Member Info for Slam01

This is a really interesting find...... This appears to be a Taiwan based Company so there are a couple of questions about it:

1) Are we selling this directly to Taiwan or is this covered by the By-Health agreement whereby they will sell into the agreed "Territories". If the latter is the case it means that we must be already supplying By-Health with SD II, and

2) The product is covered by a US FDSA safety certification - which means that the Global market does formally establish the American recognition of SD II. No mention of application for Blue Hat status that I can see.

Whatever the answers to these questions it is another step forward in International Sales.

I don't think that we would all be here unless we thought that this is exactly what could happen to PXS when the "News" drops!!!!

DP64

I wouldn't go so far as to label this thread as a "proposed takeover" but the Company have certainly alluded to the fact that they would not be averse to an approach by using the wording that they have used in the RNS.

I guess that one of the neat tricks that they have done in coming up with these options is to tie the current management and staff into the Company over the next 2 years and 3 months. That period is likely to be pivotal in the history of the Company as we look to the continued growth of sales, as we look to the move into profitability and as we await the SAMR approval from the Chinese Authorities and the launch of the product into a massive new market.

The one thing that I hope is that the undisclosed conditions on the grant of these options includes reference to all of these thing AND also base their conditions on significant movement upwards in the share price. If anyone from the Company does read these message boards then I would encourage them to be much more open with their shareholders from here on in, with regular updates of the progress of the Company throughout the progress. IMO they have not been transparent enough in the last few years and the fact that they are prepared to issue options at such a deep discount should bring with it a responsibility to treat their long term supporters with equal respect.

If we were to discuss a potential suitor for the Company, we would start with the two obvious suspects:

DSM: Already hold 10% (plus) of the Company and were the first to act in a supporting role (it has puzzled me that DSM were prepared to sell their remaining stock of FF to us when I would have thought that they needed it themselves for the development of their gut microbiome product - why do this unless that they thought it was only a loan and a good way of acquiring new shares).

By Health: Have invested heavily in the future of FF in the Asian Market and in the Associated Territories. However, they appear to have taken no interest in acquiring a stake in the Company thus far (this has also puzzled me)

Could either of these Companies afford to let the other take control of Provexis????

Could either of these Companies afford to let Provexis fall into the Control of a 3rd party Competitor????

I am really not sure what to make of the latest RNS and the issuance of new options at a deeply discounted price so I am not going to weigh into that argument at the moment.

However, one aspect of the RNS seems to have focussed some minds on the value of the IP (through the various patents) and for this I am extremely grateful. I am a long term shareholder and supporter of the Company. I have continued to hold, and even build a larger stake because I believe in the Product itself. I have held onto my shares through years and years of unprofitability and pain simply because I felt that the value of the IP was more important.

A couple of years ago I recollect that I posted on here that I thought that the value of the IP lay in the region of 2.5- 3 pence per share. Since then there have been at least 3 major developments that should not be discounted:

DSM and Gut Health: New Patent

By Health and drug status: This application for a patent which would recognise FF as a possible drug in the treatment of Strokes, and

By Health and Blue Hat status: The application itself is a recognition of By Health's belief in FF's properties - the granting of Blue Hat status by the chinese authorities will be formal recognition. (the fact that it will also open up a completely new market for the sale of FF is the icing on the cake)

In my mind, these 3 developments have merely added to my thoughts on the valuation of the IP.

I agree with XPublican, I think that talk of a 2p take out price is significantly lower than I would expect. Any buyer would be taking all of the IP and, If we attain Blue Hat status in the meantime, I would think that you should treble that figure but I would welcome a discussion on that.

Slam

HaydenJ,

You have inferred that you know the amount of the DSM Royalty Payments. If that is the case, please could I ask you to post the figure as I have been trying to work through some estimates for ages.

Many thanks

Slam

HaydenJ,

That is quite a misleading post - ALL of the costs are already reflected in the P&L which itself identifies a significant improvement over previous years and would appear to indicate that PXS is on the road to profitability.

The only impact that the transfer from debt to Equity will have is on the Balance Sheet and this will release cash into the Company's coffers adding to the £478K already reported at 30/9/2024. This will provide a significant cash runway for the future development of the Company.

My initial estimates (very rough) are that the DSM Royalty payments for the period, which are included in the "Cost of Sales" figures, exceed £150K.

In other words, if you discount the cost of these Royalty Payments which we know will diminish to zero over the next two years, you could argue that we are already trading at a profit.

In addition we also know that the debt for these royalties for the period to 31/12/2024 has been converted into shares. This has a massive impact on the Balance sheet, reducing the Total Liabilities by approx £300K.

All in all 2025 looks like it will be a pivotal year, and if we receive Chinese SAMR Approval............................

My first impressions after a very quick read through are that this is an extremely positive report not just for the 6 months covered but also for the future.

The Operating Loss is certainly mush less than I was fearing and the forward looking statements are entirely positive.

Lots more to digest yet

9:59 this year!!!!

Have I got the nerve to open it????????

This is patently (excuse the pun) the initial phase of an attempt to gain recognition of fruitflow as a formal "drug" to be used in mainstream medicine. It is a very long path to follow but IMO this can only serve to increase the value of our own IP. I am not sure of the legalities as presumably the patent and future development of the patent will belong to By-Health. As it stands, Provexis could not afford the ongoing research and Development costs BUT it is clear to see that this will have a massive impact on our own IP.

I have no idea how PXS can get this message into the markets BUT this is another cog in the transformational journey.

Slam

BB,

You are right that it doesn;t result in an injection of cash but it does result in an equivalent reduction of liabilities - such that we no longer need to find the cash to pay those bills. Also, if you measure the worth of the Company as being Net Assets minus Net Liabilities, then the company is worth an equivalent amount more.

Gixer

In an odd way, I am quite glad that we have found an explanation for a significant amount of our Trade Debt. Like BB, I couldn;t work out how we had accrued so much debt and I am happier now that this level of debt has been explained and reduced.

I think that the answer to Gixer's question is much simpler than the Chat GPT options. I think that:

1) PXS have recognised the true cost of the royalty payments in each of the periods in which they were accrued. Effectively this means that we have recognised the true cost and that there will be no further charge for these periods. However,

2) PXS has not yet physically paid the money in cash form to DSM. At the year end accounts PXS reported that it had £307,448 of outstanding debts (identified as Trade Debts and Other Payables). I am fairly certain that the £129,000 royalty accrued in the full year is included within this figure.

We have now settled this debt by issuing DSM with new shares.

What has surprised me in the RNS is that I get the impression that we have not paid any of the royalties that have accrued since 1/1/2023. we have showed the whole lot as a debt in the accounts. This doesn;t mean that we are paying twice for these royalty payments. It simply mmeans that DSM have forgiven the debt and have accepted shares to the same value in payment.

From PXS point of view the debt will now be removed from the balance sheet and this will release cash into the Company's coffers to use for a new run of inventory.

BB,

I agree with your assessment of the Royalties for the last FY being approx £129K. I would also add that I think the royalties for the period 1/1/2023 to 31/3/2023 amounted to approx £17.1K.

These royalties are contractual and therefore have to be included as expenses in the P&L Account for the period in which they are incurred. Indeed the Company have already stated that they are included in the "Cost of Sales" line of the Accounts.

What we don;t know is whether these royalties were actually ever paid in cash to DSM. Any unpaid royalties would then need to be included as part of the "Creditors" line in the accounts. We have no idea how much of this balance remains outstanding or how much additional liability has been accrued in H1 2024/25.

I go along with your estimate that the debt owing to DSM could easily lie in the range £200 - 250K. But, as we now know, that debt has now been converted into equity and we have also received a chunk of inventory on top of that.

The more I think about it the more I think it has been a good deal for PXS and its shareholders.

In all of my years of following PXS, this RNS is probably one of the most positive that I have seen.

In terms of the factual content, it clears up the issue of funding the immediate requirement for new inventory but it also describes:

1) a very positive price for the funding - issuing new shares at a price of approx 0.67 pence. I would argue that this has now set a long term "low" price for the shares.

2) It shows that DSM have confidence in the future of the Company - to invest over £500K in the Company at that price.

3) It tidies up the cash requirement over Royalty Payments and releases cash into the PXS balance Sheet

4) It indicates that the current increase in inventory might not be enough to sustain ongoing demand and that we will need a full production run in early 2025.

All good news IMO - however, I was also impressed by the tone of the RNS - containing some really positive sentiment and not just the usual cut and paste stuff. A breath of fresh air!!!

If we had already received Blue Hat status wouldn;t By-Health have started to launch their range of products and wouldn;t we (well, Gixer anyway) have already seen that launch?.

It still seems like everything is a waiting game on news of (i) Profitability and (ii) Chinese approval.

I continue to hold on the basis that I think that the IP is worth between 3p and 4p per share. However I also think that positive news of either of the 2 issues noted above will be transformative.

Sales have been increasing at a staggering rate and I am hoping we will see more evidence of this in the half year report. The problem that we have is funding the next run of inventory production and I am also hoping to see the plans for this outlined in the report.

Slam

The way I read that was that it was indicating a pathway forward to applying for "drug status". I know that that is a very long pathway but it is opening another pathway and that has got to be good.

FWIW, here are my thoughts on the specific trading margins attributable to each source of income contained within the latest R&A.

In the first instance I have to advise that I have had to amend my original model (which was devised to identify the level of Royalties payable to DSM). As a result of the new information contained in this report MY thoughts are:

FRUITFLOW + Omega 3:

We have a great deal of prior information regarding the profit margins on this. Historically it has been possible to identify the Cost of Goods and to compare it with the Income generated by sales. Historically it can be shown that a level of inventory of £3.3K will support gross sales of approx £10K. I guess that you could infer that we were making a mark up of 200% of the cost of producing the Tablets. I do not see any particular reason why this might have changed.

If you project this into the current results, you could estimate that, based on Gross sales of £150,119 in 23/24, we depleted the inventory levels by £49,539.

SD II

We know that the Total Inventory Depletion during 2023/24 was £389,078. Part of this depletion was generated by sales of FF+. If you deduct the estimated cost of FF+ (£49,539) you could infer that Inventory values of ££339,539 were used to support sales of £651,845.

You could conclude from this that our profit margin on the direct sale of SD II was approx 92% (ie £10,000 of inventory supports £19,200 of sales).

DSM Royalties:

Am I right by concluding that you could use this analysis to identify the DSM Royalty Payment???? (Total Cost of Sales - Total Inventory Depletion).

Just my anal musings - They are probably miles off the mark but I think that we are quite close to full profitability even if it isn't in 2024/25.

Slam

Sphinx,

That was one of my queries too!! FWIW my take on this was that the Company ran out of stock in Q4 and didn't announce that they had replenished the stock until the end of March 2024.

I suspect that some of the £700K sales since April include some of the shortfall that you have noted in your post. There is a Note in the Accounts that sales are only registered in the Accounts on the date of despatch. This appears to be a new Note

Apologies if you misunderstood me....... I was not trying to drum up support to oust the management. I was trying to get some sort of a group together to try to agree on the questions to ask in a coordinated way at the AGM.

There are some changes within these accounts and I am trying to make some more sense of them.

I have some concerns regarding these Accounts as, I am sure a lot of you have.

Taking BB's comments on board it might be useful if everybody disclosed their current holdings so that we could identify the strength of our hand as a group.

For me - I hold 12.75M (small in the scale of things but meaningful to me).

Slam