Conditional placing of unsecured CLNs

Belluscura PLC

02 July 2024

 

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE, TRANSMISSION, DISTRIBUTION OR FORWARDING, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE, TRANSMISSION, DISTRIBUTION OR FORWARDING WOULD BE UNLAWFUL (OR TO ANY PERSONS IN ANY OF THOSE JURISDICTIONS). PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO PURCHASE AND/OR SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN BELLUSCURA PLC OR ANY OTHER ENTITY IN ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT OF ITS DISTRIBUTION, SHALL FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH ANY INVESTMENT DECISION IN RESPECT OF BELLUSCURA PLC.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE UK VERSION OF THE MARKET ABUSE REGULATION (EU) NO.596/2014, WHICH FORMS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK MAR"). IN ADDITION, MARKET SOUNDINGS (AS DEFINED IN UK MAR) WERE TAKEN IN RESPECT OF CERTAIN OF THE MATTERS CONTAINED WITHIN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF INSIDE INFORMATION (AS DEFINED UNDER UK MAR). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, ANY PERSONS WHO RECEIVED INSIDE INFORMATION IN A MARKET SOUNDING ARE NO LONGER IN POSSESSION OF SUCH INSIDE INFORMATION, WHICH IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

2 July 2024

BELLUSCURA PLC

("Belluscura" or the "Company" or "Group")

Conditional placing of approximately £1.71 million

Belluscura 7% Unsecured Convertible Loan Notes 2029

Subscriptions for Ordinary Shares to raise approximately £0.21 million

Related Party Transactions

Belluscura plc (AIM: DIA), a leading medical device developer focused on lightweight and portable oxygen enrichment technology, announces that further to the announcements of 12 June 2024 and 24 June 2024, it has raised gross proceeds of approximately £1.92 million through (i) the conditional issue of approximately £1.71 million of 7% unsecured convertible loan notes 2029 (the "Placing Loan Notes") at par and (ii) the issue of 1,375,665 new ordinary shares of 1 penny each ("Ordinary Shares") at the price of 15 pence per share (the "Subscription Shares") to raise approximately £0.21 million. The placing of the Placing Loan Notes (the "Loan Note Placing") and the subscriptions for the Subscription Shares (the "Subscriptions") are together defined as the "Fundraising". The Subscriptions are not conditional upon completion of the Loan Note Placing.

Adam Reynolds, Chairman of Belluscura, commented: "The Group has made good progress in recent months, gaining further traction in the North American markets and delivering record sales for X-PLOR in June 2024.

"The proposed fundraise will provide Belluscura with the funding to capitalise on the strong anticipated demand for X-PLOR and the considerable interest in DISCOV-R."

The Loan Note Placing is conditional on, inter alia, shareholder approval of the resolutions (the "Resolutions") to be proposed at a General Meeting of the Company to be held at 11.00 a.m. on 8 July 2024. A circular setting out initial details of the Loan Note Placing, together with notice of the General Meeting, was posted to Shareholders on 14 June 2024 and is available on the Company's website at https://ir.belluscura.com/. A supplementary circular setting out full details of the Loan Note Placing will be posted to Shareholders and made available on the Company's website at https://ir.belluscura.com/ later today.

The Subscriptions utilise the Directors' existing authorities given by Shareholders to issue Ordinary Shares for cash on a non-pre-emptive basis. The price of 15 pence per share represents a discount of approximately 3.23 per cent. to the mid-market closing price of an Ordinary Share on 1 July 2024 (being the last business day prior to this announcement).

Dowgate Capital Limited ("Dowgate") is acting as sole placing agent, bookrunner and broker in connection with the Fundraising and SPARK Advisory Partners Limited ("SPARK") is acting as the Company's nominated adviser. The Fundraising is not being underwritten (in whole or in part) by Dowgate, SPARK or any other person.

Unless otherwise stated, capitalised terms not otherwise defined in the text of this announcement have the meaning ascribe to them in Circular posted to Shareholders on 14 June 2024 and which is available on the Company's website at https://ir.belluscura.com/.

This announcement should be read in its entirety.

For further information please contact:

Belluscura plc	Tel: [phone]
Adam Reynolds, Chairman Robert Rauker, Chief Executive Officer
SPARK Advisory Partners Limited Nominated Adviser	Tel: [phone]
Neil Baldwin / Jade Bayat
Dowgate Capital Limited Broker	Tel: [phone]
Russell Cook / Nicholas Chambers
MHP Financial PR & Investor Relations	Tel: [phone] email: [e-mail]
Katie Hunt/Matthew Taylor

About Belluscura plc (https://belluscura.com/)

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

1.   Background to and reasons for the Fundraising

With the global demand for medical oxygen continues to grow with an estimated 300 - 400 million people suffering from Chronic Obstructive Pulmonary Disease, the Company has invested considerable resource on developing its next-generation DISCOV-R portable oxygen generator, improving and expanding its manufacturing capabilities in the US and China and building, expanding and improving its sales force capabilities in the US and China.

Legacy supply chain and manufacturing issues from COVID, mostly lack of availability of components and longer than normal-lead times to order others, impacted sales of the X-PLOR portable oxygen concentrator product but these have now been resolved enabling the Company to focus on sales growth.

Following the successful DISCOV-R portable oxygen concentrator prototype launch nine months ago, the Company has since received more than 6,500 preliminary orders for the product laying the foundation for the recent initial product launch with the full commercial launch in October 2024. The Company anticipates strong growth in sales from both the X-PLOR and DISCOV-R portable oxygen concentrator devices.

Consequently, and further to the announcement of 12 June 2024, the Company has raised gross proceeds of approximately £1.92 million through (i) the conditional issue of approximately £1.71 million Placing Loan Notes and (ii) £0.21 million through the Subscriptions with the proceeds being used to provide further working capital to support the growth in sales of the X-PLOR and DISCOV-R portable oxygen concentrator devices.

The Loan Note Placing is conditional upon passing of the Resolutions to be considered at a General Meeting to be held at 11.00 a.m. on 8 July 2024 at 15 Fetter Lane, London EC4A 1BW, notice of which was posted to Shareholders on 14 June 2024 and which is available on the Company's website at https://ir.belluscura.com/.

2.   Current trading and outlook

The Company announced its audited results for the year ended 31 December 2023 on 27 June 2024 and these are available on the Company's website at https://ir.belluscura.com/.

The Board anticipates that both the X-PLOR and DISCOV-R portable oxygen concentrator devices will contribute to significant revenue growth this year and beyond.

US sales of X-PLOR have approximately doubled month-on-month in each of the last four months through to May 2024. Sales were $450,000 in May 2024 and are expected to be not less than $520,000 in June 2024.

Feedback received in March 2024 from distributors at the largest home healthcare trade show in the US, Medtrade, was very positive. Sales in the first half of 2024 have trended significantly higher than in 2023 with the ramp up continuing to grow following the recent initial launch of the DISCOV-R portable oxygen concentrator. Over 6,500 preliminary orders have been received for the product.

The Board is pleased with recent progress and is optimistic that this momentum will continue, particularly as testing and validation of the DISCOV-R portable oxygen concentrator continues with demand increasing. On this basis the Board looks forward to a positive outturn for 2024. However, the Board emphasises that the Company's forecast cash resources are predicated on the continued momentum in sales of the X-PLOR portable oxygen concentrator and progress made in regard to the DISCOV-R portable oxygen concentrator, though the Board cannot be certain that these projected monthly growth rates and milestones may be achieved and delivered within the anticipated timeframes.

3.   Use of proceeds

The net proceeds of the Fundraising, together with the net proceeds of the subscription announced on 24 June 2024, will be used for working capital purposes to support the growth in both the X-PLOR and DISCOV-R portable oxygen concentrator devices sales as set out above.

4.   Expected timetable of principal events

Announcement of Fundraising	2 July 2024
Posting of the supplementary circular	2 July 2024
Admission of Subscription Shares	5 July 2024
Latest time and date for receipt of Forms of Proxy for the General Meeting	11.00 a.m. on 6 July 2024
General Meeting	11.00 a.m. on 8 July 2024
Announcement of the result of the General Meeting	by 4:30 p.m. on 8 July 2024
Issue of Placing Loan Notes	9 July 2024
Expected date of dispatch of certificates for the Placing Loan Notes	by 19 July 2024

5.   Details of the Loan Note Placing

Dowgate has placed (conditional, inter alia, on the passing of the Resolutions) an aggregate of £1,705,635 of the Placing Loan Notes with a group of investors, including certain existing Belluscura shareholders.

Terms of the Placing Loan Notes

Instrument:                   7% Convertible Unsecured Loan Notes 2029 constituted pursuant to a loan note instrument dated 2 July 2024 (the "Instrument"). The Placing Loan Notes will be transferable in accordance with the terms of the Instrument but will not be listed on a public market.

Issue price:                   Placing Loan Notes of £1.00 issued at par.

Conversion:                  Convertible into ordinary shares of the Company at a conversion price of 19 pence per share, save that any conversion within the first 28 days following the issue date of the Placing Loan Notes will be at a conversion price of 16 pence per share.

The Placing Loan Notes can be converted at the holder's election at any time provided that doing so would not trigger an obligation under Rule 9 of the Takeover Code.

Only the principal amount of the Placing Loan Notes is convertible into ordinary shares of the Company, not any interest on the Placing Loan Notes.

All outstanding Placing Loan Notes shall be automatically converted into ordinary shares of the Company on 9 July 2029 (the "Maturity Date") in accordance with the terms of the Instrument.

Redemption:                 The Company may elect to redeem the Placing Loan Notes in whole or in part at any time by paying a redemption premium equal to 15% of the principal amount of the Placing Loan Notes to be redeemed. Noteholders will have the opportunity to convert their Placing Loan Notes into ordinary shares of the Company prior to any such redemption. 

Term:                           From the date of issuance up to the Maturity Date.

Placing Loan Notes are not redeemable in cash at the election of the Noteholders, other than in exceptional circumstances such as an 'event of default' (as defined in the Instrument).

All outstanding Placing Loan Notes shall be automatically converted into ordinary shares of the Company on the Maturity Date.

Coupon:                       7% per annum, paid bi-annually on 30 June and 31 December. The coupon will be paid in cash with the first payment date being 31 December 2024.

Royalty:                       The holders of Placing Loan Notes will benefit from a pro rata distribution to be paid, in cash, annually equivalent to 0.5% of the total annual revenues of the Company for a total of three years during the term of the Placing Loan Notes and an equivalent to 0.25% of the total annual revenues of the Company for a total of two years during the term. The level of distribution will be calculated by reference to the audited annual revenues in respect of the relevant period in accordance with the following schedule:

Year ending 31 December	Proportion of annual revenues	Estimated payment date of royalty
20241	0.50%	31 July 2025
2025	0.50%	31 July 2026
2026	0.50%	2 August 2027
2027	0.25%	31 July 2028
2028	0.25%	31 July 2029
20292	0.50%	31 July 2030

Notes:

(1)       Payment for 2024 will be for the period from the issue date of the Placing Loan Notes to 31 December 2024

(2)       Payment for 2029 will be for the period from 1 January 2029 to the Maturity Date

Minimum size holding:   £10,000

Loan Note Placing Agreement

Pursuant to the loan note placing agreement between the Company, SPARK and Dowgate dated 2 July 2024 (the "Loan Note Placing Agreement"), Dowgate has conditionally agreed to use its reasonable endeavours to place £1,705,635 of the Placing Loan Notes.

The Loan Note Placing is conditional, inter alia, upon:

a)   the Resolutions being validly passed at the General Meeting already convened to be held at 11.00 a.m. on 8 July 2024;

b)   the Loan Note Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms; and

c)   the Placing Loan Notes being issued on 9 July 2024 or such later time and/or date as the Company and Dowgate Capital may agree (but in any event by no later than 31 July 2024).

If such conditions are not satisfied or, if applicable, waived, by the date(s) and time(s) referred to above, the Loan Note Placing will not proceed.

The Loan Note Placing, will result in the issue upon conversion of the Placing Loan Notes of up to 8,977,026 new Ordinary Shares, representing approximately 5.06 per cent. of the enlarged issued share capital of the Company.

The Placing Loan Notes will not be admitted to trading on AIM or any other exchange. Any new Ordinary Shares issued pursuant to any conversion of the Placing Loan Notes will, once issued, rank pari passu with the Ordinary Shares in issue at that time and application for admission to trading on AIM in respect of such Ordinary Shares will be made at the appropriate time.

6.   Details of the Subscriptions

Certain new and existing investors have agreed to subscribe for an aggregate 1,375,665 Subscription Shares at the price of 15 pence per share. Utilising the Directors' existing authorities given by Shareholders to issue Ordinary Shares for cash on a non-pre-emptive basis, the Company has raised gross proceeds of £206,349.75 through subscriptions by such new and existing investors.

7.   Directors' participation in the Loan Note Placing

Certain Directors of the Company, have agreed that they will participate in the Loan Note Placing as set out below:-

Name	Holding of Existing Ordinary Shares	Current holding as percentage of Existing Ordinary Shares	Placing Loan Notes Subscribed	Number of Shares issued on Conversion of Placing Loan Notes (in event of conversion)
David Poutney	14,255,7311	8.63%	£393,000	2,068,421
Robert Rauker	1,035,684	0.62%	£40,000	210,526
Simon Neicheril	-	-	£20,000	105,263

(1)       Includes 2,658,314 Ordinary Shares held by Vivienne Poutney, David Poutney's spouse

8.   Related Party Transactions

Participation in the Loan Note Placing

Directors

The participation in the Loan Note Placing by David Poutney, Robert Rauker and Simon Neicheril constitute 'related party transactions' under the AIM Rules for Companies.

Nigel Wray

Nigel Wray, a Substantial Shareholder (as defined in the AIM Rules for Companies), has agreed that he will participate in the Loan Note Placing as set out below:-

Name	Holding of Existing Ordinary Shares	Current holding as percentage of Existing Ordinary Shares	Placing Loan Notes Subscribed	Number of Shares issued on Conversion of Placing Loan Notes (in event of conversion)
Nigel Wray	17,821,079	10.79%	£100,000	526,315

The participation in the Loan Note Placing by Nigel Wray constitutes a 'related party transaction' under the AIM Rules for Companies.

As each of David Poutney, Robert Rauker and Simon Neicheril are not considered independent for the purposes of AIM Rule 13, all the other Directors (being Adam Reynolds, Dr. Patrick Strollo, Robert Fary, Ric Piper, Paul Tuson and Jonathan Satchell) (the "Independent Directors") have considered the terms of each 'related party transaction' set out above for the purposes of AIM Rule 13.

Having consulted with SPARK, the Company's nominated adviser, the Independent Directors consider that the terms of each of David Poutney's, Robert Rauker's, Simon Neicheril's and Nigel Wray's participation in the Loan Note Placing are fair and reasonable insofar as Shareholders are concerned.

Loan Note Placing Agreement with Dowgate

David Poutney, a Non-Executive Director of the Company, is Chairman of, and a major shareholder in, Dowgate Group Limited ("Dowgate Group") and Chief Executive of Dowgate, a wholly owned subsidiary of Dowgate Group.

As set out above, Dowgate is party to the Loan Note Placing Agreement under which Dowgate will receive:

-     a fee of £40,000; and

-     a commission amounting to 5% of funds raised pursuant to the Loan Note Placing (excluding subscriptions by Directors).

Entering into the Loan Note Placing Agreement constitutes a 'related party transaction' under the AIM Rules for Companies.

As David Poutney is not considered independent for the purposes of AIM Rule 13, all the other Directors (being Adam Reynolds, Dr. Patrick Strollo, Robert Fary, Ric Piper, Paul Tuson and Jonathan Satchell, Robert Rauker and Simon Neicheril) have considered the terms of 'related party transaction' with Dowgate for the purposes of AIM Rule 13.

Having consulted with SPARK, the Company's nominated adviser, the Directors (excluding David Poutney) consider that the terms of the Loan Note Placing Agreement are fair and reasonable insofar as Shareholders are concerned.

9.   Application for Admission

Application has been made for the 1,375,665 Subscription Shares to be admitted to trading on AIM ("Admission") and it is expected that Admission will become effective and that dealings will commence at 8.00 a.m. on or around 5 July 2024. Once issued, the Subscription Shares will rank pari passu with the Company's existing Ordinary Shares.

10.  Total Voting Rights

Following Admission, the enlarged issued share capital of the Company will comprise 168,408,232 Ordinary Shares. The Company does not hold any Ordinary Shares in treasury. Consequently, 168,408,232 is the figure which may be used by Shareholders as the denominator for the calculation by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

11.  General Meeting

The General Meeting of the Company, notice of which was posted to Shareholders on 14 June 2024 and which is available on the Company's website at https://ir.belluscura.com/, is to be held at 11.00 a.m. on 8 July 2024 at 15 Fetter Lane, London EC4A 1BW, at which the Resolutions will be proposed.

12.  Resolutions

A summary and brief explanation of the two Resolutions to be proposed at the General Meeting is set out below. Please note that this is not the full text of the Resolutions and Shareholders should read this section in conjunction with the Resolutions contained in the Notice of General Meeting in the Circular which was posted to Shareholders and made available on the Company's website at https://ir.belluscura.com/. The following two Resolutions will be proposed at the General Meeting:-

Resolution 1, which will be proposed as an ordinary resolution, is to authorise the Directors to grant the rights to convert all or any of the aggregate principal amount of the Loan Notes into Ordinary Shares, up to a maximum aggregate nominal amount of £300,000.00.

Resolution 2, which will be proposed as a special resolution, and which is subject to the passing of Resolution 1, is to empower the Directors to grant the rights to convert all or any of the aggregate principal amount of the Loan Notes into ordinary shares of the Company, up to a maximum aggregate nominal amount of £300,000.00 as if the statutory pre-emption rights of Existing Shareholders under section 561(1) of the Act did not apply.

The share allotment authorities contained in Resolutions 1 and 2 will expire at the conclusion of the next annual general meeting of the Company and are in addition to those share allotment authorities granted to Directors at the 2023 Annual General Meeting.

13.  Action to be taken by Shareholders

Whether or not Shareholders intend to be present at the General Meeting, they are asked to submit a proxy vote online via the Link Investor Centre app or at https://investorcentre.linkgroup.co.uk/Login/Login. Alternatively, Shareholders may request a hard copy Form of Proxy from Link Group. Shareholders should complete the Form of Proxy and return it to the Company's registrars, Link Group, PXS1, Central Square, 29 Wellington Street, Leeds LS1 4DL so as to be received not less than 48 hours (excluding any part of a day that is not a business day) before the time and date fixed for the holding of the meeting or any adjournment thereof (as the case may be). For the avoidance of doubt, the last possible date for the submission of Forms of Proxy will be 11.00 a.m. on 6 July 2024 (or in the case of an adjournment of the General Meeting, not later than 48 hours before the time fixed for the holding of the adjourned meeting (excluding any part of a day that is not a business day)).

Shareholders who hold their Ordinary Shares in uncertificated form in CREST may vote using the CREST Proxy Voting Service in accordance with the procedures set out in the CREST Manual. Further details are also set out in the notes accompanying the Notice of General Meeting which was posted to Shareholders on 14 June 2024 and made available on the Company's website at https://ir.belluscura.com/. Proxies submitted via CREST must be received by the Company's agent (ID RA10) by no later than 11.00 a.m. on 6 July 2024 (or if the General Meeting is adjourned, 48 hours (excluding any part of a day that is not a business day) before the time fixed for the adjourned meeting).

Shareholders who are institutional investors may also be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io and refer to the notes to the Notice of General Meeting.

The completion and return of a Form of Proxy will not preclude Shareholders from attending the General Meeting and voting in person should they so wish.

14.  Board Recommendation

The Directors consider that the Fundraising to be in the best interests of the Company and its Shareholders as a whole. Consequently, the Directors unanimously recommend that Shareholders vote in favour of the Resolutions, as they intend to do in respect of their beneficial holdings amounting to, in aggregate, 18,833,491 Ordinary Shares representing approximately 11.28 per cent. of the existing Ordinary Shares.

IMPORTANT NOTICES

THIS ANNOUNCEMENT  AND THE TERMS AND CONDITIONS SET OUT HEREIN (TOGETHER, THIS "ANNOUNCEMENT") IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR FORM ANY PART OF AN OFFER TO SELL OR ISSUE, OR A SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY SECURITIES IN THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA (COLLECTIVELY, THE "UNITED STATES")), AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR WHICH WOULD RESULT IN A REQUIREMENT TO COMPLY WITH ANY GOVERNMENTAL OR OTHER CONSENT, REGISTRATION, FILING OR OTHER FORMALITY WHICH THE COMPANY REGARDS AS UNDULY ONEROUS (THE "RESTRICTED JURISDICTIONS") OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NO PUBLIC OFFERING OF THE PLACING LOAN NOTES OR PLACING SHARES IS BEING MADE IN ANY SUCH JURISDICTION. ANY FAILURE TO COMPLY WITH THESE RESTRICTIONS MAY CONSTITUTE A VIOLATION OF THE SECURITIES LAWS OF SUCH JURISDICTIONS.

This Announcement is not for publication or distribution or release, directly or indirectly, in whole or in part, in or into Restricted Jurisdiction. The distribution of this Announcement may be restricted by law in certain jurisdictions and persons into whose possession this document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. No action has been taken that would permit an offering of the Placing Loan Notes or Subscription Shares or possession or distribution of this Announcement in any jurisdiction where action for that purpose is required.

The Placing Loan Notes or Subscription Shares have not been and will not be registered under the US Securities Act of 1933, as amended (the "US Securities Act"), or under the securities laws of any state or other jurisdiction of the United States, and may not be offered, sold, pledged, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, into or within the United States, absent registration under or an exemption from, or transaction not subject to, the registration requirements of, the Securities Act and the securities laws of any relevant state or other jurisdiction of the United States. No public offering of securities is being made in the United States or in any other jurisdiction.

Subject to certain exceptions, the Placing Loan Notes or Subscription Shares may not be offered or sold in the Restricted Jurisdictions or to, or for the account or benefit of, any national, resident or citizen of the Restricted Jurisdictions. No public offering of the Placing Loan Notes or Subscription Shares is being made in the United States, the United Kingdom or elsewhere.

The distribution of this Announcement and the Fundraising in certain jurisdictions may be restricted by law. No action has been taken by the Company, Dowgate, SPARK or any of their respective affiliates, directors, officers, partners, employees, advisers or agents (collectively, "Representatives") that would, or is intended to, permit an offer of the Placing Loan Notes or Subscription Shares or possession or distribution of this Announcement or any other offering or publicity material relating to such Placing Loan Notes or Subscription Shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company, Dowgate and SPARK to inform themselves about and to observe any restrictions contained in this Announcement. Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Announcement should seek appropriate advice before taking any action. Persons distributing any part of this Announcement must satisfy themselves that it is lawful to do so.

No offering document, admission document or prospectus has been or will be submitted to be approved by the FCA or submitted to the London Stock Exchange in relation to the Fundraising and no such prospectus is required (in accordance with the UK Prospectus Regulation) to be published in the United Kingdom or any equivalent document in any other jurisdiction.

Certain statements in this Announcement are forward-looking statements with respect to the Company's expectations, intentions and projections regarding its future performance, strategic initiatives, anticipated events or trends and other matters that are not historical facts and which are, by their nature, inherently predictive, speculative and involve risks and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. All statements that address expectations or projections about the future, including statements about operating performance, strategic initiatives, objectives, market position, industry trends, general economic conditions, expected expenditures, expected cost savings and financial results are forward-looking statements. Any statements contained in this Announcement that are not statements of historical fact are, or may be deemed to be, forward-looking statements. These forward-looking statements, which may use words such as "aim", "anticipate", "believe", "could", "intend", "estimate", "expect", "may", "plan", "project" or words or terms of similar meaning or the negative thereof, are not guarantees of future performance and are subject to known and unknown risks and uncertainties. There are a number of factors including, but not limited to, commercial, operational, economic and financial factors, that could cause actual results, financial condition, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond the Company's ability to control or estimate precisely, such as changes in taxation or fiscal policy, future market conditions, currency fluctuations, the behaviour of other market participants, the actions of governments or governmental regulators, or other risk factors, such as changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions, including inflation, recession and consumer confidence, on a global, regional or national basis. Given those risks and uncertainties, readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of this Announcement. Each of the Company, Dowgate and SPARK expressly disclaims any obligation or undertaking to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise unless required to do so by applicable law or regulation.

Each of Dowgate and SPARK are authorised and regulated in the United Kingdom by the Financial Conduct Authority ("FCA"). Each of Dowgate and SPARK is acting exclusively for the Company and for no one else in connection with the Fundraising and will not regard any other person (whether or not a recipient of this Announcement) as a client in relation to the Fundraising or any other matter referred to in this Announcement and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for giving advice in relation to the Fundraising or any other matter referred to in this Announcement.

This Announcement is being issued by and is the sole responsibility of the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by or on behalf of Dowgate or SPARK (apart from the responsibilities or liabilities that may be imposed by the Financial Services and Markets Act 2000, as amended ("FSMA") or the regulatory regime established thereunder) or by their respective affiliates or any of their respective Representatives as to, or in relation to, the accuracy, adequacy, fairness or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers or any other statement made or purported to be made by or on behalf of Dowgate or SPARK or any of their respective affiliates or any of their respective Representatives in connection with the Company, the Placing Loan Notes or Subscription Shares or the Fundraising and any responsibility and liability whether arising in tort, contract or otherwise therefor is expressly disclaimed. No representation or warranty, express or implied, is made by Dowgate or SPARK or any of their respective affiliates or any of their respective Representatives as to the accuracy, fairness, verification, completeness or sufficiency of the information or opinions contained in this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefor is expressly disclaimed. The information in this Announcement is subject to change.

The information in this Announcement may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever. Any forwarding, distribution, reproduction or disclosure of this Announcement, in whole or in part, is unauthorised. Failure to comply with this directive may result in a violation of the US Securities Act or the applicable laws of other jurisdictions.

This Announcement does not constitute a recommendation concerning any investor's options with respect to the Fundraising. Recipients of this Announcement should conduct their own investigation, evaluation and analysis of the business, data and other information described in this Announcement. This Announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in the Placing Loan Notes or Subscription Shares. The price and value of securities can go down as well as up and investors may not get back the full amount invested upon the disposal of shares (including any shares issued as a result of any conversion from the Placing Loan Notes). Past performance is not a guide to future performance. The contents of this Announcement are not to be construed as legal, business, financial or tax advice. Each investor or prospective investor should consult with his or her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, business, financial or tax advice.

Any indication in this Announcement of the price at which the Company's securities have been bought or sold in the past cannot be relied upon as a guide to future performance. Persons needing advice should consult an independent financial adviser. No statement in this Announcement is intended to be a profit forecast or profit estimate for any period and no statement in this Announcement should be interpreted to mean that earnings, earnings per share or income, cash flow from operations or free cash flow for the Company for the current or future financial periods would necessarily match or exceed the historical published earnings, earnings per share or income, cash flow from operations or free cash flow for the Company.

Members of the public are not eligible to take part in the Fundraising and no public offering of Placing Loan Notes or Subscription Shares is being or will be made.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this Announcement.

This Announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside the United Kingdom.

Each of Dowgate and SPARK and their respective affiliates may have engaged in transactions with, and provided various commercial banking, investment banking, financial advisory transactions and services in the ordinary course of their business with the Company and/or its affiliates for which they would have received customary fees and commissions. Each of Dowgate and SPARK and their respective affiliates may provide such services to the Company and/or its affiliates in the future.

Product Governance

Solely for the purposes of the product governance requirements of Chapter 3 of the Handbook Product Intervention and Product Governance Sourcebook issued by the FCA or any successor provisions which may replace such rules and guidance from time to time (the "UK Product Governance Requirements"), as a manufacturer of financial instruments Dowgate has taken steps to maintain, operate and review a process for the approval of the financial instruments being marketed as part of the Fundraising on the terms and conditions contained in this announcement (the "Financial Instruments"). This approval process has been used to determine an appropriate target market for the Financial Instruments (the "Target Market Assessment"). The purpose of the Target Market Assessment is to ensure that the distribution of the Financial Instruments is made to investors for whom such a product is likely to be appropriate.

Following the Target Market Assessment, Dowgate has concluded that the Financial Instruments are broadly compatible with the investment needs and financial understanding of 'professional clients' and 'eligible counterparties', each as defined in the UK Product Governance Requirements. Dowgate has further concluded that the Financial Instruments are eligible for all distribution channels permitted under the UK Product Governance Requirements.

Notwithstanding the Target Market Assessment, distributors of the Financial Instruments should be aware that the Financial Instruments are more likely to meet the investment needs of clients: (i) with basic capital markets knowledge or experience of owning shares including shares in companies traded on the AIM market of the London Stock Exchange; (ii) who have the ability to bear up to 100% capital loss; (iii) who are willing to hold an untradable security for the opportunity to receive higher returns and who have a medium to high risk tolerance; and (iv) who seek capital growth in liquid instruments which are relatively illiquid and suitable for any investment time horizon.

The Financial Instruments do not offer: (i) capital protection or the full repayment of the amount invested; or (ii) a fully guaranteed income or a fully predictable return profile. Dowgate considers that the Financial Instruments are inappropriate for clients who are fully risk averse or who have no risk tolerance.

For the avoidance of doubt, the Target Market Assessment does not constitute a recommendation to any investor or group of investors to invest in, purchase, or take any other action whatsoever with respect to, the Financial Instruments or otherwise act as an assessment of suitability or appropriateness for the purposes of the UK Product Governance Requirements, and Dowgate disclaims all and any liability whether arising in tort, contract or otherwise in respect of the assessment of the Financial Instruments, any information made available, or the Fundraising.

Furthermore, the Target Market Assessment shall be without prejudice to any selling restrictions applicable to the Financial Instruments as identified within the terms of and conditions to such Financial Instruments.

In addition, notwithstanding the Target Market Assessment, Dowgate will only solicit investors who may be classified under the FCA's rules as professional clients and eligible counterparties.

Each distributor is responsible for undertaking its own target market assessment in respect of the Financial Instruments and determining appropriate distribution channels.

 

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