DVRG.L Regulatory News (DVRG)

20 December 2023

DeepVerge plc

("DeepVerge" or "the Company")

Update; exclusivity agreement with Microsaic

Further to the previous notification on 13 December 2023, the Company has today entered into an agreement with Microsaic Systems plc ("Microsaic") granting Microsaic a period of exclusivity ("Exclusivity Period") in respect of the potential sale of certain assets currently held within subsidiaries relating to its Modern Water business ("the 'Business").

The assets broadly comprise equipment for the laboratory-based manufacturing of bio-reagents used in related water testing equipment currently based at the Company's York laboratory and include all IP and rights to the related water testing equipment including LX, FX and Continuous Toxic Measuring ("CTM") machines and water membrane technology.

The Business specifically excludes the voltammetry technology and equipment manufactured by B3 Electronic Design Pty Ltd in Perth, Australia.

The granting of the Exclusivity Period follows the receipt of an indicative outline proposal from Microsaic to purchase the Business for £100,000 in cash payable on completion ('the Proposal').

In addition upon completion Microsaic Systems is willing to discharge all intra company debt (sum to be verified) between DeepVerge and Microsaic as part of the consideration for the acquisition.

The Exclusivity Period runs until the earlier of (a) 16 January 2024, (b) the signature of a legally binding sale & purchase agreement between the DeepVerge and Microsaic for the Business ("the Transaction") and (c) withdrawal of the Proposal by Microsaic.

No consideration has been received by DeepVerge for the granting of the Exclusivity Period.

During the Exclusivity Period DeepVerge shall not solicit, advertise, market or enter any other negotiations, arrangements or options with any third parties relating to the sale of the Business and shall not complete the Transaction other than with Microsaic.

The Exclusivity Period may, at its sole discretion, be extended by Deepverge for a further period for the Transaction to be finalised.

The Exclusivity Period is designed to provide Microsaic with time to conclude its due diligence, obtain binding commitments for a fundraising, including working capital for the enlarged Microsaic business, and consideration for the Transaction, and to negotiate and sign a detailed sale and purchase agreement. There is no guarantee that the Transaction will occur, or that the outline terms indicated in the Proposal will be those on which a binding agreement is signed. As previously notified on 13 December 2023, any proceeds from a disposal transaction is likely to realise insufficient value to avoid the closure or administration of the relevant Group subsidiaries.

DeepVerge director Dr Nigel Burton is also a director of Microsaic. Given his conflict of interest, Dr Burton is not involved in the DeepVerge board's consideration of the Transaction. Ross Andrews is the only independent director ("Independent Director").

As previously notified, the cancellation of the admission of the Company's shares to trading on AIM ("Cancellation") is expected therefore to take place with effect from 7.00 a.m. on 27 December 2023.

If the Transaction occurs before the date of Cancellation it would constitute a related party transaction under the AIM Rules for Companies (the "AIM Rules") and would require treatment in accordance with AIM Rule 13 (related party transactions) and AIM Rule 15.

The Company will no longer be subject to the AIM Rules once Cancellation has occurred. In the event that Cancellation occurs before a binding agreement is entered into for the sale of the Business to Microsaic, the requirements of AIM Rule 13 and 15 would cease to apply to the transaction.

The Independent Director expects that if the Transaction occurs, it is likely to occur at a point following Cancellation.

Further updates will be given as appropriate.

This announcement contains inside information as stipulated under the UK version of the Market Abuse Regulation No 596/2014 which is part of English Law by virtue of the European (Withdrawal) Act 2018, as amended. On publication of this announcement via a Regulatory Information Service, this information is considered to be in the public domain.