Firescape Update

Firescape Holdings Ltd


Following is the latest business updates from Firescape

Since our last newsletter Firescape Global Limited ("FGL") held its launch event on the 24th April 2017 in the City of London. A number of Shareholders attended the event and for those that couldn't, a video and pictures can be viewed on our Website

The event was well received with a number of key partners and customers attending as well as representatives of several fire services from various countries. The event led to a number of new sales leads which are being actively followed up.

Meanwhile we have continued to work hard to bring our product portfolio to market readiness. The journey from concept to sale is never as easy as might be expected, with the efficacy of each product being continually improved along the way as the products have passed a series of tests to achieve appropriate accreditations. Suitable packaging and labelling, which satisfies relevant regulatory requirements, has also been developed for each product. We are determined that not only will we have an impressive range of products, but that they meet very high standards of both performance and quality. This will underpin the value that we are creating and this is worth taking a little time over.

The result is that FGL is now able to offer a number of high quality products to the market and progress in that regard is set out below.

To reach our market we have established relationships with a number of support service providers and other commissioned agents (as expanded on below). Whilst some promising international connections have arisen as a consequence of the origins of the project and through serendipity (and to the extent that these are promising they are being followed up) the focus is upon developing UK sales.

FGL’s extinguishers filled with our fluid are sold under our Extinguish- Safe brand. A number of patent applications have been filed in respect of the fluid.

Firescape has been working with London Fire Brigade to undertake the first roll out of the products now scheduled for July 2017 with 30 Fire Stations who in the first phase will be adopting our 9 litre Extinguishers.

Dorset & Wiltshire fire and rescue service are currently piloting our 9 litre and 6 litre extinguishers as well as the bulk fluid, to ascertain the commercial benefits and how many will be required on a monthly basis and the amount of fluid that will be used.

Shareholders should appreciate that sales to fire brigades are important for three reasons: firstly, the early adoption of our technology by such demanding and discerning users is a great marketing tool in itself. Secondly, the fire brigades are expected to be busy and frequent users of our products and the immediate feedback they provide will help us further develop and improve our products. Thirdly, the sales will of course generate immediate revenue.

We have 1,300 extinguishers in stock with another 2,700 (already paid for) arriving during July and our supply chain is able to deliver more at a rate of up to 40,000 a month, as required.

With the extinguishers we have two possible market offerings: leasing and outright sales. We are going to test both in the market to ascertain which performs better. A key advantage of leasing (or our managed service offering) is that it lowers the up-front cashflow impact for the end user, which is important as our extinguishers will cost more than conventional extinguishers on an item by item basis – although in practice that extra cost should be more than offset by both (a) a reduction in the number of extinguishers likely to be required (as our extinguishers will be certified for all classes of fires including electrical) and (b) reductions in the training costs which are mandated for end user staff. Leasing also offers other advantages for the end user including the monitoring of the extinguisher assets.

The lease model involves a sales partner who will sell the leases, an assessor to determine the required number and location of the extinguishers and a service provider who will install the extinguishers and then inspect them during the term of a five-year contract.

FGL has two confirmed service providers who have signed up with FGL (on a non-exclusive basis), whom together with a number of fire extinguisher assessors, will enable FGL to sell, install and service (principally 6 litre) extinguishers across the UK. The main sales agent is Universal FireX whose remit is to develop our sales pipeline across the UK commercial sector. A key benefit to FGL of these arrangements is support from a sales team under the guidance of its own MD, without the immediate need for the significant up-front costs that would be incurred were FGL to seek to build its own marketing resource in this area. This is a strategy that we intend to replicate with other providers and agents as appropriate.

We have worked closely with these providers to ensure they understand FGL’s sales/installation process from start to finish. A number of training days have been arranged and attended by the entire team to re-enforce this.

The company’s smart technology add-on will, subject to Board approval, be developed and deployed later this year/early next year following field tests. The smart technology add-on will facilitate remote monitoring of extinguishers – functionality which the market has shown great interest in having.

Sales and leasing of extinguishers will begin during July 2017 now that the products are ready and appropriate sales and back-up processes are in place.

For the 6 litre model FGL’s focus will be on the managed service lease offering, outlined above, targeted initially at the commercial, retail, property management and construction sectors.

FGL recognises that some market sectors may not be receptive to the lease model however and we shall simply sell to them as appropriate; for example FGL will sell 9 litre extinguishers to the UK’s fire services, to the waste management industry and others as the market requires. FGL continues to seek and expand its sales partners/distributers across the product range

Pan Safe is our sachet product, for use on domestic pan fires.

Pan Safe was launched on a number of cheaper low volume shopping channels this month (as displayed on our website and on social media) and is now available in two sizes, with the new slightly longer version designed to satisfy British Standard PAS 2013/1:2013 - the world’s first fire sachet product with such approval. The original sachet will be sold in countries where accreditations are not required. The volume of sales on such channels to date has been disappointing – less than 250.

However, we do expect sales of Pan Safe to accelerate once we have obtained Clearcast approval. Clearcast approve the content of adverts to ensure that they comply with the UK Code of Broadcast Advertising. In practice Clearcast is a prerequisite for access to TV channels with a bigger audience. We anticipate having Clearcast approval by August 2017.

A Japanese TV shopping Channel is expected to place its first order for Pan Safe in August in support of a pilot show that is planned for later that month.

FGL is also seeking direct sales of Pan Safe through major retail outlets, which we anticipate being the main marketplace for Pan Safe. Discussions are ongoing with a number of players in the retail space.

We have 20,000 sachets in stock (at a cost of c. £20k). Pansafe can be delivered at a rate in excess of 200,000 a month if required.

FGL is also in the process of developing training videos and smart APPS for its product range. The training APPs demonstrate the safe use of the products and allow for staff training if required, on-line, via the completion of a series of questions after seeing a video, with the issue of a certificate if successful. The training APPS are launched through a mobile phone or other electronic device

Historically the mandatory staff fire extinguisher training requirements imposed upon employers have often not been complied with. Post Grenfell that is expected to change as ever more focus comes on strict compliance with existing legislation.

The training app has the potential to generate significant extra revenue for FGL as for end users it represents a materially cheaper way of training their staff, avoiding as it does the need to attend an offsite training course.

Shareholders will have the opportunity to be able to view and use these training APPS at an event in London near the end of July 2017. (see appendix)

Spay Safe is FHL’s plastic aerosol product. It combines a small size, lightness and consequent ease of use with significant fire-fighting capabilities. The combination has the potential to open up a whole new range of end user applications, including automotive.

Spray Safe is about to come out of the R&D phase (having passed various performance testing) but still needs certain additional accreditations as an aerosol product. It is anticipated that it will be released for sale in mid-November (335 ml vessel). A larger 500ml size is also undergoing testing and should also be ready for market by the end of the year.

A demonstration video showing the capability of the 335 ml size will be available on FGL’s website by the end of July. There is already significant interest in the Spray Safe products. We are currently in the process of negotiating with potential distributors.

PV Stop is a liquid sprayed onto solar panels to prevent them generating electricity. The presence of solar panels on roofs of burning buildings is a significant risk for fire services as they can cause the fire fighter applying a water jet to the building to be electrocuted.

FGL has entered into a heads of terms arrangement with Solar Developments Pty (the Australian company that makes PV Stop) with a view to FGL and its sales agents undertaking the distribution and sales of its PV Stop product in the UK and other countries to be agreed.

London Fire Brigade is expected to place its first order for PV Stop for 30 units (c £3k) within the next couple of months.

It is then planned to roll it out across all UK fire services, with international sales following later in the year.

PV Stop is not going to be a major focus for FGL but does represent a useful addition to the product range on offer to customers.

As at 30 June 2017 the business had invoiced c. £15k of product for initial trials by customers. This is a low figure but reflects the fact that the business operates in a highly regulated market and that it does take time to bring quality products to the market.

We do now anticipate significant sales and are forecasting in excess of £500k turnover in the next quarter.

Our current forecast for next financial year is that sales should exceed several millions of pounds, although as with all start-ups, unforeseen regulatory and other barriers can negatively impact on the volume of sales and how soon they can be made.

The majority of these sales are expected to be for the UK market where the contacts and opportunities are now developing well. As regards overseas markets, most of our efforts are focussed on local fire services. In Ireland our agent is progressing sales across the current product range in both the commercial and domestic market. In Japan our distributor will be focusing on Pan Safe and Spray Safe.

We do expect that cashflow break-even will be achieved within the next three to six months based on projected sales.

More detail on the Group Financial position will be published shortly on the Company Page