LifeSafe has fallen by circa 50% since its IPO last year. Value investors looking for new tech opportunities are watching. Read why below.
LifeSafe (LON: LIFS) shares have not enjoyed a particularly pleasant journey since the IPO in July 2022. The company launched at 75p per share, raising gross proceeds of £3 million and leaving LIFS with a market capitalisation close to £17 million.
The company is now worth less than £8 million — even after reporting excellent half-year results.
At the IPO, CEO Neil Smith enthused that ‘this listing will provide us with the profile, capital and platform to go on to capture more of what we believe is a growing market with our innovative fire extinguishing products…every home should have our simple to use and highly effective Stay Safe fire extinguisher to protect life and property.’
In another market, LifeSafe shares may be trading above their IPO, especially given the rapidly increasing revenue and strengthening business strategy. For context, when the company started its IPO roadshow, the markets were ‘quite buoyant,’ with the directors preferring this less dilutive route over private equity funding.
However, where there’s weakness, there’s opportunity.
For this piece, I contacted Chairman Dominic Berger — the full interview can be found at the end of the piece.
Long-time readers will know I like to invest in ‘categories of shares.’ For example:
Oncology: AVCT, POLB, CIZ & HEMO
Lithium: PREM, KOD, ATM, ALL, & MARU
Gold: AMRQ, HUM, GGP, & KEFI
One other category I like to invest in, I usually classify as ‘new tech,’ or ‘other bets.’ Really though, that’s an abbreviation — this sector is companies which have developed a new, patented product, which delivers on a clear unmet need.
Businesses I have covered within this category in 2023, which form this part of my portfolio, include Ondo Insurtech (up 278% ytd), Abingdon Health (up 53% ytd), OptiBiotix (up 106% ytd), & Tekcapital (down 23% ytd).
Ondo has the LeakBot, Abingdon the first mass market saliva-based pregnancy test, and Opti and Tek has developed revolutionary new sugar and salt replacements respectively. Despite some huge volatility, these are companies I continue to hold for the long term as their disruptive tech has the potential to deliver even larger returns.
However, there’s always room for another quality company in the portfolio — especially where negative market sentiment has sent the share price into value territory.
Let’s dive in.
LifeSafe investment case
In brief, LifeSafe has developed a range of novel, innovative eco-friendly fire extinguishing fluids:
‘the real essence of the business and where the investment case lies is the novel fluid the company has developed. The genesis of the business was to try and invent a novel and eco-friendly fluid that could put out as many types of fire as possible.’
This product has been developed to solve three problems within the fire safety space:
1. Increasing domestic fire extinguisher ownership
- Berger notes (correctly) that most people don’t know what extinguisher to use on which fire, and accordingly, only 17% of people own an extinguisher, while 90% have a fire alarm. The idea of the company’s flagship Stay Safe All-In-One Extinguisher is that it replaces the need to buy multiple different extinguishers, at a low cost, while being light and portable enough for anyone to use.
- For context, the product sells for £24.99 on Amazon, and boasts a 4.6 star rating. The Stay Safe All-in-1 contains a non-toxic, non-hazardous, eco-friendly patented fluid and can extinguish ten types of everyday fire: lithium-ion batteries, bioethanol, motor oil, bio-diesel, diesel, E5 and E10 petrol, electrical, textiles, wood and cooking oil. It’s also maintenance free and fully recyclable.
2. Meeting new environmental legislation
- European legislation from mid-2025 is coming in that will see many current fire extinguisher liquids banned from the market. Many are already banning Aqueous Film Forming Foam for its environmental damage, but LifeSafe’s fluid is non-toxic, green, and fluorine-free. Most countries internationally are following suit with similar legislation.
3. Tackling lithium-ion opportunities
- I’ve covered lithium about a thousand times, but one of the problems with Li-ion batteries is that when they go wrong, they continue to generate heat even when the fire seems to have gone out, in a process known as thermal runaway. LifeSafe’s fluid is a super coolant, and one version (Thermal Runaway Fluid), can be used to prevent lithium-ion fire reignition. It’s not hard to see how this can be commercialised in the EV age.
The company is therefore focused on developing as many different ways to exploit its fluid as possible, including in suppression systems, sprinklers, and developing novel derivations of the original product for specific use cases.
LifeSafe shares: half-year results
In the six months to 30 June 2023, the company highlighted its ‘strong revenue growth,’ with revenue rising by 123% to £2.9 million. This already represents 72% of the entire FY22 financial year, and is also ‘ahead of the Board’s expectations.’ It’s also worth noting that in previous financial years, revenue has accelerated in H2, and therefore full-year results may come in with even stronger growth.
Meanwhile, the company generated a gross profit of £1.7 million, £1 million more than in the same period last year — and margins also improved, from 55.5% to 57.8%. However, LifeSafe is still in its growth phase. Underlying LBITDA (loss) rose by nearly £100,000 to £760,000, including R&D spending of £161,000, and reflecting a £900,000 increase in costs resulting from expansionary activities in the US.
For context, the US remains the target market of choice for selling consumer products. LIFS is already seeing solid success across the Atlantic, and the company’s usual Q4 outperformance can to some extent be attributed to US Black Friday sales and increased purchases as gifts.
But growth stocks burn through cash to get to profitability, and LIFS is no exception. LifeSafe had just £24,000 in cash at the end of the half — and in late August 2023, the inevitable happened, with the company raising £1.21 million from placing circa 3.3 million new ordinary shares at 37p per share, leaving the company with circa 25.4 million shares in issue.
Dilution is never welcomed, but it’s worth noting that many companies can’t raise any money in this market at all, even at a discount. At the time, Berger noted that he ‘remains confident that in 2023 we will reach the profitability inflection point on a monthly basis and are looking forward to further scale in 2024.’
Further to this, the company reiterated in the results that it remains ‘on track to become EBITDA profitable on a monthly basis during Q4 2023.’
Of course, it’s worth calculating the cash runway. If you exclude R&D spending, underlying LBITDA comes in at almost exactly £100,000 per month — and therefore, LIFS has a cash runway of about a year, and potentially slightly longer if revenue increases in H2 as expected.
However, there is net debt of £440,000 to consider too — this time last year, debt was negligible. But regardless, it seems that as long as month-to-month profitability occurs this year, the cash position is now strong enough that further dilution will not be necessary for some time — if ever.
When directly asked about the risk of further placings, Berger advises that ‘we will continue to assess the balance between raising further funds to drive accelerated growth versus our current and market expectations.’ I’d interpret that as no further placings unless opportunity calls for it — thought the fuller answer can be found at the end of this piece.
Overall, the Chair is enthusiastic: ‘having listed on AIM just over 12 months ago, we have consistently outperformed our financial and strategic targets, all whilst ensuring that our potentially life-saving fire safety solutions are made increasingly available to customers globally.’
Commercial channels
The LifeSafe investment case is clearly centred around its patented fluids — and the company plans to disrupt the $9 billion global portable extinguishing market. That’s a big dream for a little minnow, but trailblazing products have a habit of growing in popularity quickly.
Even Apple was a penny share once upon a time.
There are three key target markets:
Consumer — 17 million homes in the UK and 200 million homes in the US (the vast majority) do not have a fire extinguisher of any kind. LifeSafe’s original Stay Safe 5 in 1 product, which launched in August 2021, became the number one best seller within just 10 days. This is a massive market, one filled with consumers who might put their hands in their pockets for a convenient, cheap solution.
Wholesale — LIFS is targeting both landlords and the home insurance sector (perhaps inspired by ONDO’s success), but at wholesale, the catalyst came on 18 September. The Stay Safe All in-1 fire extinguisher is now available in 850 Screwfix shops as well as online, with Screwfix Trading Manager Stuart Strelley ‘pleased to be working with LifeSafe’ and CEO Neil Smith noting that the company is ‘the UK’s leading multi-channel supplier of trade products, representing a significant sales channel.’
Industrial — returning to the lithium-ion firefighting angle, the company’s Thermal Runaway Fluid (introduced in January 2023 at the world-leading Intersec conference) is designed to deal with increasing lithium-ion battery fires, which will only become more common as EVs go mainstream. For context, there are already three million e-scooters in the UK, and if every new car is going to be an EV by 2035, industrial demand for extinguishing solutions will only ever increase.
Arguably, consumer sales are just the start of the profitability story. Industrial is where the real opportunity lies — and this is evidenced by the new deal signed with Wormald Fire & Security, RNS’d alongside half-year results. Wormald is by some distance Australia’s biggest fire protection and safety business.
This is the LifeSafe’s first industrial partnership, described as a ‘significant strategic milestone.’ And for good reason — ONDO investors know what happens when you sign one decent partnership; contracts beget more contracts. As Berger notes, he is looking ‘forward to announcing other similar game changing partnerships that we are close to finalising in due course.’ Perhaps an EV manufacturer?
Wormald boasts a 130-year heritage and was already valued at $1 billion in 1990 when bought by Tyco, before being acquired by Evergreen Capital LP, a New York based investment firm in 2016.
Under the new strategic partnership agreement, LifeSafe will supply its novel, patented, TRF fire extinguishing fluid exclusively in Australia and New Zealand to Wormald, for use in their range of fire safety equipment. While this should create a big revenue boost above and beyond the already higher revenue in 2024, Wormald has ‘also provided LifeSafe with crucial introductions and expertise to access other geographies and market sectors.’
Arguably, these network links are more valuable than the contract itself. Berger enthuses that ‘this milestone is a long way ahead of our expectations even though we have been working and testing with Wormald for over 18 months. We are excited about how the partnership and endorsement of Wormald will now open a huge opportunity in the bulk supply of our fluids through similar partnerships globally.’
Meanwhile, Director of Defence, Marine & Products at Wormald, Jon Buckley, commented that he is ‘delighted to be working with LifeSafe Technologies as a strategic partner.’
Often, these are just pleasantries, but Buckley has good cause to be delighted. Not only does his company get exclusive use of a market-disrupting product, but it’s also getting ahead of coming legislation.
Again, there is going to be a total ban on fire-fighting foam containing PFOA from July 2025, and because the LIFS fluid is fluorine free, it can also replace foam (AFFF) extinguishers which will fail the ban. This is a potential $1 billion opportunity, and now nobody else in the Australasian marketplace can access it.
September successes
Before wrapping up, it’s also worth noting that LifeSafe was appointed to QBE Insurance Group’s Solutions Panel this month, as a best-in-class supplier of choice to their global client network. QBE is general insurance and reinsurance company listed on the Australian Securities Exchange and headquartered in Sydney.
The corporation employs more than 11,700 people in over 27 countries — and in the Chairman’s own words, this ‘represents the culmination of 14 months assessment of the Group’s range of fire extinguishing fluids and products. As well as generating revenue directly from recommendations to its customer base, QBE’s powerful endorsement of the Group’s fluids will be invaluable in building trust and credibility in the conversion of LifeSafe’s growing industrial sales pipeline.’
Also in September, LIFS showcased its Thermal Runaway Fluid at the industry-leading Emergency Services Show in the NEC in Birmingham. Technical Advisor to the Institute of Fire Engineers Paul Trew noted that ‘the growing use of lithium-ion powered devices and the increasing number of challenging fire incidents requires new solutions and thinking. We are delighted to be joined at this year’s event by LifeSafe who are showcasing their highly innovative new Thermal Runaway Fluid.’
Clearly, these conference appearances are working — arguably January’s showcase was key to unlocking there new client contracts.
To finish, it’s perhaps best to end with a direct quote form the Chair:
‘I am mindful though that the market may not have quite understood the enormity of our potential and the nature of our game changing fluid. We are hopeful that the market will once again recognise the value of LifeSafe in the coming months.’
Time to buy the dip?
Q&A with LifeSafe Chairman Dominic Berger
1. Can you briefly explain your twin roles as CEO at Capital Plus Partners and Chair at LifeSafe? Any other senior roles worth highlighting?
I originally came to know about LifeSafe through Capital Plus Partners where we arranged investments into LifeSafe. Subsequently we closely followed the company and eventually I was asked to join as Chairman. I am very active in the running of LifeSafe with the CEO Neil Smith.
2. Imagine you’re a growth investor looking to buy shares in a handful of growth companies selling a product with a high unmet need. Similar companies might include Ondo InsurTech and Abingdon Health — why should LifeSafe be included in that portfolio?
The investment case for LifeSafe is frequently misunderstood. Although the focus of the business today is a unique handheld consumer eco-friendly fire extinguisher that puts out all household fires, the real essence of the business and where the investment case lies is the novel fluid the company has developed. The genesis of the business was to try and invent a novel and eco-friendly fluid that could put out as many types of fire as possible. The team identified three key areas/challenges to address:
- People did not know what fire extinguisher to use on what type of fire and therefore did not buy them or indeed use them – 90% of UK households have a fire alarm, but only 17% own an extinguisher. The problem LifeSafe wanted to address was to create a simple easy to use handheld device and able to replace 3 extinguishers with one – eliminating the problem of confusion.
- With new legislation coming into effect across Europe in July 2025, there is demand for an eco-friendly and safe fluid to replace existing fire extinguishing fluids, which are toxic and some dangerous to humans. In the last year we have seen many countries begin to ban Aqueous Film Forming Foam (“AFFF”), a foam fire extinguisher, because of its harmful ingredients. Increasingly governments around the world are moving to legislate against harmful fire extinguishing fluids.
- LifeSafe’s Fluorine Free Fluids are nontoxic, environmentally friendly, and sustainable and importantly fluorine free and is poised to take advantage of the legislation change.
- Challenges of new fire types like Lithium-Ion batteries – the team recognised early on that current technology posed new fire threats in the home and work – and existing fire fluids cannot tackle. The common nature of these types of fires is that they continue to generate heat even when the fire seems to be out, and re-ignition is common. The novel approach of the LifeSafe fluid is that it is a super coolant and therefore takes the heat out and prevents re-ignition otherwise known as thermal runaway.
Therefore, the LifeSafe investment case should be all about its patent protected fluids and therefore the company’s ability to transform or disrupt the global portable extinguishing market which was valued at US$9bn in 2021. The belief is that the company’s fluid can be used in all forms of fire extinguishing systems, including cylinders (reducing the need for multiple cylinders), in suppressions systems and sprinklers. The company also has an active research and development program exploring many more derivations of the super coolant fluid it has created.
Breaking the investment case down further today we have a range of unique, eco-friendly, patented fire extinguishing fluids and product solutions operating across large, growing, global, multi-channel routes to market – Consumer, Wholesale & Digital.
- Consumer: Only 17% of homes in UK have a fire extinguisher, leaving c.21 million [homes] unprotected, whilst only 1 in 4 homes in the US (200 million homes). We are pleased to have launched our first product, Stay Safe 5 in 1, in August 2021 which quickly became the number one best seller on Amazon within 10 days. and we also launched in the US February sales £2.3m last year from a standing start – simple, easy to use products combined with “always on” engaging, relevant digital content, designed around our specific demographic is driving high conversion at low cost and high margins through Amazon and our LifeSafe platforms.
- We are continuing to invest and innovate within our Consumer R&D proposition to identify ways in which we can add value and broaden the appeal of our products.
- Wholesale: Retail (Screwfix 850 branches), Landlords, Home Insurance
- Industrial: Initially we launched our Thermal Runaway Fluid (”TRF”) to deal with increasing numbers of lithium-ion battery fires – over three million e-scooters in UK, one million are in London alone and increasing numbers of EV and charging points globally – along with mobile phones, laptop’s etc. Our Thermal Runaway Fluid effectively extinguishes lithium-ion fires and keeps them out due to its super coolant properties.
- The Group announced yesterday the significant strategic milestone of signing its first industrial partnership agreement with Wormald Fire & Security. Wormald is a leading provider of fire protection services in Australia with a 130-year heritage and was valued at US$1bn in 1990 when bought by Tyco. In 2016, Wormald was acquired by Evergreen Capital, LP, a New York based investment firm. Under the strategic partnership agreement, LifeSafe will supply its new fluorine free, lithium ion TRF fire extinguishing fluid exclusively in Australia to Wormald for use in their range of fire safety equipment. In addition to the expected revenue benefits from the distribution of the Group’s fluids, Wormald has provided LifeSafe with crucial introductions and expertise in helping to access other geographies and market sectors.
We also announced in September 2023 that LifeSafe has been appointed to QBE Insurance Group’s Solutions Panel. The appointment represents the culmination of 14 months’ assessment of the Group’s range of fire extinguishing fluids and products. As well as generating revenue directly from recommendations to its customer base, QBE’s powerful endorsement of the Group’s fluids will be invaluable in building trust and credibility in the conversion of LifeSafe’s growing industrial sales pipeline.
Not looking to labour the investment case but legislation is also assisting our growth. From July 2025, there will be a total ban on the use of fire-fighting foam containing PFOA. There is a now a rush to “future proof” products and systems in advance of 2025 – which is why Wormald, Australia’s biggest fire safety business, trusted for over 100 years, has chosen LifeSafe Technologies’ Fluorine Free Thermal Runaway Fluid for its suppression systems and cannisters to tackle lithium-ion battery fires. Moreover, our other firefighting fluids are also fluorine free and are tested and approved to put out petrol and diesel fires so can be used to replace foam (AFFF) extinguishers which will fail the ban. Our new Fluorine Free fluid which we announced on 26th September provides an effective, environmentally friendly, non-toxic alternative to the traditional foam fire extinguishers a market estimated to be worth over $1 billion.
3. Could you highlight what you consider to be the company’s core strengths? Where is future growth coming from?
i) Core strengths:
-Product: Innovative products & fluid
-People: Fire industry experience, NPD, sales & marketing expertise, strong leadership team
-Partners: manufacturing expertise – work with World-Class third-party manufacturers, Sedex approved, – scale with consistently high quality & service with no capital investment
ii) Growth:
-Consumer: huge number of homes unprotected, plus our product has a 3 year replacement cycle, recurring revenue, pipeline of new products to broaden mass market appeal
-Wholesale: Digital First Strategy builds the brand and product awareness which then leads to global retail opportunities. Home Insurance/ boat/ car, TV Shopping
-Industrial: bulk supply of new fluorine free fluids and exciting new pipeline of fluids for industrial applications e.g. fire suppression systems, electric vehicles
4. How does the new All-in-1 fire extinguisher improve on the previous generation of product?
It can extinguish twice the number of fires including lithium-ion battery fires, bio ethanol and E10 petrol.
5. How did you find the IPO process? I know you have substantial experience, but 2022 was not a particularly pleasant year for London.
When we commenced the IPO roadshow the markets were quite buoyant. At the time we had offers from private equity (PE) as well as the potential IPO. The IPO route, although less certain from a funding perspective than PE, was less dilutive to our shareholders, so we opted for the IPO journey. Towards the end of the process the market had already fallen, and we only just managed to get away amongst many aborted IPOs. Investors at IPO were mainly institutional.
6. LifeSafe shares have dropped by circa 50% since the IPO. Is this a company problem, or a markets problem?
Definitely markets in my view. We have consistently outperformed the financial market expectations and with the announcement this week of the unlock of our industrial strategy with Wormald in Australia which was ahead of internal expectations we continue to deliver. I am mindful though that the market may not have quite understood the enormity of our potential and the nature of our game changing fluid. We are hopeful that the market will once again recognise the value of LifeSafe in the coming months.
7. There are a couple of Stay Safe copycats on Amazon. Are these as good as the original brand, and why don’t your patents protect you from copies?
Competition is inevitable but with continued focus on research and development we remain confident that we are and will remain ahead of the competition. There is no product on Amazon or anywhere else that has been independently proven to extinguish 10 fire types through an environmentally friendly fluid and fully recyclable plastic aerosol, which is why the Amazon Launchpad team invited the Stay Safe 5-in-1 to be the one and only fire extinguisher on Launchpad selected by Amazon due to its innovation and sustainability credentials – a nomination we are incredibly proud of.
Our patents are protected by our IP, plus we have IP insurance to rigorously defend any infringements should we need to.
8. There was significant investor buzz that LifeSafe would sign a deal with an EV brand given the usability on lithium-ion battery fires. Was this unwarranted conjecture?
Not at all – we have consistently stated that new fluid developments would take time as we are extremely diligent on making sure we pass all required tests before bringing a fluid to market and we are ahead of our internal time expectations with the Lithium-Ion battery solution “TRF”. We always targeted the Lithium-ion solution as our first step into the industrial supply of our fluids as there was an urgent requirement for a fluid that can deal with the threat that Lithium-ion batteries pose when compromised. Our development team have been brilliant at finessing this fluid and we are extremely proud that we have just announced our Wormald partnership for the supply of TRF in Australasia. This is a fantastic milestone for the business and a solid endorsement by a market leader in fire safety that our product works. We look forward to announcing other similar game-changing partnerships that we are close to finalising in due course.
9. Zak Mir gives you the occasional mention on his blog, but there’s otherwise limited marketing output. Why is this, or am I being unfair?
Our market / investor relations philosophy to date right or wrong has been to announce meaningful updates that are truly market sensitive and fully baked in with financial consequences. That said we are mindful that the true picture of our business is relatively unknown, and we have now engaged a new PR firm FTI and we are hopeful that we can secure more coverage of our products and engage in media commentary around (forgive the pun) this hot topic.
10. Your site claims that the flagship Stay Safe extinguisher has been ‘fully tested and approved,’ but some investors doubt that it meets the regulatory requirements in certain US states to be marketed as a fire extinguisher. Is this incorrect?
It has been fully tested and verified for sale in the US – simply put without the correct documentation we would not be able to sell on Amazon.
11. Several investors became concerned after rumours circulated that the COO was selling shares just weeks after the IPO. Is this true, and if so, why?
As communicated to the market in October 2022, the COO sold down in order to facilitate personal financial planning., It is worth noting that the COO spent the previous two years bootstrapping up to the IPO and was integral to the IPO process. Conversely, I would like to point out that my colleagues and I have also been buying shares in the market when we can. We believe the business is totally undervalued.
12. Can you clarify the connections between Zenova, LifeSafe, and FireAngel Safety — specifically management crossovers?
The former CEO of Zenova was the CEO of this company which was called Firescape at the time – he left the business in 2019. The new management team recruited in 2020 includes some ex FireAngel Safety employees.
13. 2023 is arguably a much poorer financial environment. With the base rate at 5% and rising, it’s becoming both harder and more expensive to get funding, and liquidity is draining out of the small cap markets. Can you allay investor fears that further placings, or more debt at unfair terms, may be incoming?
We continue to balance the increasing global demand for our products across Consumer, Wholesale and now Industrial channels and new markets such as Australia to add to the UK, Europe and North America whilst managing cash in a responsible and prudent manner. We will continue to assess the balance between raising further funds to drive accelerated growth versus our current and market expectations.
ENDS
This article has been prepared for information purposes only by Charles Archer. It does not constitute advice, and no party accepts any liability for either accuracy or for investing decisions made using the information provided.
Further, it is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
