Electric Guitar Regulatory News (ELEG)

23 November 2023

Electric Guitar PLC

("Electric Guitar" or the "Company")

Notification of availability of Annual Report and Financial Statements 2022 and AGM notice

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, provides confirmation of the availability of annual reports and AGM notices that were not previously announced.

The annual report and financial statements for the year ended 31 March 2022 were published on 2 December 2022 and copies were sent to shareholders and are available on the Company's website at https://www.electricguitarplc.com/wp-content/uploads/2023/10/Annual-report-and-financial-statements-31-Mar-22.pdf. Key elements from the 2022 annual report have been extracted and set out in Appendix A below.

The Company announced the publication of the annual report and financial statements for the year ended 31 March 2023 on 1 August 2023 and copies were sent to shareholders and are available on the Company's website at

https://www.electricguitarplc.com/investor-documents/electric-guitar-plc-annual-report-and-financial-statements-for-the-period-ended-31-march-2023.pdf. Key elements from the 2023 annual report have been extracted and set out in Appendix B below.

This year's Annual General Meeting of the Company ("AGM") was held at One, Bartholomew Close, London, England, EC1A 7BL at 10.00 a.m. on Thursday, 7 September 2023 and copies of the Notice of AGM were posted to shareholders and are available on the Company's website at https://www.electricguitarplc.com/wp-content/uploads/2023/10/Electric-Guitar-plc-2023-AGM-FINAL86.pdf. All resolutions were passed at the AGM, as announced on 7 September 2023.

The 2023 AGM notice and the annual reports for 2022 and 2023 referred to above are also available on the National Storage Mechanism: https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

For further information:

Appendix A

Extracts from the annual report and financial statements for the year ended 31 March 2022.

Chairman's Statement

I have pleasure in presenting the annual report and financial statements for the year ended 31 March 2022.

In January 2022, the company successfully listed its shares for trading on the London Stock Exchange Main Market, and at the same time secured a placing of additional ordinary shares for £1,200,000 (before expenses). This has enabled the company to research suitable targets for acquisition in line with its stated corporate strategy. As at the time of issuing this report, the company has not yet identified a suitable target for acquisition.

The Company was formed to undertake an acquisition of a controlling interest in a company or business (an "Acquisition") in the digital media and advertising sectors. Since its listing, the Company has pursued this aim. Any Acquisition is expected to constitute a reverse takeover transaction and consideration for the Acquisition may be in part or in whole in the form of sharebased consideration or funded from the Company's existing cash resources or the raising of additional funds.

The business environment has changed significantly since the Company's successful listing in January this year.

In early spring, there were already nascent signs of the now very evident global inflationary pressures. These increased enormously with Russia's attempted invasion of Ukraine in late February. A broad range of energy, industrial and agricultural commodities saw significant price increases. These have, in turn, fed into the consumer sector, making central banks' task of managing inflation more problematical and increasing fears of an extended period of higher interest rates.

In the Company's chosen sphere of interest, digital media and advertising, the structural changes identified in our Admission Document became evident. These structural changes have continued to be driven by the increasing importance of data privacy. As expected, this year has seen legislation start to be implemented with digital companies responding by implementing privacy technology.

Legislation

In February 2022 a landmark ruling against the IAB found that the majority of cookie based digital advertising practices are 'illegal'. The IAB has since responded with a series of appeals, however the implications of this judgement are expected to be far reaching.

Privacy Technology

Other large technology companies have implemented privacy technology that has impacted digital revenues. As well as this, the reduction in the use of cookies in the future (timetable for H2 of 2024) is likely to several impact data collection on over 80% of internet users.

Structural shift

Privacy is now an increasing disadvantage for the incumbents and newcomers are capitalising on this as advertisers seek new ways of reaching digital audiences.

Whilst advertising overall has been subject to macro-economic headwinds, digital media businesses with a focus on first party data and privacy continue to prosper. This is the shift which the strategy of the business is designed to capitalise on.

The challenge for the Directors is to find a suitable acquisition upon which to base the Company's future at a time when assets in the media sector are becoming increasingly hard to value correctly. However, given the opportunities from privacy driven disruption which are increasingly evident, the directors remain confident in their ability to achieve this.

As summer progressed, it became clear that 'transitory' inflation was, in fact, more embedded, than first thought. Central banks, including the Bank of England, started to increase interest rates from historically low levels. UK base rates have risen from ¼% in January of this year to 3% currently.

Meanwhile, the current and forecast increase in energy prices, combined with a wider rise in the cost of living has, and continues to dampen consumer activities and expectations. With consumer activity representing over 60% of UK nominal GDP, this anticipated slowdown has led businesses to review their own expectations.

STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 31 MARCH 2022

?STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2022

STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 31 MARCH 2022

STATEMENT OF CASH FLOWS

FOR THE PERIOD ENDED 31 MARCH 2022

Appendix B

Extracts from the annual report and financial statements for the year ended 31 March 2023.

Chairman's Statement

I have pleasure in presenting the annual report and financial statements for the year ended 31 March 2023.

In January 2022, the company successfully listed its shares for trading on the London Stock Exchange Main Market, and at the same time secured a placing of additional ordinary shares for £1,200,000 (before expenses). This has enabled the company to research suitable targets for acquisition in line with its stated corporate strategy.

Proposed 3radical RTO

I am pleased to announce that on 6 July 2023 the Company entered into a non-binding heads of terms to acquire (through a reverse takeover subject to regulatory and shareholder approval and due diligence) all the outstanding shares in 3radical Limited ("3radical") in an all-share transaction ("Transaction").

The Transaction is in line with the Company's strategy set out at the time of its IPO last year. On completion of the Transaction, the Company's intention is to cancel its listing on the Standard List and seek admission of its ordinary share capital, as enlarged following completion of the Transaction, to trading on the AIM Market of the London Stock Exchange ("Admission").

The heads of terms place an initial valuation on 3radical of £3 million, subject to adjustments.

Macro-economic climate

The business environment has changed significantly since the Company's successful listing in January 2022. Global inflationary pressures, which first became apparent in spring 2022, have continued and whilst pressures on energy and food have abated, central banks' task of managing inflation remains challenging and it is likely that higher interest rates will continue for the time being. With bond yields rising as a result, equity investors can be expected to focus more on growth stocks.

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. Brands will have to deliver much more varied content driven by exponentially more data points, and they will have to make sense of it in ways never seen before. Technology like 3radical's is therefore becoming increasingly important to marketers.

The shift towards privacy first marketing.

In the Company's chosen sphere of interest, digital media and advertising, the structural changes identified last year have become evident. These structural changes have continued to be driven by the increasing importance of data privacy.

1. Audiences are shifting their interest from platforms based around sharing and socialising such as Facebook, towards platforms designed for broadcasting like Instagram and TikTok. As a result, user-generated content has an increasing impact on advertising Return on Investment ("ROI").

2. Companies traditionally interacting indirectly with consumers are now increasingly bypassing retail and media partners to engage and conduct transactions directly with customers.

3. Chief Marketing Officers ("CMOs") are increasingly focussed on preserving and improving consumer relationships by using consented data-driven insights to enhance customers' experience and optimise their marketing journeys from exploration to sales.

Legislation

As expected, in the last year privacy legislation has continued to evolve in line with the growing privacy-centric environment.

February 2022 saw a landmark European ruling against the Internet Advertising Bureau ("IAB") (the industry body for digital advertising), which 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 judgement are expected to be far reaching. Discussion around this judgement is ongoing. However, privacy legislation has continued to evolve towards a new privacy-centric data environment in the last year. Highlights are:

· In January 2023, the American Data Privacy and Protection Act (ADPPA) was proposed in the US Senate and is still under review. If enacted, it could homogenize data protection regulations throughout the US, thereby simplifying the present system of varying State laws.

· March 2023 marked the introduction of the UK Data Protection and Digital Information Bill (No. 2) to the House of Commons as a replacement for the European GDPR legislation. If passed in its current form, the new Bill will allow UK businesses to obtain consent in a more flexible way, including through implied consent.

· By June 2023, the EU parliament reached an agreement on the Data Act which, amongst other initiatives, creates a privacy-centric framework to allow businesses to share data. This will potentially increase opportunities for innovative privacy businesses in the marketing space.

Privacy Technology

Google's depreciation of cookies is now scheduled for the end of 2024, and privacy measures continue to be a high priority for providers of advertising networks and devices. As a result, these providers are gaining greater control of consumer data and therefore of pricing, and so related advertising costs are rising just as marketers are increasingly seeking efficiencies to offset adverse macro-economic conditions.

Structural shift

As the advertising market adjusts to the privacy-centric environment, business leaders, particularly CEOs and CMOs, are evolving their marketing to reflect a 'people first' focus on valued customers, rather than relying on commoditised data to continually attract new audiences.

Digital advertising spend is increasing, but the challenging macroeconomic environment, coupled with the dynamic landscape of consumer behaviour, the evolving regulatory environment, and the transformative power of new technologies, means that innovation and adaptation are critical to success. The marketing environment is becoming more complicated for large incumbent service providers, favouring nimbler, technology-oriented businesses.

The Company's strategy therefore continues to be to capitalise on this structural disruption in the marketing industry. This approach is coupled with relatively high interest rates leaving many growth-oriented technology companies with less access to the capital they need, resulting in more realistic valuations by their founders and seed investors, and creating more opportunities for the Company to acquire complementary technology businesses at attractive valuations.

STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 31 MARCH 2023