REG - Brandshield Systems - Proposed Cancellation and Notice of GM
20/09/2023 07:30
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RNS Number : 0466N Brandshield Systems PLC 20 September 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK
VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH
LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL) ACT 2018, AS AMENDED. ON
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.
BrandShield Systems Plc
("BrandShield" or the "Company")
Subscription to raise c.£2.68 million ($3.32 million)
Open Offer to raise up to £2.20 million
Approval of Waiver of Obligations under Rule 9 of the Takeover Code
Cancellation of admission of Ordinary Shares to trading on AIM
and
Notice of General Meeting
BrandShield Systems plc (AIM: BRSD), a leading provider of cybersecurity
solutions for brand oriented digital risk protection ("DRP"), announces that
it will shortly be posting a circular to shareholders (the "Circular"), an
extract of which is set out below:
1. Introduction
The Company announced today its proposals (the "Proposals") to:
· Raise $3.32 million (£2.68 million) in a
Subscription of 47,137,662 new Ordinary Shares and up to £2.20 million in an
Open Offer of up to 38,669,962 new Ordinary Shares, each at 5.68 pence per
Ordinary Share (in each case before expenses);
· Seek a waiver under Rule 9 of the Takeover Code;
· Issue New Options to Directors/Senior management,
and re-price certain of the Existing Options; and
· Cancel the admission of its Ordinary Shares to
trading on AIM.
This letter sets out the background to and reasons for, and provides further
details of, the Proposals.
Implementation of the Proposals, is conditional, inter alia, upon all of the
Resolutions being passed at the GM to be held at 11.00 a.m. on 13 October
2023. The Notice of General Meeting convening the General Meeting at which the
Resolutions will be proposed is set out at the end of this document.
Shareholders should note that unless all the Resolutions are approved at the
General Meeting, the Subscription and Open Offer will not complete, and the
issue of the New Options, the re-pricing of certain of the Existing Options,
and the De-Listing will not occur as currently proposed.
2. Subscription
The Company today announced a conditional Subscription to raise approximately
£2.68 million ($3.32 million) (before expenses) by the issue of the
Subscription Shares at the Subscription Price to the Subscribers.
The Subscription Shares will rank pari passu with the Existing Ordinary
Shares. Following their issue, the Subscription Shares will represent
approximately 18.40% of the Enlarged Ordinary Share Capital assuming the Open
Offer is fully subscribed (21.68% of the Enlarged Ordinary Share Capital if
there is no take up in the Open Offer).
In addition, Subscribers will receive 1 Subscription Warrant for every
Subscription Share subscribed. The Subscription Warrants will have an exercise
price of 8.52 pence per share and shall be exercisable at any time up until 4
years after Admission (16 October 2027).
Further details of the Subscription Agreements are set out in paragraph 5.1 of
Part III of this document.
The Subscribers are as follows:
Name of Subscriber Amount subscribed Number of Subscription Shares Number of Subscription Warrants
Joseph Haykov (1) £1,774,193 31,235,801 31,235,801
($2,200,000)
William Currie Investments Limited ("WCIL") £403,226 7,099,045 7,099,045
($500,000)
Sir Terence Leahy £403,226 7,099,045 7,099,045
($500,000)
Gigi Levi Weiss £96,774 1,703,771 1,703,771
($120,000)
Total £2,677,419 47,137,662 47,137,662
($3,320,000)
( )
(1) Joseph Haykov is participating in the Subscription via his investment
vehicle, Cloak, LLC.
The Subscription is conditional on, amongst other things: (a) the Subscription
Agreements having become unconditional and not having been terminated in
accordance with their terms, (b) all of the Resolutions being passed at the
General Meeting and (c) Admission having become effective by no later than
8.00 a.m. on 16 October 2023 or such later time as the Company and the
respective Subscribers may agree.
The Subscription by Joseph Haykov (via Cloak, LLC) was brokered by Mr
Subramanian Subbiah under a broking agreement, as set out in paragraph 5.2 of
Part III of this document. Mr Subbiah will receive, conditional on Admission,
Broker Warrants as follows:
- 3,123,580 Broker Warrants to subscribe for Ordinary Shares at an
exercise price of 5.68 pence and an exercise period ending 4 years following
Admission (16 October 2027).
- Up to a further 4,685,370 Broker Warrants to subscribe for Ordinary
Shares at an exercise price of 8.52 pence and an exercise period ending 4
years following the date on which Cloak, LLC's Subscription Warrants are
exercised ; the actual number issued will be determined in proportion to the
number of Subscription Warrants exercised by Joseph Haykov (through Cloak,
LLC) of the aggregate number of Subscription Warrants issued to him.
3. Details of the Open Offer
Qualifying Shareholders are being offered the opportunity to apply for Open
Offer Shares on the basis of:
1 Open Offer Share for every 2 Existing Ordinary Shares held at the Issue
Price of 5.68 pence per share
In addition, successful applicants under the Open Offer will be issued with
Open Offer Warrants, being warrants to subscribe for new Ordinary Shares. The
Open Offer Warrants are exercisable within 4 years of issuance (on a monthly
basis) at a price of 8.52 pence per Ordinary Share. The Open Offer Warrants
will be issued on the basis of 1 Warrant for every 1 Open Offer Share
successfully subscribed.
Whilst not members of the Concert Party, William Currie Investments Limited
("WCIL") and Sir Terence Leahy, by virtue of their participation in the
Subscription, would have been deemed not to be independent for the purposes of
the Waiver Resolution. However, as all Shareholders who did not participate
in the Subscription are able to participate on identical terms, and to at
least the same extent (as a % of their holding of Existing Ordinary Shares) as
WCIL and Sir Terence Leahy via the Open Offer, WCIL and Sir Terence Leahy will
be able to vote on the Waiver Resolution.
The Open Offer is conditional on all Resolutions being passed at the General
Meeting, and Admission. It is expected that Admission will occur and dealings
in the Open Offer Shares will commence on 16 October 2023. If such condition
is not fulfilled on or before 8.00 a.m. on 16 October 2023 (or such later date
as the Company may reasonably decide) application monies are expected to be
returned without interest and any Open Offer Entitlements admitted to CREST
will be disabled.
Assuming full take-up under the Open Offer, the issue of the Open Offer Shares
will raise gross proceeds of approximately £2.20 million for the Company. The
Open Offer Shares will, upon issue, rank pari passu all respects with the
Company's existing Ordinary Shares including the right to receive all
dividends and other distributions declared, made or paid after their date of
issue.
Holdings of Existing Ordinary Shares in certificated and uncertificated form
will be treated as separate holdings for the purpose of calculating
entitlements under the Open Offer, as will holdings under different
designations and in different accounts.
Qualifying Shareholders should be aware that the Open Offer is not a rights
issue. Accordingly, Qualifying Non-CREST Shareholders should note that their
Application Forms are not negotiable documents and cannot be traded.
Qualifying Non-CREST Shareholders should note that applications in respect of
Open Offer Entitlements may only be made by the Qualifying Non-CREST
Shareholder originally entitled, or by a person entitled by virtue of a bona
fide market claim in accordance with paragraph 3.1(b) of Part IV of this
document.
Application will be made for the Open Offer Entitlements in respect of
Qualifying CREST Shareholders to be admitted to CREST. It is expected that
such Open Offer Entitlements will be admitted to CREST at 8.00 a.m. on 21
September 2023. Applications through the means of the CREST system may only be
made by the Qualifying CREST Shareholder originally entitled or by a person
entitled by virtue of a bona fide market claim.
Qualifying Non-CREST Shareholders will receive an Application Form with this
circular which sets out their entitlement to Open Offer Shares as shown by the
number of Open Offer Entitlements allocated to them. Qualifying Non-CREST
Shareholders should note that the Application Form is not a negotiable
document and cannot be traded.
For Qualifying Non-CREST Shareholders, completed Application Forms,
accompanied by full payment, should be returned by post or by hand (during
normal business hours only) to Link Group, Corporate Actions, Central
Square, 29 Wellington Street, Leeds LS1 4DL so as to arrive as soon as
possible and in any event so as to be received no later than 11.00 a.m. on 5
October 2023. For Qualifying CREST Shareholders the relevant CREST
instructions must have been settled as explained in this circular by no later
than 11.00 a.m. on 5 October 2023.
If applications are made for less than all of the Open Offer Shares available,
then the lower number of Open Offer Shares will be issued, and any outstanding
Open Offer Entitlements will lapse.
Further information on the Open Offer and the terms and conditions on which it
is made, including the procedure for application and payment, are set out in
Part IV of this circular.
Members of the Concert Party and Subscribers - who in aggregate hold 92,991,950 Existing Ordinary Shares amounting to 54.59% of the Existing Ordinary Share Capital - have undertaken not to subscribe for shares in the Open Offer. As such there are 38,669,962 shares the subject of the Open Offer, which equates to 1 Open Offer Share for every 2 Existing Ordinary Shares (i.e 50% of each of these Shareholders' holdings) being made available to them in the Open Offer
Warrants to subscribe for Ordinary Shares
The Open Offer Warrants will be issued to successful applicants under the
terms of the Open Offer on the basis of 1 Warrant for every 1 Open Offer Share
subscribed. The maximum number of Open Offer Warrants that may be issued under
the Open Offer (and corresponding Ordinary Shares to be allotted pursuant to
the exercise of the Warrants) is 38,669,962.
The Open Offer Warrants will be exercisable at the subscription price of 8.52
pence per Ordinary Share on a monthly basis from time to time until the Lapse
Date and if not exercised prior to that date shall lapse. The minimum number
of Warrants that may be exercised at any one time is 1,000 Warrants (if the
holder holds less than 1,000 Warrants then the entire lesser amount).
No exercise of the Open Offer Warrants shall be permitted where such exercise
would result in any person or persons acquiring or increasing control of the
Company within the meaning given in sections 181 and 182 of the FSMA, without
the relevant regulatory approval of such acquisition or increase of control
having first been obtained and not having expired prior to such exercise.
The Open Offer Warrants will be exercisable immediately from the date of issue
but will not be listed or admitted to trading. Definitive certificates in
respect of the Warrants are expected to be dispatched within 10 days of
Admission.
Upon exercise of the Open Offer Warrants, the resulting new Ordinary Shares
will be credited as fully paid and will rank pari passu in all respects with
the Company's existing Ordinary Shares including the right to receive all
dividends and other distributions declared, made or paid after their date of
issue.
4. Reasons for the Subscription, Open Offer, De-Listing and Use of funds
The funds secured in the Subscription and Open Offer will enable the Company
to continue accelerating its growth in securing new clients and increasing its
Annualised Recurring Revenue. In tandem, efforts will continue to reduce
operational cash burn and therefore increase gross profit margins further and
at a higher level of revenues. These additional funds will be used to expand
both the sales team footprint and permit additional marketing spend to
reinforce the positive results we are seeing from such activity. The Company
announced improvements in gross margin in its recent interim results,
highlighting the increase to 68% in the 6 month period to June 2023, up from
58% in 2022 and 55% in 2021. Against that context, and in a sector in which
the Company believes is ripe for securing market share, the Board believes
aggressive targeting of growth of the top line should continue to be the
over-riding strategy. The Directors believe that reducing relative costs
remains important in order to secure a cash flow positive outcome in 2024. The
Company continually scans the competitive landscape in the digital risk
protection market, and is convinced of the opportunities that exist to both
penetrate the increasing market size and to concurrently penetrate the
existing market through targeting clients from competitors. The Directors
believe that the De-Listing will assist in improving margins further and allow
the executive to focus on operational excellence without the additional legal
and regulatory burdens imposed through our current listed status.
5. Issue of New Options and Re-pricing of Existing Options for Directors
and employees
5.1 New Options - Yoav Keren/Yuval Zantkeren
It is proposed that New Options will be awarded to Yoav Keren and Yuval
Zantkeren as set out in the table below:
Name of Option holder Number of New Options Exercise Prices
Yoav Keren up to 12,961,260† 5.68p
up to 11,885,500† 8.52p
326,850 10.5p
Total 40,120 14p
259,750 15p
798,650 20p
89,910 25p
up to 26,362,040
Yuval Zantkeren up to 12,961,260 † 5.68p
up to 11,885,500 † 8.52p
326,850 10.5p
Total 40,120 14p
259,750 15p
798,650 20p
89,910 25p
up to 26,362,040
†The number of New Options to be granted as set out in the table above has
been calculated assuming that the Open Offer is subscribed in full, and that
the Open Offer Warrants are also fully subscribed. In the event that there is
no take up in the Open Offer, 5,081,730 and 5,081,730 of the 5.68p and 8.52p
New Options respectively would not be issued to the Founders. The actual
number of New Options to be issued as result of the Open Offer, to maintain
the Founders' fully diluted shareholdings to under 10% of the Fully Diluted
Share Capital, will be proportionate to the take up in the Open Offer.
The aim of granting the New Options is to provide a meaningful incentive to
the Founders to create value in the BrandShield business. The quantum of New
Options to be granted is such that the Founders will (upon the exercise of all
options held by them) each own under 10% of the Fully Diluted Share Capital,
in the event that that all existing and proposed warrants and options in the
Company are fully exercised.
The exercise prices for the New Options range from 5.68 pence to 25 pence. The
reason for the spread of prices is to ensure that the grant of the New Options
adheres to Israeli Tax Law requirement that the holding will be under 10% at
any level of exercise of options and warrants as if all holders of options and
warrants up to that level have exercised.
In order to comply with Section 102 of the Israeli Income Tax Ordinance the
Founders will need to ensure that each of their respective shareholdings
(together with outstanding options held by them) is under 10% of the Fully
Diluted Share Capital of the Company at any time. This may involve, as
required, the forfeiture by them of Existing Options or New Options. Further
details of Section 102 are set out in paragraph 6 of Part III of this
document.
The exercise period shall be 10 years from Admission (being 16 October 2033).
The grant of the New Options is conditional upon the Resolutions being
approved by Shareholders at the General Meeting and Admission taking place.
Since BrandShield listed on AIM via a Reverse Takeover transaction in December
2020 the key executives and founders have delivered strong and consistent
growth in terms of Annualised Recurring Revenue ("ARR") and customer numbers,
including securing contracts with some of the world's leading companies in a
range of sectors. ARR has increased from approximately $2.87m at the time of
admission to trading on AIM in December 2020 to approximately $9.71m as at the
end of June 2023, representing compound annualised growth in ARR of c60.3%.
Despite this growth the share price has performed poorly on the AIM market and
successive fundraises have been conducted at prices considerably lower than
the original price at which BrandShield joined the market in December 2020 of
20p per share. This has led to sustained dilution of the Founders' equity
position in particular and it is the Board's view that it is essential to
incentivise both the Founders and key revenue generating executives in an
appropriate but fair manner that aligns their interests with those of wider
Shareholders.
As such, the Independent Directors believe that the introduction of the New
Options achieves that alignment and provides a mechanism for those individuals
to maintain a significant position in the Company, should they choose to
exercise their options at various prices. Around 50% of the New Options are
set at the Subscription Price, with the balance set at exercise prices between
50% (8.52p) and 340% (25p) above the Subscription Price.
5.2 Grant of New Employee Options - Ravit Freedman and other employees
It is proposed that New Employee Options over up to 19,680,800 Ordinary Shares
are awarded to employees, including a Director, Ravit Freedman, (200,000
options), conditional upon Admission.
14,970,800 of these options will have an exercise price of 5.68 pence per
share, and 4,710,000 of these options will have an exercise price of 8.52
pence per share, and an exercise period of 10 years.
The number of New Employee Options to be granted has been calculated assuming
that the Open Offer is subscribed in full, and that the Open Offer Warrants
are fully subscribed. In the event that there is no take up in the Open Offer,
2,034,700 and 2,034,740 of the 5.68p and 8.52p New Employee Options
respectively would not be issued.
5.3 Amendment to terms of Existing Options for Directors and employees
It is proposed that a total of 9,304,909 Existing Options held by employees,
and 649,000 Existing Options held by Ravit Freedman, and 3,127,196 Existing
Options held by each of Yoav Keren and Yuval Zantkeren, will be re-priced.
Employee options have been used by the Board as a means of incentivising
employees, by giving them a stake in the business. Options are typically
awarded following a probationary period. However, many of these options have
been issued historically at exercise prices significantly higher than the
current share price, and at present are not serving the purpose for which they
were intended.
In order to comply with the Israeli Tax Authorities ruling (Ruling no. 911),
if a re-pricing of "out of the money" options is performed, ALL existing
options must be re-priced to the same price, and therefore all the above
Existing Options (being those which are "out of the money") will be repriced
to the Issue Price of 5.68 pence, subject to Admission.
It is proposed that all of the above options (which will amount to 7.68 per
cent of the Enlarged Ordinary Share Capital (following Admission) will,
subject to Admission, be repriced to 5.68 pence per share.
Further details of the Existing Options held by employees and Directors, which
are to be re-priced, are set out in paragraph 2 of Part III of this document.
In addition, 925,236 Existing Options, including 263,037 held by each of Yoav
Keren and Yuval Zantkeren, and 399,162 held by other employees have expiry
dates of 31 December 2023. It is proposed that the expiry dates are extended
to 31 December 2028.
5.4 Amendments to exercise periods of Existing Warrants
It is proposed that all Existing Warrants whose expiry date is before 1
December 2026 (details of which are set out in paragraph 3 of Part III of this
document) have their exercise periods extended to 1 December 2026.
Of the warrants (with an exercise price of 20 pence and an exercise period
ending 4 February 2025) issued in the February 2022, 1,785,714 are held by
WCIL. The extension of the exercise period of these warrants is a related
party transaction (see paragraph 6 below).
As part of Mr Subbiah's Broking Arrangement, New Enterprise Limited will
receive the above warrant extension. Given this extension, it was felt
appropriate by the Board to extend all other warrants with an exercise period
ending prior to 1 December 2026 out to the same point.
6. Related Party Transactions
There are four related party transactions under Rule 13 of the AIM Rules,
these are:
(i) Subscription by William Currie Investment Limited ("WCIL")
As WCIL holds 21,846,087 Existing Ordinary Shares, representing 12.83% of the
current issued share capital, it is a related party of the Company pursuant to
the AIM Rules. Consequently, the participation of WCIL in the Subscription
(including the issue of the Subscription Warrants) constitutes a related party
transaction for the purposes of AIM Rule 13. The Directors (all of whom are
independent of WCIL) consider, having consulted with SPARK, the Company's
nominated adviser, that the terms of WCIL's participation in the Subscription
are fair and reasonable in so far as Shareholders are concerned.
(ii) Issue of the New Options to Yoav Keren, Yuval Zantkeren and Ravit
Freedman
Yoav Keren, Yuval Zantkeren and Ravit Freedman are Directors and, as such,
each is a related party pursuant to the AIM Rules. Consequently, the issue of
the New Options and New Employee Options to them constitute related party
transactions for the purposes of AIM Rule 13. The Directors (excluding Yoav
Keren, Yuval Zantkeren and Ravit Freedman) consider, having consulted with
SPARK, the Company's nominated adviser, that the terms of the grant of New
Options and New Employee Options are fair and reasonable in so far as
Shareholders are concerned.
(iii) Amendment to the exercise price and/or exercise period of Existing
Options to Directors
Yoav Keren, Yuval Zantkeren and Ravit Freedman are Directors and, as such,
each is a related party pursuant to the AIM Rules. Consequently, the amendment
to the exercise price of 3,127,196, 3,127,196 and 649,000 Existing Options
held by them respectively (and in the case of Yoav Keren and Yuval Zantkeren,
the extension of the exercise period of 263,037 Options each) constitute
related party transactions for the purposes of AIM Rule 13. The Directors
(excluding Yoav Keren, Yuval Zantkeren and Ravit Freedman) consider, having
consulted with SPARK, the Company's nominated adviser, that the terms of the
amendments to the Existing Options to Directors are fair and reasonable in so
far as Shareholders are concerned.
(iv) Extension to the exercise period of warrants held by WCIL
As stated in (i) above, WCIL is a related party of the Company pursuant to the
AIM Rules. Consequently, the extension of the exercise period of 1,785,714
warrants held by WCIL constitutes a related party transaction for the purposes
of AIM Rule 13. The Directors (all of whom are independent of WCIL) consider,
having consulted with SPARK, the Company's nominated adviser, that the terms
of the extension of the expiry date of the warrants are fair and reasonable in
so far as Shareholders are concerned.
7. Implications of the Proposals under the Code
The Takeover Code (the "Code") applies to BrandShield. Under Rule 9 of the
Code, any person who acquires an interest in shares which, taken together with
shares in which that person or any person acting in concert with that person
is interested, carry 30% or more of the voting rights of a company which is
subject to the Code is normally required to make an offer to all the remaining
shareholders to acquire their shares.
Similarly, when any person, together with persons acting in concert with that
person, is interested in shares which in the aggregate carry not less than 30%
of the voting rights of such a company but does not hold shares carrying more
than 50% of the voting rights of the company, an offer will normally be
required if such person or any person acting in concert with that person
acquires a further interest in shares which increases the percentage of shares
carrying voting rights in which that person is interested.
7.1 The Concert Party
The issue of the Subscription Shares, the New Options, the Subscription
Warrants and the Broker Warrants to members of the Concert Party gives rise to
certain considerations under the City Code. Rule 9 of the City Code is
designed to prevent the acquisition of control of a company to which the City
Code applies without a general cash offer being made to all shareholders of
that company.
Joseph Haykov and Gigi Weiss are members of a Concert Party which was deemed
to exist at the time of the reverse takeover of BrandShield Limited into Two
Shields Investments plc on 1 December 2020.
Under Rule 9 of the City Code ("Rule 9"), when:
i. any person acquires, whether by a series of transactions over a period of
time or not, an interest in shares which (together with shares in which
persons acting in concert with him are interested) carry 30% or more of the
voting rights of a company; or
ii. a person, together with persons acting in concert with him, is interested
in shares which in aggregate carry not less than 30% but does not hold shares
carrying more than 50% of the voting rights of a company and such person, or
persons acting in concert with him, acquires an interest in other shares which
increases the percentage of shares carrying voting rights in which he is
interested;
then, in either case, an offer under Rule 9 must be made in cash at the
highest price paid by the person required to make the offer, or any person
acting in concert with such person, for any interest in shares of the company
during the 12 months prior to the announcement of the offer.
Accordingly, the participation by Joseph Haykov (via Cloak, LLC) and Gigi Levi
Weiss in the Subscription would normally give rise to an obligation on the
Concert Party to make a general offer to all Shareholders.
Additionally, the exercise of (i) the Subscription Warrants by Joseph Haykov
(via Cloak, LLC) and/or Gigi Weiss, and/or (ii) New Options by Yoav Keren
and/or Yuval Zantkeren and/or (iii) Broker Warrants by Subramanian Subbiah,
whilst the Concert Party's holding of voting rights is less than 50%, would
also normally give rise to an obligation on the Concert Party to make a
general offer to all Shareholders. The Company has agreed with the Panel that
the persons set out in the Tables below are acting in concert in relation to
the Company.
Following Admission, the members of the Concert Party will be interested in
89,347,341 Ordinary Shares, representing between 34.88% (assuming full take up
in the Open Offer) and 41.08% (assuming no take up in the Open Offer) of the
voting rights of the Company. Assuming exercise in full by the members of the
Concert Party of the Existing Options, Existing Warrants, New Options,
Subscription Warrants and Broker Warrants (and assuming that no other person
exercises any options or any other right to subscribe for shares in the
Company), the members of the Concert Party would be interested in between
180,867,647 Ordinary Shares (assuming no take up in the Open Offer, and
representing 58.54% of the voting rights of the Company in the Fully Diluted
Share Capital and 201,194,567 Ordinary Shares, representing approximately
54.67% of the voting rights of the Company in the Fully Diluted Share Capital
assuming full take up in the Open Offer).
Tables showing the respective individual interests in shares of the members of
the Concert Party at Admission and following the exercise of the Existing
Options, Existing Warrants, New Options, Subscription Warrants and Broker
Warrants held by them is set out below - with Table 1 showing a situation
where the Open Offer is fully subscribed by non-Concert Party members and
Table 2 showing a situation where there is no take up in the Open Offer by
non-Concert Party members.
Concert Party Member Number of Existing Ordinary Shares % of current issued Ordinary Share Capital Subscription Shares Ordinary Shares held post Admission % of Ordinary Share Capital post Admission Existing Options and Existing Warrants Maximum number of Shares arising from exercise of Existing Options, Existing Maximum Number of Ordinary Shares held by Concert Party Member Maximum % of Ordinary Share Capital held by Concert Party Member ₃₄
Warrants, New Options, Subscription Warrants, and Broker Warrants₁
Yoav Keren 11,888,670 6.98% 11,888,670 4.64% 7,885,800 26,362,040₂ 46,136,510 12.54%
Yuval Zantkeren 11,888,670 6.98% - 11,888,670 4.64% 7,885,800 26,362,040₂ 46,136,510 12.54%
Gigi Levi Weiss 5,413,626 3.18% 1,703,771 7,117,397 2.78% - 1,703,771 8,821,168 2.40%
New Enterprise Ltd 11,558,235 6.79% - 11,558,235 4.51% 2,603,024 - 14,161,259 3.85%
Leelavthi Subbiah 3,275,329 1.92% - 3,275,329 1.28% - - 3,275,329 0.89%
Harel Kodesh 1,381,761 0.81% - 1,381,761 0.54% - - 1,381,761 0.38%
Afterdox and Afterdox Partners 10,003,127 5.87% - 10,003,127 3.91% - - 10,003,127 2.72%
Joseph Haykov 998,351 0.59% 31,235,801 32,234,152 12.58% - 31,235,801 63,469,953 17.25%
Subramanian Subbiah - 0.00% - - 0.00% - 7,808,950 7,808,950 2.12%
Total 56,407,769 33.12% 32,939,572 89,347,341 34.88% 18,374,624 93,472,602 201,194,567 54.67%
Table 1 : showing Concert Party holding assuming the Open Offer is fully
subscribed by non-Concert Party members
Notes:
₁ Up to 10,163,460 of the New Options to each of Yoav Keren and Yuval
Zantkeren will be issued dependent on, and proportionate to, the take up in
the Open Offer to each maintain a fully diluted shareholding of under 10%. (In
the event that there is no take up of the Open Offer none of the 10,163,460
will be issued - as set out in Table 2 below; in the case of a full take up
all 10,163,460 New Options will be issued).
₂ the above table assumes the Open Offer is fully subscribed. Up to
10,163,460 of the New Options awarded to Yoav Keren and Yuval Zantkeren will
be issued dependent on the level of take up in the Open Offer).
₃ In order to comply with Section 102 of the Israeli Tax Ordinance the
Founders will need to ensure each of their shareholdings is under 10% of the
Fully Diluted Share Capital at any point in time. They have indicated a
current intention to forfeit Options, if required, to ensure this threshold is
not exceeded.
₄assuming no options or warrants held by persons other than members of the
Concert Party are exercised.
Table 2 : showing Concert Party holding assuming NO take up in the Open Offer
by non-Concert Party members
Concert Party Member Number of Existing Ordinary Shares % of current issued Ordinary Share Capital Subscription Shares Ordinary Shares held post Admission % of Ordinary Share Capital post Admission₁ Existing Options and Existing Warrants Maximum number of Shares arising from exercise of Existing Options, Existing Maximum Number of Ordinary Shares held by Concert Party Member Maximum % of Ordinary Share Capital held by Concert Party Member ²³
Warrants, New Options, Subscription Warrants, and Broker Warrants₁
Yoav Keren 11,888,670 6.98% 11,888,670 5.47% 7,885,800 16,198,580₂ 35,793,050 11.64%
Yuval Zantkeren 11,888,670 6.98% - 11,888,670 5.47% 7,885,800 16,198,580₂ 35,793,050 11.64%
Gigi Levi Weiss 5,413,626 3.18% 1,703,771 7,117,397 3.27% - 1,703,771 8,821,168 2.85%
New Enterprise Ltd 11,558,235 6.79% - 11,558,235 5.31% 2,603,024 - 14,161,259 4.58%
Leelavthi Subbiah 3,275,329 1.92% - 3,275,329 1.51% - - 3,275,329 1.06%
Harel Kodesh 1,381,761 0.81% - 1,381,761 0.64% - - 1,381,761 0.45%
Afterdox and Afterdox Partners 10,003,127 5.87% - 10,003,127 4.60% - - 10,003,127 3.24%
Joseph Haykov 998,351 0.59% 31,235,801 32,234,152 14.82% - 31,235,801 63,469,953 20.54%
Subramanian Subbiah - 0.00% - - 0.00% - 7,808,950 7,808,950 2.53%
Total 56,407,769 33.12% 32,939,572 89,347,341 41.08% 18,374,624 73,145,682 180,867,647 58.54%
₁ the above table assumes that there is no take up in the Open Offer.
₂ In order to comply with Section 102 of the Israeli Tax Ordinance the
Founders will need to ensure each of their shareholdings is under 10% of the
fully diluted share capital at any point in time. They have indicated a
current intention to forfeit Options, if required, to ensure this threshold is
not exceeded.
₃assuming no options or warrants held by persons other than members of the
Concert Party are exercised.
7.2 Waiver of Rule 9 of the City Code
Following Admission, the members of the Concert Party will be interested in
shares carrying more than 30% of the voting rights of the Company, but will
not hold shares carrying more than 50% of the voting rights of the Company.
For so long as they continue to be acting in concert, any acquisition that
increases their aggregate interest in shares will be subject to the provisions
of Rule 9.
The exercise by the members of the Concert Party of the warrants and options
described above would normally trigger an obligation for an offer to be made
under Rule 9. However, the Panel has agreed to waive this obligation such that
there will be no requirement for an offer to be made in respect of the
exercise of such warrants and options.
If the members of the Concert Party were to exercise their Existing Options,
Existing Warrants, New Options, Subscription Warrants and Broker Warrants in
full (and assuming that no other person exercises any options or any other
right to subscribe for shares in the Company), the members of the Concert
Party would hold shares carrying more than 50% of the voting rights of the
Company and (for so long as they continue to be acting in concert) could
accordingly increase their aggregate interests in shares without incurring any
obligation to make an offer under Rule 9, although individual members of the
Concert Party will not be able to increase their percentage interests in
shares through or between a Rule 9 threshold without Panel consent.
The Panel has agreed to waive the obligation to make an offer that would
otherwise arise under Rule 9 as a result of the Proposals, subject to the
approval of Independent Shareholders. Accordingly, Resolution 1 is being
proposed at a general meeting of the Company and will be taken on a poll.
None of the members of the Concert Party are able to vote on the Rule 9 Waiver
but may exercise their voting rights in respect of Resolutions 2, 3 and 4.
In the event that the Proposals are approved, the Concert Party will not be
restricted from making an offer for the Ordinary Shares in the Company.
Your attention is drawn to Parts II and III of this document which set out
certain further information and financial information that is required to be
disclosed in this document pursuant to the rules contained in the Takeover
Code.
Under Rule 25.2 of the Takeover Code, only the Independent Directors are able
to make a recommendation to the Independent Shareholders with respect to the
proposed Waiver Resolution. The Independent Directors believe that the
Proposals are in the best interests of the Company and hereby recommend that
Independent Shareholders vote in favour of the Waiver Resolution. SPARK
Advisory Partners Limited, as the Company's independent financial adviser, has
provided formal advice to the Independent Directors that it considers the
terms of the Proposals to be fair and reasonable and in the best interests of
Shareholders and the Company as a whole. In providing this advice, SPARK
Advisory Partners Limited has taken into account the Independent Directors'
commercial assessments.
7.3 Intentions of the Concert Party
At present the Company is a leading provider of cybersecurity solutions for
brand oriented digital risk protection. The Concert Party confirms its
intention will be to support BrandShield's strategy as described in "Future
Strategy of the Company" set out in paragraph 8 below.
Immediately following the De-Listing, there will be no market facility for
dealing in the Ordinary Shares, and no price will be publicly quoted for the
Ordinary Shares. The Company intends to review the options available for
allowing dealing in the Company's shares, for example by provision of a
matched bargain facility or periodic share auctions, however there is no
guarantee that one will be put in place. Any update will be made via the
Company's website address (www.brandshield.com).
Other than the De-Listing, the Concert Party has confirmed that no changes
will be made regarding:
i. the future business of the Company, including its research
and development functions;
ii. the continued employment of the employees and management of
the Company and of its subsidiaries, including any material change in the
conditions of employment or in the balance of the skills and functions of the
employees and management;
iii. its strategic plans for the Company, which will therefore have
limited repercussions on employment and on the locations of its places of
business, including on the location of its headquarters and headquarters
functions;
iv. employer contributions into the Company's pension schemes
(including with regard to current arrangements for the funding of any scheme
deficit), the accrual of benefits for existing members, and the admission of
new members; and
v. the redeployment of the fixed assets of the Company.
7.4 Views of the Independent Directors
The Independent Directors support the Concert Party's stated intentions for
the business and its employees. The Independent Directors firmly believe that
the Proposals are in the interests of both the Company and its Shareholders.
Although the Board is acutely aware that some Shareholders will be concerned
about a de-listing from AIM and the consequent reduction in immediate
liquidity it sees no prospect in the near to medium term for the Company to
achieve a valuation that reflects its actual performance and future potential,
demonstrated through sustained growth of ARR and continued penetration of a
fast-growing market. BrandShield has been recognised independently as one of
the leading players in the Digital Risk Protection sector (Frost and Sullivan
Report 2022) and the Independent Directors believe that all its Shareholders
will be far more likely to achieve a positive outcome as a de-listed company
where it is likely to command higher valuations based on realistic ARR
multiples. In short, the Board believes the proposals are significantly more
likely to result in a positive outcome for all its stakeholders, including
employees and Shareholders. In considering this, the Independent Directors
have given due consideration to the assurances relating to the Company,
including those given to its employees regarding the implementation of the
Proposals.
8. FUTURE STRATEGY OF THE COMPANY AND USE OF PROCEEDS
The existing strategy of the Company has delivered continual and material
increases in clients serviced and revenue generated. Annual Recurring
Revenue has increased from around $2.87m at the time of admission to trading
on AIM in December 2020 to nearly $10m at present. Over this period, client
numbers have increased from 74 to around 210. The strategy going forwards will
be the continued targeting of market share in a growing sector and the
striving for operational excellence within the Company. Funds will be used
to increase the sales footprint of BrandShield and to reinforce our marketing
spend in areas that we know yields results. This will be within the backdrop
of our more recent efforts to reduce operational cash burn where efficiencies
can be found without prejudicing either capability or slowing growth. The
costs of Cloud computing will continue to be targeted closely and Research and
Development efforts will continue to be targeted at optimal automation of
tasks within our leading edge, AI based platform. The Board believes that the
implementation of BrandShield 3.0, the UI interface with our customers, will
be a step change in capability from our clients and this will be enhanced
incrementally to continue to improve functionality. The optimisation of the
enforcement element of the Company has yielded considerable efficiencies and
this process will continue.
The Board believes that continued growth of client numbers, revenue and
margins will be best done in a de-listed environment where the senior
management can focus more of its capacity on the core business without the
distractions of the additional legal, regulatory burden and cost implications
of being a quoted company. The Board also believes that BrandShield is a
fast-growing company in a fast-growing sector and the valuation attributed to
it by the London markets makes it vulnerable to acquisitive suitors. The
Board believes strongly that if any acquisition of BrandShield is considered
by other parties, that a considerably higher valuation would be secured in a
de-listed environment than if it remained quoted, a situation that would
benefit all our Shareholders despite the reduction in immediate liquidity
caused by a de-listing.
9. De-Listing
9.1 Reasons for the De-Listing
The Board has conducted a review of the benefits and drawbacks to the Group
retaining its listing on AIM and maintaining its existing corporate structure.
The Board believes that the De-Listing is in the best interests of the Company
and its Shareholders as a whole. In reaching this conclusion, the Board has
considered the following key factors:
· there is, and has been for some time, a lack of
liquidity in the Ordinary Shares such that there is a very limited market for
the Ordinary Shares;
· there is limited trading of the Ordinary Shares.
Over the past 12 months 45,436,247 Ordinary Shares were traded representing
approximately 27 per cent. of the current issued share capital and giving an
average daily volume of approximately 195,005 Ordinary Shares. Accordingly,
the costs associated with maintaining the AIM quotation are considered by the
Directors to be disproportionately high when compared to the benefits of being
listed on AIM, even though these costs have been, so far as reasonably
possible, controlled and minimised by the Company. The Board believes that
these funds could be better utilised for the benefit of the Company.
· the management time significant associated
additional advisor costs and the legal and regulatory burden associated with
maintaining the Company's admission to trading on AIM is, in the Directors'
opinion, disproportionate to the benefits to the Company.
· despite demonstrating consistent growth in
customer numbers and ARR, alongside maintaining a proactive investor relations
programme, the share price performance and subsequent valuation placed on
BrandShield since its listing on AIM has reduced in a sustained manner. High
growth businesses such as BrandShield will seek to raise expansion capital in
order to take advantage of growth opportunities as and when they present
themselves. The Board's focus since listing has been the acquisition of new
customers and the subsequent growth of its top line revenue as the Company
expands to reach critical mass. Fundraises have been conducted at
ever-increasing discounts to the original listing price and this has been
deeply frustrating to the Board, Founders and our Shareholders. This is
despite the fact that the underlying shareholder base has transformed over the
listing period and has been enhanced through material stakes being built up by
a small and focused number of institutional investors. This change in the
shareholder base has not managed to insulate the share price from downward
pressure created by generally low volumes of trading across the Aim market.
The Board does not believe that it is right to expose our existing
Shareholders further to future dilution based valuation multiples that it does
not believe reflect a realistic valuation of BrandShield.
The Board therefore believes that the interests of all Shareholders will be
better served in an off-market context whereby the Company can continue to
focus on high growth levels and the potential to provide all Shareholders with
a liquidity event that fairly reflects the true value of the business and its
global significance in this sector.
· BrandShield Shareholders, whilst recognising and
being willing to accept the risks associated with remaining as an investor in
an unlisted company, who anticipate realising greater value in their
BrandShield Shares in the future, may wish to remain as Shareholders in
BrandShield.
9.2 Effect of De-Listing
The principal effects of the De-Listing will be that:
· Shareholders will no longer be able to buy and
sell Ordinary Shares through a public stock market, further reducing the
liquidity in the Ordinary Shares; the Company intends to review the options
available for allowing dealing in the Company's shares, for example by
provision of a matched bargain facility or periodic share auctions, however
there is no guarantee that one will be put in place.
· the Company will no longer be required to
announce material events or interim results;
· the Company will no longer be required to comply
with many of the corporate governance requirements applicable to companies
traded on AIM;
· the Company will no longer be subject to the
Disclosure Guidance and Transparency Rules and will therefore no longer be
required to disclose major shareholdings in the Company;
· the Company will no longer be subject to the AIM
Rules, with the consequence that Shareholders will no longer be afforded the
protections given by the AIM Rules. Such protections include a requirement to
obtain shareholder approval for reverse takeovers and fundamental changes in
the Company's business and to announce, inter alia, certain substantial and/
or related party transactions; and
· the De-Listing may have either positive or
negative taxation consequences for Shareholders. Shareholders who are in any
doubt about their tax position should consult their own professional
independent adviser immediately.
Shareholders should note that the City Code will continue to apply to the
Company following the De-Listing. The Company will also continue to be bound
by the Companies Act (which requires Shareholders' approval for certain
matters) following the De-Listing.
9.3 De-Listing Process
Under the AIM Rules, the De-Listing can only be effected by the Company after
securing a special resolution of Shareholders in a general meeting and the
expiry of a period of 20 clear Business Days from the date on which notice of
the De-Listing is given to the London Stock Exchange.
In addition, a period of at least five clear Business Days following
Shareholders' approval of the De-Listing is required before the De-Listing may
become effective. The Resolutions seek (amongst other matters) the approval of
Shareholders for the De-Listing. Assuming that the Resolutions are approved,
it is proposed that the De-Listing will take place by 7.00 a.m. on 23 October
2023.
9.4 Ordinary Share dealing Prior to De-Listing
If Shareholders wish to buy or sell Ordinary Shares on AIM they must do so
prior to the De-Listing becoming effective. As noted above, in the event that
Shareholders approve the De-Listing, it is anticipated that the last day of
dealings in the Ordinary Shares on AIM will be 20 October 2023 and that the
effective date of the Cancellation will be 23 October 2023.
9.5 Ordinary Share dealing following De-Listing
Immediately following the De-Listing, there will be no market facility for
dealing in the Ordinary Shares, and no price will be publicly quoted for the
Ordinary Shares. The Company intends to review the options available for
allowing dealing in the Company's shares, for example by provision of a
matched bargain facility or periodic share auctions, however there is no
guarantee that one will be put in place. Any update will be made via the
Company's website address (www.brandshield.com).
10. Current Trading and Future Prospects
The Company published its financial results for the six month period ended 30
June 2023 on 19 September 2023. The Company's highlights and outlook sections
are detailed below:
"Financial highlights
· H1 2023 Annual Recurring Revenue₁ ("ARR") up 46% to $9.71m (H1
2022: $6.67m)
· Positive momentum continued with the August 2023 ARR figure
reaching $9.85m, up 36% vs. $7.26m in August 2022.
· Delivered revenue growth of 56.3% to $4.42m in H1 2023 (H1 2022:
$2.83m)
· Loss for the period decreased by 53% to $2.05m in H1 2023 (H1
2022: $4.37m)
· As part of operational improvements Gross profit increased from
48% in H1 2022 and 54% in December 2022 to 68% in H1 2023
· Cash of $1.35m at period end (31 Dec 2022: $2.60m)
(1)Annual Recurring Revenue is a non-GAAP measure and an industry specific
measure
Operational highlights
· Strong new business momentum achieved in the first half of 2023,
with the Company securing 45 new customer wins in the period to take its total
number of customers to 209. This growth continued post-period end, and as at
end of August 2023, BrandShield services 214 customers.
· Ongoing sales and marketing initiatives continues to support the
growth in the Company's customer footprint, expanding the Group's presence
across in key growth sectors such as pharmaceutical, retail, ecommerce and
finance.
· BrandShield consolidated its position as one of the leading
Digital Risk Protection Provider
o BrandShield named the third best DRP service provider globally in a 2022
review by Frost & Sullivan ("F&S") the global business consultancy
group.
o BrandShield cognised with the 2023 Global Digital Risk Protection New
Product Innovation and Best Practices Award by Frost & Sullivan.
Post period-end and Outlook
· The Company has made a solid start to H2 2023 and look forward to
reporting another period of both operational and financial progress.
· Recent focus on reducing cash burn is having a marked impact on
gross margins as the Company continues to grow towards becoming cash flow
positive".
The Directors of the Company can confirm that, since the date of publication
of these financial results, there has been no significant change in the
trading or financial position of the Company.
Following the Proposals, the Company intends to continue operating as it has
done over the Company's last financial year and carry out the same activities,
and to retain the same business strategy that it did as a quoted public
company. Based on current market conditions, the Company does not envisage any
significant changes to the Company's trading position once the Proposals are
completed.
11. Proposals to be voted on at the General Meeting
For the purposes of effecting the Proposals, the Resolutions will be proposed
at the General Meeting. Set out at the end of this document is a notice
convening the General Meeting to be held at 11.00 a.m. on 13 October 2023 at
the offices of Edwin Coe LLP, 2 Stone Buildings, Lincoln's Inn, London, WC2A
3TH. The full texts of the Resolutions are set out in that notice.
The Resolutions, which are summarised below, are necessary for the
implementation of the Proposals.
Resolution 1 (Ordinary Resolution)
THAT the waiver granted by the Takeover Panel of the obligation that would
otherwise arise on the Concert Party, both individually and collectively, to
make an offer to the shareholders of the Company pursuant to Rule 9 of the
Takeover Code as a result of the Proposals is hereby approved.
Note: In order to comply with the Takeover Code, this Resolution will be taken
on a poll of Independent Shareholders.
Resolution 2 (Ordinary Resolution)
Conditional upon the passing of Resolutions 1, 3 and 4, this ordinary
resolution will grant the Directors authority to allot New Ordinary Shares for
the purposes of the Open Offer, to the extent existing authorities are
insufficient. The authority given by this Resolution will expire on the
earlier of 16 October 2024 or the date of the Company's next annual general
meeting.
Resolution 3 (Special Resolution)
Conditional on the passing of Resolutions 1, 2 and 4, this special resolution will grant the Directors authority to disapply the statutory pre-emption rights in respect of the allotment of the new Ordinary Shares to be allotted pursuant to Resolution 2 in connection with the Open Offer. The authority given by this Resolution will expire on the earlier of 16 October 2024 or the date of the Company's next annual general meeting.
Resolution 4 (Special Resolution)
Conditional on the passing of Resolutions 1, 2 and 3 that the cancellation of
the admission of the Ordinary Shares to trading on AIM is approved.
12. Action to be taken
General Meeting
The appointment of a proxy will not preclude you from attending and voting in
person at the General Meeting or any adjournment thereof, if you so wish and
are so entitled.
If your proxy appointment has not been submitted by 11.00 a.m. on 11 October
2023, your vote in relation to the Resolutions will not count.
You can vote either:
• by logging on to www.signalshares.com and following the
instructions.
• you may request a hard copy Form of Proxy directly from the
registrars. Link Group on Tel: 0371 664 0300. Calls are charged at the
standard geographical rate and may vary by provider. Calls outside the United
Kingdom will be charged at the applicable international rate. Lines are open
between 09:00 -17:30, Monday to Friday excluding public holidays in England
and Wales. The Form of Proxy should be completed and returned in accordance
with the instructions printed thereon so as to arrive at the Company's
Registrars, Link Group, Central Square, 29 Wellington Street, Leeds, LS1 4DL
by 11.00 a.m. on 11 October 2023.
• in the case of CREST members, by utilising the CREST
electronic proxy appointment service in accordance with the procedures set out
in the notes to the Notice of General Meeting.
13. Recommendation
In respect of Resolution 1, the Independent Directors, having been so advised
by SPARK Advisory Partners, the Company's Financial and Nominated Adviser,
considers that the Proposals are fair and reasonable and in the best interests
of Shareholders and the Company as a whole and accordingly recommend that
Independent Shareholders vote in favour of the Rule 9 Waiver. In providing its
advice to the Independent Directors, SPARK Advisory Partners has taken into
account the Independent Directors' commercial assessments. Accordingly, the
Independent Directors recommend that Independent Shareholders vote in favour
of Resolution 1 as they intend to do in relation to their respective
shareholdings.
All the Directors recommend that Shareholders vote in favour of Resolutions 2
to 4 (inclusive) as they intend to do in relation to their respective
shareholdings.
Yours faithfully
Azriel Moscovici
Chairman
Enquiries:
BrandShield Systems plc +44 (0)20 3143 8300
Yoav Keren, CEO
Spark Advisory Partners Limited (Nominated Adviser) +44 (0)20 3368 3554
Neil Baldwin / Andrew Emmott / James Keeshan
Shore Capital (Joint Broker) +44 (0)20 7408 4090
Toby Gibbs / James Thomas (Corporate Advisory)
Henry Willcocks (Corporate Broking)
Vigo Consulting (Financial Public Relations) +44 (0)20 7390 0237
Jeremy Garcia / Kendall Hill
brandshield@vigoconsulting.com
About BrandShield
Brandshield is a provider of cybersecurity solutions from brand protection to
online threat hunting. BrandShield detects online threats and takes them down.
The Company's client base is a growing list of organisations including Fortune
500 and FTSE100 companies. By utilising AI and big-data analysis, BrandShield
monitors, detects, and removes online threats facing companies. These threats
include social phishing, executive impersonation, fraud, brand abuse, and
counterfeits.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Date and Time (2023)
Record Date for entitlement under the Open Offer Close of business on 18 September
Announcement of the Proposals including the Subscription, the Rule 9 Waiver, 20 September
the Open Offer and the De-Listing
Ex-Entitlement Date 7.00 a.m. on 20 September
Posting of this Circular and Application Form to Shareholders 20 September
Open Offer Entitlements credited to stock accounts in CREST of Qualifying 21 September
CREST Shareholders
Latest recommended time and date for requesting withdrawal of Open Offer
Entitlements from CREST 4.30 p.m. on 29 September
Latest time for depositing Open Offer Entitlements into CREST 3.00 p.m. on 2 October
Latest time and date for splitting Application Forms (to satisfy bona fide 3.00 p.m. on 3 October
market claims)
Latest time and date for receipt of completed Application Forms and payment in
full from Qualifying Shareholders under the Open Offer or settlement of 11.00 a.m. on 5 October
relevant CREST instruction (as appropriate)
Result of the Open Offer announced through a Regulatory Information Service
6 October
Voting deadline ( no later than 48 hours before the General Meeting) 11.00 a.m. on 11 October
General Meeting 11.00 a.m. on 13 October
Admission of the Open Offer Shares and the Subscription Shares to trading on 8.00 a.m. on 16 October
AIM
CREST accounts expected to be credited for the Open Offer Shares and the 16 October
Subscription Shares in uncertificated form (where applicable)
Earliest date for the De-Listing and cancellation of admission of the Ordinary 7.00 a.m. on 23 October
Shares to trading on AIM
Posting of share certificates and warrant certificates for the Open Offer within 14 days of Admission
Shares and the Subscription Shares by the Registrar (where applicable)
The Company reserves the right to alter the date and times referred to above
and to accept applications under the Open Offer at any time prior to 5 October
2023. If any of the above times and/or dates change, the revised times and/or
dates will be notified to Shareholders by announcement through a Regulatory
Information Service.
All times are references to London time.
All events in the above timetable following the GM are conditional, inter
alia, upon the approval of all the Resolutions.
The De-Listing requires the approval of not less than 75 per cent. of the
votes cast by Shareholders at the General Meeting.
If you have any questions on the procedure for acceptance and payment, you
should contact Link Group on +44 (0) 371 664 0321. Calls are charged at the
standard geographic rate and will vary by provider. Calls from outside the
United Kingdom will be charged at the applicable international rate. The
helpline is open between 9.00 a.m. - 5.30 pm, Monday to Friday excluding
public holidays in England and Wales. Please note that Link Group cannot
provide any financial, legal or tax advice and calls may be recorded and
monitored for security and training purposes.
DEFINITIONS
The following shall apply throughout this document unless the context
otherwise requires:-
"2022 Options" the share options granted on 26 May 2022 by the Company to Yoav Keren, Yuval
Zantkeren and others;
"Act" the Companies Act 2006;
"acting in concert" has the meaning given to it in the Takeover Code;
"Admission" admission of the Open Offer Shares and Subscription Shares to trading on AIM;
"AIM" a market operated by the London Stock Exchange;
"AIM Rules" the "AIM Rules for Companies" published by the London Stock Exchange from time
to time;
"Articles" the articles of association of the Company, as amended from time to time;
"Annualised Recurring Revenue" or "ARR" calculated by annualising the monthly revenue on all of BrandShield's active
subscriptions for its services in a particular month;
"Application Form" the application form for use in the Open Offer;
"Associates" any person who, from time to time, is connected or associated with a
Shareholder for the purposes of sections 252 to 255 Companies Act 2006;
"Board" the board of directors of the Company, as set out on page 13;
"Broker Warrants" the warrants to be issued to Mr Subramanian Subbiah in respect of his fee for
brokering the subscription by Joseph Haykov (via Cloak, LLC), details of which
are set out in paragraph 5.2 of Part III of this document;
"Business Day" a day, not being a public holiday, Saturday or Sunday on which clearing banks
in London are open for business;
"City Code" or "Takeover Code" the UK City Code on Takeovers and Mergers;
"Company" BrandShield Systems Plc;
"Concert Party" certain Shareholders, as more fully described in paragraph 1 of Part II of
this document;
"CREST" or "CREST System" the relevant system (as defined in the Regulations) which enables title to
units of relevant securities (as defined in the Regulations) to be evidenced
and transferred without a written instrument and in respect of which Euroclear
UK & International Limited is the Operator (as defined in the
Regulations);
"CREST Manual" the compendium of documents entitled "CREST Manual" issued by Euroclear from
time to time and comprising the CREST Reference Manual, the CREST Central
Counterparty Service Manual, the CREST International Manual, the CREST Rules
(including CREST Rule 8), the CREST CCSS Operating Manual and the CREST
Glossary of Terms;
"CREST member" a person who has been admitted to CREST as a system-member (as defined in the
CREST Manual);
"CREST member account ID" the identification code or number attached to a member account in CREST;
"CREST participant" a person who is, in relation to CREST, a system-participant (as defined in
the CREST regulations);
"CREST participant ID" shall have the meaning given in the CREST Manual issued by Euroclear;
"CREST payment" shall have the meaning given in the CREST Manual issued by Euroclear;
"CREST Regulations" the Uncertificated Securities Regulations 2001 (SI 2001/3755) (as amended
from time to time);
"CREST sponsor" a CREST participant admitted to CREST as a CREST sponsor;
"CREST sponsored Member" a CREST member admitted to CREST as a sponsored member;
"De-Listing" the proposed cancellation of admission of the Ordinary Shares to trading on
AIM, subject to passing of Resolution numbered 4 at the General Meeting and in
accordance with Rule 41 of the AIM Rules;
"Directors" the directors of the Company (each being a "Director");
"Disclosure and Transparency Rules" The Disclosure Guidance and Transparency Rules published by the Financial
Conduct Authority from time to time;
"Disclosure date" 19 September 2023, being the latest practicable date prior to the publication
of this document;
"Eligible Shareholders" Shareholders on the register of members of the Company on the Record Date;
the enlarged issued ordinary share capital following Admission (assuming full
subscription under the Open Offer);
"Enlarged Ordinary Share Capital"
"Euroclear" Euroclear UK & International Limited;
"Existing Options" the options over 27,968,483 Ordinary Shares in issue at the date of this
document, as set out in more detail in paragraph 2 of Part III;
"Existing Ordinary Share Capital" or "Existing Ordinary Shares" the existing issued share capital of the Company, being 170,331,874 Ordinary
Shares as at the date of this document;
"Existing Warrants" the warrants over 12,122,247 Ordinary Shares in issue at the date of this
document, which entitle the holders to subscribe for Ordinary Shares, as set
out in more detail in paragraph 3 of Part III;
"Form of Proxy" or "Proxy Form" the individual form of proxy for use by Ordinary Shareholders in connection
with the General Meeting;
"Founders" Yoav Keren and Yuval Zantkeren;
"FSMA" the Financial Services and Markets Act 2000, as amended from time to time;
"Fully Diluted Share Capital" the issued share capital of the Company assuming (i) completion of the Open
Offer and Subscription, and (ii) exercise of all of the Existing Options, the
Existing Warrants, the New Options, the Subscription Warrants, the Open Offer
Warrants and the Broker Warrants;
"General Meeting" or "GM" the general meeting of the Company convened for 11.00 a.m. on 13 October 2023,
notice of which is set out at the end of this document (including any
adjournment of such meeting);
"Group" the Company and its subsidiary undertakings (as defined in the Act);
"Independent Directors" the Directors (excluding Yoav Keren, Yuval Zantkeren and Harel Kodesh who are
members of the Concert Party);
"Independent Shareholders" Shareholders who are entitled to vote on the Waiver Resolution, namely
Shareholders who are not members of the Concert Party;
"ISIN" International Securities Identification Number;
"Lapse Date" the date on which an Open Offer Warrant lapses, being the date that is 4 years
after the issue of the Open Offer Shares;
the long term incentive plan of the Company, adopted on 1 December 2020;
"LTIP" or "Long Term Incentive Plan"
"LTIP Options" the options granted pursuant to the LTIP;
"Money Laundering Regulations" The Money Laundering, Terrorist Financing and Transfer of Funds (Information
on the Payer) Regulations 2017 (as amended and supplemented);
"New Options" the new unapproved share options over up to 52,724,080 to be granted to Yoav
Keren and Yuval Zantkeren, as set out in paragraph 5 of Part I of this
document;
"New Employee Options" the new share options over up to 19,680,800 Ordinary Shares to be granted to
employees including 200,000 to Ravit Freedman;
"Notice of General Meeting" the Notice of General Meeting set out at the end of this document;
"Official List" the official list of the FCA;
"Open Offer" the invitation to Qualifying Shareholders to subscribe for Open Offer Shares
at the Issue Price on the terms of and subject to the conditions set out or
referred to in Part IV of this document;
with respect to each Qualifying Shareholder, the pro rata entitlement to apply
to subscribe for 1 Open Offer Share for every 2 Existing Ordinary Shares held
by them on the Record Date pursuant to the Open Offer;
"Open Offer Entitlement" up to 38,669,962 warrants which entitle the holders to subscribe for Ordinary
Shares to be issued on a 1:1 basis to subscribers for the Open Offer Shares;
the up to 38,669,962 New Ordinary Shares to be issued pursuant to the Open
Offer subject to, inter alia, the passing of the Resolutions at the General
Meeting;
"Open Offer Warrants"
a Shareholder who has a registered address outside the United Kingdom, or who
is a citizen or resident of, or is incorporated or registered in, a country
other than the United Kingdom, or who is holding Ordinary Shares for the
benefit of such a person (including, without limitation and subject to
certain exceptions, custodians, nominees, trustees and agents);
"Open Offer Shares"
"Overseas Shareholders"
"Ordinary Shareholders" holders of Ordinary Shares;
"Ordinary Shares" ordinary shares of 1 penny each in the capital of the Company;
the institutional placing of 29,166,667 new ordinary shares of 1 penny each in
the capital of the Company in November 2022 as more fully detailed in
"Placing" paragraph 5.4 of Part III of this document;
the placing agreement entered into by the Company and Shore Capital
Stockbrokers Limited dated 28 November 2022 in respect of the Placing;
"Placing Agreement"
"Proposals" together the Subscription, the Open Offer, the Rule 9 Waiver, the De-Listing,
the issue of the New Options, the re-pricing of certain of the Existing
Options and the amendments to the exercise period of certain of the Existing
Warrants, all as described in this document;
"Record Date" 18 September 2023;
"Registrar" Link Group, Central Square, 29 Wellington Street, Leeds, LS1 4DL;
"Register" the register of members of the Company;
"Retail Investors" eligible investors (being existing Qualifying Shareholders) in the Open Offer;
"Qualifying CREST Shareholders" Qualifying Shareholders whose Existing Ordinary Shares on the register of
members of the Company on the Record Date are held in uncertificated form on
CREST;
Qualifying Shareholders whose Existing Ordinary Shares on the register of
members of the Company on the Record Date are held in certificated form;
holders of Existing Ordinary Shares on the register of members of the Company
on the Record Date for the Offer (other than certain Overseas Shareholders);
"Qualifying Non-CREST Shareholders" the resolutions to be tabled at the General Meeting;
each and any of the United States, Australia, Canada, Hong Kong, Japan, New
Zealand and the Republic of South Africa and any other jurisdiction where the
extension or the availability of the Placing would breach any applicable law;
"Qualifying Shareholders"
"Resolutions"
"Restricted Jurisdictions"
"Rule 9 Waiver" the waiver by the Panel of the obligations that would otherwise arise on the
Concert Party to make a general offer for the Company under Rule 9 of the
Takeover Code as a consequence of the allotment and issue of the Subscription
Shares and the exercise by them of New Options, Subscription Warrants and
Broker Warrants pursuant to the Proposals, granted by the Panel conditional
upon the passing of the Waiver Resolution by Independent Shareholders voting
on a poll, further details of which are set out in paragraph 6 of Part I of
this document;
"Shareholders" the holders of Ordinary Shares and "Shareholder" shall mean any one of them;
"Subscribers" the subscribers in the Subscription as set out in paragraph 2 of Part I of
this document;
"Subscription" the conditional Subscription for the Subscription Shares at the Subscription
Price;
"Subscription Agreements" the respective agreements entered into between (1) the Company and (2) the
Subscribers, as more fully detailed in paragraph 5.1 of Part III of this
document;
"Subscription Price" or "Issue Price" 5.68 pence per Subscription Share and Open Offer Share;
"Subscription Shares" the 47,137,662 new Ordinary Shares that are the subject of the Subscription;
"Subscription Warrants" the 47,137,662 warrants which entitle the holders to subscribe for Ordinary
Shares to be issued on a 1:1 basis to subscribers for the Subscription Shares;
"Takeover Panel" or "Panel" the UK Panel on Takeovers and Mergers;
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland; and
"Waiver Resolution" the Resolution numbered 1 in the Notice of General Meeting, being an ordinary
resolution to be voted on by the Independent Shareholders (on a poll) at the
General Meeting.
All references in this document to specified times are to London time.
All references in this document to ''£'' or ''pence'' are to the lawful
currency of the United Kingdom.
All references in this document to ''$'' or ''cent'' are to the lawful
currency of the United States of America.
All references to legislation in this document are to English legislation
unless the contrary is indicated.
Documents Published on the Company's Website
Copies of the following documents will be made available at the website
address www.brandshield.com (http://www.brandshield.com) . from the date of
posting of the Circular up to the date of the General Meeting:
(a) the Memorandum and Articles of Association of the Company;
(b) the audited accounts of the Company for the years ended 31
December 2021 and 31 December 2022 and the interim unaudited accounts for the
six months ended 30 June 2023;
(c) the consent letter from SPARK Advisory Partners;
(d) the service contracts and letters of appointment of each of
the Directors set out in paragraph 4 of Part III of the Circular;
(e) the material contracts set out in paragraph 5 of Part III of
the Circular; and
(f) copies of the Circular.
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