BELL Belluscura Plc

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Belluscura plc

("Belluscura" or the "Company")

Trading Update

LONDON, U.K. and PLANO, TX, U.S. (2 April 2024). Belluscura plc (AIM:BELL), a leading medical device developer focused on lightweight and portable oxygen enrichment technology, provides a trading update.

Impact of delay in completion of acquisition of TMT Acquisition plc ("TMT")

Although it is early in our financial year, it has become apparent that primarily due to the untimely delay in completing the acquisition and closing of TMT, sales and manufacturing progress on both the X-PLOR^® and DISCOV-R™ products has been pushed back by at least four months compared to our previous expectations.

At the time of our trading update as notified on 20 December 2023, we had expected that, given the proceeds from the funds raised in November 2023, together with the anticipated resources from completion of the TMT offer, the Company would have sufficient working capital to meet its growth plans through to becoming cashflow positive. As stated in the Offer Document of 19 January 2024, due to the delay to the Chinese NMPA approval and completion of the TMT offer, the Company revised its commercial activity in order to preserve cash resources. This has resulted in a delay in selling into the profitable Direct to Consumer ("DTC") market and delaying the launch of the DISCOV-R product and the acquisition of components.  As a result, the current sales mix projection, and the timing of receipts of China royalty revenue, we now expect operating cashflow to be positive in Q1 2025 and thereafter.

As at 31 March 2024, the Company's (unaudited) cash balances amount to c$3 million.

As a result of the operational changes set out above, the Company expects to achieve positive Adjusted EBITDA from Q3 of 2024 onwards. Consequently, Revenue and Adjusted EBITDA for 2024 are expected to be lower than market expectations* at $16 to $19 million and $(0.75) to $(1.5) million, respectively.

During the recent period the Company has worked closely with its partner InnoMax Medical Technology Ltd ("InnoMax") to expedite the launch of X-PLOR in China and the manufacture of the DISCOV-R. Due to the restructuring of manufacturing in China and the delay in profitability we are in discussions with certain parties to provide a line of credit to meet the funding requirement for non-recurring engineering, quality control and regulatory expenses for both the US and China, and initial DISCOV-R inventory details of which are expected to be announced in due course.

The initial launch of the DISCOV-R is now expected to be the end of June this year, compared to a previous estimate of the end of March, with a full commercial launch expected during September 2024. InnoMax will manufacture the great majority of these products and the expectation is for a 40% reduction in the unit cost of goods compared to that incurred in the US.

Accounts for year to 31 December 2023: Additional provisions

The audit of the accounts for the year to 31 December 2023 is progressing satisfactorily.

In considering the fair value of certain assets and liabilities as at 31 December 2023, the Board has determined that, as compared with its expectations for the year to December 2023 at the time of issuing its the Trading Update on 20 December 2023 and confirmed at the time of making the offer on 19 January 2024, it now expects to make one-time fair value adjustments (subject to audit) for Inventory (both finished products and raw materials), future supply arrangements for raw materials with certain suppliers and warranty provisions for product supplied in 2023 and earlier years.

The Board expects to publish the audited accounts in June 2024. 

Manufacturing in China

Following an operational review against future strategic objectives, the Board has decided to move the majority of its manufacturing operations to our Chinese partner InnoMax by the end of Q2 / beginning of Q3, which should result in a significant, immediate and long-term reduction in the cost of goods, as well as increased manufacturing capacity.

Robert Rauker commented:

"It is disappointing that cashflow breakeven has been delayed to Q1 2025. However, the actions we have taken to manufacture the great majority of our products through InnoMax in China will result in significant savings in the cost of goods, resulting in a material improvement to gross profit.

"We have substantial interest in the DISCOV-R, as demonstrated by the demand and orders we have already taken from leading oxygen providers.  We are focused on bringing this new product to initial launch as quickly and efficiently as possible within the next three months."

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About Belluscura plc (www.belluscura.com)

Belluscura is a UK medical device company focused on developing oxygen enrichment technology spanning broad industries and therapies. Our innovative oxygen technologies are designed with a global purpose: to create improved health and economic outcomes for the patients, healthcare providers and insurance organisations.

* Market expectations for the full year stand at total revenue of $22.5 million and Adjusted EBITDA of $1.5m as per Dowgate Capital's research note dated 13 September 2023