APPS.L Regulatory News (APPS)

16 May 2018

appScatter Group plc

('appScatter' or the 'Company')

Posting of Circular and Notice of General Meeting

appScatter Group plc (AIM: APPS), the scalable business-to-business ('B2B') Software as a Service ('SaaS') platform that allows users to distribute and manage their apps on multiple app stores around the world, announces that it posted a circular to shareholders on 15 May 2018 (the "Circular") in order to convene a General Meeting of the Company at which resolutions seeking authority for the issue of new ordinary shares in the Company ("Ordinary Shares") in connection with the proposed acquisition by the Company of Priori Data GmbH (the "Acquisition") and an intended £15.0 million fund raise required to effect the Acquisition and to provide additional working capital for the Enlarged Group (the "Fund Raise") will be put to shareholders.

The General Meeting of the Company is being convened for 11.00 a.m. on 31 May 2018 at the offices of FTI Consulting, 200 Aldersgate, Aldersgate Street, London EC1A 4HD.

The Circular and Notice of General Meeting are available on the Company's website at www.appscatterplc.com.

Pursuant to a variation to the Acquisition Agreement entered into on 15 May 2018, the Acquisition Agreement is now conditional on the conclusion of the Fund Raise. Notwithstanding the convening of the General Meeting, if the Fund Raise is not concluded, the Acquisition will not proceed.

Capitalised terms used in this announcement shall have the same meanings as the definitions included in the Circular.

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Market abuse regulation (MAR) disclosure

Certain information contained in this announcement would have been deemed to be inside information for the purposes of article 7 of Regulation (EU) No 596/2014 until the release of this announcement. This announcement has been issued by and is the sole responsibility of the Company.

About appScatter Group plc

appScatter is a scalable B2B SaaS platform that allows paying users to distribute their apps to, and manage their apps on, multiple app stores. Additionally, the centralised platform enables app developers and publishers to manage and track performance of their own and competing apps across all of the app stores on the platform.

1. Introduction

On 6 April 2018 appScatter Group plc (''appScatter'' or the ''Company'') announced its intention to acquire 100% of the entire issued share capital of Priori Data GmbH for a consideration of £13.5 million of which £9.45 million is payable in cash and the balance of £4.05 million by the issue of 5,785,714 New Ordinary Shares at an effective price of 70p per share.

The Company has now posted the Circular to Shareholders to provide Shareholders with information regarding the Acquisition and to convene a General Meeting at which resolutions seeking shareholder authority for the issue of the New Ordinary Shares will be put to Shareholders. If these resolutions are not passed the Company will be unable to issue the New Ordinary Shares and the Company will not be able to proceed with the Acquisition.

A General Meeting has been convened for 31 May 2018 to consider resolutions to empower the Directors to allot up to 27,214,285 Ordinary Shares in connection with the Acquisition and the intended Fund Raise required to effect the Acquisition and to provide additional working capital for

the Enlarged Group.

Further information about the Acquisition and the Company's current trading and prospects is set out below. Additional information about the Company and its business, financials and constitutional documents can be found on the Company's website at: www.appscatterplc.com.

2. Background to, and reasons for, the Acquisition and the Fund Raise

The Board of appScatter believes the Acquisition will allow the Enlarged Group to provide significantly enhanced, market leading, data-led app insights. The Directors believe that these insights, when combined with Priori's data intelligence software, will enhance the Group's ability to

meet the increasing data demands of existing and prospective customers.

The combined range of the appScatter and Priori datasets will be available to the Company's targeted customers such as brands, app publishers, advertising agencies and mobile networks to conduct more targeted demographic campaigns.

If completed, the Fund Raise will enable the Company to fund the Cash Consideration and will provide additional working capital resources for the Enlarged Group. If the Fund Raise is not completed, the Acquisition will not proceed.

3. The Acquisition

The Company has entered into a conditional sale and purchase agreement to acquire Priori, pursuant to which appScatter has agreed to purchase 100 per cent. of the issued share capital of Priori, subject to appScatter raising sufficient funding pursuant to the Fund Raise.

The total consideration for the Acquisition is £13.5 million, to be satisfied by the payment of the Cash Consideration and the issue of the Consideration Shares.

20.73 per cent. of the Consideration Shares, which will be issued to Priori management, will be subject to a lock-in agreement for an initial period of 12 months and an orderly market arrangement for a further period of 12 months following the expiry of the initial lock-in period. The remaining 79.67 per cent. of the Consideration Shares to be issued to the non-management Sellers, representing venture capital and early angel investors in Priori, shall be subject to an orderly market arrangement for a period of 12 months.

The Acquisition and the Fund Raise are conditional, inter alia, upon the approval of appScatter Shareholders of the Resolutions to be proposed at the General Meeting.

4. The Acquisition Agreement

Pursuant to a conditional acquisition agreement dated 5 April 2018 (the ''Acquisition Agreement'') between (1) the Company and (2) Quixote Holdings UG, Lakestar I LP, Martin Rajcan, Priori Trust UG, Seedcamp III LP and Calceus GmbH (together the ''Sellers''), the Company has agreed to acquire all the issued and to be issued shares in Priori. The consideration under the Acquisition Agreement is £13.5 million to be satisfied on completion through the payment of the Cash Consideration and the issue of the Consideration Shares.

Completion of the Acquisition is conditional on appScatter raising sufficient funding pursuant to the Fund Raise to effect the Acquisition and to provide additional working capital for the Enlarged Group and the passing, at the General Meeting, of the Resolutions. The parties have agreed a long stop date for completion of the Acquisition of 31 May 2018.

Under the terms of the Acquisition Agreement, the Sellers have agreed to indemnify the Company

for:

(i) all claims, liabilities, costs and reasonable expenses arising in connection with any legal dispute regarding the usage of certain images on Priori's website in the past;

(ii) all claims, liabilities, costs and reasonable expenses arising in connection from any violations of the laws with respect to (i) bogus self-employment and (ii) minimum wage laws by Priori (in each case, including but not limited to social security contributions, taxes, fines and penalties and external costs with respect to such matter);

(iii) all claims, liabilities, costs and reasonable expenses arising in connection from any violations of the Protection Against Unfair Dismissal Act by Priori in respect of its employees;

(iv) all claims, liabilities, costs and reasonable expenses arising in connection with any convertible loan agreements made between the Priori and certain lenders in 2013 and 2016; and

(v) all claims, liabilities, costs and reasonable expenses arising in connection with any claim made by any employee of Priori (whether current or former) or other person with respect to the intellectual property rights or with respect Priori's proprietary software.

Each of the Sellers are giving warranties in favour of the Company as to title only. The management Sellers are giving a suite of warranties in favour of the Company that are usual for this type of transaction.

The aggregate liability of the Sellers for claims in respect of title shall not exceed an amount equal to the Consideration and all other claims, indemnity claims and all claims under the tax covenant given by the Sellers shall not exceed an amount equal to twenty-five per cent. (25%) of the Consideration. For the avoidance of doubt, the aggregate liability of the Sellers in respect for any and all claims shall under no circumstances exceed the Consideration.

The management Sellers have agreed not to carry on or be engaged, concerned or interested (whether directly or indirectly) with the business of any other app analytics platform for a period of

2 years following completion of the Acquisition.

The Acquisition and the Fund Raise are conditional, inter alia, upon the approval of appScatter Shareholders at the General Meeting.

The Acquisition Agreement is conditional on the completion by the Company of the intended Fund Raise. If the Fund Raise is not concluded, and notwithstanding Shareholders voting in favour of the Resolutions, the Acquisition will not proceed.

5. About Priori

Founded in 2013, Priori is a B2B SaaS platform provider of mobile app intelligence based in Berlin, Germany with proprietary core data intelligence software and 16 full time employees with experience in monetising app market data, including data scientists, engineers and sales.

Priori's data is sourced from more than six billion unique user devices in 252 territories and Priori's proprietary core machine learning data intelligence software provides intelligence across keywords, apps, markets, usage and audience.

Priori's active customers include blue-chip multinational organisations.

Based on unaudited management information, in the financial year ended 31 December 2017 Priori had revenues of €1,056,000 (on a cash-receipt basis) and recorded EBITDA losses of €410,000 (on a net cash-receipts/cash-expense basis). On completion of the proposed Acquisition, following the conversion of existing Priori loan notes, Priori is expected to have unaudited estimated target net assets of approximately €39,000.

6. Intended Fund Raise

The Acquisition is conditional on, inter alia, the completion by the Company of the associated Fund Raise. The net proceeds of the Fund Raise, if completed, will be utilised to fund the Cash Consideration and to provide additional working capital for the Enlarged Group. If the Fund Raise is not concluded, the Acquisition will not proceed.

EIS advanced assurance

The Company has made application to HMRC for advanced assurance that a proportion of the Fund Raise will qualify for EIS relief. Confirmation from the UK tax authorities that a portion of the planned Fund Raise qualifies for EIS relief has not yet been received.

Until such confirmations have been received it is unlikely that those investors for whom EIS relief is important will be able to subscribe with the certainty they desire that EIS relief will be forthcoming.

While any EIS based investment cannot be used to fund the Acquisition such EIS funding needs to be invested in appScatter shares before the funds raised to complete the Acquisition. In the event therefore that the EIS confirmation is still outstanding at the date of the General Meeting it may be necessary to seek approval of the Resolutions but also to extend the long stop date for the completion of the Acquisition.

The New Ordinary Shares will rank, on issue, pari passu in all respects with the Company's Existing Ordinary Shares. The New Ordinary Shares will be issued free from all liens, charges and encumbrances.

7. Current Trading and Prospects

2017 was a prominent year for the Company, with appScatter reporting maiden revenues in the first half of 2017, being admitted to AIM in September 2017 and launching the appScatter platform in November 2017.

As at 14 May 2018, the Company had 16,153 registered users, of which 1,805 were licensed users of the appScatter platform (comprising free users, trial users and paying users).

The Company was pleased to announce its first major partnership agreement, with Airpush, Inc, a leading mobile advertising network, in March 2018. The Company currently expects the marketing campaign which is to accompany this partnership, and is designed to promote the appScatter platform to Airpush users, to commence in Q2 2018.

The Board reports that trading for the year ended 31 December 2017 remains in line with market expectations and the Company's current expectations are that the Company will report 2017 revenues of approximately £1.9 million and a loss before interest and tax of approximately £6.5 million. 2018 has started well and trading in the year to date is in line with management expectations. The Company has a number of potential partnerships under discussion and progressing and, should any of these potential partnerships be concluded, the Board would expect these partnerships to be accretive to revenues in future periods.

The Company expects to announce its full year results to 31 December 2017 in early June 2018.

8. Financial Information

Financial information for the Group for each of the three years ended 31 December 2016 was set out in the Company's admission document dated 29 August 2017 which is available on the Company's website at www.appScatterplc.com, as are the unaudited interim accounts for the six months ended 30 June 2017.

9. General Meeting

The issue of the New Ordinary Shares is conditional upon, inter alia, the approval by Shareholders of the Resolutions to be proposed at the General Meeting of the Company which has been convened for 11.00 a.m. on 31 May 2018, at which the following Resolutions will be proposed to enable the issue of the New Ordinary Shares:

Resolution 1 - Authority to allot shares

The Directors require the authority of shareholders in order to allot the New Ordinary Shares. Resolution 1 to be put to shareholders at the General Meeting will provide such authority. For the purposes of the issuing the New Ordinary Shares, Resolution 1 will grant the Directors authority to allot new Ordinary Shares up to a maximum nominal amount of £1,360,714.27 (representing, as at 15 May 2018 (being the latest practicable date before the publication of this document) 43.1 per cent. of the Existing Ordinary Shares) being 27,214,285 new Ordinary Shares in number.

Resolution 1 is being proposed as an ordinary resolution and will therefore require more than 50 per cent. of the votes cast, whether in person or by proxy, to be in favour. This authority, if granted, will be in substitution for the existing authorities to allot Ordinary Shares granted to the Directors prior to the date of the Circular which will be revoked, and will enable the Directors to effect the Fund Raise and the Acquisition. This authority will expire on the later of the conclusion of the next Annual General Meeting of the Company or 30 June 2019.

Resolution 2 - Disapplication of statutory pre-emption rights

Section 561 of the Companies Act requires that, on an allotment of ''equity securities'' for cash, such equity securities must first be offered to existing Shareholders in proportion to the number of Ordinary Shares they each hold at that time. The Fund Raise will result in ''equity securities'' allotted for cash and, accordingly, cannot be offered on a non pre-emptive basis unless Shareholders have first waived their pre-emption rights. Resolution 2, if passed, provides such a waiver. If Resolution 2 is passed, the Directors will be able to allot the new ordinary shares on a non pre-emptive basis, to the extent of the authority granted by Resolution 1.

Resolution 2 is being passed a special resolution and will therefore require not less than 75 per cent. of the votes cast, whether in person or by proxy, to be in favour. This authority, if granted, will be in substitution for the existing authorities to allot Ordinary Shares free of pre-emption rights granted to the Directors prior to the date of the Circular which will be revoked. This authority will expire on the later of the conclusion of the next Annual General Meeting of the Company or 30 June 2019.

The issue of the New Ordinary Shares, and completion of the Acquisition, are conditional, inter alia, on Shareholders passing the appropriate Resolutions being proposed at the General Meeting.

If Shareholders do not pass the appropriate Resolutions, the issue of the New Ordinary Shares and/or the Acquisition will not proceed.

10. Recommendation and Voting Intentions

The Board believes that the Acquisition and the associated Fund Raise are in the best interests of the Company and Shareholders as a whole and unanimously recommends that you vote in favour of the Resolutions as the Directors intend to do in respect of their own beneficial shareholdings.

Inclusive of the shareholdings of the Directors, irrevocable commitments to vote in favour of the Resolutions have been received from Shareholders representing an aggregate of 29.48 per cent. of the Existing Ordinary Shares.