back in a face to face position with customers. That's brilliant. Thank you very much indeed, Bevan.

5:44 And next one reads as follows here. Are new products under development?

5:50 Yeah. Absolutely. They are. Quite a few, actually. So some of those products are gonna be launching this year, and they are gonna be targeted at human and environmental health. And as I mentioned in the introduction, those products are to extend our offering to include sample extraction, sample handling, and separation plus software and service so that we can broader broaden our offering, for example, in water analysis and human diagnostics. For those of you that follow us on on Twitter and LinkedIn and indeed read our r RNSs, you can see that we are quite rapidly now opening up the the kinds of markets that are, well, what I would call real world problems, you know, in human and environmental health, particularly in remote or real time monitoring, whether that's looking at the toxins in a river for, for example, forever chemicals or antibiotics or indeed

6:52 migrating into a hospital setting. And you may have seen the RNS we put out last month about our agreement with China. So, yeah, a rich product portfolio, but but, you know, we're not we're not sort of navel gazing for years and years in in a sort of, you know, very long long term r and d project. These products will come to market in relatively quick measure. Glenn, thank you very much indeed. Next question we've got here is when will you consolidate your shares to make MicroZeg more visible to funds?

7:31 Good question. The board does not have any immediate plans to consolidate its shares. Such an exercise will incur management time and, as we all know, quite a few legal fees. I suppose our focus, and especially since the fundraise, has been about achieving key operational milestones, growing the business, and pivoting our our strategy.

8:02 My own view is that funds don't invest in a company just based on its share price. It's more around the fundamentals of the company and its growth prospects. It's true that many funds don't invest in in SMEs, like Microsaic, but a share consolidation will not change the market cap of Microsaic. That's great. Thank you, Peppin. Okay. Is there any restriction on the MicroSAIC board from selling shares?

8:36 There's there's no restriction on the board selling shares, Paul. The the directors have no intention of selling their shares in the company. And Glenn and I have been with the company over five years, and we're still holding the shares that we've bought many years ago as we believe in the future of the company.

8:58 That's great. Thank you very much indeed. How long is your sales cycle for each of your main product lines?

9:07 Yeah. Look look, it it depends. It could be quick or it could be very long, but I but I think the key thing is our our strategy since we pivoted with with Jerry coming on board is to reduce the reliance on capital, long term capital purchases, which tend to be elongated, you know, for for certain markets where funding needs curing such as academia. And we're looking to change that model, if you've seen my previous presentations,

9:39 to a much more annuity or recurring based model very much focused on on software. Although there will be innovative hardware and and detection below that, you know, we we are we are selling a solution to a problem, and and that kind of sales model is is very, very different. That's great. Thank you. Again, just for sort of touching on products again, which products are your highest volume and margin opportunities?

10:11 So the the biggest potential in the short term is is definitely the provision of water safety equipment and and and service that goes along with that. And, really, as a as a result of our product developments, which I spoke to you about, which achieved very shortly, plus the channel provided by Modern Water, you know, I'm really very confident we're gonna make a a very big impact with these products. And in fact, they

10:39 augment the modern water offering, you know, delightfully. The overlap between the two companies is just fantastic. The range of things we can monitor in in rivers and oceans, so on and so forth is is truly fantastic. Of course, deep urge brings the the AI. But but thinking longer term, but not not too long, we see massive potential in human diagnostics. And as I just mentioned, we've got ahead the terms, which we're we're working hard to convert into an agreement in the next few weeks with our Chinese partner to commercialize.

11:19 Yeah. Yeah. This is a a real fantastic opportunity to put our our instruments into the the the many hospitals in China next to the beds of patients, and we'll be looking at applications in companion diagnostics. And the interesting thing with this agreement is this revenue sharing on on end user reagents and services. So so, you know, really very much looking forward to to bringing you more news on that.

11:50 That's great. Thank you very much indeed, Glenn. Can you describe how you plan to work with third party channels to increase sales? You know, I I think the

12:00 it might it might sound a brief answer, but I but I think, you know, in simple terms, by being relevant to them and their problem, that's why our product development and our whole strategy is pivoted towards providing a complete workflow.

12:17 You know, if you talk about science and detection and and, you know, so on and so forth, so what, although that is important at a certain level, you've gotta be able to provide the the whole, you know, the meal deal, the software, the service, and the expertise. It also means focusing on key markets and building up a significant breadth of applications in those markets, which we are. So, for example, in water safety, we're leading with forever chemicals, PFAS chemicals, which I spoke to you about a couple of weeks ago. But, you know, we're gonna bring to that also APIs, active pharmaceutical ingredients in water, their metabolites, pesticides, herbicides in water, and also sort of hormone hormonal chemicals. So, you know, a massive range of of of chemical reach.

13:11 But the key thing is that you could talk to your end users, such as water companies or agencies, in their language and provide a service and solution that actually, you know, makes a difference to them.

13:25 That's great. Thank you again, Glenn. A quick question here just on geographics. Which countries are most important for fast growth and why?

13:34 So I you know, I think each each territory and country have or has their own merits. So focusing on one, I I don't think would be would be right. And, you know, what we're doing it with Microsafe and DeepVerge is is focusing on trends that are truly global. You know? So it's very difficult to separate, say, the trend of of water pollution and and monitoring from from various countries because, actually, we're all suffering from the same problem. And, actually, you know, most countries are looking for for similar or same solutions. So, you know, we're we're not singling one out. So, you know, as I say, these real world problems are the safety and quality of our rivers, our oceans, our soils, and also helping farm and make novel therapeutics for disease.

14:28 So, you know, I I can't think of any one country or territory that that wants to go about it a different way. So, you know, we're really serving all of them. Great stuff. Probably a bit more one for you, Bevan, actually. What is your anticipated recurring revenue stream per annum? Well, historically, Micro Saix recurring revenue stream has been limited to spares and con consumables with the focus more more on the capital equipment sale. And as Glenn has said a couple of times already in this presentation, the new strategy is more about a fundamental shift in our business model away from the capital equipment sale to more reoccurring revenues becoming important in the future and particularly through the partnership developing with DeepVerge.

15:27 So the the company is transitioning to a more annuity model and providing integrated solutions for our partners. And as Glenn said, it's supported by artificial intelligence driven data analytics, which will provide additional ongoing revenue streams in the future. That's great. Thank you, Bevan. Potential pre submitted question we have here is, I understand you're awaiting medical license approval in China in 2022. I can't recall if this was mentioned at the recent investor presentation, but are you seeking similar licenses in The UK and Europe? If you can't answer, is that the broad plan longer term? Yeah. Absolutely. It is. Without without a doubt. You know, the the license we're we're going for in China is to do with companion diagnostics And, you know, medical licenses are are very specific and very different. And certainly in China, we'd like to expand that to cover other application areas, and we are having discussions with with relevant third parties, collaborators out there. But we we do see some very compelling opportunities in in the more traditional markets in North America and Europe, should we say. So absolutely, that is the plan.

16:47 That's great. Thank you, Glenn. Final one we have here, the pre submitted questions. Months ago, were looking at looking to sell the company, and now you're not. What's changed, and what is the source of optimism? Well, first, let me say that, you know, the board has always believed that MicroSAIC's technology was a was a game changer. Yes. We are very optimistic, but that's based on solid fundamentals. For example, we're fully capitalized now. We've pivoted the strategy and are more focused on delivering customer solutions rather than just selling equipment. Revenues in q one were a 120% up last year. Although we appreciate the quantums last year were were very low.

17:37 We have signed an exciting agreement with DeepVerge, which expands our sales channels and also provides numerous areas for collaboration. We've also recruited five people over the last three months in marketing and r and d, have announced and made their heads of terms on the MS technology point of care for the Chinese market as as Glenn just explained. So I'd say we we are confident. We are optimistic, But we are ticking the boxes on those key milestones, which I mentioned earlier, are a key part of us becoming cash positive in two years' time.

18:26 That's great. Thank you very much indeed. That concludes the presubmitted questions. We have had several questions come through. Perhaps, Pepe, if I could just ask you to click on that q and a tab just on the the right of the screen there, and you'll just see those. And if I may, if I can just ask you to read out those questions where appropriate to do so and just give you a response, that'd be fantastic. Okay. Dale H says, where do you see the market cap in three years' time? Well, if only I had a a crystal ball.

19:14 Clearly, market cap is is around 14,000,000. We're we're we're pleased with the progress since the capitalization was fully implemented. And I think the future, once we get to being cash positive and beyond, is very exciting. So I'll I'll leave that up to, you know, our our shareholders and investors to determine where they're gonna see see the market cap, but but significantly higher than where it is at the moment. Yeah. No. You know, obviously, I'll I'll just add that, know, I think it's a mix of two things. Right? You know? So so there's there's yeah. I gotta temper my words, aren't I? You know, there's a significant significant potential. You know, we we're looking at markets that, you know, really you know, you may have seen a tweet we put out on the g seven meeting, you know, with the the collaboration between DeepVerge and MicroZirca hitting each one of those subject areas in terms of disease, monitoring, water safety, digital.

20:20 So there's there's not one of those areas that we we either both or one of us aren't aren't in. And then, you know, as as Bevan said, you know, quite rightly, you know, we're we're very, very focused on hitting tangible milestones. So the fundamentals say, you know, you have the potential and the fundamentals, and, you know, I I'd like to see that market cap be significantly more in the future. There was another question on the on the market cap cap from Andrew t. So I'll just deal with that at the same time. It says, why do you feel the market cap remains frozen at 15,000,000? That's the first part of the question. Well, you know, if if I'm honest, we go back to January and our market cap was less than £1,000,000.

21:05 We did the capitalization raising 5,500,000. And on that day, our market cap was, you know, $14.15. It's it's, you know, it's been been up and down, but it's been quite consistent. And I think consistency is good. Obviously, you know, the market is waiting to hear more news. We're only four months since the fundraising. We'd like to see the market cap obviously go up, but it doesn't drive what we do on on the ground in the business. The market cap is what the market cap is. If shareholders don't don't sell shares then, and they're harder to buy, it's gonna it's gonna go up. But, you know, that's the that's what a a market driven company is is all about.

21:54 Says why is the medium term business plan message not reaching the wider audience? It's important that company delivers fundamentals rather than just tweets and LinkedIn posts. Well, look. I mentioned some of the fundamentals today, and and and that that's not obviously, as a company listed, we have to be careful about what we disclose, especially if it's price sensitive. But recruiting key people, you know, as I said, showing that we're back on track with our our sales. These these things have come through as well. So I'd like to say we we are we are delivering, but, you know, it it it's early days, and we're looking forward to the second half of this year. Yeah. Absolutely. It it you know, and and what I would add is, you know, we're not just tweeting and and posting things on LinkedIn. I mean, we we are the other side of the argument is, you know, what what can you give us context?

22:51 You know, what does it mean? What does water testing mean? What's a p first? You know? What's diagnostic? So what we're absolutely attempting to do here is, you know, give give the context to shareholders and indeed partners because, you know, it's not just shareholders, of course, read those tweets and post on LinkedIn. Also, you know, we are engaging with shareholders much more than we ever have have through this platform. And once again, apologies you can't see me today. Hopefully, next time it will work work. But, you know, we'll be doing this a lot more. We have news in the pipeline in in in a range of different areas. So so, yeah, it it it's the new getting news out there isn't isn't always RNS and to drive share prices to set the context.

23:40 It's to allow people to talk to to management. It's it's, you know, an understanding of our products and our markets. There there's a couple of questions. One from Mark p and one from PD, both in relation to worries around IP or protection of IP as as we move into China. I know China, you know, if you're reading things, can can have that reputation. But I think first and the most important is you're you're working with key partners there that that you trust and you can work with. The second thing is we do have protection with our patents.

24:26 I'd say third is that, you know, our our products, of which we have sold over a 170 units, have been in the marketplace, albeit not potentially well, they have been for about eighteen months in China. But longer term, obviously, they've twenty years they've been, in other jurisdictions. It's not that easy to, take apart our mass spec and and copy it. So in the manufacturing process as well, there's also not IP, but there's a there's a a method and of of pulling the equipment together, which in itself, you know, does does create a barrier to people just just copying it. So we are aware of that.

25:12 I would say four, five years ago, we would actively avoid going into certain markets, but I think the reality is now that work with partners you trust and make sure that you obviously have visibility on any IP infringements. Let me just have a look down. I did note there was one interesting, one from I'm just trying to find it now, but, someone was saying we talk like politicians. I'm not sure that yeah. That's definitely not a compliment, but I see where you're coming from. Look. If we and we're not potentially answering some of the questions. Look. You know, for us, clearly, the biggest markets are are The US, Europe, and Southeast Asia.

26:07 We we have partners in those markets, but, you know, we we certainly have have the ability to to grow our partnerships and to really progress in those those key markets. But you've gotta focus. We're a small company. That's why we're focusing, for example, on expanding in China with our first diagnostic product in in human health. So, again, sorry. We'll try and we'll try and be a little less political. But, anyway, that's that's the answer is the former ballpark timescales would surely not conflict with any nondisclosure agreements. You know, again, you know, we have confidentiality agreements clearly with with with our partners and and and must ensure that, you know, we we we maintain those.

27:12 PLC, as a percentage, how dependent are you on on deep verge sales? Well well, again, we see that as a great opportunity. One of the challenges as a small company we've always faced is to being able to to successfully commercialize our our great technology. And and through deep verge, we, you know, we we are gonna be able to access, a number of markets. So, again, we see it as a real opportunity. But it is early days, so we'll just have to see how that evolves and the collaborations evolve. Says, can you mention some of the institutional funds that have bought into the company recently? Yes. Well, as as you mentioned, we've got Unicorn, which is a a VCT investor.

28:06 That question actually was by Yousef I'm sorry. It was by it was by Chris M. So, Chris, yes, helium is another one. You know, they are committed. But, clearly, what we feel now compared with before the fundraise is we've got a much better balance to our share register. It was very institutionally driven with probably five five key institutional investors contributing to over 70% of our shares. We didn't have the the the the the shared movement in the market because they were obviously holding on to their shares, which is great.

28:58 But now, you know, there's much more liquidity because we've got high net worth individuals which came in. We we have some funds again. They seem very committed, but, you know, we have to deliver, and that's that's key. PLC is the UK government showing interest in your solutions. Again, this is something that we're being more proactive about and and also also through some of the contacts contacts that DeepVerge has, especially in in, you know, in water. Yeah. I mean, I think I think, you know, going back to the point, sometimes we can't answer the question. The the the honest answer to that is no. We can't answer the question. But yeah. Absolutely.

29:52 Yeah. You know, it's it's it's no surprise. As as I mentioned, you know, the g seven summit, there are several key themes in there that resonate extremely well with DeepVerge and Microsaic. Next question. Yeah. Youssef said how many people do you have selling? We're a small company. We use our partners, distributors, original equipment manufacturers, we call them as well. We have taken on board recently in two application development individuals. And although selling is not their main thing, they will be managing any opportunities that that come along. So it's really through partnerships. Glenn, you wanna add something?

30:43 So I think, you know, I I think the answer is that, yeah, you know, if you if you look at the number of partners we have, which is which is around 10, you know, each one of those have have their own salespeople. So, you know, you're looking at well over sort of 50 to a 100 actually who, you know, are selling our products. Yeah. We we don't have direct salespeople ourselves. Plus, you also add on the the channel that that Modern Water have, and, you know, that that significantly increases the number of sales. I think, though, as I said right at the start, the the key thing with as we start to, you know, increase our offering to be more service and solutions oriented, You know, this is more about business development than, you know, sort of face to face selling, if that makes sense. So business development is much more focused on on multiple installs of long term key account sales.

31:41 Yousef h. Hi, Yousef. It's just you say can you say again, what are your expectations in your business plan for reoccurring revenues versus one off as an overall percentage? Look, Yousef, our our business plan is is currently evolving because of the the new strategy. The business plan we started off with, you know, at the time of the the the fundraising with without pivoting the strategy was showing about 10% per year coming from consumables, spares, and and service fee income. But as we've mentioned today, with artificial intelligence, etcetera, and that that is not being delivered yet. That's clearly a collaboration we're gonna be working on, is that it'll be significantly higher than that percentage.

32:36 But I can't I can't give you actual percentages. I think we've yeah. So I think maybe we've got time for one more question before we wind up. Just having a look down if there's someone we haven't no. I think I can't really comment on any any contracts that have mentioned. So I think we'll wind up there. Sorry if your particular question wasn't addressed. We obviously have, some difficulties with Glenn not being able to see the questions today, so he's he's coming in on the back of, questions I've answered. Anyway, wanna thank everyone for attending and and making the time again. Just a reminder, please please do vote.

33:28 It's your way to say you support or don't support the company, and we'd like you to support the company. So, Glenn Yeah. Winding up. Thank you. Thank you all for attending again. It's it's really great to have you great to have you on board. And, you know, please do keep, you know, reading our communications, whether there are RNSs, reaches, tweets, or LinkedIns. You'll get a a very good appreciation of where we're heading. I'm personally very excited about where we are heading. You know, we are attacking those real sort of tiny markets in monitoring of of pollutants in water streams. We look we're and in human health, in diagnostics. So, yes, a a a very, very interesting second half. And once again, thanks for attending.

34:19 Yeah. Thank you from me as well. That's great. Glenn, Bevan, thank you very much indeed, and thank you for addressing those questions you can from attendees. And, of course, you will have the ability to review any further questions submitted today, and we'll publish responses where appropriate to do so on the Investor Meet company platform. Glenn Bevin, thank you for answering the questions. We do apologize if any of you did experience a delay in getting into the meeting this morning. Could I please ask attendees not to close the session as you will now automatically be redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few minutes and greatly valued by the company, so please do give it your attention. On behalf of the management team of MicroZeck Systems PLC, we'd like to thank you for attending today's presentation. Thank you, and good morning.