REG-GoTech Group plc: Adjournment of GM and update re NEX admission

Global Opportunities TrustAnnouncement

11/06/2018 12:00

11 June 2018

GoTech Group plc

(“GoTech” or the “Company”)

Adjournment of General Meeting,

Proposed NEX admission - Investment Strategy Clarification and Risk Factors

GoTech announces that its general meeting (“General Meeting”), convened to
be held at 11 a.m. today has been adjourned. As part of the Company’s
application for its ordinary shares of 0.1 pence each (“Ordinary Shares”)
to be admitted to trading on the NEX Exchange Growth Market (“NEX”) as an
investment vehicle, the Company has made minor amendments to its proposed
investment strategy, further details of which are set out below.

The adjourned General Meeting will now be held on 15 June 2018 at 11.00 a.m.
at the offices of Peterhouse Capital Limited, New Liverpool House, 15 Eldon
Street, London EC2M 7LD. A copy of this announcement will be posted to
shareholders tomorrow and will be made available on the Company’s website
https://www.gotechgroup-plc.com/. Votes that have been cast will remain valid,
but shareholders may change their votes if they so wish or alternatively may
cast their votes if they have not yet done so. Shareholders should refer to
the voting instructions enclosed in the circular which was dated 24 May 2018
and posted to shareholders on 25 May 2018, a copy of which is available on the
Company’s website at: https://www.gotechgroup-plc.com/.  

The Company’s proposed admission to trading on NEX is conditional, inter
alia, on all resolutions being approved at the General Meeting to take place
on 15 June 2018 (“General Meeting”) and the cancellation of admission of
its Ordinary Shares to trading on AIM (“Cancellation”) occurring.

As detailed in the Company's circular and announcement of 24 May 2018,
trading in the Company’s Ordinary Shares on AIM will be suspended with
effect from 7.30am on 21 June 2018 pursuant to AIM Rule 15. Subject to the
relevant resolution being passed at the General Meeting, it is expected that
Cancellation will take effect at 7.00 a.m. on 25 June 2018.  It is
anticipated that dealings in the Company's Ordinary Shares on NEX will
commence at 8.00 a.m. on 25 June 2018.

Investment Strategy Process Clarified

In conjunction with the Company’s application for its Ordinary Shares to be
admitted to trading on NEX, the Company would like to clarify its Investment
Strategy further, pursuant to the legal obligations with respect to investing
in cannabis quoted and listed companies.

The Company at this stage with will not focus on mainland Europe until the
regulatory status of the medicinal cannabis industry becomes more developed.
In due course and with increased Company resources, the Company may review the
status of mainland Europe and consult Shareholders as appropriate.

The Company will be responsible for commissioning appropriate legal due
diligence on prospective investments.

External advisers and investment professionals will be engaged as necessary to
assist with the sourcing and due diligence of prospective opportunities. The
Directors will also consider appointing additional directors with relevant
experience if the need arises.

As part of each investment analysis, Malcolm Burne (to be appointed as a
director of the Company in conjunction with the proposed admission to NEX),
with the assistance of the Board, will liaise with and where necessary,
instruct National or Foreign Counsel to produce a legal opinion relating to
the terms and lawfulness of the Company’s proposed investment. The Board
will review the Counsel’s opinion to identify whether the investment is in
line with a legal opinion to be given by UK Counsel in relation to the same
matter.  The Board will heed the advice provided by Foreign and UK Counsel,
and where the advice given reflects any negatives, regulatory risks, or
otherwise advised, will decline the proposed investment. In particular, the
Board will seek to ensure that there is as little risk as possible of
breaching the Proceeds of Crime Act 2002 (“POCA 2002”), The Misuse of
Drugs Act 1971 (“MDA 1971”), The Misuse of Drugs (Designation) Order 2001
(“MDDO 2001”) and The Misuse of Drugs Regulations 2001 (S.I. 2001/3998)
(“MDR 2001”). The Board will also seek to avoid any risk of breaching
Money Laundering Legislation and will seek to ensure that any prospective
future dividends will not contravene any laws, having particular regard to
whether there may be any breach of POCA 2002.

Once the Board, led by Malcolm Burne, has completed due diligence on a
prospective investment, it will opine on its findings in a comprehensive
report. The Independent Non-Executive Director (as required by the NEX Rules)
will in turn provide their comments and recommendations to the Board as to
whether the Company should pursue the prospective investment.

The Company will endeavour to follow good corporate governance, in that it
will continually monitor changes in activities of its investee companies, and
especially those investee company shares that will be held long term. The
Board will, in particular, assess the credibility of the investee company
directors. There is a vast array of recently quoted and listed companies that
fall within the Company’s investment strategy targets. The Company will
monitor and engage with investee companies. This will allow the Company to
improve its understanding of investee companies and their governance
structures. To this end, meeting with management of investee companies will
take place regularly to review management process and best practices in,
amongst other things, regulatory questions pertaining to the Investment
Strategy. At a minimum, the Company would expect companies to comply with the
accepted corporate governance standard in their domestic country.

In compliance with Rule 51 of the NEX Exchange Rules, if the Company (as an
Investment Vehicle) has not substantially implemented its investing policy
after the period of one year following Admission, it will seek Shareholder
approval in respect of the subsequent year for the further pursuit of its
investment strategy.

Pursuant to Rule 52 of the NEX Exchange Rules, the Company (as an Investment
Vehicle), is required to substantially implement its investment strategy
within a period of two years following Admission. In the event that the
Company has not undertaken a transaction constituting a Reverse Takeover under
Rule 57 of the NEX Exchange Rules, or if it has otherwise failed to
substantially implement its investment strategy within such two-year period,
NEX Exchange will suspend trading of the Company’s Issued Share Capital in
accordance with Rule 78 of the NEX Exchange Rules. If suspension occurs, the
Directors will consider returning the Company’s cash to Shareholders after
deducting all related expenses. However, in the case of the Company, NEX
considers the two years’ period to have commenced on 20 December 2017, the
date on which the Company became an AIM Rule 15 cash shell.

RISK FACTORS

1. Risks relating to the investment in target companies whose main activities
include Cannabis production and research and development thereof

The Company and its shareholders may be at risk of committing offences under
POCA 2002

Even with the Company taking all precautions to ensure that it and the target
companies in which it invests comply fully with all applicable regulations and
legislation in relation to cannabis (both in the UK and in the relevant
foreign jurisdiction applicable to a target company), there are no guarantees
that the activities of the Company and a target company will always be deemed
lawful if there are any changes in the applicable law. 

The Company will take all precautions possible to ensure that it does not at
any time contravene POCA 2002. Contravention of POCA 2002 carries potential
criminal liability.

The Company’s reputation may be damaged

Damage to the Company’s reputation can be the result of the actual or
perceived occurrence of any number of events, and could include negative
publicity, whether true or not. This may arise as a consequence of investing
in companies that are involved in the production and the research and
development of medicinal cannabis, cannabis being a Class B drug within the
UK.

The increased usage of social media and other web-based tools used to
generate, publish and discuss user-generated content and to connect with other
users has made it increasingly easier for individuals and groups to
communicate and share opinions and views in regards to the Company and its
activities, along with those activities of certain target companies in which
the Company invests.

Reputation loss may result in decreased investor confidence, increased
challenges in developing and maintaining community relations, banking
relationships etc. and thereby having a material adverse impact on the
financial performance, financial conditions, cash flows and growth prospects
of the Company.

The Company, or the Medicinal Cannabis industry more generally, may receive
unfavourable publicity or become subject to negative consumer perception

The Company believes that the medicinal cannabis industry is highly dependent
upon consumer perception regarding the medical benefits, safety, efficacy and
quality of the cannabis distributed for medical purposes to such consumers.
Consumer perception of a target company’s products can be significantly
influenced by scientific research or findings, regulatory investigations,
litigation, political statements, media attention and other publicity (whether
or not accurate or with merit) regarding the consumption of cannabis products
for medical purposes, including unexpected safety or efficacy concerns arising
with respect to the products of a target company or its competitors.

There can be no assurance that future scientific research, findings,
regulatory proceedings, litigation, media attention or other research findings
or publicity will be favourable to the medicinal cannabis market or any
particular product, or consistent with earlier publicity. Future research
reports, findings, regulatory proceedings, litigation, media attention or
other publicity that are perceived as less favourable than, or that question,
earlier research reports, findings or publicity could have a material adverse
effect on the demand for a target company’s products and the business,
results of operations and financial condition of a target company and
therefore materially adversely affect the Company’s return on investment.

Furthermore, adverse publicity reports or other media attention regarding the
safety, efficacy and quality of cannabis for medical purposes in general, or a
target company’s products specifically, or associating the consumption of
cannabis with illness or other negative effects or events, could have such a
material adverse effect. Such adverse publicity reports or other media
attention could arise even if the adverse effects associated with such
products resulted from consumers’ failure to consume such products legally,
appropriately or as directed.

Cannabis plant may not be approved for medicinal use in all (or any)
jurisdictions

Medical regulatory authorities in many jurisdictions require carefully
conducted studies (clinical trials) in hundreds to thousands of human subjects
to determine the benefits and risks of a possible medication. In many
jurisdictions, researchers have not conducted sufficient large-scale clinical
trials that show that the benefits of the cannabis plant (as opposed to its
cannabinoid ingredients) outweigh its risks in patients it's meant to treat.

2. Risks relating to regulatory matters

Laws, regulations and guidelines may change in ways that the Company has not
predicted

The laws, regulations and guidelines applicable to the medicinal cannabis
industry may change in ways currently unforeseen by the Company.

The Company’s operations and investments into quoted or approved and
properly licensed companies lawfully producing and/or conducting research into
cannabis are subject to laws, regulations and guidelines. If there are any
changes to such laws, regulations or guidelines, which are matters beyond the
Company’s control, the Company may incur significant costs in complying with
or is unable to comply with such changes. This may have a material adverse
effect on the Company’s business, financial condition and results of
operations.

Regulatory Compliance Risks and maintaining a bank account

Failure to comply with regulations may result in additional costs for
corrective measures, penalties or in restrictions of operations. In addition,
changes in regulations, more vigorous enforcement thereof or other
unanticipated events could require extensive changes to operations, increased
compliance costs or give rise to material liabilities, which could have a
material adverse effect on the business, results of operations and financial
condition, and, therefore, on the Company’s prospective returns.

As a result of perceived reputational risk and regulatory risks, the Company,
in the medicinal cannabis sector, may in the future have difficulty in
maintaining its current bank accounts, establishing further bank accounts, or
other business relationships.

Environmental Regulations and Risks

The operations of some target companies will be subject to environmental
regulation in the various jurisdictions in which they operate. These
regulations mandate, among other things, the maintenance of air and water
quality standards and land reclamation. They also set forth limitations on the
generation, transportation, storage and disposal of solid and hazardous waste.
Environmental legislation is evolving in a manner which will require stricter
standards and enforcement, increased fines and penalties for non-compliance,
more stringent environmental assessments of proposed projects and a heightened
degree of responsibility for companies and their officers, directors and
employees. There is no assurance that future changes in environmental
regulation, if any, will not adversely affect the business, financial
condition and operating results of a target company, and therefore have a
material adverse effect on the Company’s return on investment.

Changes to safety, health and environmental regulations could have a material
effect on future operations of target companies

Safety, health and environmental legislation will affect nearly all aspects of
a target company’s operations including product development, working
conditions, waste disposal and emission controls. Compliance with safety,
health and environmental legislation can require significant expenditures and
failure to comply with such safety, health and environmental legislation may
result in the imposition of fines and penalties, the temporary or permanent
suspension of operations, clean-up costs resulting from contaminated
properties, damages and the loss of important permits. Exposure to these
liabilities arises not only from a target company’s existing operations but
from operations that have been closed or sold to third parties. A target
company could also be held liable for worker exposure to hazardous substances
and for accidents causing injury or death. There can be no assurances that a
target company will at all times be in compliance with all safety, health and
environmental regulations or that steps to achieve compliance would not
materially adversely affect a target company’s business, and therefore have
a material adverse effect on the Company’s return on investment.

Safety, health and environmental laws and regulations are evolving in all
jurisdictions. The Company is not able to determine the specific impact that
future changes in safety, health and environmental laws and regulations may
have on a target company’s operations and activities, and its resulting
financial position; however, the Company anticipates that capital expenditures
and operating expenses will increase in the future as a result of new and
increasingly stringent safety, health and environmental regulation. Further
changes in safety, health and environmental laws, new information on existing
safety, health and environmental conditions or other events, including legal
proceedings based upon such conditions on an inability to obtain necessary
permits, may require increased financial reserves or compliance expenditures
or otherwise have a material adverse effect on a target company, and therefore
have a material adverse effect on the Company’s return on investment.

Terms defined in the Circular to Shareholders dated 24 May 2018, have the same
meaning in this announcement.

For further information, please visit www.gotechgroup-plc.com or contact:

 Rupert Horner                           GoTech Group plc                                                  Tel: +44 (0) 787 257 1312   
                                                                                                                                       
 Virginia Bull James Reeve Liz Kirchner  Allenby Capital Limited (AIM Nominated Adviser and Joint Broker)  Tel: +44 (0) 20 3 328 5656  
                                                                                                                                       
 Duncan Vasey Lucy Williams              Peterhouse Capital Limited (AIM Joint Broker)                     Tel: +44 (0) 20 7220 9797   
 Guy Miller                              Peterhouse Capital Limited (Corporate Adviser for NEX Admission)  Tel: +44 (0) 20 7469 0930   



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