ADAM.L Regulatory News (ADAM)

ADAMAS FINANCE ASIA LIMITED

("ADAM" or the "Company")

Offer to Warrantholders

Proposed Share Consolidation

Proposed change to the Investing Policy

Subscriptions to raise approximately US$2.2 million

The Directors of ADAM are pleased to announce that the Company will today post a circular to Shareholders and Warrantholders containing details of:

1. an offer to Warrantholders to receive one Existing Ordinary Share for every four Shareholder Warrants held;

2. a proposed Share Consolidation whereby every ten Existing Ordinary Shares will be consolidated into one New Ordinary Share;

3. a proposed change to the Investing Policy as referred to in the final results published on 6 June 2014; and

4. a fundraising resulting in the issue of 31,648,000 Existing Ordinary Shares at a price of US$0.07 per share (which would then be subject to the Share Consolidation), to raise US$2,215,360.

The Circular incorporates notice of the Annual General Meeting to be held at 10.00 a.m. BST/ 5.00 p.m. HKT on 11 July 2014, at which the necessary resolutions to give effect to the matters above will be proposed.

In addition, the Company will separately today post the annual report and accounts to Shareholders. The Circular and annual report and accounts will be available for download from www.adamasfinance.com with effect from 20 June 2014.

Background to the Offer and Details of the Subscriptions

The Company has entered into the Subscription Agreements with new investors. Pursuant to the terms of the Subscription Agreements, the investors have agreed to subscribe for an aggregate of 31,648,000 Existing Ordinary Shares at a price of US$0.07 per share, raising a total of US$2,215,360 for the Company. The Existing Ordinary Shares issued pursuant to the Subscription Agreements will be subject to the Share Consolidation.

Prior to the AGM, the Company expects to be able to announce that it has entered into further subscription agreements on the same terms as the Subscription Agreements.

Application will be made for the New Ordinary Shares resulting from the Subscription Agreements and any further subscription agreements entered into prior to the AGM to be admitted to trading on AIM, which is expected to take place on 14 July 2014.

In discussing the capital structure of the Company with the new incoming investors and with a view to the Company's ability to raise new money through equity funding in the future, it became clear to the Directors that having a significant number of outstanding warrants all exercisable at US$0.06 (and in the case of the Consideration Warrants, exercisable over a five year period) would materially constrain the Company's ability to complete future equity fundraisings as new investors might be deterred from investing in the Company because of the potential dilution attaching to such a large number of outstanding warrants.

Accordingly, the Independent Directors have discussed how best to deal with both the Consideration Warrants and the Shareholder Warrants. Further to those discussions, the Directors and Elypsis, which holds the Consideration Warrants, have agreed that in light of the current fundraising described above it would be preferable for the Consideration Warrants to be exchanged for Existing Ordinary Shares as soon as possible and to reduce the dilution occurring upon the equitisation of the Consideration Warrants, four Consideration Warrants will be exchanged for one Existing Ordinary Share.

The Independent Directors further reviewed the position of the Shareholder Warrants and based on the above discussion and agreement with Elypsis, the Independent Directors are of the view that, notwithstanding the fact that the exercise period of the Shareholder Warrants expires in February 2015, the holders of the Shareholder Warrants should be treated in the same way such that, pursuant to the Offer, four Shareholder Warrants shall be capable of being exchanged for one Existing Ordinary Share. Although this is a substantial change to the terms of the Shareholder Warrants, the Independent Directors note that Elypsis' agreement to exchange the Consideration Warrants on the same basis will remove the substantial dilutive impact of those warrants.

The Elypsis Offer is considered to be a related party transaction pursuant to Rule 14 of the AIM Rules for Companies. The Independent Directors consider, having consulted with WH Ireland, that the terms of the Elypsis Offer are fair and reasonable insofar as Shareholders (excluding Elypsis) are concerned. Pursuant to the terms of the Relationship Agreement, Elypsis will not vote on resolution relating to the Elypsis Offer at the AGM.

The Offer

The Company is offering Warrantholders at the Offer Record Date the opportunity to exchange their Shareholder Warrants on the basis of

1 Existing Ordinary Share for every 4 Shareholder Warrants held

The Offer is conditional on the passing of the necessary resolution at the AGM. If the resolution is not passed with the requisite majority, the Offer shall immediately lapse.

The Company has received an irrevocable undertaking from Elypsis, which holds 85.15 per cent. of the issued voting shares of the Company to vote in favour of all of the resolutions to be proposed at the AGM, other than the resolution relating to the Elypsis Offer.

In the event that a Warrantholder does not accept the Offer, that Warrantholder will continue to hold such Shareholder Warrants, which will be subject to adjustment (in accordance with the terms of the Shareholder Warrants) to reflect the Share Consolidation. The effect of the Share Consolidation will mean that any holder of fewer than 40 warrants who accepts the Offer will not receive any New Ordinary Shares. Warrantholders who accept the Offer in respect of all of their Shareholder Warrants, will have their Shareholder Warrants rounded down to the nearest whole number of Shareholder Warrants which is divisible by 4 and any Shareholder Warrants above this rounded down figure will be cancelled by the Company.

The Offer is only capable of being accepted by Warrantholders in relation to their total holding.

The Offer is simply the exchange of Shareholder Warrants for Existing Ordinary Shares. There will be no exercise price payable by Warrantholders in relation to the Offer.

Elypsis and the Consideration Warrants

The Company has made an offer to Elypsis to exchange the Consideration Warrants for Existing Ordinary Shares on the same basis as the Offer being made to Warrantholders. Elypsis has undertaken to accept such offer conditional only on the necessary resolution being passed at the AGM.

In the event that all Warrantholders accept the Offer (and Elypsis accepts the Elypsis Offer) and the subscriptions referred to above are completed in full, the aggregate holding of Elypsis and APCF will be approximately 84.62 per cent. of the New Ordinary Shares (following the Share Consolidation).

In the event that no Warrantholders accept the Offer (and Elypsis accept the Elypsis Offer) and the subscriptions referred to above are completed in full, the aggregate holding of Elypsis and APCF will be approximately 85.32 per cent. of the New Ordinary Shares (following the Share Consolidation).

Share Consolidation

A reorganisation of the Existing Ordinary Shares is proposed whereby every 10 Existing Ordinary Shares, whether issued or unissued, will be consolidated into one New Ordinary Share.

Holders of fewer than 10 Existing Ordinary Shares will not be entitled to receive any New Ordinary Shares following the Share Consolidation. Shareholders with a holding in excess of 10 Existing Ordinary Shares, but which is not exactly divisible by 10, will have their holding of Existing Ordinary Shares rounded down to the nearest whole number which is divisible by 10. Fractional entitlements will be cancelled by the Company.

Following the Share Consolidation, the Existing Ordinary Shares will no longer be in issue. Share certificates in respect of New Ordinary Shares are expected to be posted, at the risk of Shareholders, in the week commencing 14 July 2014 to those Shareholders who currently hold their Existing Ordinary Shares in certificated form (and who hold more than 10 Existing Ordinary Shares). These will replace existing certificates which should be destroyed. Pending the receipt of new certificates, transfers of New Ordinary Shares held in certificated form will be certified against the register of members of the Company.

The New Ordinary Shares will be allocated a new stock identification code, which will be notified via the Regulatory News Service in due course.

The New Ordinary Shares will be in registered form. Securities issued by non-UK registered companies such as the Company cannot be held or transferred in the CREST system. CREST is a computerised paperless share transfer and settlement facility enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by written instrument in accordance with the CREST Regulations. To enable investors to settle such securities through the CREST system, a depositary or custodian can hold the relevant securities and issue dematerialised Depositary Interests representing the underlying securities which are held on trust for the holders of the depositary interests. Application will be made for the DIs in respect of the underlying Ordinary Shares to be admitted to CREST. Holders of Ordinary Shares in certificated form who wish to hold DIs through the CREST system may be able to do so and should contact the Registrar.

The Share Consolidation Record Date will be close of business on 11 July 2014. The rights attaching to the New Ordinary Shares will be identical in all respects to those of the Existing Ordinary Shares.

Change to the Investing Policy

As announced within the final results published on 6 June 2014, the Company is proposing a resolution at the AGM to make an amendment to its investing policy, which currently provides that the average maturity of transactions will range from 24 to 36 months. The Company is proposing to amend the Investing Policy such that the average maturity of transactions will range from six to 24 months. The amendment is designed to enable the Company to benefit from shorter term opportunities being identified by Adamas HK, whilst remaining within the provisions of the Investing Policy.

Recommendation

The Independent Directors recommend Warrantholders accept the Offer in relation to the Warrants held by them, as John Croft (the only Director Warrantholder) has irrevocably undertaken to do in respect of his own beneficial holding.

The Board considers that the resolutions to be proposed at the AGM are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Independent Directors unanimously recommend that all Shareholders vote in favour of the resolutions to be proposed at the AGM, as John Croft (the only Director Shareholder) intends to do in respect of his own beneficial holding, comprising in aggregate 339,453 Existing Ordinary Shares, representing approximately 0.02 per cent of the existing issued voting share capital of the Company.

Conor MacNamara recommends that all Shareholders vote in favour of the Resolutions (save for the resolution relating to the Elypsis Offer) to be proposed at the AGM.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Enquiries:

DEFINITIONS

All references to dates and times in this document are to BST unless otherwise stated. References to the singular shall include references to the plural, where applicable, and vice versa.