REG - Electric Guitar PLC - Acquisition, fundraising, admission to AIM & GM
15/04/2024 17:45
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RNS Number : 6974K Electric Guitar PLC 15 April 2024
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15 April 2024
Electric Guitar PLC
("Electric Guitar" or the "Company")
Proposed acquisition of 3radical Limited, fundraising, Board changes,
admission to AIM and notice of General Meeting
The Board of Electric Guitar PLC (LSE: ELEG), the Special Purpose Acquisition
Company seeking acquisitions in the digital marketing and advertising industry
as a provider of first-party data solutions, is pleased to announce the final
terms for the proposed acquisition of 3radical Limited, a marketing technology
company for consumer data acquisition and audience engagement solutions, a
fundraising and application for admission of the Company's issued and to be
issued ordinary shares to trading on AIM.
Key highlights:
· Acquisition of 3radical for approximately £1.28 million, to be
satisfied through the issue of 61,184,843 new Ordinary Shares.
o 3radical has created and proven a Software as a Service platform, 3radical
Voco, which enables organisations to engage individuals and request their data
directly using progressive and interactive digital experiences, at scale.
o Data obtained by 3radical Voco can be critical for marketing and for
providing a compelling customer experience, optimising communications,
designing products and services, and, ultimately, driving revenues.
o The Existing Directors believe that 3radical Voco is well positioned to
capitalise on the shift driven by data legislation, consumer sentiment and
technology changes, which means that brands and businesses need to acquire
data themselves rather than purchase it from third parties and relying on
Cookies.
o 3radical Voco is already deployed by some major brands in the UK, US and
APAC, with its scalability and robustness proven by demanding clients across
financial services, online gaming and e-commerce sectors, amongst others.
· £1.32 million raised (before expenses) through a Placing and
Subscription at 2.1p per share, alongside approximately £0.88 million of
costs and liabilities being satisfied through the issue of new Ordinary Shares
at the Issue Price.
· The net proceeds of the Fundraising will provide the Enlarged Group
with a strengthened balance sheet and additional working capital to enable it
to invest in the growth of 3radical and implement the strategy of the Enlarged
Group.
· Application for admission to AIM of the Enlarged Share Capital and
concurrent cancellation of of the Existing Ordinary Shares from the standard
segment of the Official List and trading on the Main Market, to become
effective on or around 3 May 2024.
· The Proposals are subject to, inter alia, shareholder approval of
resolutions to be proposed at a General Meeting on 1 May 2024.
· Based on the issue price of 2.1p per share, the market capitalisation
of the Enlarged Group will be approximately £4.70 million on Admission.
· David Eldridge, a founder and the Chair of 3radical, Caroline Worboys
and Grahame Cook will be appointed as Non-Executive Directors of the Company,
and Sarfraz Munshi will leave the Board.
· The Directors and senior management of the Company will own
approximately 12 per cent of the issued Ordinary Shares on Admission.
· The Company has made a request to the FCA for the suspension of the
Existing Ordinary Shares on the standard segment of the Official List to be
lifted so that trading in the Existing Ordinary Shares on the Main Market can
resume. A further announcement in this regard will be made in due course.
· The Ordinary Shares will continue to trade under the ticker ELEG from
Admission and will retain the ISIN of GB00BN11T727 and SEDOL of BN11T72.
John Regan, Chief Executive Officer of Electric Guitar PLC, commented:
"We are delighted to announce final terms to acquire 3radical, a fundraising
and our application to be quoted on AIM. We believe that 3radical's
sophisticated customer engagement and first-party data technology align
perfectly with our strategy to acquire businesses that help marketers maximise
the value of first-party data.
"I would like to thank both new and existing investors who have shown their
support during the fundraising process, and I believe that this is a testament
to our Company being well-positioned to capitalise on the changing regulatory
environment in digital marketing and advertising, especially during the global
pivot away from third-party cookies.
"We believe that our admission to AIM will provide us with further access to
growth capital, which will enhance our strategy to acquire and invest in
businesses operating in similar industries, and we look forward to updating
the market on future opportunities in due course."
David Eldridge, Chairman of 3radical, commented:
"By our admission to AIM through our reverse takeover with Electric Guitar, we
believe we will have access to the funding, talent, and profile to grow our
business and enhance our technology.
"With the current shift in the structure of the online marketing and
advertising industry towards first-party data solutions, we believe that the
enlarged group is in a strong position to capitalise on this trend and enhance
shareholder value."
Details of the Proposals, Admission Document and General Meeting
Appendix 1 to this announcement sets out further details of the Proposals,
including the background to and reasons for the Acquisition, details of
3radical and the strategy of the Enlarged Group, as extracted from the
Company's AIM Admission Document published today ("Admission Document").
Appendix 2 sets out the historical financial information of 3radical.
The Admission Document which contains the Notice of General Meeting will be
posted to Shareholders today and will be available on the Company's website
later today at www.electriguitarplc.com (http://www.electriguitarplc.com) .
Resolutions to implement the Proposals will be put to Shareholders at the
General Meeting to be held at 9 a.m. on 1 May 2024 at the offices of BDB
Pitmans LLP, One Bartholomew Close, London, EC1A 7BL.
Axis Capital Markets and Allenby Capital are acting as Joint Brokers to the
Company in relation to the Placing and Admission. Allenby Capital is also
acting as Nominated Adviser to the Company.
Cancellation of admission to the Official List and to trading on the Main
Market
The Company announced on 13 March 2024 the proposed cancellation of admission
of the Existing Ordinary Shares to the standard segment of the Official List
and to trading on the Main Market. Subject to the passing of the Resolutions
at the General Meeting, the Company now intends to request that the
Cancellation takes effect at 07.30 a.m. on 3 May 2024, in conjunction with
Admission that day, and accordingly, the last day of trading in the Existing
Ordinary Shares on the Main Market will be 2 May 2024.
Expected timetable of principal events
Publication and posting to Shareholders of this document and the Form of Proxy 15 April 2024
Latest time and date for receipt of votes by Proxy and receipt of electronic 9.00 a.m. on
proxy appointments via the CREST system
29 April 2024
General Meeting 9.00 a.m. on 1 May 2024
Cancellation of listing on the standard segment of the Official List (standard 7:30 a.m. on 3 May 2024
segment) and trading on the Main Market
Completion of Acquisition* 8:00 a.m. on 3 May 2024
Admission effective and dealings in the Englarged Share Capital commence on 8:00 a.m. on 3 May 2024
AIM*
Expected date for CREST accounts to be credited in respect of New Ordinary 3 May 2024
Shares to be held in uncertificated form*
Dispatch of definitive share certificates in respect of New Ordinary Shares, Within 14 days of Admission
where applicable*
*Assuming the Resolutions are passed at the General Meeting.
All future times and/or dates referred to in this document are subject to
change at the absolute discretion of the Company and Allenby Capital, and if
any of the above times or dates should change, the revised times and/or dates
will be notified by an announcement on a regulatory information service. All
references to times in this document are to London times.
Directors' declaration
For the purposes of Listing Rule 5.6.15G:
1) the directors of the Company consider that this announcement contains
sufficient information about the business to be acquired (3radical) to provide
a properly informed basis for assessing its financial position; and
2) the Company has made the necessary arrangements with the vendors of
3radical to enable it to keep the market informed without delay of any
developments concerning 3radical that would be required to be released were
3radical a subsidiary of the Company.
Related party transactions
Appendix 3 sets out certain related party transactions with the Directors and
Sanderson Capital Partners Limited, an 18.33 per cent shareholder of the
Company.
The terms and definitions used in this announcement have the same meaning as
ascribed to them in Appendix 4 of this announcement unless otherwise stated.
Important notices are set out at the end of this announcement.
For further information:
Electric Guitar PLC
John Hutchinson 01189 570 444
Chair
Allenby Capital 020 3328 5656
(Nominated Adviser and Joint Broker)
Jeremy Porter
Piers Shimwell
Dan Dearden-Williams
Axis Capital Markets 020 3026 0320
(Joint Broker)
Richard Hutchison
Yellow Jersey PR 020 3004 9512
Sarah Hollins electric@yellowjerseypr.com
(https://appriver3651008983.sharepoint.com/sites/CompanyData/Shared%20Documents/Corporate%20Finance/Mandated%20Transactions/Electric%20Guitar/Announcements/electric@yellowjerseypr.com)
Annabelle Wills
Bessie Elliot
APPENDIX 1
DETAILS OF THE PROPOSALS
The following information has been extracted without amendment from Part I and
Part II of the Company's Admission Document published today. References to
'paragraphs', 'Parts' and 'this document' in this Appendix 1 relate to the
Company's Admission Document which will be available later today on the
Company's website at www.electricguitarplc.com
(http://www.electricguitarplc.com) .
PART I
LETTER FROM THE CHAIR OF ELECTRIC GUITAR PLC
1. Introduction
The Board is pleased to inform Shareholders that final terms have been agreed
for the proposed Acquisition of the entire issued and to be issued share
capital of 3radical, a marketing technology company for consumer data
acquisition and audience engagement solutions. The total consideration for the
Acquisition is £1,284,882 based on Locked Box Accounts and is subject to
customary adjustments for any financial "leakage" (excluding permitted
leakage) from 3radical to the Sellers during the period from the Locked Box
Date until Completion. The consideration is to be satisfied by the issue of
the Consideration Shares on Admission.
The Company's strategy, as outlined at the time of its admission to the
standard segment of the Official List, is to seek acquisitions in the digital
media sector and to act as a consolidator and operator in the digital
marketing and advertising market, focused principally on First Party Data
solutions. The Existing Directors believe that the Acquisition represents a
significant opportunity as it not only aligns with the Company's stated
strategy, but also brings a quality product, management team and business
which the Existing Directors believe provides significant growth potential.
The Acquisition amounts to a reverse takeover under the Listing Rules and
therefore the Acquisition is conditional, inter alia, on the approval by
Shareholders of the Resolutions to be proposed at the General Meeting, which
is being convened for 9.00 a.m. on 1 May 2024, notice of which is set out at
the end of this document.
In addition to the Acquisition, the Company announced on 15 April 2024 that it
has conditionally raised approximately £1.32 million before expenses,
pursuant to the Placing and Subscription at the Issue Price, alongside
approximately £0.88 million in liabilities being satisfied through the
Equity Settlement. The net proceeds of the Fundraising will provide the
Enlarged Group with a strengthened balance sheet and additional working
capital to enable it to invest in the growth of 3radical and implement the
strategy of the Enlarged Group.
Alongside the Acquisition and the Fundraising, the Company is seeking the
admission of the Enlarged Share Capital to trading on AIM and the cancellation
of the admission of the Existing Ordinary Shares to the standard segment of
the Official List and to trading on the Main Market immediately prior to
Admission.
The Company is also seeking certain amendments to its Articles, details of
which are set out in resolution 5 of the Notice of General Meeting.
The Proposals are conditional upon, inter alia, the Resolutions being passed
at the General Meeting and Admission. Shareholders should note that the
Resolutions required to enable the Proposals to occur are inter-conditional
and, consequently, if any of the Resolutions to be proposed at the General
Meeting relating to the Proposals are not passed, the Acquisition, the
Fundraising, the Equity Settlement and Admission will not occur and the
Existing Ordinary Shares will continue to be admitted to the Official List
and to trading on the Main Market. In such event, proposals will be put to
Shareholders as to the continuation and future strategy of the Company. If the
Resolutions are approved at the General Meeting and the other conditions set
out in the Acquisition Agreement and the Placing Agreement are met, it is
expected that the Acquisition, Fundraising, Cancellation and Admission will
become effective, and dealings in the Enlarged Share Capital will commence on
AIM, on or around 3 May 2024. Further details of the General Meeting are set
out in paragraph 20 of this Part I.
The Existing Directors consider the Acquisition to be an excellent opportunity
for the Company and in the best interests of the Company and Shareholders as a
whole. Accordingly, the Existing Directors recommend unanimously that
Shareholders vote in favour of the Resolutions to be proposed at the General
Meeting.
The purpose of this document is to provide details of the Acquisition, the
Fundraising and Admission and to explain why the Existing Directors believe
that the Proposals are in the best interests of the Company and Shareholders
as a whole and to recommend that Shareholders vote in favour of all the
Resolutions at the General Meeting. The Existing Directors have irrevocably
undertaken to vote in favour of all the Resolutions in respect of their
beneficial holdings of Ordinary Shares, comprising in aggregate 7,341,000
Ordinary Shares (being 12.69 per cent. of the Existing Ordinary Shares). In
addition, certain other Shareholders have irrevocably undertaken to vote in
favour of the Resolutions in respect of their beneficial holdings of Ordinary
Shares, comprising in aggregate 25,065,000 Ordinary Shares (being 43.32 per
cent. of the Existing Ordinary Shares). The Notice of General Meeting, which
has been convened for 9.00 a.m. on 1 May 2024, is set out at the end of this
document.
You should read the whole of this document, which comprises an Admission
Document prepared under the AIM Rules for Companies, and your attention is
drawn in particular to the risk factors set out in Part III of this document.
2. Background to Electric Guitar
Electric Guitar was incorporated in March 2021 as a special purpose
acquisition company to seek acquisitions in the digital media sector and with
the intention to act as a consolidator and operator in the digital marketing
and advertising market.
Electric Guitar was formed by a team of digital, data, content and technology
entrepreneurs with a 30-year track record of founding, acquiring and growing
successful businesses in the data, digital and media sectors. It was admitted
to the standard segment of the Official List and trading on the Main Market
in January 2022 to acquire and grow such businesses, with a view specifically
to creating a world-class enterprise delivering the technology and data that
marketers need to build meaningful consumer connections in the post-Cookie,
'People First' world.
The Company will continue this strategy after the Acquisition and Admission,
seeking to identify and invest in businesses capable of gathering and
exploiting data to maximise marketing return on investment through targeting,
connected experiences, optimisation, measurement and attribution.
3. Market background
Summary
The advertising and marketing industries have been disrupted by a number of
structural changes, including digital privacy legislation, Generative AI and
changes in consumer expectations, as further detailed below.
Before the advent of the internet, advertisers and marketers would reach their
target audience by airing advertisements on television or radio at certain
times of the day, publishing them in newspapers and magazines that their
audience might read, or using billboards in places where their audience would
see them.
With the global reach of the internet and its extensive use for social media
and purchasing activity, advertisers and marketers now use digital advertising
to gain access to users of personal computers and mobile devices such as
smartphones. This includes publishing promotional material through online
platforms such as social media, search engines, websites, in App, and any
other format that can be accessed digitally. Digital advertisements work by
using internet-based advertising tools to research, manage, track, analyse,
and improve online advertising campaigns. Many of these advertising tools use
Third Party Data harvested by Third Party Cookies to help them identify and
target customers.
The broad drift of consumer viewing away from historic media channels such as
broadcast television, radio, newspapers and magazines, to web-based services
has led to traditional marketing and advertising channels giving way to
insights-driven targeting, based around data collected from individual users'
web browsing activities. This is reflected in advertising spending habits.
Global digital advertising spend already represents over 50 per cent. of the
overall advertising market. In 2023, approximately 67 per cent. of all
spending was projected to be on digital advertising, rising to approximately
74 per cent. in 2027, an increase from a forecast of approximately US$602
billion in 2023 to approximately US$871 billion in 2027.
In addition, the US, UK and EU identity, data, technology and services segment
(including spending on identifying the market audience, data (including First
Party Data) and data analytics) - an area of focus of the Company - is
projected to grow at a CAGR of 8.3 per cent. between 2022 and 2026 and is
estimated to be worth US$51 billion in 2023.
The Directors believe that the combination of growth and disruption are
causing the marketing environment to become more challenging for large
incumbent service providers, who can be expected to continue focusing on
defending their existing high margin business of mediating between marketers
and consumers, rather than risk cannibalising it through technology-enabled
automated personalisation, favouring nimbler, technology-oriented businesses.
Third Party Cookies
Third Party Cookies track individual user activity across multiple websites,
building up a large amount of information on browsing behaviour over a period
of time. A major use of this information is to serve, target and personalise
digital advertising.
Cookies were first used in the 1990s for personalising website content, when
there was little consideration of the impact they might have on an
individual's privacy. Since then, online ad-networks which rely heavily on
Cookies to collect and sell Third Party Data to advertisers have proliferated,
with several becoming globally significant gateways between product and
service providers and their customers. According to online research firm
Statista, it was projected that Google/Alphabet has a 39 per cent. share of
digital advertising spend in the US, followed by Facebook/Meta with 18 per
cent. and Amazon with 7 per cent. Google claims that the Google Display
Network reaches 90 per cent. of all internet users, whilst Facebook claims it
reaches 2.9 billion users, which is approximately 50 per cent. of all internet
users. As such, these platform operators have, and continue to gather,
enormous quantities of data on consumers.
Digital privacy legislation
Efforts to protect digital privacy by regulating online surveillance by
ad-networks and other organisations have developed in the EU and UK through
the General Data Protection Regulation, and in multiple states in the US led
by the California Consumer Privacy Act ("CCPA") and are now under discussion
at federal level. Data protection legislation in the APAC region is also
undergoing significant change, with most of the mature economies expected to
amend or create laws to align with the EU.
Data Control In the UK
Generally, personal data under the GPDR and the UK GDPR is any kind of
information that can be directly or indirectly related to a living individual
and therefore directly identify the data subject or reverse engineered to
identify the data subject. This includes anything from names, email addresses,
social security numbers, device identifier, Internet Protocol ("IP")
addresses, browser specifications, search history and Unique Identifiers
("UID"). Most Cookies contain a UID which is stored on a user's browser after
a website visit and so are governed by GDPR and UK GDPR.
In the UK, the Information Commissioner's Office ("ICO") monitors adherence
to the UK GDPR and the Data Protection Act 2018 (DPA). UK GDPR is the retained
EU law version of GDPR as it forms part of UK law. The principles of UK GDPR
are set out below under the heading "Data control in the EU".
The DPA 2018 sets out the framework for data protection law in the UK and sits
alongside and supplements the UK GDPR.
In addition, the Privacy and Electronic Communications Regulations 2003
("PECR") applies specifically to privacy and electronic communications, and
the rules (for example, user consent) take precedence over the UK GDPR. PECR
also covers the use of similar technologies for storing or accessing
information, such as Flash Cookies and device fingerprinting.
Currently UK GDPR requires websites to obtain user consent before activating
Cookies that will process personal data. The current UK legislation is being
updated by the UK Data Protection and Digital Information (No.2) Bill which
aims to simplify UK GDPR compliance in lower-risk situations such as direct
marketing. As of the date of this document, it has passed through its third
reading. It is currently at the House of Lords where it has been introduced
and is under consideration, and is expected to become law in 2024.
Data control in the EU
In the EU, the use of Cookies and trackers on websites is regulated by the
GDPR and Privacy and Electronic Communications (EC Directive) Regulations
2003, which are law in all EU member states. The GDPR governs the processing
of personal data of individuals inside the EU, and most Cookies today collect
personal data from users when they visit websites. The GDPR requires websites
to obtain user consent before activating Cookies that will process personal
data. Websites are not allowed to activate Cookies and trackers that process
personal data unless the user has first consented to it, unless the Cookies
can be deemed strictly necessary for the basic functions of the website.
In February 2022 a landmark European ruling against the Internet Advertising
Bureau ("IAB") (the industry body for digital advertising) declared that the
majority of Cookie-based digital advertising practices are 'illegal'. The IAB
has since responded with a series of appeals, but the implications of this
judgment are expected to be far reaching. Discussion around this judgment is
ongoing. However, privacy legislation has continued to evolve towards a new
privacy-centric data environment in the last year.
On 7 March 2024, in response to the appeals submitted by the IAB, The European
Court of Justice ruled that IAB Europe's advertising model falls under GDPR
jurisdiction. This ruling emphasises the need for stricter consent
requirements, increased transparency, and has potential impacts on real-time
bidding in digital advertising. Whilst the exact implications of this ruling
remain to be seen, this decision underscores the need for explicit user
consent for data processing, including the use of Third Party Cookies, and is
likely to further shift focus towards First Party Data and privacy-friendly
advertising technologies.
The European Data Act ("EDA") became law on 11 January 2024. This is designed
to sit alongside the GDPR, amongst other initiatives. The EDA creates a
privacy-centric framework to allow businesses to share data.
Data control in the US
In the US, the use of Cookies and the processing of personal information is
not regulated on a federal level as it is in the EU by the GDPR. Instead, some
states have their own set of laws governing personal information collection
and digital privacy, while other states have no real protection for users.
In the US, the most extensive data protection legislation relating to Cookie
control is the CCPA. This took effect in January 2020 and only applies to the
state of California. The CCPA grants consumers the right to request disclosure
of the categories and specific pieces of personal information that a business
has collected on them. It also grants consumers the right to request deletion,
as well as the right to opt out of having their data sold to third parties.
The CCPA requires that users are informed about the Cookies in operation on a
website, what kind of personal information they collect and for what purposes.
The CCPA also requires websites to inform users of the third parties with whom
they share their personal information. Other states in the United States are
looking to follow California's lead. Nevada has passed its online privacy
amendment, and proposals in New York and Washington, D.C. appear to be gaining
momentum.
In 2023, five new state-level data privacy acts came into force in Virginia,
Colorado, Connecticut, Utah, and California. In 2024, additional regulations
are expected in Texas, Oregon, and Montana. The California Privacy Rights Act
(CPRA) builds off the California Consumer Privacy Act (CCPA), creating a
dedicated agency for enforcement and clarifying consumer rights regarding
personal data. Also in 2023, the American Data Privacy and Protection Act was
proposed in the US House of Representatives and is still under review. If
enacted, it could harmonise data protection regulations throughout the US,
thereby simplifying the present system of varying state laws.
The UK-US data bridge came into force on 12 October 2023. This arrangement
simplifies the transfer of data from the UK to the US and it enables UK
citizens to access a redress mechanism if they believe their data has been
accessed unlawfully by US authorities. The UK-US bridge is not reciprocal. US
companies transferring data to the UK must comply with UK legislation.
On 28 February 2024 President Biden issued an executive order focused on
safeguarding personal and sensitive information, including geolocation data
and certain kinds of personally identifiable information (PII).
Data Control in APAC
Data protection legislation in the APAC region is undergoing significant
changes. Throughout 2024, privacy laws in the region are expected to have
grown significantly since 2021. Several key jurisdictions, including China,
Thailand, Indonesia, and Sri Lanka, have either adopted or are in the process
of implementing comprehensive privacy laws. India and Vietnam are also thought
likely to introduce significant privacy laws. Mature jurisdictions like
Australia, Japan, Korea, New Zealand, and Singapore are amending their laws to
align more closely with European privacy rules.
Web browsers
As early as 2013, concern around Third Party Cookies emerged and two web
browsers, Safari and Firefox, took action to block them. As of August 2023
these two accounted for approximately 23 per cent. of the web browser market.
In January 2020, Google announced plans to follow suit by planning to phase
out support for Third Party Cookies in their browser, Chrome, with the
intention of doing this within two years. As of January 2024, Google started
restricting Third Party Cookies by default for 1 per cent. of Chrome users.
This is part of a testing phase, with plans to ramp up to 100 per cent. of
users from Q3 2024, subject to addressing any remaining competition concerns
of the UK's Competition and Markets Authority (CMA).
As of August 2023 Chrome accounted for approximately 64 per cent. of the
global web browser market, which means that, by the end of 2024, around 87 per
cent. of internet users are expected to be using browsers which block Third
Party Cookies on the basis that Safari, Firefox and Chrome's share of the web
browser market remains constant.
This rapid and substantial change to the digital marketing industry is
impacting a broad range of businesses, including brands advertising products
and services online, ad-networks, data vendors, publishers, social media,
media buyers, and news organisations that populate the web with such
advertisements.
Advertising data accessibility
As a result of structural changes such as changes in legislation and consumer
attitudes, and blocking of Third Party Cookies, a large portion of consumer
data previously accessible to marketers is now held and controlled by
Microsoft, Alphabet (Google), Meta (Facebook), Apple and Amazon (together
known as MAMAA), who between them receive 67 per cent. of advertising revenue.
As a result of the increased focus on privacy, these organisations are
increasingly restricting the way in which advertisers can access this data.
Whilst targeting is still possible within the MAMAA platforms, marketers are
now forced to rely on MAMAA to measure campaign effectiveness and provide
undisclosed campaign optimisation created by opaque Machine Learning driven
processes. This has led to concerns about transparency and lack of control.
Generative AI
The use and capabilities of Generative AI, such as ChatGPT, are rapidly
expanding. The ability to automate content creation, generate and implement
media plans autonomously, and replace traditionally people-oriented services
like campaign account management, is already hastening the shift to
data-driven, personalised marketing. It is therefore expected that rather than
a traditional "scatter gun" or "one-size fits all" approach, brands will have
to deliver much more varied content driven by exponentially more data points
that Generative AI creates, and they will have to obtain and make sense of the
data in order to capitalise on it.
However, because much of the data controlled by MAMAA is highly relevant for
personalisation, the rapid increase of the use of Generative AI in marketing
has increased advertisers' concerns about data access. As Generative AI is
increasingly adopted to drive personalisation, and as Generative AI in
marketing is particularly reliant on this type of data, MAMAA will have more
potential to control how brands communicate with their customers.
Structural change: marketers are shifting their strategies towards 'People
First' marketing
In the Company's chosen sphere of interest - digital marketing and advertising
- the Directors believe that the market has been disrupted and continues to be
disrupted by a number of structural changes, including the following:
● Legislation: The privacy landscape has changed significantly
due to the introduction of the GDPR in the UK and EU and other privacy
regulations, and consequential actions taken by MAMAA to retain consumer data
for themselves. Alphabet's move to 'depreciate' Google's Third Party Cookies -
once integral to online advertising - further fuels this disruption, with, as
previously stated, around 87 per cent. of these Cookies expected to be blocked
by the end of 2024. The significance of this is that the MAMAA companies have
superior consumer insight compared to that of advertisers and marketers.
● Generative AI: Generative AI's ability to personalise content
offers the potential of true one-to-one marketing at scale, which is a huge
opportunity for marketers to understand their consumers better. However, it
requires the right data for this to work, and much of that is increasingly
controlled by MAMAA. This adds to already existing concerns about the extent
of MAMAA's control of data.
● Consumer expectations: Consumers, whilst expressing concerns
about data harvesting (only 33 per cent. believe advertisers use their data
responsibly), also expect greater personalisation from advertisers. 86 per
cent. of consumers say data privacy is a growing concern, but at the same time
71 per cent. expect companies to deliver personalised interactions.
The aforementioned changes to the privacy landscape have made Third Party Data
more difficult to access. Simultaneously, Generative AI has made data-driven
one-to-one marketing more accessible, and consumers are concerned about both
privacy and restricting access to their data, as well as wanting more
personalised experiences that require access to their personal data.
As a result of these changes, business leaders, particularly CEOs and Chief
Marketing Officers (CMOs), are recognising the need for 'People First'
marketing: a trusted, mutually beneficial relationship with consumers to
directly access their data in exchange for more personalised experiences. They
are shifting their marketing strategies to reflect a greater emphasis on the
use of transparently collected First Party Data to support two- way
interactions, tailored dialogues and engaging relationships, which offer a
value exchange between consumers who want a personalised experience and
advertisers who need access to their data. This contrasts with the traditional
process of high frequency advertisements broadcast to high volume audiences in
the hope that a message will sink in.
This shift is evident in the growing emphasis on more meaningful engagement
with consumers: 69 per cent. of business leaders are increasing their
investment in personalisation despite economic headwinds; 78 per cent. of
businesses consider First Party Data to be the most valuable source of data
for personalisation; 49 per cent. of CMOs prioritise more meaningful
engagement with consumers; 60 per cent. of CMOs plan to increase spend on
acquiring First Party Data; and 79 per cent. of marketers are prioritising
tracking online behaviour as necessary for success.
Conclusion
Digital advertising spending is forecast to increase to US$871 billion by
2027, but the challenging macroeconomic environment, coupled with the evolving
regulatory environment, the transformative power of new technologies, and the
dynamic landscape of consumer behaviour, mean that innovation and adaptation
are critical to success. The Directors believe that the marketing environment
is becoming more complicated for large incumbent service providers, favouring
nimbler, technology-oriented businesses.
4. Information on 3radical
Led by an experienced team of marketing technology professionals, 3radical has
created and proven a Software as a Service (SaaS) platform, 3radical Voco,
which enables organisations to engage individuals and request their data
directly, using progressive and interactive digital experiences, at scale.
This data can be critical for marketing and for providing a compelling
customer experience, optimising communications, designing products and
services and, ultimately, driving revenues.
The Directors believe that the 3radical Voco platform, which creates
meaningful engagement with consumers and collects First Party Data, is well
positioned to capitalise on the market disruption and consequent strategic
shift in marketing processes described in paragraph 3 above. The Platform is
already deployed by some major brands in the UK, US and APAC.
The Directors also believe that Voco Solution Portal (VSP), a development of
3radical Voco which has entered beta testing and is expected to be
commercially launched during the summer of 2024, will enhance 3radical's
ability to grow revenue through new business.
Details on the business and operations of 3radical are set out in Part II of
this document (Information on 3radical Limited).
5. Reasons for the Acquisition
The Existing Directors believe the Acquisition represents an excellent first
step in implementing the Company's stated strategy in the digital marketing
and advertising sector. The Existing Directors believe the Acquisition is an
opportunity to create a global platform from which to build a data-centric
business, capitalising on disruption in the digital advertising market driven
by increased emphasis on data privacy, the removal of Cookies in 2024,
increased consumer demand for engaging, personalised and connected brand
experiences, and the advent of Generative AI.
The Existing Directors believe that the key benefits of the Acquisition are
as follows:
● Strategic positioning: The Acquisition will position the
Enlarged Group for the next stage of its development by further raising its
profile and enhancing shareholder value. By utilising 3radical's technology,
the Acquisition provides the Enlarged Group with a platform for future growth,
thereby potentially attracting other acquisition opportunities and wider pools
of capital.
● Accelerating market opportunity: The need for First Party Data
solutions has become increasingly urgent for marketers, as not only are the
Third Party Cookies that have enabled consumer targeting disappearing from
their toolkits, but Generative AI is rapidly creating expectations of much
more personalised consumer conversations. The Existing Directors believe
3radical provides an excellent basis for solving these marketing challenges.
● Experienced management: 3radical has an experienced and
long-standing management team who have developed the 3radical Voco engagement
technology platform. Under the guidance of the experienced New Board, and as
part of a group focused entirely on delivering the development and growth of
businesses in data, digital and media, the Existing Directors believe that
this team will thrive.
● Opportunities to leverage the 3radical business: 3radical's
technology will complement the products and services of other potential
acquisition targets.
● Footprint in EMEA, APAC and US: creating a global business is
key to maximising future growth. 3radical has established client relationships
in the US, across Europe, and in APAC via its office in Singapore, and this
offers an excellent opportunity to grow in these markets and to introduce
future acquisitions to global markets.
The Existing Directors believe that under the guidance of the New Board, and
as part of the Enlarged Group with access to complementary management
expertise and strategies, as well as additional sales and marketing resources,
the development of 3radical's business will accelerate.
6. Principal terms of the Acquisition
Under the terms of the Acquisition Agreement, the Company has conditionally
agreed to acquire the entire issued and to be issued share capital of 3radical
for a total consideration of £1,284,882 based on the Locked Box Accounts
subject to customary adjustments for any financial "leakage" (excluding
permitted leakage) from 3radical to the Sellers, during the period from the
Locked Box Date until Completion. The consideration for the Acquisition will
be satisfied by the issue of the Consideration Shares to the Sellers on
Admission.
Completion is subject to, inter alia, the passing at the General Meeting of
the Resolutions, there not having been any material adverse change in relation
to either 3radical or the Company since the date of the Acquisition Agreement
and Admission having occurred. The conditions to the Acquisition Agreement
must be satisfied or waived on or before 15 May 2024 or such other date as
may be agreed by the Company and the Sellers' representative.
The Acquisition Agreement contains customary warranties and indemnities from
the Principal Sellers in favour of the Company subject to certain limitations,
in particular as to the maximum amounts which may be claimed. The Company has
taken out warranty and indemnity insurance of up to £1,284,882 to provide
additional protection in respect of any claims that may arise under such
warranties and indemnities.
The Minority Agreements are conditional on Completion and are subject to the
provisions of the Acquisition Agreement relating to the Locked Box Accounts,
including certain adjustments for any financial "leakage" (excluding
permitted leakage) from 3radical to the Sellers during the period from the
Locked Box Date until Completion.
Application will be made to the London Stock Exchange for the Consideration
Shares to be admitted to trading on AIM. Admission of the Consideration Shares
is expected to become effective on 3 May 2024. The Consideration Shares will
be issued fully paid and, following allotment, will rank in full for all
dividends or other distributions hereafter declared, made or paid on the
Ordinary Shares of the Company and will rank pari passu in all other respects
with all other New Ordinary Shares and Existing Ordinary Shares in issue on
Admission.
Further details of the Acquisition Agreement and the Minority Agreements are
set out in paragraph 10 (h) of Part VII of this document.
7. Strategy of the Enlarged Group
Structural shift
As the advertising market adjusts to the privacy-centric environment, business
leaders are evolving their marketing to reflect a 'People First' focus on
valued consumers, rather than relying on commoditised data to continually
attract new audiences.
The Company's strategy therefore continues to be to capitalise on this
structural disruption in the marketing industry. The Company will invest in
becoming a leading provider of First Party Data solutions for the marketing
and advertising industry, aiming to make it the provider of choice, both for
marketers seeking solutions to gain First Party Data and then realise the
value of it, and for technology developers looking to secure and enhance the
future of their businesses.
The Company will continue to seek acquisitions that offer not only
complementary technologies to those provided by 3radical, but also access to
additional clients, geographical markets and verticals. The key acquisition
criteria Electric Guitar will consider include:
· operating in segments where opportunities exist to develop or
expand digital media and/or data services revenues;
· existing high-quality clients;
· complementary or supplementary management and/or technology to
existing businesses within the Enlarged Group;
· companies that provide the foundation or platform for a scalable
business which generates substantial and sustainable free cash flow over
time;
· the ability to grow with additional capital and/or be replicated
in other markets;
· having a sustainable competitive advantage or a unique selling
proposition, arising from a product or service that is in high demand;
· the potential for near-term cash flow and development success
and a significant return for Shareholders; and
· being able to be funded adequately to deliver a realistic plan of
achieving credible milestones and significant growth opportunities for
Shareholders.
This approach is coupled with a belief by the Directors that relatively high
interest rates are leaving many growth-oriented technology companies with less
access to the capital they need, resulting in lower expected valuations by
their founders and investors, and creating more opportunities for the Company
to acquire complementary technology businesses at more attractive valuations.
In conjunction with this, the Directors believe that the Company's quoted
shares may represent a more attractive form of consideration than a straight
cash exit, as sellers of businesses will not only be gaining access to the
benefits of complementary and experienced management, growth capital and
operational synergies, but also the opportunity for the equity consideration
they receive to increase in value over time to levels reflecting their
aspirations as these benefits are realised.
Commercial Strategy
· Sales and marketing
On Completion, the Company has an extensive and detailed plan to invest in
marketing resources to support sales and sales pipeline generation. This will
include, but not be limited to, website utilisation, advertising, and
exhibiting at industry events. The Company will investigate the needs of
specific market sectors and create tailored product offerings designed to
appeal to verticals such as retail, e-commerce and financial services.
Potential opportunities include vertical specific measurement and analysis
dashboards, vertical specific experiences, and integration with vertical
specific platforms such as Shopify for e-commerce.
· Dedicated sales and marketing staff
3radical has been preserving capital by largely relying on resellers for
sourcing new customers, whilst focusing its own resources on signing up those
new customers and providing sales and deployment support. On Completion, the
Company plans to create a sales team dedicated exclusively to sourcing
business which is anticipated to scale with the success of the Enlarged Group.
Sales and marketing will also complement the anticipated roll out of VSP, a
version of the Platform with a simpler user interface, designed to appeal not
only to marketing teams in larger organisations, but also to a new target
market of agencies, marketing departments of enterprises and large SMEs
wanting to deploy 3radical solutions quickly and with minimal support. Further
information on VSP is provided in paragraph 3 of Part II of this document.
· Client Development
Standard Clients
By freeing up the existing team from the responsibility for sourcing new
business, the Company will enable them to focus more on existing clients and
grow client revenue further. Additionally, following Completion, the Company
intends to invest in more dedicated account management and customer success
resource over time, to grow existing clients and support new clients as the
business grows. The Company will also seek opportunities for 3radical to
cross-sell products from a suite of offerings gained via future acquisitions
and investments.
Marquee clients
In addition to investing in developing the current sales pipeline, the Company
intends to identify and target high-value prospects which each have the
potential to provide greater revenues to 3radical. The Directors believe that
their industry expertise and relationships, in combination with those of the
existing 3radical management team, will enable the Company to extend the
existing product offering to encompass data hosting and related services, and
thereby increase the revenue potential from clients, with data hosting also
typically creating longer term client relationships.
· Product development
In addition to supporting 3radical's existing product development plan, the
Directors believe that their wide sector expertise will inform further product
development in partnership with 3radical's management and third parties,
enabling 3radical to capitalise on the shift in the market, and to complement
future acquisitions and investments. On Completion, the Company will therefore
seek opportunities to invest in the following areas of development:
Generative AI
Generative AI is disrupting both advertising and the development process. The
Company will investigate product development both internally and with third
parties to capitalise on the use of Generative AI to enhance the existing
product development strategy.
Data asset
3radical has collected a GDPR-compliant dataset which consists of
approximately 0.5 billion anonymised engagement interactions and associated
data. Independent due diligence has determined that "the 3radical data asset
contains high quality interaction stream data". This gives the Company
confidence that this dataset is suitable for monetising in a number of ways
including the use of Machine Learning to develop AI algorithms which could
enable the prediction and understanding of the ways in which consumers are
engaging with 3radical Voco.
· Measurement and tracking
The Company intends to partner with providers of Cookie-free measurement and
tracking to enable 3radical to deliver to clients a wider analysis of the
behaviour of engaged and non-engaged website traffic.
· Leveraging partners in the US and APAC
The Company intends to engage in joint marketing and other initiatives with
its partners in the US and APAC to accelerate their success. As VSP comes to
market the Directors believe this will open the opportunity for further
partnerships across all regions.
8. Financial Information
The Company
The following summary of the audited financial information relating to the
Company for the period from incorporation on 24 March 2021 to 31 March 2022
and the financial year ended 31 March 2023 has been extracted without
material adjustment from the Company's annual report and accounts which are
contained in Appendix A and Appendix B of this document. The summary
financial information below for the six months ended 30 September 2023 has
been extracted without material adjustment from the Company's unaudited half
year report which is contained in Appendix C of this document. These documents
are also available on the Company's website at
www.electricguitarplc.com/results-reports-and-presentations/.
(http://www.electricguitarplc.com/results-reports-and-presentations/)
In order to make a proper assessment of the financial performance of the
Enlarged Group's business, prospective investors should read this document as
a whole and not rely solely on the summarised information in this section.
Audited Audited Unaudited
Year ended Year ended Six months
Summary Statement of Comprehensive Income 31 March 31 March 2023 30 September 2023
2022 £'000 £'000
£'000
Revenue - - -
Operating (loss) (245) (544) (178)
Total comprehensive (loss) (245) (538) (591)
Audited Audited Unaudited
31 March 31 March As at 30 September 2023
2022 2023
Summary Statement of Financial Position £'000 £'000 £'000
Non-current assets - - -
Current assets 1,028 521 188
Total assets 1,028 521 188
Equity 992 455 (136)
Non-current liabilities - - -
Current liabilities 36 66 324
Total equity and liabilities 1,028 521 188
3radical
Part IV of this document contains audited consolidated historical financial
information of 3radical for the three years ended 31 March 2023 and the
unaudited interim financial information of 3radical for the six month periods
ended 30 September 2022 and 30 September 2023.
The following summary of the audited financial information relating to
3radical's activities for each of the three years to 31 March 2023 has been
extracted without material adjustment from the financial information on
3radical set out in Section B of Part IV of this document. The following
financial information for the six month period to 30 September 2023 has been
extracted from the unaudited interim financial information of 3radical set
out in Section C of Part IV of this document.
In order to make a proper assessment of the financial performance of the
Enlarged Group's business, prospective investors should read this document as
a whole and not rely solely on the summarised information in this section.
Audited Year ended Audited Year ended Audited Year ended Unaudited
31 March 2021 31 March 2022 31 March 2023 Six months
30 September
2023
Summary Statement of Comprehensive Income £'000 £'000 £'000 £'000
Revenue 600 619 710 259
Gross profit 410 474 498 163
Gross margin 68.3% 76.6% 70.1% 62.9%
Operating (loss) (1,742) (1,709) (1,045) (615)
(Loss) before tax (1,764) (1,712) (1,050) (615)
Total comprehensive (loss) (1,691) (1,555) (1,108) (568)
Audited Year ended Audited Year ended Audited Year ended Unaudited
31 March 2021 31 March 2022 31 March 2023 Six months
30 September
2023
Summary Statement of Financial Position £'000 £'000 £'000 £'000
Non-current assets 4 5 2 1
Current assets 596 565 365 354
Total assets 600 570 367 355
Equity 88 157 32 35
Non-current liabilities - - - -
Current liabilities 512 413 335 320
Total equity and liabilities 600 570 367 355
Non-IAS Information
EBITDA
The 3radical financial information set out in Part IV Section B "Historical
Financial Information of 3radical Limited" of this document includes certain
financial measures that are not defined or recognised under IAS, including
EBITDA. EBITDA is defined by 3radical as "earnings before interest, tax,
depreciation and amortisation". EBITDA for each of the three years ended 31
March 2021, 31 March 2022 and 31 March 2023 and the unaudited six-month
periods ended 30 September 2022 and 30 September 2023 is as follows:
Audited Year ended 31 March 2021 Audited Year ended 31 March 2022 Audited Year ended 31 March 2023 Unaudited Six months ended 30 September 2022 Unaudited Six months ended 30 September 2023
£'000 £'000 £'000 £'000 £'000
Operating (loss) (1,742) (1,709) (1,044) (284) (615)
Add back/ (deduct): Interest in operating expenses
- - (3) - -
Depreciation 5 5 8 2 1
Unrealised foreign exchange
(41) 18 (291) (568) 105
EBITDA (1,778) (1,686) (1,330) (850) (509)
Adjusted EBITDA
During the six-month period ended 30 September 2023, 3radical incurred certain
administrative expenses in anticipation of the Acquisition, Fundraising and
Admission. Had the decision to undertake the Acquisition, Fundraising and
Admission not been taken by 3radical, then such expenditure would not have
been incurred. During the six-month period ended 30 September 2022, 3radical
received payment of funds which were provided for in the prior year as bad
debt. This recovery has been excluded in the calculation of Adjusted EBITDA
for the six-month period ended 30 September 2022.
Adjusted EBITDA is therefore defined as EBITDA, less the additional
administrative expenses incurred in anticipation of the Acquisition,
Fundraising and Admission and recovery of bad debts provided for in prior
periods.
Unaudited Adjusted EBITDA for the six-month periods ended 30 September 2022
and 30 September 2023 is as follows:
Unaudited Six months ended 30 September 2022 Unaudited Six months ended 30 September 2023
£'000 £'000
EBITDA (850) (509)
(Deduct)/add back:
Non-recurring expenditure (41) 135
Adjusted EBITDA (891) (374)
Enlarged Group
An unaudited pro-forma statement of net assets of the Enlarged Group is
contained in Part V of this document to illustrate the effect of the
Acquisition, Fundraising, Equity Settlement and Admission on the Company, as
if the Acquisition, Fundraising, Equity Settlement and Admission had completed
at the most recent balance sheet date of 30 September 2023.
9. Current trading and prospects
The Company
The Company has continued to trade as a Special Purpose Acquisition Company
since it was listed on the standard segment of the Official List in January
2022.
In April 2023, the Company expanded its Board by the appointment of Richard
Horwood, an experienced corporate financier and media-tech entrepreneur and
manager, to help it continue to seek out and investigate potential
acquisitions, and he has since been appointed Chief Operating Officer. This
led to its agreeing non-binding heads of terms on 6 July 2023 to acquire
3radical. The Company then progressively engaged a series of advisers to
assist it in the detailed due diligence of 3radical, as well as the proposed
transfer of its listing to AIM, with a view to facilitating the proposed
Acquisition and Fundraising.
On 1 September 2023, the Company appointed experienced chartered accountant
Ben Lister as Chief Financial Officer.
On 27 October 2023, the Company secured a £250,000 loan facility from its
largest shareholder, Sanderson Capital Partners Limited, to help fund it to
complete the proposed Acquisition, £200,000 of which is drawn and the final
£50,000 is now being drawn down. On 26 March 2024, the Company entered into
an additional facility agreement with Sanderson Capital Partners Limited,
supplementing a term sheet signed on 11 March 2024, for the provision of a
£600,000 loan facility to the Company conditional on, inter alia, Completion
and Admission, none of which has been drawn down as at the date of this
document but it may be utilised later this year. Details of these arrangements
are set out in paragraphs 10 (d) and 10 (e) of Part VII of this document.
On 24 November 2023, the Company announced its interim results for the six
months to 30 September 2023, which are set out in Appendix C of this document.
3radical
Following a restructuring in late 2022 to reduce costs and seek to bring the
business closer to break even pending further investment, whilst maintaining
the benefit of 3radical's prior investment in the US market, the business has
been:
· focusing on developing its channel partnerships in the US with
Allant and in APAC with Mastercard in order to bring 3radical's capabilities
to their customers and prospects; and
· developing VSP - which retains the core capabilities of the
existing platform but offers a simpler configuration process enabling clients
to directly deploy their own campaigns and experiences, or make adjustments as
necessary, without deferring to 3radical.
The full benefit of the cost reductions is reflected in the cost base from
the start of the financial year ended 31 March 2024, with operational costs
(excluding FX and any one-time costs) for the six months to 30 September 2023
(as shown by the Interim Financial Information of the 3radical Group) halving
to £0.6 million from £1.2 million in the same period in the financial year
ended 31 March 2023.
Revenue for the six month period to 30 September 2023, shown by the Interim
Financial Information of the 3radical Group, reduced to £0.3 million from
£0.4 million for the comparative period in the previous financial year.
The reduction in net revenues has resulted in part from the transition from
direct sales in the US to indirect sales through Allant where the revenue
recognised by 3radical is moving to be net of partner commission, while also
reducing operating costs. There has also been some attrition in the customer
base as a result of issues within those customers' own businesses. In
addition, 3radical has been operating with extremely limited sales, marketing
and account management functions following the restructuring, which will
continue until Completion.
The second half of the financial year ended 31 March 2024 has also seen a
reduction in year on year revenue resulting from these factors. However, in
the second half of the financial year ended 31 March 2024, the reseller
partnership with Allant has started to yield new client wins, including two
new proof of concept clients in the US. In addition, 3radical has had success
increasing the value of some existing client relationships, such as the
addition of Jewson as a brand to a pre-existing relationship in September
2023; and contracts have been renewed with Lions Club/RKD in the US and Saint
Gobain in the UK, with a new contract recently signed with returning UK
client, Essilor. Both Allant and Mastercard have built promising pipelines of
future business to take forward into the new financial year.
The unaudited Adjusted EBITDA loss (which excludes FX and one-time costs) for
the six month period to 30 September 2023 reduced to £0.4 million (H1 FY23:
£0.9 million). The second half of the financial year ended 31 March 2024 has
continued to see the benefit of cost savings, with the full year Adjusted
EBITDA loss also expected to be lower than the prior year.
Looking forward, VSP has entered beta testing and is expected to launch
commercially during the summer of 2024. Positive feedback on the product has
already been received. The relationships with Allant and Mastercard and the
strength of their pipelines, increased investment and expertise in sales and
marketing from Electric Guitar, and market developments driving the move to
First Party Data, underpin the Directors' view that 3radical is well
positioned to grow in the new financial year and beyond.
10. Directors and senior management
(a) Existing Directors
John Hutchinson (aged 62) - Non-Executive Chair
John Hutchinson is an experienced Non-Executive Director and founder of
businesses. He has maintained his career as a corporate lawyer for more than
30 years alongside his external business activities.
In 2005 he became Chair of Intavent Limited, a medical devices company,
overseeing realisation of value for its shareholders over two years as the
company wound up its UK activities. In 2007 he was part of a team that set up
Epi-V, a private equity fund investing in technologies for the oil and gas
industry. In 2012 he became managing partner of the fund, responsible for over
£110 million of transactions. In 2015 he was asked to take over as managing
partner of Pitmans LLP, where he oversaw the reorganisation of the firm's
management team and took the firm into a merger in 2018, creating a more than
£50 million turnover law firm, BDB Pitmans LLP. John is currently managing
partner of BDB Pitmans LLP.
John has been on the boards of several innovative and growth orientated
technology companies. Examples include SafeToNet Limited, a company
safeguarding children globally online, and Flodatix Limited, a private equity
backed multi-phase flow metering company using unique technology in the oil
and gas sector.
John has a degree from the University of Victoria in Canada.
John Regan (aged 54) - Chief Executive Officer
John is a serial entrepreneur with 30 years' experience of the advertising
industry, including over 25 years of experience in data privacy and marketing
data analytics. He started his career selling classified advertisements for
the Daily Telegraph in 1991, before moving into radio advertising for
Independent Radio Sales, part of Katz Communications.
In 1998, he founded Cognisance Ltd, one of the first independent marketing
analysis businesses in the UK, which he sold to Diversified Agencies UK
Holdings Ltd (formerly Lopex plc), a subsidiary of Havas Advertising S.A, the
French multinational advertising and public relations company. It became part
of EHS Brann.
John then co-founded his second and third businesses, namely Absolute
Intuistic Limited, trading as AI Data Intelligence, and Intuistic Limited,
which were bought out by Communisis Plc in 2008. AI Data Intelligence
specialised in the use of advanced analytics to optimise direct mail campaigns
for large clients including Royal Bank of Scotland, Lloyds TSB and Vodafone.
Following the sale, John spent two years as a director on the acquisitions
team of Communisis Data Limited (part of the Communisis Plc group). In 2019 he
founded the advertising technology business Mymyne Limited, which continues to
research digital privacy and digital advertising.
John has a BA(Hons) degree in Social Policy and Administration from Portsmouth
University.
Richard Horwood (aged 66) - Chief Operating Officer
Richard joined the Company in 2023 and has been an innovator in media and
technology for some 30 years, after careers in investment banking and law.
Having started out as a solicitor in private practice, he joined Hill Samuel
Bank's corporate finance department in 1985 before becoming head of M&A
at securities house Smith New Court in 1990.
Recruited to create and run the Mirror Group's TV business in 1993, his
300-strong division comprised a network of national and local broadcasters, an
independent production company, a premium rate telephone service provider, and
an airtime sales house.
In 2001 Richard bought, refinanced and ran technology company Vio, later
adding AdSEND in America, turning them into a world market leader in print
advertising online delivery solutions. Living in New York for two years, he
was instrumental in establishing AdsML as the global XML specification for
managing print advertising workflows.
After returning to the UK, in 2010 he partnered with Sony and three major
local media companies to bid for the London TV franchise. Since then, Richard
has been actively involved in independent video production, neighbourhood
planning, and charitable activities.
Richard is currently the Non-Executive Chair of recruitment agency, Retail
Human Resources PLC, and of The Local Digital Company, a specialist in online
video production. He is also an investor in businesses ranging from frozen
food delivery to GP practice administration.
Richard has an LLB (Hons) degree in law from Bristol University and passed the
Solicitors Finals at the College of Law, Guildford.
Sarfraz Munshi (aged 33) - Non-Executive Director
Sarfraz has over nine years of experience in the financial industry. In 2013
Sarfraz began working in stockbroking, managing and advising hedge funds and
high and ultra-high net worth clients in markets including but not limited to
the UK, Hong Kong, Australia, Canada and US.
In 2015 Sarfraz became an investment manager and partner at Sanderson Capital
Partners Limited, a family office, successfully funding, investing and
exiting in numerous listed investments. Sarfraz has also invested in numerous
private equity deals including in the technology, oil & gas and biotech
sectors.
Sarfraz has a first class degree in economics from the University of
Nottingham. Sarfraz will cease to be a Director on Admission.
(b) Proposed Directors
David Eldridge (aged 55) - Non-Executive Director
David established his first company aged 14, to market the software he wrote,
which won first prize in a BBC National Competition. Roles at Shell and GB
Group were followed in 1997 by the co-founding of Alterian plc, where David
led its IPO in 2000 and its development to become a recognised leader in the
marketing platform space. He is a co-founder of 3radical and was its CEO until
2020 and has since been its Chair. Featured in BtoB Magazine's "Who's who in
BtoB" and Data Strategy's "Power 50 in Data", David sits on the board of
several high growth tech companies.
David has a first class BSc (Hons) degree in business & management
studies from Salford University.
Grahame Cook (aged 66) - Independent Non-Executive Director
Grahame is an experienced public company non-executive director, with over 20
years' experience as an audit and risk committee Chair. Grahame's background
is in investment banking, with 20 years' experience of M&A, equity capital
markets and corporate advisory. Grahame started his career at Arthur Andersen,
where he qualified as a chartered accountant.
Grahame has sat on a number of technology and technology rich healthcare
company boards, both listed and unlisted. Grahame currently serves as the
Senior Independent Director and chair of the Audit, Risk and Valuations
Committee at Molten Ventures plc, as well as a non-executive director of
Advanced Medical Solutions Group plc and Minoan plc.
Caroline Worboys (née Johnston) (aged 63) - Independent Non-Executive
Director
Caroline brings a wealth of experience in the data industry. After selling her
data business to News International, Caroline went on to consolidate and lead
the post-sales growth of their data-centric businesses as CEO of Broadsystem,
and their future evolution post its second sale to Callcredit Information
Group. After Callcredit was sold to private equity, Caroline headed Wunderman
Data and Insights in Europe and then globally, based in their New York
office.
Caroline has also served as Chief Operating Officer and founder at Outra Ltd,
a data specialist focused on multi-channel marketing, customer targeting and
granular segmentation, until 2021.
Caroline was Chair of the IDM (the Institute of Data & Marketing) for over
10 years, is on the board of the DM Trust and has been Deputy Chair of the DMA
(the Data & Marketing Association) for nearly two years.
(c) Senior Management
Ben Lister (aged 41) - Chief Financial Officer
Ben is a chartered accountant and chartered tax adviser, having qualified
with Deloitte in 2008. He held a number of senior finance and operational
roles at Lloyd's Register from 2011 to 2018, before joining Fox Networks Group
as Finance Director in 2018. Prior to joining Electric Guitar in September
2023, Ben held the position of UK Financial Controller at The Engine Group and
was key in selling the business to Next 15 plc in March 2022 and subsequently
reorganising and integrating the business into Next 15 architecture.
Rebecca Trivella (aged 51) - Commercial Director of 3radical
Rebecca is an experienced commercial leader of regional, EMEA and worldwide
sales with deep knowledge of working across data and analytics, MarTech and
Software as a Service (SaaS).
She is a successful and skilled leader, with over 25 years' experience gained
across a range of organisations and market sectors. Rebecca has built teams,
developed existing teams and been responsible for revenue from both direct and
indirect routes to market. She has experience of working in a variety of
organisations, ranging from start-ups to global companies, including
ACNielsen, IRI, Alterian plc, SDL and most recently, data science consulting
firm, Mango Solutions. Rebecca joined 3radical in 2020.
11. The Fundraising and Equity Settlement
Axis Capital Markets and Allenby Capital as agents for the Company pursuant to
the Placing Agreement have conditionally placed 29,738,090 Placing Shares with
investors at the Issue Price to raise approximately £0.62 million and
Subscription Letters have been received pursuant to the Subscription making
conditional application for 33,249,320 Subscription Shares at the Issue Price
to raise £0.70 million, in each case before expenses. Neither the Placing nor
the Subscription has been underwritten by the Joint Brokers.
The Fundraising Shares represent approximately 28.14 per cent. of the Enlarged
Share Capital and on issue will raise gross proceeds for the Company of £1.32
million (before estimated expenses of £1.3 million of which £0.4 million has
been paid). On Admission, the Company will have a market capitalisation of
approximately £4.7 million at the Issue Price.
The Placing and the Subscription are conditional upon Admission and the
Placing Agreement becoming unconditional in all other respects and not being
terminated by 8.00 a.m. on 3 May 2024 or such later date (being no later than
8.00 a.m. on 15 May 2024) as the Company and the Joint Brokers may agree. The
Placing Agreement contains provisions entitling the Joint Brokers to terminate
the Placing in certain customary circumstances prior to Admission becoming
effective. If this right is exercised, the Placing and Subscription will lapse
and Admission will not occur and any monies received in respect of the Placing
and Subscription will be returned to investors without interest.
As part of the Fundraising certain of the Directors have agreed to subscribe
for Ordinary Shares at the Issue Price as follows:
Name Number of New Ordinary Shares
Richard Horwood 1,296,960
John Regan 4,952,380
David Eldridge 1,904,760
The Fundraising Shares will be issued credited as fully paid and will, on
Admission, rank pari passu in all respects with the Existing Ordinary Shares
and the other New Ordinary Shares, including the right to receive all
dividends and other distributions declared, made or paid on the Enlarged Share
Capital after Admission.
Further details of the Placing Agreement and Subscription Letters are set out
in paragraphs 10 (j) and 10 (i) of Part VII of this document.
Equity Settlement
Certain of the Directors have agreed to accept Conversion Shares in
satisfaction of accrued salary and bonuses due as follows:
Name Number of Conversion Shares
John Hutchinson 3,214,280
Richard Horwood 1,441,140
Sanderson Capital Partners Limited, which has lent (i) £200,000 to the
Company, and another £50,000 which is currently being drawn; and (ii)
£75,000 to 3radical (which loan will be assumed by the Company at Completion)
has agreed to accept 25,476,190 Loan Shares at the Issue Price in satisfaction
in full of these loans and all associated facility fees, drawdown fees and
legal fees, and in satisfaction of facility fees, drawdown fees and legal
fees associated with the Sanderson Loan, which, in aggregate, total £535,000.
Details of the loan agreements for these loans are set out in paragraphs 10
(d), 10 (e) and 10 (f) of Part VII of this document.
Anglia Securities Limited, which has provided the Anglia Loan and of which
£125,000 has been drawn, has agreed to accept 1,190,480 Loan Shares at the
Issue Price in satisfaction of £25,000 of the loan. Details of the Anglia
Loan are set out in paragraph 10 (c) of Part VII of this document.
10,476,170 Fee Shares will be issued by the Company at the Issue Price on
Admission in satisfaction of approximately £220,000 of fees payable by the
Company and 3radical in connection with the Proposals as set out in paragraph
21(g) of Part VII of this document.
The Conversion Shares, Loan Shares and Fee Shares will be issued credited as
fully paid and will, on Admission, rank pari passu in all respects with the
Existing Ordinary Shares and the other New Ordinary Shares, including the
right to receive all dividends and other distributions declared, made or paid
on the Enlarged Share Capital after Admission.
12. Use of Fundraising proceeds
The net proceeds of the Fundraising will provide the Enlarged Group with a
strengthened balance sheet and additional working capital to enable it to
invest in the growth of 3radical and implement the strategy of the Enlarged
Group, as well as to repay up to £190,000 (plus accrued but unpaid interest)
of the Anglia Securities loan referred to in paragraph 10 (c) of Part VII of
this document. The strategy of the Enlarged Group will be achieved through,
inter alia, having a stronger balance sheet, the further development and
commercialisation of the 3radical Voco technology and services, and through
developing the Company's evolving pipeline of acquisitions and investments.
Investment will initially be focused on the following areas:
· Sales and marketing: An immediate focus will be investment in
sales and marketing resources for 3radical. 3radical's success to date has
been with limited investment and resource in sales and marketing, most
recently relying on resellers for sourcing new customers. The Enlarged Group
will invest in direct sales and marketing resources, with a focus on promoting
the Voco Solution Portal, which is scheduled for launch during the summer of
2024, as well as to win additional sales of the existing 3radical Voco
solution directly from new customers.
· Generative AI: Investment will be made in exploring and
developing solutions utilising Generative AI. Generative AI excels at
one-to-one conversations with masses of individuals and therefore has the
potential to replace incumbent mass-produced digital advertising, with an
impact, the Directors believe, similar in significance to how classified
print advertising was superseded by online search engines. It could also offer
considerable efficiencies in other marketing functions. The Enlarged Group
will utilise existing software tools in the market to build AI-fueled
solutions for marketers, whether as value-added capabilities of the 3radical
Voco platform, or as new products in collaboration with third parties. Early
testing of AI integration into 3radical Voco has shown promising results with
3radical's development team being able to recreate the look and feel of a
customer site faster, potentially saving the customer success team
significant time when configuring enterprise level new solutions. In the
short term, the Enlarged Group plans to research the use of AI to further
tailor gaming experiences according to customer specifications.
· Data Asset: 3radical has collected a dataset consisting of
approximately 0.5 billion interactions. As at the date of this document, due
diligence has established that this dataset is likely to be valuable for
developing an AI powered product. Investment will be made in exploring this
potential and developing this product.
13. Admission and CREST
Application will be made to the London Stock Exchange for the Enlarged Share
Capital to be admitted to trading on AIM. It is expected that Admission will
take place, and that dealings in the Enlarged Share Capital on AIM will
commence, on or around 8.00 a.m. on 3 May 2024.
The Articles permit the holding of Ordinary Shares under the CREST system and
therefore from Admission, settlement of transactions in the Ordinary Shares
may take place within the CREST system, if any Shareholder so wishes. CREST is
a paperless settlement system in the United Kingdom enabling securities to be
evidenced otherwise than by a certificate and to be transferred otherwise
than by a written instrument. CREST is a voluntary system and holders of
Ordinary Shares who wish to receive and retain share certificates will be
able to do so.
14. Lock-in Deeds
Pursuant to the Lock-in Deeds, certain Locked-in Persons (comprising the
Directors (excluding Caroline Worboys, Grahame Cook and Sarfraz Munshi) and
certain employees and other shareholders of the Enlarged Group) owning a total
of 96,611,223 Ordinary Shares on Admission, representing approximately 43.16
per cent. of the Enlarged Share Capital, have agreed that, subject to certain
exceptions, they will not dispose of any Ordinary Shares held by them at
Admission during the period of 12 months from the date of Admission. In
addition, for a further 12 months from the first anniversary of Admission
they have each agreed with Allenby Capital and Axis Capital Markets not to
dispose of any Ordinary Shares held by them at Admission except in accordance
with certain orderly market principles set out in the Lock-in Deeds.
In addition, certain other Locked-in Persons owning a total of 15,298,329
Ordinary Shares on Admission, representing approximately 6.83 per cent. of the
Enlarged Share Capital, have agreed that, subject to certain exceptions, they
will not dispose of any Ordinary Shares held by them at Admission during the
period of six months from the date of Admission. In addition, for a further 12
months from the end of such six month restriction, they have each agreed with
Allenby Capital and Axis Capital Markets not to dispose of any Ordinary Shares
held by them at Admission except in accordance with certain orderly market
principles set out in their Lock-in Deeds.
One other Locked-in Person owning a total of 1,450,745 Ordinary Shares on
Admission, representing approximately 0.65 per cent. of the Enlarged Share
Capital, has agreed for a period of 24 months from the date of Admission not
to dispose of Ordinary Shares held by him except in accordance with certain
orderly market principles set out in his Lock-in Deed.
The circumstances in which Locked-in Persons may dispose of Ordinary Shares
during the Lock-In Period, include where a Locked-in Person who is a Seller is
required to pay any tax liability arising as a result of their being unable to
claim EIS tax relief or the withdrawal of such relief due to the Acquisition
and/or such person is required to pay any tax or other liability incurred by
them in connection with their exercise of a relevant option to acquire shares
in 3radical prior to Admission (including any liability incurred by them with
respect to the price to be paid by them on the exercise of the option).
Additionally, where a Locked-in Person is a Director, such Locked-in Person
may dispose of Ordinary Shares during the Lock-In Period if he or she is
required to pay any amount to the Joint Brokers in respect of any claim
brought against them under the terms of the Placing Agreement and in the case
of Richard Horwood and Ben Lister may dispose of Ordinary Shares during the
Lock-in Period to satisfy any tax liability arising as a result of receiving
Consideration Shares.
Further details of the Lock-in Deeds are set out in paragraph 10 (k) of Part
VII of this document.
15. Share options and warrants
The Directors recognise the importance of the Company's ability to recruit,
incentivise and retain its key employees. Therefore, the Directors believe
that certain employees should be given the opportunity to participate in share
incentive arrangements to align them with the success of the Company going
forward.
The Enlarged Group intends to adopt the Share Plans at Admission. It is
anticipated that Share Options over a total of 32,455,827 new Ordinary Shares
will be granted to certain Directors and employees pursuant to the Electric
Guitar plc 2024 Employee Incentive Plan on Admission, exercisable at the Issue
Price. The interests of the Directors in Share Options to be granted under the
Electric Guitar plc 2024 Employee Incentive Plan are set out in paragraph 9(b)
of Part VII of this document. Further details of the Share Plans are set out
in paragraph 17 of Part VII of this document.
As at the date of this document the Company has issued and are outstanding:
· 3,494,910 A-Series Warrants, all of which will be surrendered
with effect from Admission; and
· 1,157,256 B-Series Warrants issued and outstanding, all of which
will be exercisable from Completion for a period of 3 years, at 4.5 pence per
share.
In exchange for the surrender of the A-Series Warrants on Admission:
· John Regan and Richard Horwood will be granted EMI options over
the same number of Ordinary Shares as their A-Series Warrants and with the
same vesting terms but with an exercise price per share equal to the Issue
Price;
· John Hutchinson will be granted options under the Consultant Plan
over the same number of Ordinary Shares as his A-Series Warrants and with the
same vesting terms but with an exercise price per share equal to the Issue
Price; and
· Sarfraz Munshi will receive New Warrants over 205,991 Ordinary
Shares exercisable at the Issue Price for a period of 3 years from Admission.
Conditional on Admission, the Company has also granted the Broker Warrants.
Further details of the Broker Warrants, the New Warrants and the Share Plans
are set out in paragraphs 10 and 17 of Part VII of this document.
16. Dividend policy
The primary purpose of the Fundraising is to provide growth capital with which
to fund and accelerate the continuing expansion and development of the
Enlarged Group's business and to pursue future acquisitions and further
investments. Accordingly, it is not expected that the Company will declare a
dividend in the near term. The payment of dividends will only be recommended
by the New Board at such time as it considers it commercially prudent to do
so, having regard to the availability of distributable profits and the funds
required to finance the continuing working capital requirements and future
growth of the Enlarged Group.
17. Corporate governance
The Board recognises the importance of sound corporate governance and intends
to adopt, with effect from Admission, the QCA Code insofar as they consider
the QCA Code to be appropriate given the Company's size, board structure,
stage of development and resources. Details of how the Company complies with
the QCA Code is set out in Part VI of this document, as well as details of the
Committees.
Share Dealing Code
With effect from Admission, the Company will operate its Share Dealing Policy,
which is compliant with Article 19 of UK MAR and Rule 21 of the AIM Rules for
Companies. The Share Dealing Policy will apply to any person discharging
managerial responsibility, including the Directors, and the senior management
and any closely associated persons and applicable employees.
The Share Dealing Policy imposes restrictions beyond those that are imposed by
law (including by the FSMA, UK MAR and other relevant legislation) and its
purpose is to ensure that persons discharging managerial responsibility and
persons connected with them do not abuse, and do not place themselves under
suspicion of abusing, price-sensitive information that they may have or be
thought to have, especially in periods leading up to an announcement of both
financial results. The Share Dealing Policy sets out a notification
procedure which is required to be followed prior to any dealing in the
Company's securities.
Anti-bribery policy
The Company has adopted an anti-bribery and corruption policy designed to
ensure that the business of the Enlarged Group is conducted in an honest and
ethical manner. The policy applies to all persons working for the Enlarged
Group in any capacity and sets out detailed guidance on the kind of behaviour
that may amount to bribery and which the Company will treat as unacceptable.
Primary responsibility for implementing the policy rests with the
Non-Executive Chair.
18. Takeover Code
The Takeover Code applies to the Company. Under Rule 9 of the Takeover Code
("Rule 9"), 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 per cent. or more of the voting rights of
a company which is subject to the Takeover 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
per cent. of the voting rights of such a company but does not hold shares
carrying more than 50 per cent. 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.
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.
The Company has agreed with the Panel that David Eldridge and George
Stavrinidis (the directors of 3radical), Rebecca Trivella (Commercial Director
of 3radical), Clive Armitage (former director and consultant of 3radical) and
certain other employees and shareholders of 3radical and their connected
parties are acting in concert for the purposes of the Takeover Code, in
relation to 3radical. Following Admission, the members of the Concert Party
will be interested in 19,104,227 Ordinary Shares in aggregate, representing
8.54 per cent. of the total voting rights of the Company. In addition, it is
intended that certain members of the Concert Party should be granted 2,238,333
Share Options on Admission. If those Share Options are exercised in full (and
assuming that no other person converts any convertible securities or exercises
any options or any other right to subscribe for shares in the Company and no
other Ordinary Shares are issued), the members of the Concert Party would then
be interested in 21,342,560 Ordinary Shares in aggregate, representing
approximately 9.44 per cent. of the then total voting rights of the Company. A
table showing the interests in shares of the members of the Concert Party on
Admission and following the exercise of Share Options is set out below.
Immediately following admission Following exercise of Share Options*
Name of Concert shareholder No. of Ordinary Shares Percentage of Enlarged Share Capital No. of Share Options Percentage of Enlarged Share Capital No. of Ordinary Shares Percentage of Enlarged Party Share Capital
David Eldridge 5,418,360 2.42% 2,238,333 1.00% 7,656,693 3.39%
George Stavrinidis 3,516,604 1.57% - - 3,516,604 1.57%
Rebecca Trivella 1,840,831 0.82% - - 1,840,831 0.82%
Clive Armitage 558,824 0.25% - - 558,824 0.25%
Others 7,769,608 3.47% - - 7,769,608 3.47%
Total 19,104,227 8.54% 2,238,333 1.00% 21,342,560 9.50%
*assuming the exercise of all Share Options held by the Concert Party and that
no other person converts any convertible securities or exercises any options
or any other right to subscribe for shares in the Company and no other
Ordinary Shares are issued
19. Taxation
Your attention is drawn to paragraph 20 of Part VII of this document. These
details are intended only as a general guide to the current tax position under
UK law. If an investor is in any doubt as to their tax position, they should
consult their own independent financial adviser immediately.
20. General Meeting
Set out at the end of this document is a notice convening the General Meeting.
A Form of Proxy for use by Shareholders in connection with the General Meeting
has been sent to Shareholders with this document.
The Resolutions to be proposed at the General Meeting are, in summary, as
follows:
1. To approve the Acquisition.
2. To authorise the Directors to allot and issue the Fundraising Shares,
the Consideration Shares, the Conversion Shares, the Fee Shares, the Loan
Shares, the Broker Warrants, the New Warrants and new Ordinary Shares pursuant
to any future conversion of the Sanderson Loan.
3. To authorise the Directors to allot shares up to an aggregate nominal
amount of £373,055.48, being approximately one third of the Enlarged Share
Capital.
4. To disapply the pre-emption provisions of section 561 of the Act, to
allow the Directors to issue the Fundraising Shares for cash pursuant to the
Placing and Subscription, to issue the Loan Shares, the Fee Shares, the
Conversion Shares and new Ordinary Shares pursuant to any future conversion of
the Sanderson Loan and to issue the Broker Warrants and the New Warrants
conferring rights to subscribe in cash for Ordinary Shares.
5. To disapply the pre-emption provisions of section 561 of the Act, to
allow the Directors to issue equity securities (other than as referred to in
paragraph 4 above) in relation to any rights issue or open offer and otherwise
up to a maximum aggregate nominal amount of £111,916.64 (representing
approximately 10 per cent. of the Enlarged Share Capital).
6. To allow the Directors to issue equity securities up to an additional
10 per cent. of the Enlarged Share Capital to be used for either an
acquisition or specified capital investment and to make a follow on offer to
existing holders of shares up to an aggregate nominal amount equal to 20 per
cent. of such securities.
Shareholders appointing a proxy to vote on their behalf at the General Meeting
are recommended to appoint the Chair of the General Meeting as their proxy.
The Chair will vote all proxy votes at the meeting in accordance with
shareholder instructions set out in completed Forms of Proxy.
A Form of Proxy is enclosed for use at the General Meeting. Shareholders can
appoint a proxy by following the notes to the Notice of General Meeting and in
the Form of Proxy.
The Resolutions will be put to a vote on a poll. This will result in a more
accurate reflection of the views of Shareholders by ensuring that every vote
is recognised. On a poll, each Shareholder has one vote for every Ordinary
Share held.
Completed Forms of Proxy should be returned to Share Registrars Limited as
soon as possible and, in any event, so as to be received by not later than
9.00 a.m. on 29 April 2024. If a Shareholder holds their Ordinary Shares in
uncertificated form in CREST, they 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 at the end of this document. Proxies submitted via CREST must be
received by Share Registrars Limited by no later than 9.00 a.m. on 29 April
2024 (or, if the General Meeting is adjourned, 48 hours (excluding any part of
a day that is not a working day) before the time fixed for the adjourned
meeting).
21. Irrevocable undertakings
The Company has received irrevocable undertakings from each of the Existing
Directors (except Sarfraz Niaz Munshi who is not currently a shareholder) and
certain other shareholders to vote in favour of the Resolutions (or procure to
be done) in respect of their interests in Ordinary Shares (and those of their
family and trusts), representing, in aggregate, approximately 43.32 per cent.
of the Existing Ordinary Shares.
22. Further information
Prospective investors should read the whole of this document, which provides
additional information on the Company, the Enlarged Group and the Fundraising,
and not rely on summaries or individual parts only. In particular, the
attention of prospective investors is drawn to Part III which contains a
summary of the risk factors relating to an investment in the Company.
23. Recommendation and action to be taken by Shareholders
The Existing Directors believe that the Proposals are in the best interests of
Shareholders and the Company as a whole and therefore recommend that all
Shareholders vote in favour of Resolutions as they have undertaken to do in
respect of their own aggregate beneficial holdings of 7,341,000 Ordinary
Shares, representing approximately 12.69 per cent. of the Existing Ordinary
Shares.
In the event the Acquisition does not complete the Company would remain
classified as a shell company and the Existing Ordinary Shares would remain
listed on the Official List. The Company has expended a significant amount
of its available cash resources on the due diligence and costs incurred in
connection with the proposed acquisition of 3radical. Therefore, if the
Acquisition does not complete, the Company will need to raise further working
capital to enable the Company to continue as a going concern.
PART II
INFORMATION ON 3RADICAL
1. Introduction
Led by an experienced team of marketing technology professionals, 3radical has
created and proven a Software as a Service platform, 3radical Voco, which
enables organisations to engage individuals and request their data directly
using progressive and interactive digital experiences, at scale. This data can
be critical for marketing and for providing a compelling customer experience,
optimising communications, designing products and services, and, ultimately,
driving revenues.
The Existing Directors believe that 3radical Voco is well positioned to
capitalise on the shift driven by data legislation, consumer sentiment and
technology changes, which means that brands and businesses need to acquire
data themselves rather than purchase it from third parties. Further details on
the market opportunity are set out in paragraph 3 of Part I of this document.
Nearly £8 million has been invested in 3radical Voco and its scalability and
robustness are proven by demanding clients across financial services, online
gaming and e-commerce sectors, amongst others. The Platform is already
deployed by some major brands in the UK, US and APAC.
A very large number of interactions with individuals have been delivered by
3radical Voco to date and approximately 0.5 billion interactions have been
anonymised and streamed into a data asset which provides 3radical with a
unique asset and insight into consumer behaviour to capitalise on.
2. Background and history of 3radical
3radical was founded by David Eldridge, Michael Talbot and Timothy McCarthy
(together, the "Founders") in December 2011. The Founders had also been
founders of Alterian plc, a cross channel campaign management software
provider, where they were CEO, CTO and R&D Director respectively. Alterian
plc was founded in 1997, listed on the Main Market of the London Stock
Exchange in 2000 and was sold in 2012 to SDL plc following expansion into the
US and APAC and completing and integrating a number of acquisitions.
The Founders believed that traditional marketing approaches were degrading in
their effectiveness and that a way to reach consumers with individually
targeted offers and incentives via their mobile phones would deliver greater
engagement and response.
The original version of the 3radical product combined a mobile App including a
series of games and requests (e.g., visit a store or website, buy a product)
with rewards and a points system whereby rewards earned for carrying out
requests could be used to signal status or for level ups in the games. This
was powered by a Software as a Service campaign management and analytics
software tool enabling brands to set up their requests and rewards within that
software and monitor their effectiveness and optimise them.
In 2013 a first version of the 3radical product underwent trials in Singapore
and 3radical's Singapore subsidiary, 3radical Pte Limited, was established in
May 2013. The first external finance was raised to support these trials from a
variety of "angel investors", with the business having been funded by its
Founders to this point.
Data and insight gathered from the initial trials led to 3radical changing
approach. The engagement mechanics included in the product did generate higher
response and engagement rates than traditional approaches, but the main
feedback was that brands were more interested in using the engagement
mechanics included in the 3radical product directly with their own audience
rather than taking part in an App where multiple brands provided content for
the same audience.
The 3radical product was therefore modified to enable the creation and
deployment of interactive digital experiences using a range of requests and
rewards by a single brand. It was made commercially available in Singapore to
capitalise on the interest created during the trial period and initial
customers were signed up
in 2014, including DBS Bank, the largest consumer bank in Singapore which saw
the opportunity to increase engagement with card offers using the 3radical
mechanics.
In 2014 3radical Pty. Ltd was formed in Australia as a wholly owned subsidiary
of 3radical and a small team hired to promote the Platform in that market.
This was seen as a steppingstone to larger Western markets. In late 2014,
Anytime Fitness was signed as an initial Australian customer.
Also, in late 2014 a small commercial team was hired in the UK to promote the
Platform and initial UK customers began to be signed from summer 2015.
3radical was particularly successful in winning customers in the casual dining
market in the UK, including Azzuri Group, Casual Dining Group and Mitchells
and Butlers.
Throughout the development of the 3radical product, now named 3radical Voco,
the Platform continued to receive substantial investment into the scalability,
breadth of content, and the delivery of content to a range of channels beyond
mobile applications (e.g. web browsers).
In 2019 the business carried out a strategic review and identified that the
most valuable use case for the Platform was that it enabled brands to ask for
data directly from individuals and for permission to use that data for
marketing and other purposes. With the introduction of legislation such as the
GDPR limiting how data could be gathered and shared, an increasing awareness
amongst consumers of the value of their data and how it was being used and
moves by technology firms such as Google to enable consumers to protect their
privacy, the 3radical Directors believed that advertisers and marketers
recognised that gathering data directly from individuals at scale was seen as
a necessary solution. Interactive experiences delivered by the 3radical Voco
platform, with its ability to use request and reward techniques to increase
engagement and response, had successfully earned First Party Data for brands
and customers using the Platform to date. The 3radical Directors therefore
decided to focus on this use case, which it saw as a rapidly growing
opportunity, and to launch it in the US market which was seen as the largest
in the world for marketing data.
In March 2020, 3radical Inc was formed in the US as a wholly owned subsidiary
of 3radical and a small team hired to promote 3radical Voco and its use to
earn data. In order to support funding this strategy, resources were reduced
in other markets.
COVID-19 had a material negative impact on the business, especially in the UK
where a large portion of the revenue was from casual dining and in Singapore
where a major customer cancelled the roll out of the Platform due to budget
reductions. However, during the 2020 to 2022 period, 3radical revenue in the
US began to build to replace lost revenue in other territories. There was
significant interest in the First Party Data proposition and whilst, in common
with other businesses, spend on First Party Data was slower to start than
expected, customers were being won, including FKA Homedics, Giving Assistant
and Kayser Roth. Over the period the board of 3radical considered ways to
accelerate progress, including merging with complementary businesses, but did
not identify any appropriate opportunities to progress to completion.
Following a review of the pace of progress and based on the then current
funding environment, in Autumn 2022 the 3radical Directors decided to
restructure 3radical to reduce costs and seek to bring the business closer to
break even, whilst maintaining the benefit of the investment in the US market.
Accordingly, the US team left the business in late 2022 and joined marketing
services provider Allant, which became a 3radical reseller partner in the US,
selling and supporting the Platform in the region for both new and existing
customers in return for a margin on sales to these customers. Other cost
saving measures were also implemented such as significantly reducing the
marketing budget by c.80 per cent. during the six months ended 31 March 2023
compared to the six months ended 31 March 2022. Altogether, this reduced
operating costs of 3radical by circa 50 per cent. for the period April to June
2023 compared to the same period in the prior year. 3radical also focused on
developing sales partnerships as a route to market, including a partnership in
APAC with Mastercard. Both the Allant and Mastercard partnerships have
resulted in multiple new clients.
Given the investment of approximately £8 million into developing the
Platform, 3radical has accumulated tax losses of approximately £6 million in
the UK, £2 million in APAC and £2 million in the US, from which the Enlarged
Group expects to be able to benefit in the future.
3. 3radical's product and services - 3radical Voco
3radical Voco is a proprietary SaaS platform that enables organisations to
collect First Party Data, increase audience engagement and repeat visits,
drive loyalty, and acquire customers. It does this by using digital
experiences and gamification techniques, such as games, quizzes and surveys,
to interact with audiences in a timely and relevant manner across various
channels, incentivising them with rewards or other value in exchange for
access to their data. This contrasts with the traditional covert methods of
using Cookies to track users and acquire Third Party Data.
3radical Voco tailors the user experience in real-time based on user-provided
information and any other information available to the Platform. To improve
the quality and depth of the data gathered, it also uses progressive data
capture, which collects First Party Data in stages rather than through lengthy
questionnaires.
The Platform allows marketers to choose from a wide array of pre-designed
experiences or create bespoke experiences which integrate through the 3radical
Voco API.
3radical Voco is designed to support consumer journeys and First Party Data
acquisition, adapting the experience as consumer needs evolve from acquisition
and onboarding, to retention and loyalty.
Key benefits of 3radical Voco
· Enterprise-level technology: Built to handle the complexities and
nuances of enterprise requirements, offering more than just simple, one-off
experiences. This is validated by the roster of blue chip clients 3radical
currently serves and has served.
· Strategic integration: Seamlessly integrates with existing campaigns
and marketing technology to enhance engagement and data collection, making it
suitable for long-term marketing campaigns rather than just tactical use
cases.
· Personalised experiences: Utilises known information about
individuals (e.g., customer or prospect status) to deliver a tailored
experience. This differs from the one size fits all offerings of one-off
solutions providers.
· Campaign adaptive: The experience adapts depending on the marketing
campaign to which the consumer has responded, providing a more connected and
consistent experience.
· Multi-step engagement: Offers experiences with multiple steps that
adapt based on the individual's interaction with the platform, encouraging
long-term engagement.
· First Party Data generation: Specialises in generating valuable First
Party Data, which is increasingly important in the digital advertising
landscape.
· Repeat engagement: Designed to encourage users to engage with the
platform repeatedly over a longer period, increasing lifetime value and First
Party Data captured.
· Beyond 'no-code': Offers a more nuanced and powerful solution compared
to simple 'no-code' or "off-the-shelf' platforms, making it ideal for
businesses looking for a strategic tool.
· Diverse engagement experiences: Offers a wide range of interactive
experiences like games, quizzes, puzzles and questionnaires and a wide variety
of rewards like vouchers, points, competition entries and positions on
leaderboards.
· Adaptive experiences: The Platform adjusts in real-time based on
consumer input and other data available to the Platform, making each
interaction more personalised.
· Progressive data capture: Utilises a staged approach to collecting First
Party Data, avoiding the need for long questionnaires and enhancing data
quality.
· Speed to market: Enables rapid deployment of marketing campaigns
focused on First Party Data collection.
· Cost-effective: Significantly lower costs compared to custom content
development for First Party Data collection.
· Real-time flexibility: Easy to modify content and tactics at any time
to optimise First Party Data collection.
· Template variety: Provides a broad range of template tactics for
quick implementation and First Party Data collection.
· Optimisation support: Includes A/B testing features to fine-tune
content and consumer journeys for better First Party Data collection.
· Enhanced engagement: Compared to passive content, 3radical Voco
significantly boosts response and engagement rates, accelerating First Party
Data collection.
Capabilities and deployment of 3radical Voco
Building on the extensive experience in the marketing technology industry that
3radical's founders gained during their 13 years at Alterian plc, and
extensive real-world use by brands across the UK, APAC and US, 3radical Voco
has a broad range of capability.
3radical has developed Voco with gamification and First Party Data at its
core. As a comprehensive audience engagement and First Party Data solution, it
provides organisations the ability to:
· obtain user traffic from a range of sources including email, web ads,
social media, etc;
· serve users a variety of engaging games or surveys as per the brand's
requirement;
· generate rewards including points, badges or vouchers, including cash
value (e.g., a 10 per cent. off voucher/ £5 off etc.) or non-cash rewards
(badges and achievements); and
· integrate rewards vouchers on Voco into the customer's systems
allowing users to claim these rewards and the brand to better understand their
users and serve their needs better with the earned data.
o Experiences
3radical Voco has an extensive library of digital "building blocks" for
experiences to be designed and deployed by the Platform, ranging from very
simple to highly complex. Interactive digital experiences and associated
rewards can be created quickly and simply using the storyboard interface and
pre-built wizards, but there is also the flexibility to incorporate multiple
gamification techniques and therefore customers are not constrained by limited
templated features.
Experiences that the Platform can deploy include:
· requests for action such as answer quizzes and surveys, visit a
website, visit a store, share on social media, etc;
· engagement mechanics to encourage interaction such as single use game
of chance (e.g., wheel of fortune and scratch cards), brain training games
(e.g., sudoku, word search), repeat games (e.g., board game, snakes and
ladders);
· reward mechanics such as vouchers, competitions, points (and a "shop"
for redeeming these for vouchers), leader boards; and
· ways of tying these together, such as progress journeys (e.g., you
are 60 per cent. of the way to a prize, next you need to do "x").
o Delivery
3radical Voco has multiple ways to deliver its interactive experiences to
individuals in order to obtain data. The experience can be delivered in a
stand alone microsite, within a frame on the brand's existing website, as an
overlay on an existing website, within Apps, or by other such means. Some
examples of how consumers reach the experiences are as follows:
· through clicking on online adverts which take the individual to a
website with the content;
· by following links from voucher or coupon sites;
· through clicking on social media posts or adverts linking to 3radical
content;
· by clicking through an email with a similar link;
· by visiting a brand's website where the content exists; and
· by using an application where 3radical content is embedded.
o Integration and branding
The Platform has the ability to integrate with other marketing technologies so
that experiences and campaigns can be delivered at scale via a broad range of
pre-existing digital channels (website, Apps, social channels) and are
automatically optimised for engagement on mobile devices.
The look and feel of the experience is tailored to match the brands'
guidelines and seamlessly integrate with their marketing.
Further, deployment of 3radical Voco is flexible and has little or no
requirement for client technology personnel to be deployed.
o Adaptive personalised consumer/user experiences
A key feature that makes 3radical Voco successful is that it is able to
deliver a different experience to each individual. The decision of what
content an individual will receive is made in real time by the Platform,
adjusting progressively to enhance response rates, and can be based not just
on behaviour the individual exhibits within the experience, e.g., answers to
questions in a survey, but other factors such as marketing segment codes or
other information provided by the brand, location, time of day, weather -
anything that the Platform can access.
Each unique journey is built from a collection of "tactics" of the Platform -
games and other digital building blocks such as those set out above. Journeys
can be linear or dynamic and will respond to a user's interactions to create
their own unique experiences and presenting them with the next best piece of
interactive content relevant to them.
o Configuration
Alongside the Platform, an experienced customer success team supports
customers with configuration and optimisation of experiences. 3radical
provides an initial customer and brand assessment and advice on the optimum
campaign and solution to be deployed by the Platform, tailored to the brand's
needs or client's objective. This in-house expertise continues to grow with
the more experiences delivered. Over time, a range of best practice journeys
has been developed within the Platform for common business objectives.
Data collection
The Platform supports third party API connections for data management. Once
engaging with an experience from the Platform, a substantial amount of data is
collected on how an individual interacts with the content and answers to
questions, and by engaging with the experience, permission is obtained for the
brand to use that data. This data is then fed back into a brand's IT systems,
such as CRM systems, customer data management platforms, email platforms, and
other business intelligence tools, through a range of pre-built connectors for
the brand to utilise.
Hosted on Amazon Web Services, shared instances of 3radical Voco are available
locally in the US, UK, Singapore and Australia. This underpins both
performance for local clients and the storage of data locally rather than
across borders. Where required by customers, 3radical can rapidly deploy
dedicated instances of 3radical Voco for clients who require this to meet
their security requirements, although all current clients use the 3radical
shared infrastructure.
First Party Data generated through the use of the Platform by clients belongs
to the respective client, and they use this information typically to improve
their customer understanding, personalise future communications to improve
customer experience and inform product and service development.
Data Asset
Where agreed with the client, 3radical anonymises interaction data generated
through the use of 3radical Voco and consolidates and holds this in a central
data store. This central data store now contains approximately half a billion
anonymised data interactions which could have multiple uses going forward -
including using AI to optimise requests and rewards presented through 3radical
Voco, and benchmarking of performance for clients and others. To date this
data asset has not been monetised.
Voco Solutions Portal (VSP)
3radical is currently in the advanced stages of developing a simplified,
self-serve version of Voco called Voco Solution Portal (VSP). VSP is a
comprehensive solution based on the current, proven 3radical Voco platform.
VSP retains the core capabilities of the existing platform but offers a more
user-friendly and simpler configuration process for commonly used "journeys"
and experiences to enable 3radical's customers to directly deploy their own
campaigns and experiences on the Platform with minimal training, or make
adjustments as necessary, without deferring to 3radical. Where more complex
requirements exist, these can still be delivered using the current Platform
and 3radical's personnel as required.
VSP has entered beta testing and is expected to be rolled out commercially in
the summer of 2024.
Key benefits of VSP:
· Easily brought 'in house': Enables clients to deploy campaigns
independently, reducing reliance on 3radical's team and providing clients with
greater control.
· Agency friendly: Agencies can independently use VSP and combine it
with other campaign strategies to provide a single point of contact for their
clients.
· Low friction entry point: the Directors believe that the
"plug-and-play" nature of VSP will provide 3radical with easier access to
marketing teams and larger enterprise clients.
· Simplified interface: A user-friendly configuration process for
creating and deploying common interactive experiences requiring no technical
expertise
· Robust enterprise features: Retains the core capabilities of the
existing Platform for more complex needs.
· Expert assistance: The 3radical team is available for support in
deploying intricate experiences.
· Progressive First Party Data capture: Utilises a staged approach for
enhanced data quality.
· Wide accessibility: The new interface makes the VSP platform
accessible to a broader range of users, not just those with specialised skills
and training.
Target market for VSP:
VSP makes 3radical Voco's capabilities accessible to a broader range of users,
making it a versatile option for various types of organisations. The Directors
believe it is particularly well-suited for:
· SMEs (small and medium-sized enterprises): These businesses often
lack the resources for extensive training or specialised teams to manage
complex platforms. VSP offers a more accessible entry point for them to engage
with their audience and collect First Party Data.
· Marketing teams in larger organisations: These teams frequently need
to roll out campaigns quickly and efficiently. VSP's streamlined interface
allows for rapid deployment without the need for extensive technical support,
making it a valuable tool for agile marketing strategies.
· Agencies: Agencies managing multiple client campaigns require a
flexible yet powerful tool that can adapt to various needs. VSP's
user-friendly interface and robust backend make it particularly suitable for
delivering tailored audience engagement experiences.
· The Directors believe that VSP fills a gap in the market, offering a
powerful yet user-friendly solution for audience engagement and First Party
Data collection. Additionally, VSP will reduce the customer support resource
required within 3radical as well as providing a low friction entry point to
enterprise clients.
4. Research and development
Nearly £8 million has been invested in research and development to build the
Platform to date. 3radical continues to develop proprietary technology that
drives the 3radical Voco software platform and its features, as well as
focusing on the development and launch of VSP in the summer of 2024.
3radical performs its research and development activities in-house using its
UK and Singapore teams, and using contractors as necessary.
The Platform is hosted on Amazon Web Services (AWS) infrastructure, and is
highly scalable, enabling customers to rapidly build interactive digital
experiences (e.g., quizzes with prizes) and deploy these across websites and
other channels.
3radical Voco is regularly penetration tested and evaluated by demanding
enterprise clients for robustness and security, such as Mastercard.
5. Revenue model
3radical obtains its revenue from four sources:
Annual licence - This is 3radical's preferred method for billing customers,
with cash typically collected upfront at the start of the licence year, except
for the US market which is principally billed monthly. The average value of a
licence is £43,000 per annum1 but can range from as low as £36,000 to as
high as £97,000 annually and typically lasts for one year up to five years.
Proof of concept (PoC) - A PoC licence is offered to potential customers as a
trial, with the aim of signing them up for an annual licence. The PoC licence
lasts between one and six months and the average value ranges from £13,000 to
£20,000 and includes services.
One-off campaigns - Some customers prefer to use Voco for one-off campaigns.
During this period, the customer can be supported by 3radical's Customer
Success team who can customise campaigns. The name "one-off" can be misleading
as 3radical has customers who regularly opt for multiple campaigns each year
on this basis. One off campaigns typically last up to three months and deal
sizes are up to c. £30,000 and including services.
Implementation - A fee is charged to cover consultancy costs to configure Voco
to meet the specific needs of the client. This fee ranges from £5,000 to
£15,000.
The Directors believe revenue expansion opportunities arise from increased
volume of data and users of Voco and adding brands or territories to a
licence.
6. Customers
Current licence customers and multiple campaign users include the following:
UK US Singapore
Saint-Gobain (term licence) Champion Petfoods (individual campaign / POC licence) DBS Bank/POSB (term licence) Mastercard (individual campaign licences)
Bally Gamesys (term licence) Lions Club (term licence)
Essilor (individual campaign licences)
NSPCC (individual campaign licences)
3radical Voco attracts interest from a broad spectrum of companies and brands.
The Directors focus on and see particular opportunity in the retail,
eCommerce, D2C and financial services sectors.
7. Sales and marketing
The Board believes that there is substantial opportunity to develop direct
sales of 3radical Voco through investment in sales and marketing, and to
accelerate reseller partner relationships, particularly as a result of the
Acquisition, which will bring additional management and investment capability.
3radical currently has very limited resources for sales and marketing and
therefore the Board believes there is a substantial unrealised opportunity.
There are two commercial staff members (one in the UK and one in Singapore)
who deliver marketing campaigns, prospect for new customers, account manage
existing customers, and win and manage 3radical's reseller partner
relationships. The UK commercial staff member also oversees the Customer
Success team globally - the team which configures and implements 3radical Voco
for customers. There is no marketing team and only very limited marketing
activity, such as blog writing, which is outsourced to a B2B marketing agency.
On 17 November 2023, conditional on Completion, 3radical entered into an
agreement with Mymyne Limited (a company which is a related party to Electric
Guitar), providing for substantially enhanced sales and marketing resources. A
summary of the terms is set out in paragraph 16(b) of Part VII of this
document.
Over the past year, a major area of focus of 3radical has been the development
of reseller partnership relationships including with Allant in the US, and
Mastercard in APAC. Both of these relationships have led to multiple customer
wins.
Allant is a marketing service provider based in Chicago and which employs
3radical's former US team. The partnership maintains a US presence to continue
maintaining and growing revenues for 3radical without the overhead of a US
operation, with Allant receiving commission on software/support fees from
sales and licences.
Mastercard is a partner of 3radical in APAC and is one of the world's largest
payment processors. 3radical works with them to provide 3radical Voco to their
customers and prospects.
As set out in paragraph 7 of Part I, following the Acquisition the expansion
of sales and marketing will be a key focus for the Enlarged Group.
APPENDIX 2
FINANCIAL INFORMATION OF 3RADICAL LIMITED
SECTION A: HISTORICAL FINANCIAL INFORMATION OF 3RADICAL LIMITED FOR THE THREE
YEARS ENDED 31 MARCH 2023
Consolidated Income Statement
Note Year ended 31 March 2023 Year ended 31 March 2022 Year ended 31 March 2021
£'000
£'000
£'000
Continuing operations
Revenue 5 710 619 600
Cost of sales (212) (145) (190)
Gross Profit 498 474 410
Other operating income 7 25 117
Administrative expenses 7 (1,550) (2,208) (2,269)
Operating loss (1,045) (1,709) (1,742)
Finance income /(cost) 9 (5) (3) (22)
(Loss) before tax (1,050) (1,712) (1,764)
Taxation 10 190 136 163
(Loss) for the year (860) (1,576) (1,601)
Attributable to:
Equity holders of the parent (860) (1,576) (1,601)
Net loss per share
Basic and diluted (pence) 11 (30) (140) (192)
Consolidated Statement of Comprehensive Income
Year ended 31 March 2023 Year ended 31 March 2022 Year ended 31 March 2021
£'000 £'000 £'000
Loss for the year (860) (1,576) (1,601)
Other comprehensive income:
Exchange differences on translation of foreign operations (248) 21 (90)
Total comprehensive loss for the year (1,108) (1,555) (1,691)
Attributable to:
Equity holders of the parent (1,108) (1,555) (1,691)
Consolidated Statement of Financial Position
Note As at 31 March 2023 £'000 As at 31 March 2022 £'000 As at 31 March 2021 £'000
ASSETS
Non-current assets
Property, plant & equipment 12 2 5 4
Investments 13 - - -
Total non-current assets 2 5 4
Current assets
Trade and other receivables 14 327 477 274
Cash and cash equivalents 38 88 322
Total current assets 365 565 596
TOTAL ASSETS 367 570 600
EQUITY
Share capital 16 1,338 1,300 918
Share premium 10,941 9,957 8,711
Share based payments reserves 17 35 74 78
Foreign currency translation reserve 17 (181) 67 46
Accumulated losses (12,101) (11,241) (9,665)
Total equity 32 157 88
LIABILITIES
Current liabilities
Trade and other payables 15 335 413 512
Total liabilities 335 413 512
TOTAL EQUITY AND LIABILITIES 367 570 600
Consolidated Statement of Changes in Equity
Note Share Capital Share premium account Share based payments reserve Foreign currency translation Accumulated Losses Total Equity
£'000
£'000
£'000
£'000
£'000
£'000
As at 1 April 2020 813 7,418 - 136 (8,064) 303
Comprehensive income
Loss for the year - - - - (1,601) (1,601)
Forex currency translation differences - - - (90) - (90)
Total comprehensive loss for the year - - - (90) (1,601) (1,691)
Transactions with owners
Issue of shares 16 105 1,293 - - - 1,398
Share based payments - - 78 - - 78
As at 31 March 2021 918 8,711 78 46 (9,665) 88
Comprehensive income
Loss for the year - - - - (1,576) (1,576)
Forex currency translation differences - - - 21 - 21
Total comprehensive loss for the year - - - 21 (1,576) (1,555)
Transactions with owners
Issue of shares 16 382 1,246 - - - 1,628
Share based payments - - (4) - - (4)
As at 31 March 2022 1,300 9,957 74 67 (11,241) 157
Comprehensive income
Loss for the year - - - - (860) (860)
Forex currency translation difference - - - (248) - (248)
Total comprehensive loss for the year - - - (248) (860) (1,108)
Transactions with owners
Issue of shares 16 38 984 - - - 1,022
Share based payments - - (39) - - (39)
As at 31 March 2023 1,338 10,941 35 (181) (12,101) 32
Consolidated Statement of Cashflows
Note Year ended 31 March 2023 Year ended 31 March 2022 Year ended 31 March 2021
£'000
£'000
£'000
Net cash used in operating activities 18 (1,069) (1,858) (1,539)
Investing activities
Acquisition of property, plant and equipment 12 (3) (4) (5)
Net cash used in investing activities (3) (4) (5)
Financing activities
Proceeds on issue of shares 1,022 1,628 1,398
Net cash from financing activities 1,022 1,628 1,398
Net decrease in cash and cash equivalents (50) (234) (146)
Cash and cash equivalents at beginning of year 88 322 468
Cash and cash equivalents at end of year 38 88 322
Notes to the above historical financial information can be found in the
Admission Document which will be available later today on the Company's
website at www.electricguitarplc.com (http://www.electricguitarplc.com) .
There are no key differences between the Company's accounting policies and the
policies used to present the financial information on 3radical.
SECTION B: INTERIM CONSOLIDATED FINANCIAL INFORMATION OF 3RADICAL LIMITED
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023
Six months to Six months to
30 September 2023
30 September 2022
(Unaudited) (Unaudited)
Notes £'000 £'000
Continuing operations
Revenue 3 259 384
Cost of sales (96) (99)
Gross Profit 163 285
Administrative expenses 5 (777) (567)
Depreciation (1) (2)
Operating Loss (615) (284)
Finance income - 3
Finance expense - (5)
Loss before tax (615) (286)
Tax - -
Loss for the period (615) (286)
Attributable to:
Equity holders of the parent (615) (286)
Net loss per share
Basic and diluted (pence)** 7 (9.9) (20.1)
All items in the above statement derive from continuing operations.
** Various warrants and options outstanding at the balance sheet date are not
considered to have any dilutive effect as the average market price of the
ordinary shares during the period did not exceed the exercise price of the
warrants.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
30 September 2023
Six months to 30 September 2023 Six months to 30 September 2022
(unaudited) (unaudited)
£'000 £'000
Loss for the period (615) (286)
Other comprehensive income:
Exchange differences on translation 47 11
of foreign operations
Total comprehensive loss for the year (568) (275)
Attributable to:
Equity holders of the parent (585) (275)
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 September 2023
As at 30 September 2023 As at 31
March 2023
(unaudited) (audited)
Notes £'000 £'000
ASSETS
Non-current assets
Property, plant & equipment 1 2
Total non-current assets 1 2
Current assets
Trade and other receivables 7 140 327
Cash and cash equivalents 214 38
Total current assets 354 365
TOTAL ASSETS 355 367
EQUITY
Share capital 9 1,357 1,338
Share premium 11,451 10,941
Share based payments reserves 19 35
Foreign currency translation reserve (75) (180)
Accumulated losses (12,717) (12,102)
TOTAL EQUITY 35 32
LIABILITIES
Current liabilities
Trade and other payables 3, 8 320 335
TOTAL LIABILITIES 320 335
TOTAL EQUITY AND LIABILITIES 355 367
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
30 September 2023
Notes Share Capital Share premium account Share based payments reserve Foreign currency translation Accumulated Losses Total Equity
£'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 2022 1,300 9,957 74 67 (11,241) 157
Comprehensive income
Loss for the period - - - - (286) (286)
Currency translation differences - - - (124) - (124)
Total comprehensive loss for the period - - - (124) (286) (410)
Transactions with owners
Issue of shares 10 24 626 - - - 650
Share based payments - - (25) - - (25)
As at 30 September 2022 1,324 10,583 49 (57) (11,527) 372
Comprehensive income
Loss for the period - - - - (574) (574)
Currency translation differences - - - (124) - (124)
Total comprehensive loss for the period - - - (124) (574) (698)
Transactions with owners
Issue of shares 10 14 363 - - - 377
Share issue costs - (5) - - - (5)
Share based payments - - (14) - - (14)
As at 31 March 2023 1,338 10,941 35 (181) (12,101) 32
Comprehensive income
Loss for the period - - - - (615) (615)
Currency translation difference - - - (105) - (105)
Total comprehensive loss for the period - - - (105) (615) (72)
Transactions with owners
Issue of shares 10 20 510 - - - 530
Share based payments - - (16) - - (16)
As at 30 September 2023 1,358 11,451 19 (286) (12,716) (174)
UNAUDITED CONDENSED CONSOLIDATED CASHFLOW STATEMENT
30 September 2023
Six months to Six months to
30 September
30 September
2023
2022
(unaudited) (unaudited)
Notes £'000 £'000
Operating loss (615) (284)
Adjustments for:
Share based payments (16) (25)
Depreciation 1 2
Foreign exchange differences 5 105 (568)
Operating cash flows before movements (525) (875)
in working capital
(Increase)/decrease in receivables 8 187 384
Increase/(decrease) in payables 9 (16) 8
Cash used in operations (354) (483)
Investing activities
Acquisition of property, plant and equipment - 2
Net cash used in investing activities - 2
Financing activities
Proceeds on issue of shares 10 530 650
Net cash from financing activities 530 650
Net (decrease)/increase in cash and cash equivalents 176 169
Cash and cash equivalents at beginning of period 38 88
Cash and cash equivalents at end of period 214 257
Notes to the above historical financial information can be found in the
Admission Document which will be available later today on the Company's
website at www.electricguitarplc.com (http://www.electricguitarplc.com) .
There are no key differences between the Company's accounting policies and the
policies used to present the financial information on 3radical.
Events after the balance sheet date
On 18 July 2023, 3radical entered into a loan agreement with Anglia Securities
Ltd for the provision of a drawdown facility of up to £215,000 at a rate of
21 per cent. per annum with a 5 per cent. drawdown fee. The loan and interest
are repayable on completion of the reverse takeover by Electric Guitar Plc or
17 May 2024 whichever is sooner. 3radical drew an initial £50,000 against the
facility on 16th November 2023 and a further £75,000 on 19 March 2024.
On 21st December 2023 the Board of 3radical approved the provision of a
£100,000 unsecured loan facility by Sanderson Capital Partners Limited,
Richard Horwood and Ben Lister, all of which has been advanced. The loan is
subject to a 20 per cent. facility fee and the issue of 15 per cent. of the
enlarged equity of the Company to the lenders. The loan is repayable together
with the facility fee on completion of the acquisition of 3radical by Electric
Guitar PLC, or 6 months from the date of the balance of the loan being drawn,
whichever is the earlier.
NO SIGNIFICANT CHANGE
Save as disclosed in this announcement there has been no significant change in
the financial position or performance of 3radical since 30 September 2023,
being the date of the end of the last financial period to which financial
information has been provided in the Admission Document.
APPENDIX 3
RELATED PARTY TRANSACTIONS
The following related party transactions have been entered into:
a. the agreements with certain Directors to subscribe to new
Ordinary Shares at the Issue Price in the Subscription as set out in paragraph
11 of Part 1 of Appendix 1 of this announcement;
b. the agreements with certain Directors for the issue of
Conversion Shares in satisfaction of accrued salary and bonuses as set out in
paragraph 11 of Part 1 of Appendix 1 of this announcement;
c. the proposed surrender of A-Series Warrants as set out in
paragraph 15 of Part 1 of Appendix 1 of this announcement;
d. John Regan and Richard Horwood have each agreed to defer payment
of £39,600 of their salary and benefits until October 2025, and John
Hutchinson has agreed to defer payment of £27,000 of his director's fee until
October 2025. Such deferred amounts will be increased by 100 per cent. at the
time of payment as recompense for the delayed payment;
e. On 27 October 2023 the Company entered into a loan agreement
with Sanderson Capital Partners Limited for the provision of a loan facility
to the Company. The facility is an unsecured facility of up to £250,000 to be
drawn down in three tranches on defined milestones prior to Admission.
£200,000 has been drawn as at the date of this document and £50,000 is in
the process of being drawn down. It is repayable on the earlier to occur of
Admission and 31 May 2024, and will be satisfied by the issue of Loan Shares
on Admission. Arrangement fees, drawdown fees and legal fees in connection
with the facility totalling £70,000 will also be satisfied by the issue of
Loan Shares;
f. on 26 March 2024 the Company entered into a facility agreement
with Sanderson Capital Partners Limited, supplementing a term sheet with
Sanderson Capital Partners Limited signed on 11 March 2024, for the provision
of a loan facility to the Company conditional on, inter alia, Completion and
Admission. This agreement and the term sheet includes standard events of
default, covenants and representations and warranties. The facility is an
unsecured facility of up to £600,000 available to be drawn down during the
period of 12 months from Admission on 30 days' notice (first draw not to be
more than £100,000). At the end of the 12 month period, the Company has an
option to extend the facility for a further 8 months in exchange for a
facility fee of £15,000 which is payable at the end of the 8 month period.
Fees of £105,000 are payable on Admission and will be satisfied by the issue
of Loan Shares. The loan is convertible in whole or in part at any time by
Sanderson Capital Partners Limited into Ordinary Shares at a price per share
equal to the 5 day volume weighted average price of an Ordinary Share. The
minimum conversion price per Ordinary Share is equal to the Issue Price;
g. On 22 January 2024 3radical entered into a term sheet with
Sanderson Capital Partners Limited for the provision of a loan facility to
3radical. The facility is an unsecured facility of up to £75,000, all of
which has been drawn down. Subject to completion of the Acquisition and
Admission, the Company has agreed to assume liability for this loan which will
be repaid by the issue of Loan Shares at Admission. Fees connected with the
facility of £20,000 are payable on Admission and will also be satisfied by
the issue of Loan Shares;
h. The Company has entered into a subscription agreement dated 3
April 2024 with Tanvier Malik pursuant to which Mr. Malik will subscribe for
8,333,330 Subscription Shares at the Issue Price. Mr. Malik is a person who
has significant control of Sanderson Capital Partners Limited; and
i. The Company has entered into a subscription agreement dated 11
April 2024 with Sanderson Capital Partners Limited pursuant to which Sanderson
Capital Partners Limited will subscribe for 4,761,900 Subscription Shares at
the Issue Price. Sanderson Capital Partners Limited is a substantial
shareholder in the Company.
The Existing Directors who are independent of the relevant transactions set
out above consider the transactions to be fair and reasonable from the
perspective of the Company and other shareholders in order to support and
complete the Proposals.
APPENDIX 4
DEFINITIONS
The following section has been extracted without amendment from the Company's
Admission Document published today. References to 'paragraphs', 'Parts' and
'this document' in this Appendix 4 relate to the Company's Admission Document
which will be available later today on the Company's website at
www.electricguitarplc.com (http://www.electricguitarplc.com) .
"2021 Admission" the admission of the Ordinary Shares to the standard segment of the Official
List and to trading on the Main Market on 11 January 2022
"2021 Placing" the placing of 40,000,000 Ordinary Shares at 3 pence per Ordinary Share
pursuant to the 2021 Admission, as set out in the Company's prospectus dated
24 December 2021
"3radical" 3radical Limited, a company incorporated in England and Wales with the company
number 07872556
"3radical Directors" David Eldridge and George Stavrinidis
"3radical Group" 3radical and its subsidiaries
"Acquisition" the proposed acquisition by the Company of the entire issued and to be issued
share capital of 3radical pursuant to the terms of the Acquisition Agreement
and the Minority Agreements
"Acquisition Agreement" the conditional agreement dated 15 April 2024 between the Company and the
Principal Sellers relating to the acquisition of the entire issued and to be
issued share capital of 3radical, details of which are set out in paragraph 10
(h) of Part VII of this document
"Act" the Companies Act 2006 (as amended)
"acting in concert" shall bear the meaning ascribed thereto in the Takeover Code
"Admission" the admission of the Enlarged Share Capital to trading on AIM becoming
effective in accordance with Rule 6 of the AIM Rules for Companies
"Adviser Warrants" the 2,238,333, warrants over new Ordinary Shares to be issued, conditional on
Admission, to Allenby Capital, under the terms of a warrant instrument dated
15 April 2024, details of which are set out in paragraph 10 (m) of Part VII
of this document
"AIM" the market of that name operated by the London Stock Exchange
"AIM Rules" the AIM Rules for Companies and the AIM Rules for Nominated Advisers
"AIM Rules for Companies" the rules which set out the obligations and responsibilities in relation to
companies whose shares are admitted to AIM as published by the London Stock
Exchange from time to time
"AIM Rules for Nominated Advisers" the rules which set out the eligibility, obligations and certain disciplinary
matters in relation to nominated advisers as published by the London Stock
Exchange from time to time
"Allant" Allant Group LLC, Inc., a reseller partner of 3radical in the US
"Allenby Capital" Allenby Capital Limited, a company incorporated in England and Wales under
company number 06706681, the Company's nominated adviser and joint broker
"Anglia Loan" The unsecured loan facility of £215,000 made by Anglia Securities Limited,
further details of which are set out in paragraph 10 (c) of Part VII of this
document
"APAC" the Asia-Pacific region
"Articles" the current articles of association of the Company, further details of which
are set out at paragraph 6 of Part VII of this document, and which will be
amended as set out in resolution 5 of the Notice of General Meeting
"Audit Committee" the audit committee of the Company duly authorised by the Board
"Axis Capital Markets" or "Axis" Axis Capital Markets Limited, a company incorporated in England and Wales
under company number 08133033, the Company's joint broker
"Axis Warrants" the 2,238,333 warrants over new Ordinary Shares to be issued, conditional on
Admission, to Axis Capital Markets, under the terms of the warrant instrument
dated 15 April 2024, details of which are set out in paragraph 10 (n) of Part
VII of this document
"Board" the directors of the Company as at the date of this document, whose names are
set out on page 20 of this document
"Broker Warrants" the Adviser Warrants, Axis Warrants and GIS Warrants
"Cancellation" the cancellation of the admission of the Existing Ordinary Shares to the
standard segment of the Official List and to trading on the Main Market
"Committees" together the Audit Committee, Nomination Committee and Remuneration Committee
"Company" or "Electric Guitar" Electric Guitar plc, a public limited company incorporated in registered
office address is One Bartholomew Close, London, EC1A 7BL
"Completion" completion of the sale and purchase of the entire issued and to be issued
share capital of 3radical on Admission in accordance with the Acquisition
Agreement, the Minority Agreements
"Concert Party" David Eldridge, George Stavrinidis, Rebecca Trivella, Clive Armitage and
certain other employees and shareholders of 3radical and their connected
parties
"Conversion Shares" the 4,655,420 new Ordinary Shares to be issued at the Issue Price to certain
of the Directors, details of which are set out in paragraph 9 (e) and
paragraph 9 (g) of Part VII of this document
"Consideration Shares" the 61,184,843 new Ordinary Shares to be issued to the shareholders of
3radical on Completion, as consideration for the purchase of their shares in
3radical by the Company
"CREST" the computerised settlement system to facilitate the transfer of title to
shares in uncertificated form operated by Euroclear
"CREST Manual" the rules governing the operation of CREST as published by Euroclear
"CREST Regulations" Uncertificated Securities Regulations 2001 (S.1.2001 No.3755), including (i)
any enactment or subordinate legislation which amends those regulations; and
(ii) any applicable rules made under those regulations or such enactment or
subordinate legislation for the time being in force
"Directors" the Existing Directors and the Proposed Directors
"EDA" the European Data Act
"Enlarged Group" the Company and its subsidiaries following Completion
"Enlarged Share Capital" the issued Ordinary Shares of the Company upon Admission comprising the
Existing Ordinary Shares, the Fundraising Shares, the Loan Shares, the
Conversion Shares, the Fee Shares and the Consideration Shares
"Equity Settlement" the satisfaction of approximately £0.88 million of liabilities by the Company
through the allotment and issue of the Conversion Shares, the Fee Shares and
the Loan Shares
"EU" the European Union
"Euro" or "€" the Euro, the single currency of the European Union
"Euroclear" Euroclear UK & International Limited, a company incorporated in England
and Wales and the operator of CREST
"Existing Directors" each of John Regan, John Hutchinson, Richard Horwood and Sarfraz Munshi
"Existing Ordinary Shares" 57,862,776 ordinary shares of £0.005 in the capital of the Company in issue
as at the date of this document
"Fee Shares" 10,476,170 new Ordinary Shares to be issued by the Company at the Issue Price
in satisfaction of £219,999.57 of fees payable by the Company and 3radical in
connection with the Proposals as set out in paragraph 21(g) of Part VII of
this document
"FCA" the Financial Conduct Authority of the United Kingdom
"Form of Proxy" the form of proxy accompanying this document for use by Shareholders at the
General Meeting
"FSMA" the Financial Services and Markets Act 2000 of the United Kingdom, as amended
including any regulations made pursuant thereto
"Fundraising" the Placing and the Subscription
"Fundraising Shares" the Placing Shares and the Subscription Shares
"GIS" Global Investment Strategy UK Limited, a company incorporated in England and
Wales under company number 04576299
"GIS Warrants" the 2,238,333, warrants over new Ordinary Shares to be issued, conditional on
Admission, to GIS, under the terms of the warrant instrument dated 15 April
2024, details of which are set out in paragraph 10 (o) of Part VII of this
document
"General Meeting" the general meeting of the Company to be held at the offices of BDB Pitmans
LLP, One Bartholomew Close, London, EC1A 7BL at 9.00 a.m. on 1 May 2024
"HMRC" His Majesty's Revenue and Customs
"IFRS" International Financial Reporting Standards as adopted by the United Kingdom
"Interim Financial Information of the Company" the unaudited interim historical financial information of the Company for the
six months ended 30 September 2022 and 30 September 2023, as set out in
Appendix C of this document
"Interim Financial Information of the 3radical Group" the unaudited interim historical financial information of the 3radical Group
for the six months ended 30 September 2022 and 30 September 2023, as set out
in Section C of Part IV of this document
"Issue Price" 2.1 pence per New Ordinary Share
"Joint Brokers" Axis Capital Markets and Allenby Capital
"Listing Rules" the Listing Rules of the FCA
"Loan Shares" 26,666,670 new Ordinary Shares to be issued at the Issue Price to Sanderson
Capital Partners Limited and Anglia Securities Ltd pursuant to the repayment
of: (i) £535,000 of certain loans and associated fees with Sanderson (details
of which are set out in paragraph 10 (d), (e) and (f) of Part VII of this
document) on Admission; and (ii) the repayment of £25,000 of the Anglia Loan
(Details of which are set out in paragraph 10 (c) of part VII of this document
"Locked Box Accounts" the unaudited consolidated balance sheet of the 3radical Group as at the
Locked Box Date
"Locked Box Date" 30 September 2023
"Lock-in Deed" the conditional lock-in and orderly marketing deeds dated 15 April 2024
entered into between the Locked-in Persons, the Company, Allenby Capital and
Axis Capital Markets described in paragraph 14 of Part I and paragraph 10 (k)
of Part VII of this document
"Lock-in Period" means the period of up to 24 months from Admission
"Locked-in Persons" the Directors and certain other persons who on Admission will hold, in
aggregate, 113,360,297 Ordinary Shares and will be subject to lock-in and
orderly marketing arrangements described in paragraph 14 of Part I and
paragraph 10 (k) of Part VII of this document
"London Stock Exchange" or "LSE" London Stock Exchange plc
"Main Market" the LSE's main market for listed securities
"MAR" the Market Abuse Regulation No. 596/2014 (as it forms part of domestic UK law
pursuant to the European Union (Withdrawal) Act 2018)
"Mastercard" a leading global technology company in the payments industry
"Minority Agreements" the agreements, each dated 15 April 2024, relating to the acquisition of
shares in 3radical between the Company and the shareholders of 3radical other
than the Principal Sellers whose shares are to be acquired pursuant to the
Acquisition Agreement, details of which are set out in paragraph 10 (h) of
Part VII of this document
"New Board" the directors of the Company from Admission, being each of John Hutchinson,
John Regan, Richard Horwood and the Proposed Directors
"New Ordinary Shares" together, the Fundraising Shares, the Loan Shares, the Conversion Shares, the
Fee Shares and the Consideration Shares
"New Warrants" the new warrants to be issued to Sarfraz Munshi, conditional on Admission,
to subscribe for New Ordinary Shares at the Issue Price, details of which are
set out in paragraph 10 (p) of Part VII of this document
"Nomination Committee" the nomination committee of the Company duly authorised by the Board
"Notice of General Meeting" or the "Notice" the notice convening the General Meeting set out at the end of this document
"Official List" the Official List maintained by the FCA in its capacity as competent
authority for the purposes of Part VI of FSMA
"Ordinary Shares" ordinary shares of £0.005 each in the issued share capital of the Company
"Panel" the UK Panel on Takeovers and Mergers
"Placees" investors to whom Placing Shares are to be issued pursuant to the Placing
"Placing" the conditional placing by Axis Capital Markets and Allenby Capital on behalf
of the Company of the Placing Shares at the Issue Price pursuant to the
Placing Agreement
"Placing Agreement" the conditional agreement dated 15 April 2024 between (1) the Company, (2) the
Directors, (3) Allenby Capital and (4) Axis Capital Markets relating to the
Placing and Admission, details of which are set out at paragraph 11 of Part I
and paragraph 10 (j) of Part VII of this document
"Placing Shares" 29,738,090 new Ordinary Shares to be issued at the Issue Price to the Placees
pursuant to the Placing
"Principal Sellers" David Eldridge, Rebecca Trivella, Aaron Shrimpton, Steve Rogers and George
Stavrinidis
"Proposals" the Acquisition, the Fundraising, the Equity Settlement, the proposed
amendments to the Articles, the Cancellation and the Admission
"Proposed Directors" each of Caroline Worboys, David Eldridge and Grahame Cook"
"Prospectus Regulation Rules the prospectus regulation rules made by the FCA pursuant to section 73A of
FSMA as amended from time to time
"QCA" the Quoted Companies Alliance
"QCA Code" The Corporate Governance Code published by the QCA in April 2018 and as
amended from time to time
"Registrar" Share Registrars Limited
"Remuneration Committee" the remuneration committee of the Company duly authorised by the Board
"Resolutions" the resolutions set out in the Notice of General Meeting
"Restricted Jurisdiction" the United States of America, Canada, Australia, the Republic of South
Africa and Japan or any other jurisdiction outside the United Kingdom where
the distribution of this document and/or an offer to sell or issue, or the
solicitation of an offer to subscribe for or buy, directly or indirectly,
Fundraising Shares or other securities in the Company would contravene local
securities laws or regulations
"Sanderson Loan" the facility agreement with Sanderson Capital Partners Limited for £600,000
referred to in paragraph 10 (e) of this Part VII of this document
"Sellers" the holders of shares in the capital of 3radical to be acquired by the Company
pursuant to the Acquisition
"Share Dealing Policy" the policy on share dealings adopted by the Company as more particularly
described in paragraph 17 of Part I of this document
"Shareholder" a holder of Ordinary Shares or New Ordinary Shares, as the context requires
"Share Options" options to acquire new Ordinary Shares granted from time to time pursuant to
the Share Plans
"Share Plans" the Electric Guitar plc 2024 Employee Incentive Plan and the Electric Guitar
plc 2024 Consultant Incentive Plan details of which are set out in paragraph
17 of Part VII of this document
"Sterling" or "£" Pound sterling, the legal currency of the UK
"Subscribers" the persons entering into the Subscription Letters
"Subscription" the conditional subscription for the Subscription Shares at the Issue Price by
the Subscribers pursuant to the Subscription Letters
"Subscription Letters" the letters dated between 27 March 2024 and 12 April 2024 between the Company
and each Subscriber pursuant to which each such Subscriber has agreed to
subscribe for Subscription Shares
"Subscription Shares" the 33,249,320 New Ordinary Shares to be allotted and issued at the Issue
Price pursuant to the Subscription Letters
"Takeover Code" the UK City Code on Takeovers and Mergers issued by the Panel as amended from
time to time
"UK" the United Kingdom
"Uncertificated" or "in uncertificated form" recorded on the register of Ordinary Shares as being held in uncertificated
form in CREST, and title to which, by virtue of the CREST Regulations, may be
transferred by means of CREST
"United States" or "US" the United States of America, its territories and possessions, any state of
the United States of America, the District of Columbia and all other areas
subject to its jurisdiction
"US$" United States dollar, the lawful currency of the United States of America
"Voco Solution Portal" or "VSP" a new version of Voco, which has a simpler user interface and more
pre-configured and automated deployment, designed for customers wanting to
deploy 3radical solutions quickly and with minimal support
"Warrants" the A-Series Warrants, the B-Series Warrants, the Broker Warrants and the New
Warrants, details of which are set out in paragraph 10 of Part VII of this
document
GLOSSARY
"A/B testing" compares the performance of two versions of digital content to see which one
appeals more to visitors/viewers
"ad-network" a service that connects advertisers to websites and platforms, facilitating
the buying and selling of advertising space, often using tracking, targeting
and optimisation technologies
"AI" artificial intelligence
"APAC" Asia-Pacific
"API" an application programming interface, being a set of rules and protocols for
building and interacting with software applications, allowing different
software systems to communicate with each other
"App" short for application, a software programme designed to perform specific
tasks for users, often running on mobile devices or computers
"browser" a computer programme for displaying and navigating between web pages
"CAGR" compound annual growth rate
"Cookie" a small data file stored on a user's computer by the web browser, used to
remember information about the user's visit and preferences
"CRM" customer relationship management
"Data Protection & Digital Information (DPDI) Bill" the UK Data Protection & Digital Information (No.2) Bill aims to simplify
GDPR compliance in lower-risk situations while maintaining high data
protection standards, and it is expected to become law in 2024
"D2C" direct to consumer
"ESG" environmental, social and governance
"First Party Data" data collected by a company through customer interactions with its own
channels having gained that individuals consent
"Flash Cookies" also known as Local Shared Objects (LSOs), a type of Cookie used by Adobe
Flash Player to store information on a user's computer often used in online
advertising for tracking purposes because they are less likely to be deleted
and can store more information than traditional Cookies
"General Data Protection Regulation" or "GDPR" the General Data Protection Regulation (GDPR) is a regulation enacted by the
European Union in 2018 to protect the privacy and personal data of EU citizens
"Generative AI" a form of artificial intelligence technology that can produce various types
of content, such as text, imagery or audio, using generative models
"Internet Protocol" also referred to as 'IP', refers to a set of rules that govern how data is
sent and received over the internet or similar networks.
"Machine Learning" a branch of artificial intelligence where systems learn and improve from
experience without being explicitly programmed
"MAMAA" the five major technology companies: Meta, Amazon , Microsoft, Apple, and
Alphabet (Google's parent company). This acronym was introduced as a
replacement for the older acronym "FAANG," which stood for Facebook (now
Meta), Apple, Amazon, Netflix, and Google
"MarTech" marketing technology, referring to the software and tools used in digital
marketing and advertising
"Software as a Service" or "SaaS" a software licencing and delivery model in which software is licenced on a
subscription basis and is centrally hosted
"Third Party Cookies" a small data file created by an entity other than the website they are
visiting placed on a user's device by the website they are visiting, commonly
used to track user behaviour across multiple sites in order to serve targeted
advertising or gather user data for analysis
"Third Party Data" information collected by an entity that does not have a direct relationship
with the user whose data is being collected
"UK GDPR" the United Kingdom's version of the General Data Protection Regulation, a
legal framework that sets guidelines for the collection and processing of
personal information
"UK-US data bridge" the UK-US data bridge that came into force on 12 October 2023, which aims to
streamline and facilitate the smooth transfer of personal data between the UK
and the US
"Unique Identifiers" codes or numbers assigned to uniquely distinguish an individual, entity,
object, or data set in a specific context
"XML" Extensible Markup Language, a text-based format used for storing and
transporting structured data across different systems and platforms
"Zero Party Data" data that individuals have intentionally and proactively provided to the
collector of that data
IMPORTANT NOTICES
Notice to Distributors
Solely for the purposes of the product governance requirements contained
within: (a) EU Directive 2014/65/EU on markets in financial instruments, as
amended and as this is applied in the United Kingdom ("MiFID II"); (b)
Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593
supplementing MiFID II and Regulation (EU) No 600/2014 of the European
Parliament, as they form part of UK law by virtue of the European Union
(Withdrawal) Act 2018, as amended; and (c) local implementing measures
(together, the "MiFID II Product Governance Requirements"), and disclaiming
all and any liability, whether arising in tort, contract or otherwise, which
any "manufacturer" (for the purposes of the MiFID II Product Governance
Requirements) may otherwise have with respect thereto, the Ordinary Shares
have been subject to a product approval process, which has determined that
such securities are: (i) compatible with an end target market of: (a) retail
investors who do not need a guaranteed income or capital protection and (b)
investors who meet the criteria of professional clients and eligible
counterparties, each as defined in MiFID II; and (ii) eligible for
distribution through all distribution channels as are permitted by MiFID II
(the "Target Market Assessment"). The Ordinary Shares are not appropriate for
a target market of investors whose objectives include no capital loss.
Notwithstanding the Target Market Assessment, distributors should note that:
the price of the Ordinary Shares may decline and investors could lose all or
part of their investment; the Ordinary Shares offer no guaranteed income and
no capital protection; and an investment in the Ordinary Shares is compatible
only with investors who do not need a guaranteed income or capital protection,
who (either alone or in conjunction with an appropriate financial or other
adviser) are capable of evaluating the merits and risks of such an investment
and who have sufficient resources to be able to bear any losses that may
result therefrom. The Target Market Assessment is without prejudice to the
requirements of any contractual, legal or regulatory selling restrictions in
relation to the Fundraising. Furthermore, it is noted that, notwithstanding
the Target Market Assessment, Allenby Capital and Axis Capital Markets will
only procure investors who meet the criteria of professional clients and
eligible counterparties. For the avoidance of doubt, the Target Market
Assessment does not constitute: (a) an assessment of suitability or
appropriateness for the purposes of MiFID II; or (b) a recommendation to any
investor or group of investors to invest in, or purchase, or take any other
action whatsoever with respect to the Ordinary Shares. Each distributor is
responsible for undertaking its own target market assessment in respect of the
Ordinary Shares and determining appropriate distribution channels.
Forward Looking Statements
This announcement includes statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "plans", "anticipates", "targets", "aims",
"continues", "expects", "intends", "hopes", "may", "will", "would", "could" or
"should" or, in each case, their negative or other variations or comparable
terminology. These forward-looking statements include matters that are not
facts. They appear in a number of places throughout this announcement and
include statements regarding the Directors' beliefs or current expectations.
By their nature, forward-looking statements involve risk and uncertainty
because they relate to future events and circumstances. Investors should not
place undue reliance on forward-looking statements, which speak only as of the
date of this announcement.
Notice to overseas persons
This announcement does not constitute, or form part of, a prospectus relating
to the Company, nor does it constitute or contain any invitation or offer to
any person, or any public offer, to subscribe for, purchase or otherwise
acquire any shares in the Company or advise persons to do so in any
jurisdiction, nor shall it, or any part of it form the basis of or be relied
on in connection with any contract or as an inducement to enter into any
contract or commitment with the Company.
This announcement is not for release, publication or distribution, in whole or
in part, directly or indirectly, in or into Australia, Canada, Japan, New
Zealand or the Republic of South Africa or any jurisdiction into which the
publication or distribution would be unlawful. This announcement is for
information purposes only and does not constitute an offer to sell or issue or
the solicitation of an offer to buy or acquire shares in the capital of the
Company in Australia, Canada, Japan, New Zealand, the Republic of South
Africa or any jurisdiction in which such offer or solicitation would be
unlawful or require preparation of any prospectus or other offer documentation
or would be unlawful prior to registration, exemption from registration or
qualification under the securities laws of any such jurisdiction. Persons
into whose possession this announcement comes are required by the Company to
inform themselves about, and to observe, such restrictions.
This announcement is not for publication or distribution, directly or
indirectly, in or into the United States of America. This announcement is
not an offer of securities for sale into the United States of America. The
securities referred to herein have not been and will not be registered under
the U.S. Securities Act of 1933, as amended, and may not be offered or sold in
the United States of America, except pursuant to an applicable exemption from
registration. No public offering of securities is being made in the United
States of America.
General
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) or any previous announcement made by the Company is
incorporated into, or forms part of, this announcement.
Allenby Capital, which is authorised and regulated by the FCA in the United
Kingdom, is acting as financial adviser, Nominated Adviser and broker to the
Company in connection with the Proposals. Allenby Capital will not be
responsible to any person other than the Company for providing the protections
afforded to clients of Allenby Capital or for providing advice to any other
person in connection with the Proposals. Allenby Capital has not authorised
the contents of, or any part of, this announcement, and no liability
whatsoever is accepted by Allenby Capital for the accuracy of any information
or opinions contained in this announcement or for the omission of any material
information, save that nothing shall limit the liability of Allenby Capital
for its own fraud.
Axis Capital Markets, which is authorised and regulated by the FCA in the
United Kingdom, is acting as broker to the Company in connection with the
Proposals. Axis Capital Markets will not be responsible to any person other
than the Company for providing the protections afforded to clients of Axis
Capital Markets or for providing advice to any other person in connection with
the Proposals. Axis Capital Markets has not authorised the contents of, or any
part of, this announcement, and no liability whatsoever is accepted by Axis
Capital Markets for the accuracy of any information or opinions contained in
this announcement or for the omission of any material information, save that
nothing shall limit the liability of Axis Capital Markets for its own fraud.
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