LONDON (ShareCast) - (Sharecast News) - Water saving and effluent reduction technology provider Xeros Technology Group has signed two agreements to sell the majority of its Hydrofinity US commercial laundry customer portfolio of leased machines to Eastern Laundry Systems and Wash IQ, previously known as Viking Services, it announced on Thursday.
The AIM-traded firm said Hydrofinity would receive an up-front payment of $0.11m in cash and on-going license fees for the provision of 'XOrbs' to Eastern Laundry and Wash IQ.

It said the proceeds from the transaction would fund on-going Hydrofinity working capital.

In 2018, the lease contracts generated an adjusted gross loss of $0.38m.

Xeros said the commercial washing machines and associated lease contracts had no value on its balance sheet, with the value written down during 2018 following the invention and patenting of Xeros' new 'XDrum' design for commercial washing machines.

A total of 164 commercial washing machines installed with Hydrofinity customers, and their corresponding lease contracts, had been sold to Eastern Laundry and Wash IQ.

As it had announced in November last year, Eastern Laundry 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, Wash IQ held the same exclusive rights for servicing of Hydrofinity customers in California and Arizona.

The board said the agreement reflected the Hydrofinity strategy to reduce its physical presence in markets, and to move to a full licensing model.

It said it expected further sales of smaller portfolios to similar regional distributors in the US over the coming months.

"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," said Xeros chief executive officer Mark Nichols.

"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."

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