Proposed Placing and Subscription

RNS Number : 2486G

NetScientific PLC

25 May 2017

 

THIS ANNOUNCEMENT (INCLUDING THE APPENDIX) AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, REPUBLIC OF IRELAND, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO. 

 PLEASE SEE THE IMPORTANT INFORMATION AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT (INCLUDING THE APPENDIX) IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY OR SUBSCRIBE FOR ANY ORDINARY SHARES OR OTHER SECURITIES OF THE COMPANY AND NEITHER THIS ANNOUNCEMENT NOR ANYTHING HEREIN FORMS THE BASIS FOR ANY CONTRACT OR COMMITMENT WHATSOEVER. ORDINARY SHARES OR OTHER SECURITIES OF THE COMPANY MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OF AMERICA ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION AND THE ORDINARY SHARES DESCRIBED HEREIN WILL BE SOLD IN ACCORDANCE WITH ALL APPLICABLE LAWS AND REGULATIONS.

THE CONTENT OF THIS PROMOTION HAS NOT BEEN APPROVED BY AN AUTHORISED PERSON WITHIN THE MEANING OF THE FINANCIAL SERVICES AND MARKETS ACT 2000. RELIANCE ON THIS PROMOTION FOR THE PURPOSE OF ENGAGING IN ANY INVESTMENT ACTIVITY MAY EXPOSE AN INDIVIDUAL TO A SIGNIFICANT RISK OF LOSING ALL OF THE PROPERTY OR OTHER ASSETS INVESTED.

25 May 2017

NetScientific plc

Proposed Placing and Subscription to raise approximately £8.1 million

Additional Fundraising to raise up to approximately £1.5 million

Notice of General Meeting

NetScientific plc (AIM:NSCI) (the "Company"), the transatlantic healthcare IP commercialisation Group, announces a conditional Placing and Subscription to raise approximately £8.1 million and a conditional Additional Fundraising to raise up to approximately £1.5 million, before expenses. The net proceeds of the Placing, Subscription and Additional Fundraising (together the "Offer") are principally to continue the acceleration of the development of its actively managed Portfolio Companies, and advance these toward commercialisation and potential exit opportunities. NetScientific's actively managed portfolio companies are Vortex, Glycotest, Wanda and ProAxsis. The Company also holds a minority position in PDS Biotechnology. The Offer is not underwritten.

A General Meeting to approve the necessary resolutions for the issue and allotment of the New Ordinary Shares and to permit disapplication of pre-emption rights is to be convened for 11.00 a.m. on Monday 12 June 2017 at the offices of DLA Piper UK LLP, 3 Noble St, London EC2V 7EE.

Details of the Offer

·     Placing and Subscription - Proposing to raise £8.1 million (before expenses) by way of: (i) a Placing by Stifel and Liberum of 14,083,332 Placing Shares with existing and new institutional investors at the issue price of 45.0 pence per Ordinary Share (the "Issue Price"); and (ii) a Subscription of 3,833,330 Subscription Shares with certain other investors at the Issue Price

·     Additional Fundraising - Up to 3,333,333 New Ordinary Shares at 45.0 pence per Ordinary Share to raise up to approximately £1.5 million. The Additional Fundraising will be by way of a private placing or subscription at the Directors' discretion, and is not open to the public

·     Issue Price - The Issue Price per New Ordinary Share, represents a discount of 15.1 per cent. to the closing middle market share price of 53.0 pence of the Company's Ordinary Shares on 24 May 2017

·     Notice of General Meeting - Due to the size of the Offer, Shareholder approval is required which will be sought at the General Meeting

·     Recommendation - The Directors unanimously recommend Shareholders to vote in favour of the Resolutions

·     Admission - Admission is expected to occur at 8.00 a.m. on 13 June 2017 (or such later date as the Company, Stifel and Liberum may agree, provided that such date shall not extend beyond 8.00 a.m. on 30 June 2017).

Francois R. Martelet, M.D., Chief Executive Officer of NetScientific, said:

"We are aiming to become a significant force in IP commercialisation with a focus on disruptive technologies in digital healthcare, diagnostics and therapeutics. The finance we have raised will allow us to continue to accelerate the investment into our portfolio of companies, several of which are approaching key commercial inflection points. More broadly, it will allow us to invest in new pipeline opportunities and further develop our infrastructure. NetScientific's mission is to support life-changing innovation and deliver value to shareholders and we look forward to the next stage of our journey."

-Ends-

Inside Information

This announcement contains inside information. The person responsible for arranging for the release of this announcement on behalf of the Company is Ian Postlethwaite.

A copy of this announcement has been posted on the Company's website at www.netscientific.net

For more information, please contact:

NetScientific plc
François R. Martelet, M.D., CEO			Tel: [phone]
Ian Postlethwaite, CFO
Stifel Nicolaus Europe Limited (NOMAD, broker and bookrunner)			Tel: [phone]
Jonathan Senior / David Arch / Ben Maddison
Liberum Capital Limited  (placing agent)			Tel: [phone]
David Parsons / Christopher Britton
Consilium Strategic Communications Mary-Jane Elliott / Jessica Hodgson / Chris Welsh / Laura Thornton [e-mail]		Tel: [phone]

Stifel Nicolaus Europe Limited ("Stifel") is authorised and regulated by the FCA in the United Kingdom and is acting exclusively as nominated adviser and bookrunner to the Company (for the purposes of the AIM Rules for Companies) and no one else in connection with Admission, the Placing and the matters set out in this announcement.  Stifel will not regard any other person as its customer or be responsible to any other person for providing the protections afforded to customers of Stifel nor for providing advice in relation to the transactions and arrangements detailed in this announcement for which the Company and the Directors are solely responsible and, without limiting the statutory rights of any recipient of this announcement, no liability is accepted by Stifel for the accuracy of any information or opinions contained in this announcement or for omissions of any material information for which it is not responsible.  Stifel is not making any representation or warranty, express or implied, as to the contents of this announcement.  The responsibilities of Stifel as the Company's nominated adviser and bookrunner solely for the purposes of the AIM Rules for Nominated Advisers are owed solely to the London Stock Exchange and are not owed to the Company or any Director or to any other person in respect of his decision to invest in the Company in reliance on any parts of this announcement.

Liberum Capital Limited ("Liberum"), which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for the Company and no other person in connection with the Placing.  Liberum will not regard any other person as its customer or be responsible to any other person for providing the protections afforded to customers of Liberum nor for providing advice in relation to the transactions and arrangements detailed in this announcement for which the Company and the Directors are solely responsible and, without limiting the statutory rights of any person to whom this announcement is issued, no liability is accepted by Liberum for the accuracy of any information or opinions contained in this announcement or for the omission of any material information for which it is not responsible.  Liberum is not making any representation or warranty, express or implied, as to the contents of this announcement.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Announcement of the Offer	Thursday 25 May 2017
Publication and posting of the Circular and Form of Proxy	Friday 26 May 2017
Latest time and date for receipt of completed Forms of Proxy to be valid at the General Meeting	11.00 am on Thursday 8 June 2017
Additional Fundraising Close General Meeting	11.00 am on Friday 9 June 2017 11.00 am on Monday 12 June 2017
Admission and commencement of dealings in the New Ordinary Shares	8.00 am on Tuesday 13 June 2017
New Ordinary Shares credited to CREST members' accounts (where applicable)	Tuesday 13 June 2017
Despatch of definitive share certificates for the New Ordinary Shares in certificated form (where applicable)	within 10 days of Admission

1.            The dates and times given in this announcement are based on the Company's current expectations and may be subject to change.  If any of the details contained in the timetable above should change, the revised times and dates will be notified by means of an announcement through a Regulatory Information Service.

2.            Certain of the events in the above timetable are conditional upon, amongst other things, the approval of the Resolutions to be proposed at the General Meeting.

3.            All references are to London time unless stated otherwise.

PART 1: Letter from the Chairman

Proposed Placing and Subscription of 17,916,662 New Ordinary Shares at 45.0 pence per share, Additional Fundraising of up to 3,333,333 New Ordinary Shares to raise up to approximately £1.5 million, and Notice of General Meeting

1.            Introduction

The Company announced today that it was proposing to raise £8.1 million (before expenses) by way of: (i) a Placing by Stifel and Liberum of 14,083,332 Placing Shares with existing and new institutional investors at the Issue Price; and (ii) a Subscription of 3,833,330 Subscription Shares with certain other investors at the Issue Price and to raise up to a further £1.5 million through the Additional Fundraising.  The Issue Price of 45.0 pence represents a 15.1 per cent. discount to the closing mid-market price of the Company's Ordinary Shares on 24 May 2017, being the latest practicable date prior to the date of this announcement. 

The Directors believe that there are significant opportunities to enhance returns to shareholders through:

a)            additional investment into the Portfolio Companies to accelerate them towards significant value inflection milestones, initially being the completion of series A financings, and ultimately exits;

b)            investment in new pipeline opportunities; and

c)            the exploration of potential transformational M&A activity within the IP commercialisation sector. 

The Directors propose to use the majority of the net proceeds receivable by the Company under the Offer:

a)            principally to continue the acceleration of the development of the Portfolio Companies, seeking to meet funding requirements needed to achieve completion of external series A fundraisings, to take the companies further toward commercialisation and ultimately potential exit opportunities, in particular its actively managed assets in Vortex, Glycotest, Wanda and ProAxsis;

b)            to invest in new pipeline opportunities;

c)            to explore transformational M&A opportunities for the Company with a view to gaining critical mass in the IP commercialisation sector; and

d)            for general corporate purposes.

The Directors also intend to use any proceeds received through the Additional Fundraising as disclosed directly above.

Currently, the Company does not have sufficient authority in place to allot the New Ordinary Shares on a non-preemptive basis.  Accordingly, it is proposed that the following resolutions will be proposed at the General Meeting in order that the Offer can proceed:

·           to authorise the Directors to allot and issue up to 21,249,995 New Ordinary Shares for the purposes of the Offer; and

·           to disapply pre-emption rights in connection with the proposed allotment and issue of the New Ordinary Shares pursuant to that authority.

The Offer is conditional, amongst other things, on the passing of the Resolutions by Shareholders at the General Meeting, notice of which is set out in a circular expected to be posted to Shareholders ("Circular") on Friday 26 May 2017.  If the Resolutions are passed, the New Ordinary Shares will be allotted after the General Meeting.  The Offer is not being underwritten.

2.            Background

NetScientific is a transatlantic healthcare investment group with a differentiated investment strategy focused on building transformative businesses within the digital health, diagnostics and therapeutics sub-sectors.  The Company's objective is to source, fund and commercialise healthcare companies that significantly improve the lives of people with chronic diseases.

Following Francois Martelet's appointment as CEO in May 2015 and a subsequent review of its portfolio, the Group has re-aligned its portfolio to focus strategically solely on the three healthcare sub-sectors of digital health, diagnostics and therapeutics. As a result of the review, the Group divested or discontinued its investments in a number of its portfolio assets. The Directors believe these healthcare sub-sectors are in attractive growth markets with large commercial potential, where demand from people living with chronic diseases is growing and the costs associated with dealing with such diseases are high.

The Group's aim is to maintain a portfolio of a limited number of actively managed companies and a seed portfolio of smaller investments.

NetScientific's business strategy is based on advancing the Portfolio Companies towards significant value inflection points, including private funding rounds with third party investment and eventual exit through a trade sale or public listing.  The Group is an active investor, providing extensive management support and typically taking board representation  in its Portfolio Companies.  The Company currently has board representation in all five of its Portfolio Companies.  Where available, the Group seeks additional grant funding for its Portfolio Companies, thereby reducing the need for dilutive equity funding.

As at 24 May 2017, the Company had four actively managed Portfolio Companies in which it owns a majority holding on a fully diluted basis: Vortex Biosciences, Wanda, ProAxsis and Glycotest.  It also holds a minority interest in PDS Biotechnology.  To date the Portfolio Companies have received a total investment of approximately £29.5 million from the Company and a further £19.5 million in grant funding.

The Group is now primarily concentrating on accelerating the development of Vortex, Glycotest, Wanda and ProAxsis.  It also intends to manage its minority investment in PDS Biotechnology. The point at which optimum value has been reached will be a matter of discretion for the Company.

NetScientific will continue to actively manage its Portfolio Companies, seeking to maximise shareholder return in the form of capital growth.  However, there are no fixed targets for the length of time during which an investment may be held (as opposed to a traditional VC company), as this will be dependent both on progress within each Portfolio Company, and availability of funding.  The Group's strategy means that no realisation of assets will be attempted until optimum value has been developed through achievement of key technical and commercial milestones usually reflected in regulatory approvals or demonstrable commercial traction. 

Each of the Portfolio Companies has currently begun the process of targeting external funding through series A fundraising rounds, including formal engagement of third party brokers to run each process, with completion of each of these aimed for during the course of 2017.

In addition, the Company has identified four new potential pipeline investments that are currently in the process of extended due diligence.  The potential pipeline companies are focused on pre-proof-of-concept, proof-of-concept and Phase I staged assets, across therapeutics and medical technology sub-sectors, such as cell extract and imaging, centred on chronic diseases within oncology, auto-immunology and cardiovascular conditions.

The Group is also actively working on sourcing new relationships with both universities and institutes, with early stage discussions ongoing with a number of parties.  It is aiming to formalise such relationships during the course of the 2017 and 2018.

3.            Current trading and prospects

On 3 April 2017 the Company announced its audited full year results for the year ended 31 December 2016.  For that period the Company reported audited revenues of approximately £0.5 million and a loss after tax of £13.1 million.  Cash used in operations totalled £12.9 million during the 2016 financial year, and cash and cash equivalents on the balance sheet as at 31 December 2016 were approximately £9.5 million. 

On 24 April 2017 the Company announced the sale of Wanda's shareholding in OncoVerse to BTG plc for an undisclosed amount.  The sale represented the first exit for the Group since its inception, delivering a strong return on the Group's initial investment and constituting a successful exit from the first downstream application generated from Wanda.

On 22 February 2017 Vortex announced that it had begun commercial launch of its VTX-1 Liquid Biopsy System, on 31 March 2017, it further announced the publication of two papers further validating its circulating tumour cell capture technology and, on 24 May 2017, it announced that it had initiated two clinical research studies with UCLA in patients with Non-Small Cell Lung Cancer (NSCLC).

The Company has started series A fundraising rounds for each of the Portfolio Companies and is satisfied with the current progress being made.  The Glycotest series A fundraising has already attracted indicative term sheets from a number of interested parties as set out in more detail below.

Outlook

The Board is encouraged by the Group's and the Portfolio Companies' progress over the 2016 financial year and the first four months of 2017 and remains confident that each of the Portfolio Companies offers the potential to generate significant shareholder returns over the coming years, beginning with the completion of series A fundraisings.

In addition, as indicated by the near term pipeline opportunities, the Group continues to see a healthy stream of new investment opportunities derived from the management team and the Board's extensive transatlantic networks.

4.            Summary of Portfolio Companies

Vortex Biosciences

Vortex Biosciences is a US based cancer diagnostic company with a novel liquid biopsy diagnostic instrument for isolation and enrichment of circulating tumour cells for further diagnostic analysis.  The technology enables researchers and clinicians to capture, analyse, and enumerate tumour cells for use in downstream clinical applications such as treatment selection, monitoring disease progression and drug treatment effectiveness that are important in precision medicine.  Vortex has entered into an exclusive licence for a series of four patents covering cell electroporation technology from Harvard. 

At the beginning of 2016, Gene Walther joined Vortex as CEO having previously spent several years in the global health sector, most recently as a Consultant to the Paul G. Allen Family Foundation where he advised on their Ebola strategy with a particular focus on the role of diagnostics. Prior to this, he was the Deputy Director, Diagnostics, for the Bill & Melinda Gates Foundation, Executive Chairman of the Board of GenturaDx and President and Global Head of Diagnostics at Novartis.

During 2016 Vortex also appointed a number of prominent advisers to its Scientific Advisory Board, led by Massimo Cristofanilli, M.D., and appointed Deborah Neff, formerly the Chief Operating Officer of Complete Genomics, as a non-executive director to its board.

In addition, Vortex gained a CE Mark for its liquid biopsy VTX-1 system and registered it with the FDA in August 2016 as a Class 1 device.  The Company has 18 peer reviewed publications and over 45 abstracts validating the performance of the Vortex technology. This technology has processed tests in under one hour, recovers over 60 per cent. of circulating tumour cells and captures under 100 white blood cells per processed millilitre. The Directors believe that Vortex is well placed to exploit current market dynamics based on VTX-1 displaying industry-leading ease of use, collection efficiency, CTC purity, isolation of intact and viable CTCs across a diverse set of cancer types. 

Vortex is initially focused on the research market with a medium term strategy to move into the larger clinical oncology diagnostic segment once it has received FDA approval, with first clinical sales forecast in 2019. Vortex is targeting to finalise discussions with strategic medical diagnostic partners in 2017, allowing clinical trials to be launched in 2018 using a partner's approved clinical assays.  Collaborations and clinical research studies have begun, focused on lung cancer diagnosis and drug selection for immunotherapy drugs. 

Having achieved the commercial launch of VTX-1 in February 2017, some of the key milestones for Vortex during 2017 will be the completion of PD-L1 and EGFR assays utilising CTCs, aiming to close a series A financing and achieving its first commercial sale of VTX-1.

As at 31 December 2016 the Company had invested £13.2 million in Vortex and on an undiluted basis holds 95 per cent. of its share capital (65 per cent. on a fully diluted basis).  It expects to invest a further £5.5 million within 2017 ahead of completion of the series A financing, which the Company and Vortex aim to close during the second half of 2017.

Glycotest

Glycotest is a US based diagnostics company, developing biomarkers for clinical laboratory services used in the diagnosis of liver cancers and fibrosis-cirrhosis, which the Directors believe represents a $1 billion market opportunity.  Its blood-based biomarkers take advantage of sugar-related disease signals and the company has issued patents to over 50 serum proteins with sugar structures that are altered in liver disease.  The biomarkers are being developed into tests and test panels intended for the surveillance of patients with serious liver disease.

Based on separate 208 and 127 patient head-to-head clinical studies, completed in May 2015 and May 2016 respectively, and as published in 2017 and disclosed in 2016 respectively, Glycotest's HCC diagnostic panel demonstrated superior performance versus the current dominant blood test (AFP) for the discrimination of early-stage and AFP-negative HCC from cirrhosis and other chronic liver diseases. 

Commercialisation of Glycotest's lead product in the US, the HCC Panel for the predominant form of primary liver cancer, is progressing well and remains on track.  In 2016 Glycotest formed a Medical Advisory Board, which comprises prominent experts in liver disease, to advise on the development of diagnostic tests for liver related diseases.  In addition, it has strengthened its intellectual property portfolio with a Japanese Patent grant.  Also in 2016 it has developed an HCC Panel clinical validation study plan and identified investigators and sites.  

A key milestone aimed for in respect of Glycotest in 2017 is the closing of its series A financing, which is progressing well.  Glycotest is aiming to sign the relevant documentation by the end of June 2017. It has already attracted indicative, non-binding term sheets from a number of interested parties, with investment being subject to conditions including clinical validation tests being successful.  The indicative pre-money valuations within the term sheets represent an uplift to the current implied valuation of Glycotest based on the Company's investment to date and its undiluted 87.5 per cent. shareholding (67 per cent. on a fully diluted basis) in it.  Additional broad deliverables for Glycotest, which are conditions to the completion of the current investment round, include the opening of a CLIA lab to perform analytical testing, the commencement of its validation study and completing the method development of specific biomarkers for use in the HCC Panel. As at 31 December 2016 the Company had invested £2.4 million in Glycotest.  It expects to invest a further £0.5 million within 2017 ahead of completion of the series A financing. 

Wanda

Wanda is a US located company which provides a cloud based clinical decision support software solution to help healthcare providers improve the quality of outpatient care and reduce the costs associated with managing chronic diseases.

Its software as a service aims to reduce the economic burden of hospital readmissions by providing tools to monitor and manage patients with chronic diseases, including congestive heart failure and chronic obstructive pulmonary disease.  The platform technology builds upon a patented predictive analytics and knowledge engine based on 15 years of research at UCLA that utilises information from in-home and remote monitoring devices used by patients.

Wanda has generated principally software development revenues of approximately £0.5 million in the 2016 financial year which represented sales made to OncoVerse for the development of its oncology platform.  Wanda has successfully validated its product for the home health market by delivering an end to end product for case management workflow. In 2016, Wanda entered into contracts with several home care agencies in addition to the collaboration agreement with Dignity Health, one of the biggest hospital groups in the US, to launch OncoVerse. 

On 24 April 2017, the Company announced the sale of Wanda's holding in OncoVerse to BTG plc for an undisclosed amount.  The sale represented the first exit for the Group since its inception delivering a strong return on the Group's initial investment and constitutes a successful exit from the first downstream application generated from Wanda.

Wanda has also formed channel partnerships and entered into reseller agreements, including with Konnect Patient, Inc and Rainmakers US Inc.  Out of a portfolio of nine pending patents, the first patent was granted during the 2016 financial year.

During 2016, despite an upgraded product suite, Wanda achieved only limited business traction and revenues in the market have been below expectations.  The Group took the decision to restructure Wanda to refocus on its core capabilities and to progress the company through its commercialisation phase.  This resulted in the appointment of Dr Foad Dabiri as Chief Executive Officer of Wanda in December 2016 and the subsequent realisation of value through the sale of Wanda's shareholding in OncoVerse. In addition, a Scientific Advisory Board was formed for Wanda under the leadership of Dr. M. Sarrafzadeh, Ph.D, UCLA, and which is comprised of distinguished physicians, health economics scientists, and technologists.   Due to these factors, an in-house impairment review was conducted and a provision was taken by the Group on the debt provided to Wanda, reducing the outstanding debt from £8.8 million to £3.8 million.

Wanda's key objectives for 2017 include:

·                 Utilising, testing and expanding channel partnerships and resellers;

·                 Signing up ten new commercial contracts;

·                 Targeting $800,000 in recurring revenue for the 2017 financial year;

·                 Delivering new product modules on mobile and analytics fronts; and

·                 Building a sales pipeline for Health Systems and Accountable Care Organisations.

As at 31 December 2016 the Company had invested £10.0 million in Wanda and on an undiluted basis holds 71 per cent. of its share capital (60 per cent. on a fully diluted basis).  It expects to invest a further £1.5 million ahead of completion of the series A financing, which the Company and Wanda aim to close during the second half of 2017. 

ProAxsis

ProAxsis is a UK based medical diagnostics company developing a range of products for the capture, detection and measurement of active protease biomarkers of respiratory disease.  Smart molecules - known as ProteaseTags® - trap an active protease within a complex biological sample to enable visual readout of its presence, providing a novel tool to identify and quantify active protease biomarkers.  Management estimates ProAxsis to have the potential to achieve revenues of £70-80 million per annum by 2022 (and potentially £300 million in 2025) based on an assumption of 12 million patients worldwide and ProAxsis capturing approximately 30 per cent. of the estimated market.

Since launching its ProteaseTag Active Neutrophil Elastase Immunoassay kit for CF, bronchiectasis and COPD to research laboratories in 2015, ProAxis has initiated collaborations with key academic centres, including the University of Oxford. In September 2016, ProAxsis successfully registered a CE Mark for the immunoassay, enabling an expansion of its usage into a clinical setting. Separately, the company has reached late stage development of a clinical point of care test for neutrophil elastase to allow ongoing monitoring of a range of respiratory diseases.

In 2016 it established a prominent Scientific Advisory Board, under the leadership of Professor Stuart Elborn, ex-European President of the Cystic Fibrosis Society, to support the development of its Protease Tag® activity-based immunoassays and point-of-care tests.

ProAxsis will continue to focus on building its academic and pharma customer base and developing other products for different indications.  Key milestones for 2017 include aiming to close a series A fundraising in the second half of 2017, and launching NEATstik® point of care test following grant of a CE Mark for this. 

As at 31 December 2016 the Company had invested £1.2 million in ProAxsis and on a fully diluted basis holds 57 per cent. of its share capital.  It expects to invest a further £1.0 million in 2017 ahead of completion of the series A financing, which the Company and ProAxsis aim to close during the second half of 2017. 

PDS Biotechnology

In 2016 PDS Biotechnology, a US company developing a new generation of cancer and infectious disease immunotherapies, continued to see progress with its T-cell activating technology platform, Versamune®. Versamune® combines three critical attributes for an effective immunotherapy:  effective presentation of the disease-specific antigen (protein, DNA or RNA) to the immune system to prime both helper and killer T-cells, induction of T-cell activating stimuli, and reduced tumour immune suppression leading to a potent anti-tumour response without the conventional associated toxicities.  The Company expects that the PDS Biotechnology's oncology pipeline will include seven primary trials, based on milestones and subject to sufficient funding being raised for the trials, including immunotherapies for pancreatic, ovarian, breast and colorectal cancers, in addition to its lead PDS0101 programme for several HPV-related cancers. 

PDS Biotechnology made some important advances through the 2016 finanial year in progressing Versamune®, and presented results at a number of conferences (most recently PDS0101 Phase l/lla data for HPV-induced cancers and pre-cancers at the Society for Immunotherapy of Cancer meeting in May 2016).  A key event for PDS Biotechnology was meeting with the FDA in August 2016 regarding the design of the Phase IIb clinical studies in several HPV related cancers.

Currently, pre-cervical, anal, vaginal and vulvar cancers may be treated by surgical removal of lesions, however PDS0101 could offer an effective non-surgical alternative.  Preliminary results show that it primes and activates the body's defence mechanisms (T-cells) to recognise, target, and kill precancerous and cancerous cells that display HPV viral proteins, which are detected in over 99 per cent of cervical cancers.  The results represented an important milestone for PDS Biotechnology. 

Key milestones planned for 2017 include the completion of a pharma partnership and a series A financing, to be followed up by a scaling up PDS0101 manufacturing and the initiation of multiple Phase IIb clinical trials.

The Company has to date invested £2.7 million in PDS Biotechnology and on an undiluted basis holds 17.4 per cent. of its share capital (14.5 per cent. on a fully diluted basis).  It does not currently expect to invest further capital in PDS Biotechnology in the next funding round but the Board continues to see the potential of PDS Biotechnology to create significant shareholder value for the Group's shareholders. 

5.            Reasons for the Offer and use of proceeds

The Directors believe that there is significant embedded value within the Portfolio Companies, although the four majority held Portfolio Companies all require additional capital investment in order to reach value inflection points, initially being the completion of external fundraisings.  The Group will look to replenish its pipeline investments through investments across its core sectors (digital health, diagnostics and therapeutics), with four UK and European opportunities which are currently in active due diligence.  The Group will also explore transformational M&A opportunities at the Group level with a view to gaining critical mass within the IP commercialisation sector and thus benefit from synergies in corporate costs across an enlarged group and further increase its access to sourcing opportunities for its pipeline.

Since the £18.0 million fundraising announced in September 2015 and completed in November 2015, the Group has invested approximately £15.8 million in its Portfolio Companies to bring them closer to commercialisation and it expects to invest a further £8.5 million in 2017 ahead of completion of their various funding rounds. 

Accordingly, the Directors propose to use the majority of the net proceeds receivable by the Company under the Placing and Subscription:

a)            principally to continue the acceleration of the development of the Portfolio Companies, seeking to meet funding requirements needed to achieve completion of external series A fundraisings, to take the companies further toward commercialisation and ultimately potential exit opportunities, in particular its actively managed assets in Vortex, Glycotest, Wanda and ProAxsis;

b)            to invest in new pipeline opportunities;

c)            to explore transformational M&A opportunities for the Company with a view to gaining critical mass in the IP commercialisation sector; and

d)            for general corporate purposes.

The Directors also intend to use any proceeds received through the Additional Fundraising as disclosed directly above.

The Company believes that, on the completion of the £8.1 million Placing and Subscription, it will have sufficient working capital to deliver its strategy until beyond the end of the 2018 financial year.  The total cash requirement of the Company over that period is £18.4 million, £9.5 million of which will be met by the Company's existing cash balances (£9.5 million as at 31 December 2016), with the remainder to be funded with expected net proceeds from the Placing and Subscription of approximately £7.5 million and anticipated exit proceeds from the realisation of investments of approximately £1.4 million.

 The fundraising requirement has been calculated as below:

Requirement	£(m)
Investment required to complete Series As	£9.5m
Central costs	£5.5m
Investment in new opportunities (including the costs of exploring transformational M&A activity)	£3.4m
Forecast cash requirement	£18.4m
Audited cash/cash equivalent balance (as at 31 December 2016)	£9.5m
Estimated exit proceeds from investments	£1.4m
Net fundraising requirement	£7.5m

The Directors believe that the flexibility provided by a non-preemptive placing and subscription makes it the most appropriate fundraising structure for the Company at this time.  It would allow a number of existing and new institutional and individual investors to participate in the Offer.

If Shareholders do not vote in favour of the Resolutions at the General Meeting, the Placing and Subscription cannot be implemented by the Company.  If the Placing and Subscription do not proceed and additional financing does not become available to the Company by the end of April 2018, the Company may be forced to cease trading, in which case Shareholders could lose their entire equity investment.

6.            Principal Terms of the Placing and Subscription

The Company has conditionally raised £8.1 million before expenses by way of: (i) a Placing by Stifel and Liberum of 14,083,332 Placing Shares with existing and new institutional investors at the Issue Price; and (ii) a Subscription of 3,833,330 Subscription Shares with certain high net worth individuals and companies at the Issue Price.

 The Offer is conditional, among other matters, upon:

a)            the passing of all of the Resolutions by Shareholders;

b)            the Placing Agreement becoming or being declared unconditional in all respects (except, in respect of the Subscription only, in so far as the Placing Agreement is conditional on the Subscription Agreement becoming unconditional)  and not having been terminated in accordance with its terms before Admission; and

c)            Admission occurring no later than 8.00 am on 13 June 2017 (or such later time and/or date (being no later than 8.00 am on 30 June 2017) as Stifel, Liberum and the Company may agree).

If any of the conditions are not satisfied (or waived), the New Ordinary Shares will not be issued and all monies received from the Placees and the Subscribers will be returned to them (at their own risk and without interest) as soon as possible thereafter.

The New Ordinary Shares are not being allotted subject to clawback.  The New Ordinary Shares will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

Application will be made in due course to the London Stock Exchange for the Admission of the New Ordinary Shares to trading on AIM.  Upon Admission it is also expected that the New Ordinary Shares will be enabled for settlement in CREST.

7.            Principal Terms of the Additional Fundraising

In addition to the Placing and the Subscription, the Company is targeting a maximum further raise of £1.5 million (before expenses) by way of an Additional Fundraising of up to 3,333,333 New Ordinary Shares at the Issue Price. The Additional Fundraising will be by way of a private placing or subscription at the Directors' discretion, and is not open to the public.  The Additional Fundraising will be available only to existing institutional or other investors which the Directors are satisfied can lawfully invest on a private placement basis. 

The Additional Fundraising is not underwritten and neither Stifel nor Liberum is acting for the Company, or any other person, in connection with the Additional Fundraising.

The Additional Fundraising Shares will be allotted and issued fully paid and will, on issue, rank pari passu with the Existing Ordinary Shares in issue, including the right to receive, in full, all dividends and other distributions thereafter declared, made or paid after the date of issue together with all rights attaching to them and free from all liens, charges and encumbrances of any kind.

8.            Related Party Transaction

The participations of Woodford and Invesco in the Placing constitute related party transactions under the AIM Rules for Companies by virtue of Woodford and Invesco each being a substantial shareholder in the Company.  The Directors consider, having consulted with Stifel, the Company's nominated adviser, that the terms of the transactions are fair and reasonable in so far as the Company's Shareholders are concerned.

9.            Risk Factors

The attention of Shareholders is drawn to the risk factors set out in part 2 of this announcement, which provide additional information on the risks associated with ownership of the Ordinary Shares.

10.          Recommendation

The Directors believe that the Offer and the passing of the Resolutions are in the best interests of the Company and Shareholders, taken as a whole.  Accordingly, the Directors unanimously recommend Shareholders vote in favour of Resolutions 1 and 2, as the Directors intend to do in respect of their aggregate beneficial holdings of 98,858 Ordinary Shares, representing 0.19 per cent. of the Existing Ordinary Shares..

The Placing, Subscription and Additional Fundraising are conditional, among other things, upon the passing of the Resolutions at the General Meeting.  Shareholders should be aware that if the Resolutions are not approved at the General Meeting by the Shareholders, the Offer and Additional Fundraising will not proceed. 

PART 2: Risk Factors

Overview

This section should be carefully considered by anyone evaluating whether to invest in the Company.  As necessary, you should consult a personal adviser authorised under the FSMA specialising in advising on acquiring shares.

The Directors believe the following risks to be the most significant.  However, they do not necessarily comprise all risks associated with an investment in the Company and are not in any particular order of priority.  Additional risks and uncertainties not currently known to the Directors or which the Directors currently deem immaterial may also have an adverse effect on the Group and the information set out below does not purport to be an exhaustive summary of the risks affecting the Group.

If any of the following risks were to materialise, the Group's business, financial condition, results, future operations, the commercialisation of technology, or prospects could be materially adversely affected, the Company's share price could decline and an investor may lose part or all of their investment.

The Group's financial position may be adversely affected if the Resolutions are not passed

If Shareholders do not approve the Resolutions to be proposed at the General Meeting, the Offer cannot be implemented.  If the Placing and Subscription do not proceed and no alternative third party funding becomes available to the Company by April 2018, the Company would seek to manage the Group's ongoing cash requirements and investment activities to decrease any additional amounts being invested in the Portfolio Companies by the Company and/or ceasing to invest in new opportunities.  This would constitute a change in the Company's current investment strategy.  Alternative scenarios may include the sale of Portfolio Companies to fund the ongoing funding requirements of other Portfolio Companies.   However, there can be no assurances that such change in strategy would be successful and/or that any sales by the Company of any interests in any Portfolio Companies can be achieved on terms commercially acceptable to the Company and on a timely basis or at all.  Therefore, if the Offer does not proceed and no such alternative third party funding becomes available to the Company, it may not have sufficient capital to maintain its current investment strategy.  This could results in delays in the commercialisation of the products of the Portfolio Companies and/or larger amounts being sought from third parties pursuant to series A fundraisings, thereby diluting the Company's interest more than currently anticipated.   Any such failure to obtain sufficient working capital to fund its current investment strategy may therefore have a material adverse effect on the value of the Group and the share price of the Ordinary Shares.  In such case Shareholders could lose part of or all of their investment in the Company. 

The Glycotest series A fundraising is contingent on successful validation results which may be delayed or may not be achieved

The Company and Glycotest are currently in discussions with third parties which are progressing well in connection with the series A fundraising for Glycotest.  Any such fundraising is contingent on due diligence that includes successful investor led clinical validation results from trials conducted by a third party using the Glycotest's HCC Panel. Such due diligence is in progress and Glycotest is aiming to sign the relevant documentation for the series A fundraising by the end of June 2017.  However, there can be no assurances that the validation results are successful and/or that negotiations will be completed by that time and that legally binding agreements will be entered into.  To the extent that the negotiations are not successful, the Glycotest series A fundraising may not proceed in its current form and it will seek to enter into further negotiations with other interested parties, which will, even if conducted in a timely fashion and successful, result in a time delay in the series A fundraising and the commercialisation of the HCC Panel.  This in turn would have an adverse effect on the Company's financial position and the share price of the Ordinary Shares.   

The Group cannot guarantee that its strategic aim to develop new collaborative relationships with strategic partners, universities, teaching hospitals and other research institutions will be successful

The Group is strategically aiming to develop new collaborative relationships with strategic partners, universities, teaching hospitals and other research institutions, directly or indirectly, from which the Group could source future investment opportunities.  If the Group fails to secure new relationship agreements with these institutions and organisations this could adversely impact the Group's ability to source new opportunities which are in keeping with its investment criteria.

The Group is subject to foreign currency fluctuations, especially the USD/GBP exchange rate

Four of the Group's five Portfolio Companies are based in the US and have a functional currency in US dollars.  In addition, the Company intends to allocate the majority of the proceeds of the Placing (which will be denominated in sterling) to its US Portfolio Companies whose functional currency is US dollars.  Foreign exchange risk could affect any licensing and royalty payments or other income in US dollars.  Accordingly, the Group may experience adverse fluctuations in revenues and expenses because of fluctuations in currency exchange rates.  The Company does not currently hedge against all currency exposures, but does buy US dollars to mitigate its primary currency exposure.

The Group's Portfolio Companies may not complete their target funding rounds within the expected timeframe, or at all

The Group has invested in early-stage research and technology companies that are generally regarded as higher risk than many other forms of investment.  Currently, the Portfolio Companies are loss making and do not  generate net cash inflow.  The Group's Portfolio Companies are all currently engaged with fundraising rounds, targeting external third party capital investment to take them forwards towards commercialisation. There can be no guarantee of success, with the stated target timeframes, or at all.  Should the fundraising rounds be delayed, or not complete at all, the requirement for NetScientific to invest further capital in the Portfolio Companies will increase.  This could ultimately lead to the Group requiring additional capital beyond what is raised within the Offer, or the Group may have to liquidate one or more of its Portfolio Companies, impacting the overall value of the Group.

Competition in the digital health, diagnostic and therapeutic industries is intense

There is intense competition among digital health, diagnostic and therapeutic companies.  The Group is aware of competitors who have developed or are developing products that address the same areas that the Portfolio Companies are targeting.  These companies may be significantly better resourced, or their products or services could be more effective than and/or differently regulated from any products developed by the Group.

The Group has identified the following risks to commercialising their technology successfully and which may affect the Group's value and return on investments:

Demand for the Group's products is unpredictable

Demand for any of the Portfolio Companies' products will depend in large part on the development and expansion of the digital health, diagnostic and therapeutic markets.  The size and rate of growth of these markets may in the future fluctuate significantly.

Clinical trials of products may not be successful

Products may not proceed from proof of concept to clinical trials.  Clinical trials of the Portfolio Companies' products may not begin on time, may not be completed on schedule, or at all, or may not be sufficient for registration of the products or result in products that can receive necessary clearances or approvals.  Numerous unforeseen events during, or as a result of, clinical testing could delay or prevent commercialisation of such products.

Third-party reimbursement may not be available for products developed by the Group

The Group's ability to commercialise the Portfolio Companies successfully or to attract potential strategic partners will depend in part on the price levels and the extent to which reimbursement for the costs of treatment relating to the Group's products will be available from government health administration authorities, private health insurers and other third-party payers, as well as government health care programmes.  Governments and other third party payers are increasingly attempting to contain healthcare costs, in part by challenging the price of medical products and services and restricting eligibility for reimbursement.

The Group's portfolio depends on new and innovative technologies

The digital health, diagnostic, and therapeutic industries are characterised by rapid technological changes, frequent new product introductions and enhancements, and evolving industry standards.

The Group is subject to competing intellectual property and rapid technology change

The market sectors in which the Portfolio Companies participate are highly competitive and constantly subject to rapid technological changes.  Intellectual property licensed to the Group may become obsolete or uneconomical if there are any advances in technology or if the Group's competitors succeed in developing alternative approaches to the same technology.

The Group's intellectual property could become the subject of litigation

Litigation involving intellectual property is expensive, complex and lengthy, and its outcome is difficult to predict.  Were any of the Portfolio Companies to become involved in an infringement claim, such involvement may consume significant time, financial and other resources, and may result in key technical and management personnel of such Portfolio Company diverting their attention and focus away from their normal duties and operations.  In an infringement proceeding, a court may decide that a patent is not valid or is unenforceable, or may refuse to stop the other party from using the intellectual property at issue.  An adverse determination in any litigation or other proceedings could impair the ability of the relevant Portfolio Company to exploit any intellectual property licensed to it.  If such Portfolio  Company is unsuccessful in defending any such claims, it may have to pay substantial damages and/or legal costs to the successful third party, and may be required to obtain a licence for, or cease, the manufacture, use or sale of infringing intellectual property.  Further, because of the substantial amount of discovery required in connection with intellectual property litigation or other proceedings, there is a risk that confidential information could be compromised by disclosure during discovery.

The Group may not be able to exit its investments

The ability of the Company to exit its equity shareholdings depends in part on the market's appetite for investments in technology companies with limited or no trading history, as well as valuations in the market sectors in which the Group participates.

The Group's licensing agreements have limitations

The Group typically licences intellectual property that it is seeking to commercialise and, where licenced, usually does so exclusively with rights to use certain patents and/or patent applications by the intellectual property owners and therefore may enforce only the rights it receives under licensing agreements from the intellectual property owners, such as the first right to bring and/or defend infringement claims.  These rights, in particular, do not typically include the right to control the preparation, filing, prosecution or maintenance of patent applications or patents except under separate agreement, although in practice the Group often works closely with its licensors about these matters.

Protection of intellectual property licensed to the Group

The intellectual property licensed to the Group is protected by patent, trademark, trade dress, copyright, unfair competition and trade secret laws, as well as confidentiality procedures and contractual restrictions.  These laws, procedures and restrictions provide only limited protection and any such intellectual property rights may be challenged, invalidated, circumvented, infringed or misappropriated.  In particular, patents might not contain claims that are sufficiently broad to prevent others from utilising the technology in question.  Third parties may independently develop similar or superior technology which does not infringe any protection afforded by the intellectual property available to the Group.  Unauthorised use, disclosure or reverse engineering of that intellectual property may occur.

Patents pending may not be granted

Most of the intellectual property licensed to the Group is covered by patent applications that have not yet had their claims approved.  Though the Group only invests in projects and businesses that have submitted or will submit patent applications that the Directors believe have a reasonable probability of being granted, there is significant risk the patent applications may not be granted, or, if they are granted, may be granted with claims significantly less desirable than those originally sought.

The Group's insurance coverage may not be adequate

The Group's business exposes it to potential product liability, professional indemnity and other risks which are inherent in the research and development, pre-clinical studies, clinical trials, manufacturing, marketing and use of digital health, diagnostic and therapeutic products.  Necessary insurance cover may not be available to the Group at an acceptable cost, if at all, or, if there is any claim, the level of the Group's insurance cover may not be adequate.

The Group is subject to extensive government regulation and legal uncertainty

The products being developed by the Group are subject to extensive and frequently changing legislation, regulation and taxation, including that of the FDA, federal and state governmental authorities in the United States and other comparable regulatory authorities in the United Kingdom and European Union.  Adverse regulatory rulings may lead to technologies in which the Group has invested becoming obsolete.

The Group relies on key executives and personnel

A significant part of the Group's value and the key to its future technology creation also lies with the scientists and engineers who partner with the Group and take up senior positions within the Portfolio Companies.  These individuals are key to the Group's ability to develop and commercialise its technologies.  Retention of top executives and personnel in both its investee companies and at Group level, and the maintenance and attraction of such a qualified workforce, is a high priority for the Group.

The Company's development plans are subject to review and change

The development plans for different Group companies as at the date of this announcement comprise forward-looking information including a mixture of targets, milestones and other planned project management steps.  These plans are subject to periodic review, change and reprioritisation by reference to the development of one or more Group companies.

It may be difficult to realise an investment on AIM.  The market price of the Ordinary Shares may fluctuate widely in response to different factors

The New Ordinary Shares will be quoted on AIM rather than the Official List.  The AIM Rules for Companies are less demanding than those of the Official List and an investment in a share that is traded on AIM may carry a higher risk than an investment in shares listed on the Official List.  The share price of publicly traded companies can be highly volatile.  It may be more difficult for an investor to realise his or her investment in the Company than to realise an investment in a company whose shares or other securities are listed on the Official List or other similar stock exchange.  Shares held on AIM are perceived to involve higher risks.  AIM has been in existence since 1995 and is a market designed for small and growing companies but its future success and liquidity as a market for the Ordinary Shares cannot be guaranteed.  The price at which the Ordinary Shares are traded and the price at which investors may realise their investment are influenced by a large number of factors, some specific to the Company and its operations, and some which may affect quoted companies generally.  Admission to AIM does not imply that there will be a liquid market for the Ordinary Shares.  Consequently, the price of Ordinary Shares may be subject to fluctuation on small volumes of shares, and the Ordinary Shares may be difficult to sell at a particular price.

Definitions

The following definitions apply throughout this announcement, unless the context requires otherwise:

"Act" means the Companies Act 2006 (as amended);

"Additional Fundraising" means the issue, separate to the Placing and Subscription, of up to a further 3,333,333 New Ordinary Shares to institutional or other investors to whom such shares can lawfully be offered on a private placement basis from the date of this announcement to the date of the Additional Fundraising Close by way of a placing or subscription at the Directors' discretion;

"Additional Fundraising Close" means the final date for receipt of applications to subscribe for New Ordinary Shares under the Additional Fundraising being 11.00 am on 9 June 2017 (or such later time as the Company may agree);

"Additional Fundraising Shares" means the New Ordinary Shares to be issued pursuant to the Additional Fundraising;

"Admission" means the admission of the New Ordinary Shares to trading on AIM in accordance with the AIM Rules for Companies;

"AIM Rules for Companies" means the AIM Rules for Companies and guidance notes as published by the London Stock Exchange from time to time;

"AIM" means the AIM market operated by London Stock Exchange;

"Announcement" means this announcement;

"Board" or "Directors" means the directors of the Company as at the date of this announcement;

"Business Day" means a day other than a Saturday, Sunday or public holiday in England when banks in London are open for business;

"Capita Asset Services" means Capita Asset Services Limited, of The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4ZF, registrars to NetScientific;

"CF" means Cystic Fibrosis;

"Company" or "NetScientific" means NetScientific plc;

"COPD" means Chronic Obstructive Pulmonary Disease;

"CREST member" means a person who has been admitted to CREST as a system-member (as defined in the CREST Manual);

"CREST Regulations" means the Uncertificated Securities Regulations 2001 (SI 2001/3755) (as amended);

"CREST" means the relevant system in respect of which Euroclear is the operator (each as defined in the CREST Regulations);

"CTC" means circulating tumour cells;

"Enlarged Share Capital" means the entire issued share capital of the Company immediately following the issue of New Ordinary Shares pursuant to the Offer, assuming the maximum number of Additional Fundraising shares are issued;

"Existing Ordinary Shares" means the 51,075,695 Ordinary Shares in issue on the date of this announcement;

"FCA" means the Financial Conduct Authority of the UK;

"FDA" means Food and Drug Administration of the US;

"Form of Proxy" means the form of proxy for use in relation to the General Meeting enclosed with this announcement;

"FSMA" means Financial Services and Markets Act 2000 (as amended from time to time);

"General Meeting" means the General Meeting of the Company, notice of which will be set out in the Circular;

"Glucosense" means Glucosense Diagnostics Limited;

"Glycotest" means Glycotest, Inc.;

"Group" means the Company, its subsidiaries, the Portfolio Companies and the investments in certain other companies;

"HPV" means human papillomavirus;

"Issue Price" means 45.0 pence per New Ordinary Share;

"Invesco" means Invesco UK Limited or any holding company of Invesco UK Limited or any subsidiary of such holding company;

"Liberum" means Liberum Capital Limited;

"London Stock Exchange" means London Stock Exchange plc;

"NetScientific Group" means the Company and its subsidiaries;

"New Ordinary Shares" means up to 21,249,995 new Ordinary Shares being issued in relation to the Offer;

"Notice of General Meeting" means the notice convening the General Meeting;

"Offer" means the Placing, the Subscription and the Additional Fundraising;

"OncoVerse" means OncoVerse LLC, a company in which Wanda previously held an interest;

"Ordinary Shares" means ordinary shares of 5p each in the capital of the Company;

"PDS Biotechnology" means PDS Biotechnology Corporation;

"Placees" means subscribers for New Ordinary Shares pursuant to the Placing;

"Placing" means the placing of the Placing Shares at the Issue Price, the details of which are set out in this announcement;

"Placing Shares" means the 14,083,332 New Ordinary Shares to be allotted and issued by the Company at the Issue Price pursuant to the terms and conditions of the Placing Agreement;

"Placing Agreement" means the agreement entered into between the Company, Stifel and Liberum in respect of the Placing dated 25 May 2017, as described in this announcement;

"Portfolio Companies" means Vortex, Wanda, ProAxsis, Glycotest and PDS Biotechnology;

"ProAxsis" means ProAxsis Ltd;

"Prospectus Rules" means the rules made by the FCA pursuant to sections 73A(a) and (4) of FSMA;

"Regulatory Information Service" means a service approved by the FCA for the distribution to the public of regulatory announcements and included within the list maintained on the FCA's website;

"Resolutions" means the resolutions to be proposed at the General Meeting as set out in the Notice of General Meeting;

"Restricted Jurisdiction" means United States of America, the Republic of Ireland, Canada, Australia, Japan and the Republic of South Africa and any other jurisdiction where the extension or availability of the Placing would breach any applicable law;

"Securities Act" means the US Securities Act of 1933 (as amended);

"Shareholders" means the holders of Existing Ordinary Shares;

"Stifel" means Stifel Nicolaus Europe Limited;

"Subscription" means the conditional direct placement of the Subscription Shares to certain other investors at the Issue Price, the details of which are set out in this announcement;

"Subscription Agreements" means the agreements entered into between the Company and certain individuals and companies in respect of the Subscription dated 25 May 2017, as described in this announcement;

"Subscription Shares" means the 3,833,330 New Ordinary Shares to be allotted and issued by the Company at the Issue Price pursuant to the terms and conditions of the Subscription Agreement;

"United Kingdom" or "UK" means the United Kingdom of Great Britain and Northern Ireland;

"United States", "United States of America" or "US" means the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia and all areas subject to its jurisdiction;

"Vortex" or "Vortex Biosciences" means Vortex Biosciences, Inc.;

"VTX-1" means a system, comprised of a bench-top instrument and disposable microfluidic cartridge, for use in circulating tumour cell enrichment, collection and analysis;

"Wanda" means Wanda, Inc.; and

"Woodford" means Woodford Investment Management LLP and, where the context requires, the clients and funds managed by it.

APPENDIX I - TERMS AND CONDITIONS

IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT (WHICH IS FOR INFORMATION PURPOSES ONLY) AND THE TERMS AND CONDITIONS SET OUT IN THIS APPENDIX ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA ("EEA") WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE EU PROSPECTUS DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC, AS AMENDED FROM TIME TO TIME, INCLUDING DIRECTIVE 2010/73/EC, AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE "PROSPECTUS DIRECTIVE") ("QUALIFIED INVESTORS"); AND (B) PERSONS IN THE UNITED KINGDOM WHO ARE QUALIFIED INVESTORS AND (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(1) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER") (II) ARE PERSONS FALLING WITHIN ARTICLE 48(2) ("CERTIFIED HIGH NET WORTH INDIVIDUALS") OF THE ORDER; (III) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; OR (IV) ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED; OR (C) PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").

THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT (INCLUDING THIS APPENDIX) MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS APPENDIX DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.

THE INFORMATION CONTAINED HEREIN IS NOT FOR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, THE REPUBLIC OF IRELAND, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA. THIS DOCUMENT (AND THE INFORMATION CONTAINED HEREIN) DOES NOT CONTAIN OR CONSTITUTE AN OFFER OF SECURITIES FOR SALE, OR SOLICITATION OF AN OFFER TO PURCHASE SECURITIES, IN THE UNITED STATES, THE REPUBLIC OF IRELAND, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES UNLESS THE SECURITIES ARE REGISTERED UNDER THE SECURITIES ACT, OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  NO PUBLIC OFFERING OF THE SECURITIES WILL BE MADE IN THE UNITED STATES.

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN THE PLACING SHARES. THE PRICE OF SHARES IN THE COMPANY AND INCOME FROM THEM (IF ANY) MAY GO DOWN AS WELL AS UP AND INVESTORS MAY NOT GET BACK THE FULL AMOUNT INVESTED ON DISPOSAL OF THEIR SHARES.     

By participating in the Placing, each person who is invited to and who chooses to participate in the Placing (a "Placee") will be deemed to have read and understood this Announcement in its entirety, to be participating, making an offer and subscribing for Placing Shares on the terms and conditions contained herein and to be providing the representations, warranties, indemnities, acknowledgements and undertakings contained in this Appendix.

Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Appendix I or the Announcement of which it forms part should seek appropriate advice before taking any action.

Details of the Placing Agreement and of the Placing Shares

Stifel and Liberum (together the "Banks" and each a "Bank") have today entered into a placing agreement (the "Placing Agreement") with the Company under which, on the terms and subject to the conditions set out in the Placing Agreement, each of the Banks, as agent for and on behalf of the Company, has agreed to use their reasonable endeavours to procure Placees for the Placing Shares at the Placing Price.

The Placing is conditional, inter alia, upon the approval by shareholders of the Resolutions to be proposed at the General Meeting (which will grant authority to the directors of the Company to allot the Placing Shares and disapply pre-emption rights in respect of the Placing Shares).

Application will be made for the Placing Shares to be admitted to trading on AIM.  The Placing Shares to be issued pursuant to the Placing will, following Admission, rank pari passu in all respects with the existing Ordinary Shares and will carry the right to receive all dividends and distributions declared, made or paid on or in respect of the ordinary shares after Admission.

As part of the Placing, the Company has agreed that it will not for a period of 90 days after Admission (save pursuant to the Additional Fundraising as defined in this Announcement), offer, issue, sell, contract to sell, issue options in respect of or otherwise dispose of any securities of the Company (or any interest therein or in respect thereof) or any other securities exchangeable for, or convertible into, or substantially similar to, Ordinary Shares or enter into any transaction having substantially the same effect or agree to do any of the foregoing other than with the prior written consent of the Stifel and Liberum (such consent not to be unreasonably withheld or delayed) or in relation to certain existing share schemes.

No Prospectus

No prospectus or other offering document has been or will be submitted to be approved by the FCA in relation to the Placing or the Placing Shares, and Placees' commitments will be made solely on the basis of the information contained in this Announcement (including this Appendix I) and any information publicly announced through a Regulatory Information Service (as defined in the AIM Rules for Companies (the "AIM Rules")) by or on behalf of the Company on or prior to the date of this Announcement (the "Publicly Available Information") and subject to any further terms set forth in the contract note to be sent to individual Placees.

Each Placee, by participating in the Placing, agrees that the content of this Announcement is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any information (other than the Publicly Available Information), representation, warranty or statement made by or on behalf of any Bank or the Company or any other person and none of the Banks, the Company nor any other person acting on such person's behalf nor any of their affiliates has or shall have any liability for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement.  Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing.  Each Placee should consult its own solicitor, tax adviser and financial adviser for independent legal, tax and financial advice regarding an investment in the Placing Shares. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.

Participation in, and principal terms of, the Placing

1.            Stifel is acting exclusively as nominated adviser, broker and bookrunner to the Company (for the purposes of the AIM Rules for Companies) and no one else in connection with Admission, the Placing and the matters set out in this document.

2.            Liberum is acting exclusively as placing agent for the Company and no other person in connection with the Placing.

3.            Participation in the Placing will only be available to persons who may lawfully be, and are, invited by the Banks to participate. The Banks and any of their Affiliates are entitled to participate in the Placing as principal.

4.            The Banks are arranging the Placing severally (and not jointly nor jointly and severally) as agents of the Company. Participation in the Placing will only be available to persons who are Relevant Persons and who may lawfully be, and are, invited to participate by either of the Banks. Each Bank and their respective affiliates are entitled to enter bids as principal in the Placing.

5.            The price per Placing Share is fixed at 45 pence (the "Placing Price") and is payable by the Placees to the relevant Bank (or as it may direct).

6.            No fee or commission will be paid to Placees or by Placees in respect of any Placing Shares.

7.            Each Placee's allocation is determined by the Banks in their discretion following consultation with the Company and has been or will be confirmed orally by the relevant Bank and a contract note will be dispatched as soon as possible thereafter. That oral confirmation will give rise to an irrevocable, legally binding commitment by that person (who at that point becomes a Placee), in favour of the Banks and the Company, under which it agrees to subscribe for the number of Placing Shares allocated to the Placee at the Placing Price and otherwise on the terms and subject to the conditions set out in this Appendix I and in accordance with the Company's articles of association. Except with the relevant Bank's consent, such commitment will not be capable of variation or revocation at the time at which it is submitted.

8.            Each Placee's allocation and commitment will be evidenced by a contract note issued to such Placee by the relevant Bank. The terms of this Appendix I will be deemed incorporated in that contract note.

9.            Each Placee will have an immediate, separate, irrevocable and binding obligation, owed to the relevant Bank (as agent for the Company), to pay to it (or as it may direct) in cleared funds an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to acquire and the Company has agreed to allot and issue to that Placee.

10.          Irrespective of the time at which a Placee's allocation(s) pursuant to the Placing is/are confirmed, settlement for all allocated Placing Shares to be acquired pursuant to the Placing will be required to be made at the same time, on the basis explained below under "Registration and Settlement".

11.          All obligations of the Banks under the Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Right to terminate under the Placing Agreement".

12.          By participating in the Placing, each Placee will agree that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.

13.          To the fullest extent permissible by law and applicable FCA rules, save in the event of fraud on their respective parts, none of (a) Stifel , (b) any of Stifel's affiliates, agents, directors, officers, consultants, (c) to the extent not contained within (a) or (b), any person connected with Stifel as defined in the FSMA ((b) and (c) being together "affiliates" and individually an "affiliate" of Stifel), (d) any person acting on Stifel's behalf, (e) Liberum, (f) any of Liberum's affiliates, agents, directors, officers, consultants, (g) to the extent not contained within (e) or (f), any person connected with Liberum as defined in FSMA ((f) and (g) being together "affiliates" and individually an "affiliate" of Liberum) or (h) any person acting on Liberum's behalf shall have any liability (including to the extent permissible by law, any fiduciary duties) to Placees or to any other person whether acting on behalf of a Placee or otherwise. In particular, neither the Banks nor any of their respective affiliates shall have any liability (including, to the extent permissible by law, any fiduciary duties) in respect of their conduct of the Placing or of such alternative method of effecting the Placing as the Banks and the Company may agree.

Registration and Settlement

The Banks will confirm the final allocations of Placing Shares to be issued to Placees (each a "Final Placing Participation") pursuant to the Placing orally or in writing to Placees and will issue a contract note or trade confirmation in respect of such Final Placing Participations.  The contract note or trade confirmation will include the payment and settlement procedures to be followed by Placees in connection with their subscriptions for the Placing Shares comprised in their Final Placing Participations.

Settlement of transactions in the Placing Shares following Admission will take place within CREST, subject to certain exceptions. The Banks and the Company reserve the right to require settlement for, and delivery of, the Placing Shares (or any part thereof) to Placees by such other means that they deem necessary if delivery or settlement is not possible or practicable within CREST by the expected time for settlement and delivery set out in the contract note or trade confirmation or would not be consistent with the regulatory requirements in the Placee's jurisdiction.

Each Placee agrees that it will do all things reasonably necessary to ensure that delivery and payment is completed in accordance with the instructions set out in the contract note or trade confirmation, and in accordance with the standing CREST instructions in respect of the Placing Shares that it has in place with the relevant Bank.

If allocated Placing Shares are to be delivered to a custodian or settlement agent, Placees must ensure that, upon receipt, the conditional contract note is copied and delivered immediately to the relevant person within that organisation. Insofar as the allocated Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to United Kingdom stamp duty or stamp duty reserve tax. Placees will not be entitled to receive any fee or commission in connection with the Placing.

Conditions of the Placing

The Placing is conditional upon, amongst other things:

(a)  the satisfaction of each condition necessary to enable the Placing Shares to be admitted as a participating security in CREST (other than Admission) on or before Admission;

(b)  the Company performing all its obligations under the Placing Agreement so far as the same falls to be performed prior to Admission;

(c)   the delivery to the Banks of a certificate in the form set out in the Placing Agreement duly signed by a director on behalf of the Company not later than 5.00 p.m. on the dealing day immediately prior to the date of Admission;

(d)  Admission becoming effective by not later than 8.00 a.m. on 13 June 2017 (or such later time and/or date as the Banks  and the Company may agree, not being later than 8.00 a.m. on 30 June 2017);

(e)  the Placing Agreement becoming unconditional in all respects; and

(f)   the Resolutions being passed at the general meeting to be held on 12 June 2017.

If any of the conditions set out in the Placing Agreement are not fulfilled or, where permitted, waived in accordance with the Placing Agreement within the stated time periods (or such later time and/or date as the Company and the Banks may agree), or the Placing Agreement is terminated in accordance with its terms, the Placing will lapse and the Placee's rights and obligations shall cease and terminate at such time and each Placee agrees that no claim can be made by or on behalf of the Placee (or any person on whose behalf the Placee is acting) in respect thereof.

By participating in the Placing, each Placee agrees that its rights and obligations cease and terminate only in the circumstances described above and under "Right to terminate under the Placing Agreement" below, and will not otherwise be capable of rescission or termination by it.

The Banks may, in their absolute discretion and upon such terms as it thinks fit, waive fulfilment of all or any of the conditions in the Placing Agreement in whole or in part, or extend the time provided for fulfilment of one or more conditions, save that certain conditions including the condition relating to Admission referred to in paragraph (a) above may not be waived.  Any such extension or waiver will not affect Placees' commitments as set out in this Announcement.

The Banks may terminate the Placing Agreement in certain circumstances, details of which are set out below.

Neither the Banks nor any of their respective affiliates, agents, directors, officers or employees nor the Company shall have any responsibility or liability, save in the event of fraud on their respective parts, to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and/or date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of the Banks.

Right to terminate under the Placing Agreement

Either Bank may terminate the Placing Agreement at any time on or before Admission if, inter alia:

1.    in the sole judgement of either Bank there has been a breach of or there has taken place or arisen any event rendering untrue or incorrect in any material respect any of the warranties given to it;

2.    in the sole judgment of either Bank a general moratorium on commercial banking activities in London or New York has been declared by the United States, the United Kingdom, the New York authorities or the European Central Bank or a suspension or material limitation in trading in securities, generally on the London Stock Exchange, the New York Stock Exchange or NASDAQ has occurred, or is likely to occur;

3.    in the sole judgment of either Bank the trading in any securities of the Company or trading generally on any stock exchange or in any over-the-counter market is disrupted, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any governmental authority, or a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States, Asia or in Europe;

4.    in the sole judgement of either Bank there has occurred any material adverse change in, or any development reasonably likely to involve a prospective adverse change in, or affecting, the condition (financial, operational, legal or otherwise), earnings, business, management, properties, assets, rights, results of operations or prospects of the Company which is material in the context of the Company as a whole, whether or not arising in the ordinary course of business ("Material Adverse Change") since the date of the Placing Agreement or there is a fact, circumstance or development reasonably likely to include a Material Adverse Change;

5.    it shall come to the notice of the either Bank that any statement contained in this Announcement or any other document or announcement issued or published by or on behalf of the Company in connection with the Placing is or has become untrue, inaccurate, incomplete or misleading in any material respect;

6.    in the sole judgement of the Banks, any matter or circumstance arises which is likely to give rise to an indemnity claim against the Company under the Placing Agreement;

7.    the Company fails to comply with any of its obligations under the Placing Agreement;

8.    the subscription proceeds in respect of the Subscription Shares have not been received by the Company prior to Admission;

9.    the Application is refused by the London Stock Exchange; or

10.  there has been a force majeure event which in the sole judgement of either Bank is likely to prejudice the success of the Placing, dealings in Ordinary Shares or make it impractical to proceed with the Placing.  Force majeure events include (but are not limited to) any outbreak of hostilities or escalation thereof or act or incidence of terrorism or other calamity or crisis, national or international emergency at war, or any change (or development involving a prospective change) in national or international monetary, political, financial market or economic conditions or currency exchange rates or foreign exchange controls.

If the Placing Agreement is terminated in accordance with its terms, the rights and obligations of each Placee in respect of the Placing as described in this Announcement shall cease and terminate at such time and no claim can be made by any Placee in respect thereof.

By participating in the Placing, each Placee agrees with the Company and the Banks that the exercise by the Company or the Banks of any right of termination or any other right or other discretion under the Placing Agreement shall be within the absolute discretion of the Company or the Banks and that neither the Company nor the Banks need make any reference to such Placee and that none of the Banks, the Company, or any of their respective affiliates, agents, directors, officers or employees shall have any liability to such Placee (or to any other person whether acting on behalf of a Placee or otherwise) whatsoever in connection with any such exercise, save in the event of fraud on their respective parts,.

By participating in the Placing, each Placee agrees that its rights and obligations terminate only in the circumstances described above and under the "Conditions of the Placing" section above and will not be capable of rescission or termination by it after the issue by the relevant Bank of a contract note confirming each Placee's allocation and commitment in the Placing.

Representations, Warranties and Further Terms

By participating in the Placing, each Placee (and any person acting on such Placee's behalf), provided that a Placee may be acting as agent for and on behalf of discretionary managed clients and in that case will be agreeing as agent and not as principal, for its own part only, represents, warrants, acknowledges and agrees (for itself and for any such prospective Placee) that (save where the Banks expressly agree in writing to the contrary):

1.            it has read and understood this Announcement, including the Appendices, in its entirety and that its acquisition of the Placing Shares is subject to and based upon all the terms, conditions, representations, warranties, indemnities, acknowledgements, agreements and undertakings and other information contained herein and that it has not relied on, and will not rely on, any information given or any representations, warranties or statements made at any time by any person in connection with Admission, the Placing, the Company, the Placing Shares or otherwise, other than the information contained in this Announcement and the Publicly Available Information;

2.            it has not received a prospectus or other offering document in connection with the Placing and acknowledges that no prospectus or other offering document: (a) is required under the Prospectus Directive; and (b) has been or will be prepared in connection with the Placing;

3.            insofar as, the existing Ordinary Shares are admitted to trading on AIM, and that the Company is therefore required to publish certain business and financial information in accordance with the AIM Rules, which includes a description of the nature of the Company's business and the Company's most recent balance sheet and profit and loss account and that it is able to obtain or access such information without undue difficulty, and is able to obtain access to such information or comparable information concerning any other publicly traded company, without undue difficulty;

4.            it has made its own assessment of the Placing Shares and has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing and none of the Banks, the Company or any of their respective affiliates, agents, directors, officers or employees or any person acting on behalf of any of them has provided, and will not provide, it with any material regarding the Placing Shares or the Company or any other person other than the information in this Announcement, or the Publicly Available Information; nor has it requested either of the Banks, the Company, any of their respective affiliates, agents, directors, officers or employees or any person acting on behalf of any of them to provide it with any such information;

5.            neither the Banks, nor any person acting on behalf of them nor any of their respective affiliates, agents, directors, officers or employees has or shall have any liability for any Publicly Available Information, or any representation relating to the Company, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person;

6.            the only information on which it is entitled to rely and on which it has relied in committing to subscribe for the Placing Shares is contained in this Announcement and the Publicly Available Information, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares and it has made its own assessment of the Company, the Placing Shares and the terms of the Placing based on Publicly Available Information; (b) none of the Banks, the Company or any of their respective affiliates, agents, directors, officers or employees has made any representation or warranty to it, express or implied, with respect to the Company, the Placing or the Placing Shares or the accuracy, completeness or adequacy of the Publicly Available Information; (c) it has conducted its own investigation of the Company, the Placing and the Placing Shares, satisfied itself that the information is still current and relied on that investigation for the purposes of its decision to participate in the Placing; and (d) has not relied on any investigation that the Banks or any person acting on their behalf may have conducted with respect to the Company, the Placing or the Placing Shares;

7.            the content of this Announcement and the Publicly Available Information has been prepared by and is exclusively the responsibility of the Company and that neither the Banks nor any persons acting on behalf of either of them is responsible for or has or shall have any liability for any information, representation, warranty or statement relating to the Company contained in this Announcement or the Publicly Available Information nor will they be liable for any Placee's decision to participate in the Placing based on any information, representation, warranty or statement contained in this Announcement, the Publicly Available Information or otherwise. Nothing in this Appendix I shall exclude any liability of any person for fraudulent misrepresentation;

8.            the Placee acknowledges that as the Placing Shares have not been registered or otherwise qualified, and will not be registered or otherwise qualified, for offer and sale nor will a prospectus be cleared or approved in respect of any of the Placing Shares under the securities laws of the United States, or any state or other jurisdiction of the United States, the Republic of Ireland, Australia, Canada, Republic of South Africa or Japan, subject to certain exceptions, they may not be offered, sold, taken up, renounced or delivered or transferred, directly or indirectly, within the United States, the Republic of Ireland, Australia, Canada, South Africa or Japan or in any country or jurisdiction where any such action for that purpose is required;

9.            it and/or each person on whose behalf it is participating:

(A)          is entitled to acquire the Placing Shares pursuant to the Placing under the laws and regulations of all relevant jurisdictions;

(B)          has fully observed such laws and regulations;

(C)          has capacity and authority and is entitled to enter into and perform its obligations as an acquirer of Placing Shares (or as agent where applicable) and will honour such obligations; and

(D)          has obtained all necessary consents and authorities (including, without limitation, in the case of a person acting on behalf of a Placee, all necessary consents and authorities to agree to the terms set out or referred to in this Appendix I) under those laws or otherwise and complied with all necessary formalities to enable it to enter into the transactions contemplated hereby and to perform its obligations in relation thereto and, in particular, if it is a pension fund or investment company it is aware of and acknowledges it is required to comply with all applicable laws and regulations with respect to its subscription for Placing Shares;

10.          it is not, and any person who it is acting on behalf of is not, and at the time the Placing Shares are subscribed will not be, a resident of, or with an address in, or subject to the laws of, Australia, Canada, Japan, the Republic of Ireland or the Republic of South Africa, and it acknowledges and agrees that the Placing Shares have not been and will not be registered or otherwise qualified under the securities legislation of Australia, Canada, Japan, the Republic of Ireland or the Republic of South Africa and may not be offered, sold, or acquired, directly or indirectly, within those jurisdictions;

11.          the Placing Shares acquired by it, to the best of its knowledge, have not been, and will not be, registered under the Securities Act and may not be offered, sold or resold in or into or from the United States except pursuant to an effective registration under the Securities Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in accordance with applicable state securities laws; and no representation is being made as to the availability of any exemption under the Securities Act for the reoffer, resale, pledge or transfer of the Placing Shares;

12.          it and the beneficial owner of the Placing Shares is, and at the time the Placing Shares are acquired will be, outside the United States and acquiring the Placing Shares in an "offshore transaction" not involving any directed selling efforts, in each case as defined in, and in accordance with, Regulation S under the Securities Act;

13.          it (and any account for which it is purchasing) is not acquiring the Placing Shares with a view to any offer, sale or distribution thereof within the meaning of the Securities Act;

14.          it will not distribute, forward, transfer or otherwise transmit this Announcement or any part of it, or any other presentational or other materials concerning the Placing in or into or from the United States (including electronic copies thereof) to any person, and it has not distributed, forwarded, transferred or otherwise transmitted any such materials to any person;

15.          none of the Banks, their respective affiliates, agents, directors, officers or employees and any person acting on behalf of any of them is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that participation in the Placing is on the basis that it is not and will not be a client of either of the Banks and neither of the Banks has any duties or responsibilities to it for providing the protections afforded to its clients or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of its rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;

16.          it has the funds available to pay for the Placing Shares for which it has agreed to subscribe and acknowledges and agrees that it will make payment to the relevant Bank for the Placing Shares allocated to it in accordance with the terms and conditions of this Announcement on the due times and dates set out in this Announcement, failing which the relevant Placing Shares may be placed with others on such terms as the Banks may, in their absolute discretion determine without liability to the Placee;

17.          the Placee acknowledges that no action has been or will be taken by any of the Company, the Banks or any person acting on their behalf that would, or is intended to, permit a public offer of the Placing Shares in the United States or in any country or jurisdiction where any such action for that purpose is required;

18.          the person who it specifies for registration as holder of the Placing Shares will be: (a) the Placee; or (b) a nominee of the Placee, as the case may be. Neither the Banks nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. Each Placee and any person acting on behalf of such Placee agrees to acquire the Placing Shares pursuant to the Placing and agrees to pay the Company and the Banks in respect of the same (including any HMRC interest or penalties) on the basis that the Placing Shares will be allotted to a CREST stock account of either of the Banks or transferred to a CREST stock account of either of the Banks who will hold them as nominee on behalf of the Placee until settlement in accordance with its standing settlement instructions with it;

19.          it is acting as principal only in respect of the Placing or, if it is acting for any other person, (a) it is duly authorised to do so and has full power to make the acknowledgments, representations and agreements herein on behalf of each such person and (b) it is and will remain liable to the Company and the Banks for the performance of all its obligations as a Placee (and as an agent if applicable) in respect of the Placing (regardless of the fact that it is acting for another person);

20.          the allocation, allotment, issue and delivery to it, or the person specified by it for registration as holder, of Placing Shares will not give rise to a stamp duty or stamp duty reserve tax liability under (or at a rate determined under) any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depository receipts and clearance services) and that it is not participating in the Placing as nominee or agent for any person or persons to whom the allocation, allotment, issue or delivery of Placing Shares would give rise to such a liability;

21.          it and any person acting on its behalf (if within the United Kingdom) falls within Article 19(5) and/or 48(2) and/or 49(2) of the Order and undertakes that it will acquire, hold, manage and (if applicable) dispose of any Placing Shares that are allocated to it for the purposes of its business only;

22.          it will not make an offer to the public of the Placing Shares and it has not offered or sold and will not offer or sell any Placing Shares to persons in the United Kingdom or elsewhere in the EEA prior to the expiry of a period of six months from Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of the FSMA or an offer to the public in any other member state of the EEA within the meaning of the Prospectus Directive;

23.          it is a person of a kind described in: (a) Article 19(5) (Investment Professionals) and/or 48(2) (Certified high net worth individuals) and/or 49(2) (High net worth companies etc.) of the Order, as amended, and/or an authorised person as defined in section 31 of FSMA; and (b) section 86(7) of FSMA (Qualified Investor), being a person falling within Article 2.1(e) the Prospectus Directive. For such purposes, it undertakes that it will acquire, hold, manage and (if applicable) dispose of any Placing Shares that are allocated to it for the purposes of its business only;

24.          it has only communicated or caused to be communicated and it will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) relating to Placing Shares in circumstances in which section 21(1) of the FSMA does not require approval of the communication by an authorised person and it acknowledges and agrees that neither of the Banks has approved this Announcement in their capacity as authorised persons under section 21 of FSMA and it may not therefore be subject to the controls which would apply if it was made or approved as financial promotion by an authorised person;

25.          it has complied and it will comply with all applicable laws with respect to anything done by it or on its behalf in relation to the Placing Shares (including all relevant provisions of the FSMA in respect of anything done in, from or otherwise involving the United Kingdom);

26.          if it is a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive (including any relevant implementing measure in any member state), the Placing Shares acquired by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a member state of the EEA which has implemented the Prospectus Directive other than Qualified Investors, or in circumstances in which the express prior written consent of the Banks has been given to the offer or resale;

27.          it has neither received nor relied on any confidential price sensitive information about the Company in accepting this invitation to participate in the Placing;

28.          save in the case of fraud on their respective parts, none of the Banks, any of their respective affiliates, agents, directors, officers or employees or any person acting on behalf of any of them has or shall have any liability for any information, representation or statement contained in this Announcement or for any information previously published by or on behalf of the Company or any other written or oral information made available to or publicly available or filed information or any representation, warranty or undertaking relating to the Company, and will not be liable for its decision to participate in the Placing based on any information, representation, warranty or statement contained in this Announcement or elsewhere, provided that nothing in this paragraph shall exclude any liability of any person for fraud;

29.          none of the Banks, the Company, any of their respective affiliates, agents, directors, officers or employees or any person acting on behalf of the Banks, the Company or their respective affiliates, agents, directors, officers or employees is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing nor providing advice in relation to the Placing nor in respect of any representations, warranties, acknowledgements, agreements, undertakings, or indemnities contained in the Placing Agreement nor the exercise or performance of each of the Banks' rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;

30.          it acknowledges and accepts that the Banks may, in accordance with applicable legal and regulatory provisions, engage in transactions in relation to the Placing Shares and/or related instruments for their own account for the purpose of hedging their underwriting exposure or otherwise and, except as required by applicable law or regulation, neither of the Banks will make any public disclosure in relation to such transactions;

31.          the Banks and each of their respective affiliates, each acting as an investor for its or their own account(s), may bid or subscribe for and/or purchase Placing Shares and, in that capacity, may retain, purchase, offer to sell or otherwise deal for its or their own account(s) in the Placing Shares, any other securities of the Company or other related investments in connection with the Placing or otherwise. Accordingly, references in this Announcement to the Placing Shares being offered, subscribed, acquired or otherwise dealt with should be read as including any offer to, or subscription, acquisition or dealing by the Banks and/or any of their respective affiliates, acting as an investor for its or their own account(s). Neither the Banks nor the Company intend to disclose the extent of any such investment or transaction otherwise than in accordance with any legal or regulatory obligation to do so;

32.          it has not offered or sold and will not offer or sell any Placing Shares to persons in the EEA prior to the expiry of a period of six months from Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purpose of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in any member state of the EEA within the meaning of the Prospectus Directive;

33.          it has complied with its obligations in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering Regulations 2007 (together, the "Regulations") and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;

34.          it is aware of the obligations regarding insider dealing Market Abuse Regulation EU No 596/2014 (MAR) and section 56 of the Criminal Justice Act 1993 and confirms that it has and will continue to comply with those obligations;

35.          in order to ensure compliance with the Money Laundering Regulations 2007, the Banks  (each for itself and as agent on behalf of the Company) or the Company's registrars may, in their absolute discretion, require verification of its identity. Pending the provision to the Banks or the Company's registrars, as applicable, of evidence of identity, definitive certificates in respect of the Placing Shares may be retained at the relevant Bank's absolute discretion or, where appropriate, delivery of the Placing Shares to it in uncertificated form may be delayed at the Banks or the Company's registrars', as the case may be, absolute discretion. If within a reasonable time after a request for verification of identity the Banks (each for itself and as agent on behalf of the Company) or the Company's registrars have not received evidence reasonably satisfactory to them, the Banks and/or the Company may terminate its commitment in respect of the Placing, in which event the monies payable on acceptance of allotment will, if already paid, be returned without interest to the account of the drawee's bank from which they were originally debited;

36.          it acknowledges that its commitment to acquire Placing Shares on the terms set out in this Announcement (including this Appendix I) will continue notwithstanding any reasonable amendment that may in future be made to the terms and conditions of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's or the Banks conduct of the Placing;

37.          it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing for the Placing Shares. It further acknowledges that it is experienced in investing in securities of this nature and is aware that it may be required to bear, and is able to bear, the economic risk of, and is able to sustain, a complete loss in connection with the Placing. It has relied upon its own examination and due diligence of the Company and its affiliates taken as a whole, and the terms of the Placing, including the merits and risks involved;

38.          the Company, the Banks and others (including each of their respective affiliates, agents, directors, officers or employees) will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgements and agreements, which are given to the Banks, each on their own behalf and on behalf of the Company and are irrevocable;

39.          if it is acquiring the Placing Shares as a fiduciary or agent for one or more investor accounts, it has full power and authority to make, and does make, the foregoing representations, warranties, acknowledgements, agreements and undertakings on behalf of each such accounts;

40.          time is of the essence as regards its obligations under this Appendix I;

41.          any document that is to be sent to it in connection with the Placing will be sent at its risk and may be sent to it at any address provided by it to the Banks;

42.          the Placing Shares will be issued subject to the terms and conditions of this Appendix I; and

43.          these terms and conditions in this Appendix I and all documents into which this Appendix I is incorporated by reference or otherwise validly forms a part and/or any agreements entered into pursuant to these terms and conditions and all agreements to acquire shares pursuant to the Placing will be governed by and construed in accordance with English law and it submits to the exclusive jurisdiction of the English courts in relation to any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by the Company or the Banks in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange.

The representations, warranties, acknowledgements and undertakings contained in this Appendix are given to each of the Company and the Banks (for their own benefit, and where relevant, the benefit of their respective affiliates) and are irrevocable. The Company and the Banks will rely upon the truth and accuracy of the foregoing acknowledgements, undertakings, representations and warranties.

Miscellaneous

The agreement to allot and issue Placing Shares to Placees (and/or to persons for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax relates only to their allotment and issue to Placees, or such persons as they nominate as their agents, direct from the Company for the Placing Shares in question. Such agreement also assumes that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer the Placing Shares into a clearance service. If there are any such arrangements, or the settlement relates to any other dealing in the Placing Shares, stamp duty or stamp duty reserve tax or other similar taxes may be payable, for which neither the Company nor any of the Banks will be responsible and the Placees shall indemnify the Company and the Banks on an after-tax basis for any stamp duty or stamp duty reserve tax paid by them in respect of any such arrangements or dealings. If this is the case, each Placee should seek its own advice and notify the Banks accordingly.

The Company and the Banks are not liable to bear any transfer taxes that arise on a sale of Placing Shares subsequent to their acquisition by Placees or for transfer taxes arising otherwise than under the laws of the United Kingdom. Each Placee should, therefore, take its own advice as to whether any such transfer tax liability arises and notify the Banks accordingly.

In addition, Placees should note that they will be liable for any stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the United Kingdom by them or any other person on the acquisition by them of any Placing Shares or the agreement by them to acquire any Placing Shares.

Other than as stated in the terms and conditions, each Placee and any person acting on behalf of the Placee acknowledges that the Banks do not owe any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings, acknowledgements, agreements or indemnities in the Placing Agreement.

Other than as stated in these terms and conditions, each Placee and any person acting on behalf of the Placee acknowledges and agrees that the Banks may (at their absolute discretion) satisfy their obligations to procure Placees by itself agreeing to become a Placee in respect of some or all of the Placing Shares or by nominating any connected or associated person to do so.

Unless the context otherwise requires, all references to time are to London time. All times and dates in this Announcement are subject to amendment by the Banks (in their absolute discretion). The Banks shall notify the Placees and any person acting on behalf of the Placees of any changes.

No statement in this Announcement is intended to be a profit forecast, and no statement in this Announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.

The price of shares and any income expected from them may go down as well as up and investors may not get back the full amount invested upon disposal of the shares. Past performance is no guide to future performance, and persons needing advice should consult an independent financial adviser.

The Placing Shares to be issued or sold pursuant to the Placing will not be admitted to trading on any stock exchange other than AIM, a market on the the London Stock Exchange.

The contents of the websites of the Company (including any materials which are hyper-linked to such websites) do not form part of this Announcement and prospective investors should not rely on them.

The rights and remedies of the Banks and the Company under these terms and conditions are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise of one will not prevent the exercise of others.

Where a Placee is acting as agent for and on behalf of its discretionary managed clients, then its participation and its acceptance of these terms and conditions are as agent and not as principal.

 

END

 

 

MSCAAMMTMBITBAR