Trading Update and Proposed Fundraising

OTAQ Plc (OTAQ) Trading Update and Proposed Fundraising 17-May-2024 / 07:00 GMT/BST THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND FOR INFORMATION PURPOSES ONLY AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, AND DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION, DISTRIBUTION, OFFER OR SALE WOULD BE UNLAWFUL. PLEASE SEE THE IMPORTANT NOTICES SECTION OF THIS ANNOUNCEMENT. THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO PURCHASE AND/OR SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN OTAQ PLC OR ANY OTHER ENTITY IN ANY JURISDICTION. THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018), AS AMENDED.  ON PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN AND ANY PERSONS WHO RECEIVED INSIDE INFORMATION IN A MARKET SOUNDING ARE NO LONGER IN POSSESSION OF SUCH INSIDE INFORMATION. 17 May 2024 OTAQ plc ("OTAQ", the "Company" or the "Group") Trading Update and Proposed Fundraising OTAQ, (OTAQ.AQ) a highly innovative technology company targeting the aquaculture and offshore markets, has today announced that the Company is proposing to conduct a fundraising by way of a conditional placing of convertible loan notes (the “Convertible Loan Notes”) to raise net proceeds of up to £2.0 million (with a minimum raise of £1.5 million) (the “Placing”).  The Convertible Loan Notes will be redeemable after three years (the “Redemption Date”) with a cash coupon of 10 per cent. per annum.  The Convertible Loan Notes will be convertible into OTAQ ordinary shares of 1 penny each at a price of 3.0 pence per share (the “Conversion Price”).  The Placing will be wholly conditional upon approval by shareholders of certain resolutions at a general meeting of shareholders to be convened for the purpose (the “General Meeting”). An announcement containing further details of the Placing and a timetable of expected principal events will be published shortly.  A shareholder circular including notice convening the General Meeting (the “Circular”) will then be posted to shareholders. Trading Update As previously announced, the Company expects to announce that trading in the year to 31 December 2023 was slightly ahead of management’s expectations with revenues of not less than £4.4m (2022: £4.0m). The Company expects to report a reduced EBITDA loss of approximately £311k (2022: £331k).  The EBITDA loss is some £66k higher than previous guidance, due to certain non-recuring items.  The Company continues to manage its limited cash resources with care, and it continues with scheduled repayments of the CBIL loan, which is down to £857k.  The Company’s audited full year results to 31 December 2023 will be announced on or before 28 June 2024.  Trading in Q1 FY24 has been encouraging, with revenues up 19% over Q1 FY23. and the Company continues to see progress across the Group.  The Offshore Products division has maintained the positive performance seen in 2023.  Aquaculture has also seen a number of positive developments.  The Company’s sonar shrimp system developed for Minnowtech LLC, is now gaining traction in its target markets.  The Company has also identified further new customer interest in the Company’s established Sealfence solution from salmon farmers several major salmon production regions, having sold 19 Sealfence units into these core target markets in the first quarter. LPAS Contract The Company is pleased to confirm that following four years in development, :OTAQ has now completed successful trials of its Live Plankton Analysis System (LPAS), and  has this week launched LPAS at the Aquaculture UK conference held in Aviemore. Proposed Placing of Convertible Loan Notes It is anticipated that the Convertible Loan Notes will be issued on the following terms: The Convertible Loan Notes will be redeemable after three years and will carry a coupon of 10 per cent per annum. Interest on the Convertible Loan Notes will be paid quarterly in cash. The Convertible Loan Notes will be convertible into OTAQ ordinary shares at the Conversion Price. The Convertible Loan Notes may be repaid at any time on or before the Redemption Date upon prior written notice by the Company. The Convertible Loan Notes will be secured by a charge over certain of the Company’s Sealfence inventory. Further details regarding the terms of the Convertible Loan Notes will be announced in due course. The Placing will be undertaken by Dowgate Capital Limited on behalf of the Company.  To date, the Company has received non-binding indications of interest from certain institutional and other qualified investors to participate in the Placing of £1.5 million.  Certain of the Directors have also indicated that they intend to participate in the Placing. The Company intends to use the net proceeds of the Placing: to repay the CBIL loan from Growth Lending 2020 Limited for further product development; and for general working capital. The Placing will be conditional upon, among other things, the approval of OTAQ shareholders at the General Meeting, full details will be set out in the Circular.  The Convertible Loan Notes to be issued pursuant to the Placing will not be admitted to trading on any stock exchange. Phil Newby, Chief Executive Officer of OTAQ, said: “The Board acknowledges with satisfaction the Company's progress, especially the favorable market conditions in the Offshore sector, where OTAQ is strategically positioned to pursue emerging global growth prospects for its OceanSense, Eagle IP, and subsea electrical connector & penetrator solutions. “Given the anticipated improvement in reported revenue for 2023 and the favourable start to 2024, the Board remains confident in its current growth strategy. The recent commercial launch of LPAS marks a significant milestone for the Company, one that we are poised to develop throughout the remainder of 2024 and beyond.” Enquiries OTAQ PLC [phone] Adam Reynolds, Non-Executive Chairman Phil Newby, Chief Executive Officer Justine Dowds, Chief Financial Officer Dowgate Capital Limited AQSE Corporate Advisor & Broker [phone] David Poutney / James Serjeant Nicholas Chambers / Russell Cook Walbrook PR Limited Financial PR [phone] [e-mail] Tom Cooper / Nick Rome 07971221972 or 07748325236 About OTAQ OTAQ is a highly innovative technology company focused upon the aquaculture and offshore markets. It already has a number of established products in its portfolio and is focused on further developing its presence, customer base and cross selling opportunities within core markets both organically and via acquisition. OTAQ’s aquaculture products, which include a sonar device (developed for Minnowtech LLC) to scan shrimp in ponds and water quality monitoring, are focused on maximising welfare and production yields. Additionally, the Company has developed what it believes to be a potentially game changing live plankton analysis product for finfish and shellfish farmers. It also continues to target opportunities in the acoustic deterrent devices market via its Sealfence product, which is used by salmon farmers, with global opportunities in a number of the major salmon production regions of the world. OTAQ’s offshore product range includes OceanSense subsea leak detection, Eagle IP camera systems, Lander seabed survey devices and Subsea electrical connectors and penetrators. It is targeting a number of growth opportunities in new territories and has a strong client base including Expro, Amphenol and National Oilwell Varco. The Company is also focused on the development of new products through this division, with the aim of increased cross-deployment of skills and technologies into the aquaculture arena. Important Notices THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER OR SALE OF SECURITIES INTO THE UNITED STATES. THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “US SECURITIES ACT”) AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES, EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM REGISTRATION.  NO PUBLIC OFFERING IS BEING MADE IN THE UNITED STATES. MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT IS DIRECTED ONLY AT PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING AND DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESS AND WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND ARE: (1) IF IN THE UNITED KINGDOM, QUALIFIED INVESTORS AS DEFINED IN ARTICLE 2(e) OF REGULATION (EU) 2017/1129 AS IT FORMS PART OF UNITED KINGDOM DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (THE “UK PROSPECTUS REGULATION”) WHO: (A) FALL WITHIN THE DEFINITION OF 'INVESTMENT PROFESSIONALS' IN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE “ORDER”); OR (B) FALL WITHIN ARTICLE 49(2)(a) TO 49(2)(d) ('HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.') OF THE ORDER; OR (2) OTHERWISE, PERSONS TO WHOM IT IS LAWFUL TO COMMUNICATE IT TO (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”). THIS ANNOUNCEMENT AND THE INFORMATION IN IT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS.  PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO.  ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS.  THE CONVERTIBLE LOAN NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA) (THE “UNITED STATES”) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE US SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES.  THE CONVERTIBLE LOAN NOTES ARE BEING OFFERED AND SOLD ONLY OUTSIDE OF THE UNITED STATES IN 'OFFSHORE TRANSACTIONS' WITHIN THE MEANING OF, AND IN ACCORDANCE WITH, REGULATION S UNDER THE US SECURITIES ACT AND OTHERWISE IN ACCORDANCE WITH APPLICABLE LAWS.  NO PUBLIC OFFERING OF THE CONVERTIBLE LOAN NOTES IS BEING MADE IN THE UNITED STATES OR ELSEWHERE. The content of this announcement has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000, as amended (“FSMA”). The information in this announcement may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever. Any forwarding, distribution, reproduction or disclosure of this information in whole or in part is unauthorised. Failure to comply with this directive may result in a violation of applicable laws of other jurisdictions. Cautionary statements This announcement may contain and the Company may make verbal statements containing "forward-looking statements" with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results.  Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "seek", "may", "could", "outlook" or other words of similar meaning.  By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the control of the Company, including amongst other things, United Kingdom domestic and global economic business conditions; market-related risks such as fluctuations in interest rates and exchange rates; the policies and actions of governmental and regulatory authorities; the effect of competition, inflation, deflation, the timing effect and other uncertainties of future acquisitions or combinations within relevant industries; the effect of tax and other legislation and other regulations in the jurisdictions in which the Company and its affiliates operate; the effect of volatility in the equity capital and credit markets on the Company's profitability and ability to access capital and credit; a decline in the Company's credit ratings; the effect of operational risks; changes to existing commercial arrangements and agreements, or disputes rising in relation thereto; and the loss of key personnel.  As a result, the actual future financial condition, performance and results of the Company may differ materially from the plans, goals and expectations set forth in any forward-looking statements. Forward-looking statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Undue reliance should not be placed on any forward-looking statements made in this announcement by or on behalf of the Company, which speak only as of the date they are made.  Except as required by applicable law or regulation, the Company expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Dowgate Capital Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting as AQSE Corporate Advisor and broker exclusively to the Company and to no-one else in connection with the Placing and will not be responsible to anyone (including any investors in Convertible Loan Notes) other than the Company for providing the protections afforded to its clients, nor for providing advice in relation to the Placing or any other matters referred to in this announcement. The information contained in this announcement is subject to change without notice and except as required by applicable law or regulation (including to meet the requirements of the AQSE rules, MAR, the UK Prospectus Regulation rules and/or FSMA), and the Company and Dowgate Capital Limited expressly disclaim any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statements are based. This announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in the Convertible Loan Notes. Any investment decisions to buy Convertible Loan Notes in the Placing must be made solely on the basis of publicly available information, which has not been independently verified by Dowgate Capital Limited. Each investor or prospective investor should conduct his, her or its own investigation, analysis and evaluation of the business and data described in this announcement and publicly available information. The price and value of securities can go down as well as up. Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into or forms part of this announcement. Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.

ISIN:	GB00BK6JQ137
Category Code:	TST
TIDM:	OTAQ
LEI Code:	213800CZGMYB5XTUXJ52
Sequence No.:	322094
EQS News ID:	1905349

End of Announcement	EQS News Service