Final Results and Notice of AGM

RNS Number : 5281X

EQTEC PLC

27 November 2017

 

27 November 2017

EQTEC plc

("EQTEC" or the "Company")

Final Results and Notice of AGM

EQTEC (AIM: EQT) the technology solution company for waste gasification to energy projects, today announces its audited final results for the year ended 30 June 2017. 

Summary of Acquisition as announced today

·    The Enlarged Group would combine Eqtec Iberia's patented gasification technology with a strong pipeline of projects and solid relations with some of the market leaders in the energy sector

·    The total consideration for the Acquisition is £14 million, based on the suspension price, which will be satisfied by the issue of 833,864,531 Ordinary Shares on Admission

·    The Company is proposing to raise £1.6 million (before expenses) through the issue of 246,153,847 Ordinary Shares ("Placing Shares") at 0.65 pence which will be used to fund additional working capital for the enlarged group as well as the immediate pipeline of projects

Prospective pipeline of projects

·    The Directors believe that the Acquisition represents a transformational step in refocusing the Group's strategy to the Energy from Waste ("EfW") market in the UK and Europe

·    Eqtec Gasifier Technology ("EGT") enables project developers to construct waste elimination plants converting the waste into electrical and thermal energy. The high energy efficiency also provides project developers with a competitive advantage allowing them to quote more competitive gate fees for the waste supply

·    The combined group will have five near term UK projects with a total of 66.4MWe:

o  Reliable Melton Hull and Reliable Seal Sands, in which EQTEC will supply its patented gasification technology as well as supervise the assembly and commissioning of the plant

o  Catfoss Newcastle and Renewables (Catfoss) Hull in which EQTEC will supply its patented gasification technology as well as supervise the assembly and commissioning of the plant

o  Zebec Energy located in the municipality of Usk, Wales in which EQTEC will provide a turnkey solution including, design, supplying gasification technology, and commissioning the plant

o  The existing project pipeline which includes Newry Biomass Limited will be converted where possible to use of Refuse Derived Fuel as the feedstock source in line with Eqtec Iberia's pipeline of UK based projects

Notice of AGM

EQTEC also announces that the Annual General Meeting of the Company will be held at the Cork International Hotel, Cork, on 20 December, 2017 at 11.30 a.m.

The Notice of the AGM is being posted to shareholders today and copies are available on the Company's website www.eqtecplc.com.

The Annual Report is available for viewing on the Company's website www.eqtecplc.com.

For further information:

EQTEC plc	[phone]
Gerry Madden / Brendan Halpin
Northland Capital Partners Limited - Nomad and Joint Broker	[phone]
Tom Price / Dugald J. Carlean
SVS Securities Plc - Joint Broker	[phone]
Tom Curran / Ben Tadd
VSA Capital Limited - Joint Broker	[phone]
Andrew Monk / Andrew Raca
Luther Pendragon - Financial PR	[phone]
Harry Chathli / Alexis Gore / Ana Ribeiro

About EQTEC plc:

The Enlarged Group's business model will involve sourcing and providing assistance in developing waste elimination projects to which it will ultimately sell its gasification technology EGT and O&M services. EGT enables project developers to construct waste elimination plants converting the waste into electrical and thermal energy. The high energy efficiency also provides project developers with a competitive advantage allowing them to quote more competitive gate fees for the waste supply.

EQTEC will source projects that have a local supply of waste in need of conversion. It will build relationships and bring together the developers, the waste owners, the building contractors and funders and provide the technology and engineering services to the projects. Furthermore, the Enlarged Group will provide O&M services to the operating projects generating recurring revenues over the life of the projects.

The Company is quoted on AIM and trades as EQT. Further information on the Company can be found at www.eqtecplc.com.

Chairman and Chief Executive's Report

The Company presents the 2017 Annual Report, which is issued in conjunction with an Admission Document which details the proposed acquisition (the "Acquisition") of Eqtec Iberia SL ("Eqtec Iberia"), a proposed placing of 246,153,847 new ordinary shares (the "Placing Shares") at 0.65p per share (the "Placing Price"), admission of the resulting Enlarged Share Capital to trading on AIM (the "Admission") and a Notice of Extraordinary General Meeting. The Admission Document will be posted to Shareholders at the same time as this Annual Report.

The Group was established with a view to take advantage of the growing opportunities in the clean energy sector and is now a diversified renewable energy company with assets in the UK and Ireland. The Group, to this point, focused on projects in the Biomass, Electricity and Heat sector in the UK. The Group also has assets in the wind sector in Ireland and has focused on the delivery of projects from green field opportunities, through the planning, grid and construction phases and into cash generating assets.

We believe that the Acquisition represents a transformational step in refocusing the Group's strategy to the EfW market in the UK and Europe. Pursuant to the Acquisition the Enlarged Group would combine Eqtec Iberia's patented gasification technology with a strong pipeline of projects and solid relations with some of the market leaders in the energy sector. Together with a combined experienced management, resulting from the Acquisition, and solid knowledge in the UK and Europe of the renewable energy marketplace, it will place the Enlarged Group in an advantageous position to become a leading technology provider in the EfW sector using its progressive energy recovery technology.

The current project portfolio of the Company will be assessed and dealt with in light of the revised strategy as set out in the Admission Document. The Company's existing project pipeline which includes Newry Biomass Limited will be converted where possible to use of Refuse Derived Fuel as the feedstock source in line with Eqtec Iberia's pipeline of UK based projects. The Company will not pursue the Enfield Biomass Limited project under this revised strategy. The Company will seek to exit its Biomass Heat only projects in the UK and its Wind Electricity Generation projects in Ireland as these are now seen as non-core. With this in mind the Company is at the final stages of completing the disposal of the Pluckanes single wind turbine in Ireland.

Strategy of the enlarged group

The Enlarged Group's business model will involve sourcing and providing assistance in developing waste elimination projects to which it will ultimately sell its technology and O&M services. It will source projects that have a local supply of waste in need of conversion. It will build relationships and bring together the developers, the waste owners, the building contractors and funders and provide the technology and engineering services to the projects. Furthermore, the Enlarged Group will provide O&M services to the operating projects generating recurring revenues over the life of the projects.

EGT enables project developers to construct waste elimination plants converting the waste into electrical and thermal energy. The high energy efficiency also provides project developers with a competitive advantage allowing them to quote more competitive gate fees for the waste supply.

The Enlarged Group intends to position itself as the key party providing:

·     assistance to the developer in appraising the site's suitability;

·     guidance in the selection of the fuel provider and in turn the specification to which this fuel will be subject to;

·     highly efficient energy recovery technology;

·     EPC contractor to construct the plant;

·     financial model for the project;

·     support in obtaining funding to finance the construction and commissioning; and

·     O&M services to operate and maintain the plant once commissioned.

It is further anticipated that the Enlarged Group will generate revenues by selling its technology and engineering and design services to the project company or SPV and also selling its O&M services for a five-year period after project commissioning.

Immediate pipeline of projects

A series of projects have been secured by way of an EPC contract and/or a MOU including:

·     Reliable Energy Melton Hull and Reliable Energy Seal Sands projects in which Eqtec Iberia will supply EGT, as well as supervise the assembly and commissioning of the plant. EPC Contracts were recently signed by Energy China on both of these plants which will generate an anticipated c. 32 MWe and are expected to have a total capital cost of c. €210 million

·     Catfoss Newcastle and Renewables (Catfoss) Hull projects, with an anticipated total installed capacity of c. 28 MWe, and the 6.4 MWe Zebec Energy project located in the municipality of Usk, Wales in which Eqtec Iberia will provide a turnkey solution including, design, supplying gasification technology, and commissioning the plant

Relationship with Energy China

The Enlarged Group will also benefit from the Collaboration Framework Agreement signed by Eqtec Iberia and the major shareholder of both EQTEC and Eqtec Iberia, EBIOSS, with Energy China in May 2016 to develop the pipeline of EfW projects in the UK, as set out above, other than the Zebec project in Usk. Energy China, a Global Fortune 500 company, is a Chinese state-owned enterprise with more than 140,000 employees, specialising in engineering and construction. The company developed the 22.5 GW Three Gorges Dam, the largest hydroelectric power plant in the world, which became operational in 2012.

Outlook

Combining EQTEC and Eqtec Iberia will create a leading company with proprietary advanced gasification technology which is used in industrial size power plants to convert waste into synthetic gas to generate electricity. The combined group has patented gasification technology, a strong pipeline of projects and a management team with extensive knowledge of energy markets, clean technologies and project delivery. As a result, the Directors look to the future with confidence.

 EQTEC plc (Formerly REACT Energy plc)

Consolidated statement of profit or loss

for the financial year ended 30 June 2017

	Notes	2017	2016
		€	€
Revenue		40,762	46,188
Cost of sales		-	-
Gross profit		40,762	46,188
Operating expenses
Administrative expenses		(1,007,363)	(597,022)
Impairment of property, plant and equipment		(180,640)	(307,759)
Impairment of amounts due under construction costs		(151,722)	-
Foreign currency gains/(losses)		42,096	(163,721)
Operating loss		(1,256,867)	(1,022,314)
Finance costs and income		(559,978)	(559,700)
Loss before taxation		(1,816,845)	(1,582,014)
Income tax		-	-
Loss for the year from continuing operations		(1,816,845)	(1,582,014)
Profit for the year from discontinued operations		24,575	41,970
		(1,792,270)	(1,540,044)
Loss attributable to:
Owners of the company		(1,590,914)	(1,041,035)
Non-controlling interest		(201,356)	(499,009)
		(1,792,270)	(1,540,044)

		2017	2016
		€ per share	€ per share
Basic loss per share:
From continuing operations	2	(0.014)	(0.016)
From continuing and discontinued operations	2	(0.013)	(0.015)
Diluted loss per share:
From continuing operations	2	(0.014)	(0.016)
From continuing and discontinued operations	2	(0.013)	(0.015)

EQTEC plc (Formerly REACT Energy plc)

Consolidated statement of other comprehensive income

for the financial year ended 30 June 2017

		2017	2016
		€	€
Loss for the financial year		(1,792,270)	(1,540,044)
Other comprehensive loss
Items that may be reclassified subsequently to profit or loss
Exchange differences arising on retranslation
of foreign operations		(389,829)	(603,466)
		(389,829)	(603,466)
Total comprehensive loss for the financial year		(2,182,099)	(2,143,510)
Attributable to:
Owners of the company		(1,815,266)	(1,327,723)
Non-controlling interests		(366,833)	(815,787)
		(2,182,099)	(2,143,510)

EQTEC plc (Formerly REACT Energy plc)

Consolidated statement of financial position

At 30 June 2017

	Notes	2017	2016
ASSETS		€	€
Non-current assets
Property, plant and equipment		9,464,911	9,524,726
Investments in associate and joint ventures		-	-
Financial assets		-	-
Total non-current assets		9,464,911	9,524,726
Current assets
Amounts due under construction contracts		-	150,847
Trade and other receivables		293,482	137,108
Cash and cash equivalents		286,769	193,741
		580,251	481,696
Assets included in disposal group classified as held for resale		1,344,503	1,426,519
Total current assets		1,924,754	1,908,215
Total assets		11,389,665	11,432,941
EQUITY AND LIABILITIES
Equity
Share capital		17,563,409	17,453,246
Share premium		28,678,913	21,863,190
Retained earnings/(deficit)		(41,954,438)	(40,139,172)
Equity/(capital deficiency) attributable to the owners of the company		4,287,884	(822,736)
Non-controlling interests		1,377,947	1,639,780
Total equity		5,665,831	817,044
Non-current liabilities
Borrowings		893,622	3,379,621
Total non-current liabilities		893,622	3,379,621
Current liabilities
Trade and other payables		1,143,755	5,366,550
Borrowings		2,606,203	694,880
		3,749,958	6,061,430
Liabilities included in disposal group classified as held for resale		1,080,254	1,174,846
Total current liabilities		4,830,212	7,236,276
Total equity and liabilities		11,389,665	11,432,941

EQTEC plc (Formerly REACT Energy plc)

Consolidated statement of cash flows

for the financial year ended 30 June 2017

	Notes	2017	2016
		€	€
Cash flows from operating activities
Loss for the financial year		(1,816,845)	(1,582,014)
Adjustments for:
Depreciation of property, plant and equipment		24	138
Impairment of property, plant and equipment		180,640	307,759
Impairment of amounts due from customers under construction contracts		151,722	(1,246)
Unrealised foreign exchange movements		20,706	(583,265)
Operating cash flows before working capital changes		(1,463,753)	(1,858,628)
Decrease/(Increase) in:
Amounts due from customers under construction contracts		(875)	-
Trade and other receivables		(158,014)	134,099
Increase in:
Trade and other payables		206,464	160,354
Cash used in operating activities - continuing operations		(1,416,178)	(1,564,175)
Finance costs		559,978	559,700
Net cash used in operating activities - continuing operations		(856,200)	(1,004,475)
Net cash generated from operating activities - discontinued operations		124,298	154,069
Cash used in operating activities		(731,902)	(850,406)
Cash flows from investing activities
Additions to property, plant and equipment		-	(311,490)
Net cash generated from/(used in) investing activities - continuing operations		-	(311,490)
Net cash generated from investing activities - discontinued operations		11	15
Net cash generated from/(used in) investing activities		11	(311,475)
Cash flows from financing activities
Proceeds from borrowings		293,000	2,101,631
Loan issue costs		(33,750)	(484,476)
Proceeds from issue of ordinary shares		1,142,690	-
Share issue costs		(259,351)	(128,081)
Interest paid		(206,081)	(156,286)
Net cash generated from financing activities - continuing operations		936,508	1,332,788
Net cash used in financing activities - discontinued operations		(125,864)	(58,599)
Net cash generated from financing activities		810,644	1,274,189
Net increase in cash and cash equivalents		78,753	112,308
Cash and cash equivalents at the beginning of the financial year		323,649	211,341
Cash and cash equivalents at the end of the financial year		402,402	323,649
Cash and cash equivalents included in disposal group		(116,899)	(130,454)
Cash and cash equivalents for continuing operations		285,503	193,195

EQTEC plc (Formerly REACT Energy plc)

Extract from the notes to the consolidated financial statements

for the financial year ended 30 June 2017

1.       Basis of Preparation and Going Concern

The Group's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union ('EU') and effective at 30 June 2017 for all periods presented as issued by the International Accounting Standards Board.

The consolidated financial statements are prepared under the historical cost convention except for certain financial assets and financial liabilities which are measured at fair value. The principal accounting policies set out below have been applied consistently by the parent company and by all of the Company's subsidiaries to all periods presented in these consolidated financial statements.

The financial statements of the parent company, EQTEC plc have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union ('EU') effective at 30 June 2017 for all periods presented as issued by the International Accounting Standards Board and Irish Statute comprising the Companies Act, 2014.

The Group incurred a loss of €1,792,270 (2016: €1,540,044) during the year, and had net current liabilities of €2,905,458 (2016: €5,328,061) and net assets of €5,665,831 (2016: €817,044) at 30 June 2017. 

Terms have been agreed for the proposed acquisition of the entire issued share capital of Eqtec Iberia. The total consideration for the Acquisition is £14 million, based on the suspension price, which will be satisfied by the issuance of 833,864,531 New Ordinary Shares on Admission. In addition, in order to fund the working capital needs of the Enlarged Group and the continued development of its near term pipeline the Company is undertaking a Placing to raise £1.6 million (before expenses) by the issue of the Placing Shares. Given the scale of the Acquisition, when compared to the existing Group, the transaction is a reverse takeover under the AIM Rules and therefore requires the Company to issue a new admission document and obtain Shareholder approval for the Acquisition. Under the Irish Takeover Rules (Rule 40) it is also a Reverse Takeover requiring that a circular be posted to EQTEC shareholders. Accordingly, the Acquisition is conditional, inter alia, on the approval by Shareholders of the Resolutions (as required by the AIM Rules) to be proposed at the Extraordinary General Meeting, which is being convened for 11.30 a.m. on Wednesday 20^th December 2017.

In conjunction with the Acquisition, the Company is proposing to raise approximately £1.6 million, before expenses, through the issue of the Placing Shares at the Placing Price. The Placing Shares will represent approximately 18 per cent of the Enlarged Share Capital on Admission. The Placing and the Acquisition are conditional upon, inter alia, the Resolutions being passed at the Extraordinary General Meeting and Admission of shares on AIM stock exchange.

The Directors have given careful consideration to the appropriateness of the going concern basis in the preparation of the financial statements. The validity of the going concern basis is dependent upon the approval by Shareholders of the Resolutions being passed at the Extraordinary General Meeting approving the acquisition of Eqtec Iberia and placing of new shares in order to fund the working capital needs of the Enlarged Group and the continued development of its near term pipeline  The Directors are highly confident that the shareholders will approve same and the Group will have adequate resources to continue in operational existence for the foreseeable future. For these reasons the Directors continue to adopt the going concern basis of accounting in preparing the financial statements. The financial statements do not include any adjustments that would result if the Group was unable to continue as a going concern.

EQTEC plc (Formerly REACT Energy plc)

Extract from the notes to the consolidated financial statements

for the financial year ended 30 June 2017

1.       Basis of Preparation and Going Concern - continued

The Group continues to invest capital in developing and expanding its portfolio of clean energy projects. The nature of the Group's development programme means that the timing of funds generated from developments is difficult to predict. Management have prepared financial forecasts to estimate the likely cash requirements of the Group over the next 12 months. The forecasts include certain assumptions with regard to the costs of ongoing development projects, overheads and the timing and amount of any funds generated from developments. The forecasts indicate that during this period the Group will have funds to continue with its activities and its planned development program.

Whilst the strategy is to build, own and operate plants, once a site has been secured and planning and permitting obtained the Group would be in a position, if it so chose, to monetise the value of the project.

2.	LOSS PER SHARE	2017	2016
	Basic loss per share	€ per share	€ per share
	From continuing operations	(0.014)	(0.016)
	From discontinued operations	0.001	0.001
	Total basic loss per share	(0.013)	(0.015)
	Diluted loss per share
	From continuing operations	(0.014)	(0.016)
	From discontinued operations	0.001	0.001
	From continuing and discontinued operations	(0.013)	(0.015)

The loss and weighted average number of ordinary shares used in the calculation of the basic and diluted loss per share are as follows:

		2017	2016
		€	€
	Loss for year attributable to equity holders of the parent	(1,590,914)	(1,041,035)
	Profit for the year from discontinued operations used in the calculation of basic earnings per share from discontinued operations	24,575	41,970
	Losses used in the calculation of basic loss per share from continuing operations	(1,615,489)	(1,083,005)
	Weighted average number of ordinary shares for
	the purposes of basic loss per share	118,378,906	69,684,580
	Weighted average number of ordinary shares for
	the purposes of diluted loss per share	118,378,906	69,684,580

Dilutive and anti-dilutive potential ordinary shares

The following potential ordinary shares were excluded in the diluted earnings per share calculation as they were anti-dilutive.

		2017	2016
	Share warrants in issue	39,088,960	35,245,833
	Convertible loans in issue	10,000,000	9,166,667
	Total anti-dilutive shares	49,088,960	44,412,500

EQTEC plc (Formerly REACT Energy plc)

Extract from the notes to the consolidated financial statements

for the financial year ended 30 June 2017

3.       EVENTS AFTER THE BALANCE SHEET DATE

Update on Newry Biomass Project


The Company announced on 6 July 2017 in relation to the Newry Biomass project that it continues to work towards exporting electricity to the grid by the revised deadline of 31 March 2018 ("deadline") agreed with Ofgem. EQTEC remains in regular dialogue with the local authority to confirm its application for a planning amendment following the decision made to repower the project using EBIOSS Energy SE's ("EBIOSS") gasification technology.

EQTEC continues to provide the local authority with information in relation to the planning amendment and the Company hopes to successfully conclude this process in the near term, so that it is able to can commence the necessary Civil, Electrical and Mechanical works in order to meet the deadline of 31 March 2018. However, should there be a continued delay in receiving the amended planning permission, it is likely that the Company will not be able to meet the 31 March 2018 deadline for the repowering of the project.  As a result, the Company has started to consider contingency plans for the project.

The contingency plans take into account the Company's revised business strategy to focus on taking advantage of the significant opportunities in the Energy from Waste sector using, among other things, Refuse Derived Fuel ("RDF"). The contingency plans being considered include the possibility of converting the plant from using wood biomass to RDF. The Company would, in this event, seek to monetise the value of equipment already on site through the sale of this equipment to other projects the Company is seeking to develop together with its major shareholder EBIOSS.

Extension of the Altair Loan Notes

On 17 July 2017, the Company also announced that it has reached agreement with Altair Group Investment Limited ("Altair") to extend the repayment of the £2.0 million, 7.5% Convertible Secured Loan Notes ("CSLNs") issued by the Company, from 14 July 2017 to the earlier of three business days following the completion of the Proposed Transaction ("Completion") or 31 October 2017 ("the Standstill Period").

During the period prior to the revised repayment date, the Company and Altair will seek to agree further changes to the terms of the CSLNs. In the event that Completion does not occur by 31 October 2017, all sums due under the CSLNs, including accrued interest, will be payable immediately, unless Altair and the Company have agreed new terms.

Convertible Loan 17 July 2017

On 17 July 2017, the Company also announced that it had entered into an agreement with an existing shareholder (the "Lender"), pursuant to which the Lender has agreed to make an interest free unsecured loan of £300,000 to EQTEC (the "Convertible Loan"). Such loan will convert into new Ordinary Shares on the earlier of the date of Completion and 31 October 2017 (the "Longstop Date"). 

Where the Convertible Loan converts on the date of Completion, the Conversion Shares shall be issued at a 10% discount to the price at which any such shares are issued to investors pursuant to the Placing (the "Placing Price"). Where the Convertible Loan converts on the Longstop Date, the Conversion Shares shall be issued at a 10% discount to the mid-market closing price of an Ordinary Share on the trading day immediately prior to the Longstop Date (the "Market Price").

EQTEC plc (Formerly REACT Energy plc)

Extract from the notes to the consolidated financial statements

for the financial year ended 30 June 2017

3.       EVENTS AFTER THE BALANCE SHEET DATE - continued

Convertible Loan 17 July 2017 - continued

On the date of conversion of the Convertible Loan the lender will also be granted warrants to subscribe for such number of new Ordinary Shares ("Warrants") as is equal to the number of Conversion Shares issued.  The Warrants will be exercisable for a period of two years from the date of grant at a price of either 150% of the Placing Price or 150% of the Market Price, depending on the applicable conversion event.

Convertible Loan 16 October 2017

On 16 October 2017, the Company announced that it has entered into agreements pursuant to which an existing lender (the "Existing Lender") and a new lender (the "New Lender") have agreed to make interest free unsecured loans of an aggregate amount of £225,000 to EQTEC (the "Convertible Loans"). Such loans will convert into new Ordinary Shares on the earlier of the date of Completion (as defined above) and 31 December 2017 (the Longstop Date"). The Company will also grant warrants over Ordinary Shares ("Warrants") to the lenders at the time of conversion of the Convertible Loans.

The Company and the Existing Lender, who is an existing shareholder of the Company, are parties to a loan agreement dated 17 July 2017 (the "Original Loan Agreement") pursuant to which the Existing Lender has lent the Company £300,000.  The Company and the Existing Lender have agreed to terminate the Original Loan Agreement and have entered into a new agreement pursuant to which the parties have agreed the original £300,000 is treated as having been advanced pursuant to the terms of that agreement and the Existing Lender has agreed to make an additional £200,000 loan to the Company on 19 October 2017. The Company has also entered into an agreement with the New Lender, who is not an existing Shareholder of the Company, pursuant to which the New Lender has agreed to make a £25,000 loan to the Company on 19 October 2017.

The Convertible Loans are unsecured and non-interest bearing. The Convertible Loans will convert into Conversion Shares on the earlier of the date of Completion and 31 December 2017 (the "Longstop Date"). The Convertible Loans will automatically convert into the Conversion Shares at 0.065 pence per share.

On the date of conversion of the Convertible Loans the lenders will also be granted Warrants for such number of new ordinary shares as is equal to the number of Conversion Shares issued. The Warrants will be exercisable for a period of two years from the date of grant. The exercise price of the Warrants will be 2.2 pence per share if the conversion event is Completion or 1.5 pence per share if the Convertible Loans convert on the Longstop Date.

Extension of the Altair Loan Notes

On 31 October 2017, Altair agreed with the Company the following:

(i)    to extend the Standstill Period until 31 December 2017 and, accordingly, it agrees to forbear from exercising its rights and remedies under the CSLNs until the expiry of the Standstill Period;

(ii)    to extend the date for payment of the CSLNs to the expiry of the Standstill Period; and

(iii)   that conditional on Admission becoming effective on or before the expiry of the Standstill Period, Altair agrees to further extend the date for payment of the CSLNs together with accrued interest thereon until 14 July 2020 ("Extension Date") subject to the following terms:

(A)   that the interest rate set out in the CSLNs shall be increased from 7.5% to the rate of 15% per annum for the period between (but excluding) 31 October 2017 and the Extension Date on the outstanding principal amount of the Notes;

(B)   that in the event that the Company repays the entire amount due under the CSLNs in full prior to the Extension Date the interest set above shall be reduced as follows:

1.          if the CSLNs are repaid in full between 1 November 2017 and 30 April 2018 the interest rate shall be 9% per annum; and

2.         if the CSLNs are repaid in full between 1 May 2018 and 31 October 2019 the interest rate shall be 12% per annum.

In consideration of Altair's agreement to the extension of the payment of the Notes, the Company agrees that, conditional on Admission:

(i)    the Company shall pay £300,000 to Altair within five business days following Admission in satisfaction of accrued interest on the Notes;

(ii)    the Company will amend the Instrument to provide that up to £1 million of outstanding principal amount of the Notes may be converted at the election of Altair into new ordinary shares in the Company ("Ordinary Shares") at a 10% discount to the price at which such shares are issued to investors pursuant to the fundraising undertaken in connection with Admission ("Placing Price");

 (iii)  the Company will grant Altair with warrants over Ordinary Shares at an exercise price of 150% of the Placing Price ("Exercise Price"), exercisable for five years from the date of grant. The number of Ordinary Shares subject to the warrant will be such number which, when multiplied by the Exercise Price, equals £1 million.

 

END

 

 

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