Feedback Regulatory News (FDBK)

THIS ANNOUNCEMENT IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain

25 October 2018

Feedback plc

Proposed placing and subscription to raise £1.375 million

Cambridge, 25 October 2018: Feedback plc (AIM: FDBK, "Feedback" or the "Company"), the specialist medical imaging technology company, announces that it has conditionally raised a total of £1.375 million (before expenses) via a proposed placing, by Peterhouse Capital Limited, and subscription of a total of 91,666,666 new ordinary shares ("New Ordinary Shares"), at an issue price of 1.5 pence per New Ordinary Share (the "Issue Price").

Approximately £832,000 (before expenses) has been raised pursuant to the Company's existing share authorities (the "Placing"), and a further £543,000 has been raised subject to, inter alia, the approval of Shareholders at a General Meeting of the Company (the "Subscription").

Further information on the Company, current trading and its strategy is set out below and in the shareholder circular which is expected to be posted to shareholders on or around 29 October 2018 (the "Circular").

 Placing Highlights:

· The Company has conditionally raised £1.375 million (before expenses) through the issue of the 91,666,666 New Ordinary Shares, 55,466,666 of which are expected to be admitted to trading on AIM on 31 October 2018

· Certain of the directors of the Company have subscribed for 6,933,333 New Ordinary Shares (in aggregate) pursuant to the Subscription, representing £104,000 (in aggregate) at the Issue Price

· The Placing Price represents a discount of approximately 11.8% to the closing mid-market price of 1.7 pence per Ordinary Share on 24 October 2018

· The Subscription is subject to shareholder approval at a General Meeting of the Company on 15 November 2018. If approved, the New Ordinary Shares issued pursuant to the Subscription are expected to be admitted to trading on AIM on 16 November 2018

· The New Ordinary Shares will represent 24.56% of the enlarged issued share capital of the Company

Use of Proceeds:

· Expansion of the Company's sales and marketing services

· Development of technical product support for the new Cadran product offerings and to expand the Cadran customer base

· To fund regulatory consultant commission costs in relation to the Company's plans to secure regulatory approval of TexRAD® with the US FDA, including 510k as a medical device and CFR Chapter 21 part 11 compliance for use in clinical trials of drug candidates for FDA marketing approval

· To develop the Company's partnership with Imaging Endpoints, its US imaging company partner, in order to maximise its sales in the US

· To facilitate new staff appointments

 Dr Alastair Riddell, Executive Chairman of Feedback said:

"We are pleased to have received support from existing and new investors. This is a strong endorsement of Feedback and our strategy at a time of general market uncertainty."

"This placing will enable Feedback to continue to invest in the further growth of the business. In particular, in the fields of image analysis with TexRAD®, and AI applications in linking image data to anonymised patient data with Cadran. In addition, beginning the process of seeking US FDA approval for TexRAD® can now be properly resourced. Expanding our sales, marketing and customer support capabilities, will ensure that we can build on the significant momentum generated this year."

Notice of General Meeting and Shareholder Circular

The Subscription is conditional, inter alia, on the approval of shareholders of resolutions to be proposed at a general meeting of the Company to provide authority to the Directors to allot further new ordinary shares otherwise than on a pre-emptive basis.

A General Meeting of the Company will be held at the offices of Peterhouse Capital Limited, New Liverpool House, 15 Eldon St, London EC2M 7LD at 10.00 a.m. on 15 November 2018, to seek this shareholder approval. A Circular containing a Notice of General Meeting will be posted to shareholders on or around 29 October 2018 and will be available on the Company's website, www.fbkmed.com, shortly thereafter.

Further information 

The above summary should be read in conjunction with the full text of this announcement.

LETTER FROM THE CHAIRMAN OF FEEDBACK PLC

1. Introduction

The Company is pleased to announce that it has conditionally raised £1.375 million (before expenses) by way of the proposed Placing and Subscription of a total of 91,666,666 Placing and Subscription Shares in two tranches. All Placing and Subscription Shares will be issued at the Issue Price of 1.5 pence per new Ordinary Share.

The Company has raised £832,000 (before expenses) pursuant to the Company's existing share authorities and a further £543,000 has been raised subject to, inter alia, the approval of Shareholders at the General Meeting. 

The Placing Shares are to be admitted to trading on AIM via First Admission. First Admission is expected to take place at 8:00 a.m. on 31 October 2018. The Subscription Shares are expected to be admitted to trading on AIM via Second Admission. Second Admission is expected to take place at 8:00 a.m. on 16 November 2018, should the Resolutions to be proposed at the General Meeting, further details of which can be found below, be passed at the General Meeting.

Dr Alastair Riddell, Executive Chairman of the Company, has conditionally subscribed for 1,000,000 Subscription Shares (representing £15,000 at the Issue Price). Lindsay Melvin, Chief Financial Officer of the Company, has conditionally subscribed for 600,000 Subscription Shares (representing £9,000 at the Issue Price). Simon Sturge, Non-Executive Director of the Company has conditionally subscribed for 5,333,333 Subscription Shares (representing approximately £80,000 at the Issue Price).

2. Use of Proceeds

Feedback is seeing considerable sales growth potential in the near to mid-term, from line extensions in its current product range and increased sales from its distributors. As such, the Company intends to use the net proceeds of the Placing and Subscription to expand its sales and marketing services. In addition, funds will be used to develop technical product support for the new Cadran product offerings and to expand the Cadran customer base.

In order to enable it to also address the potential in the US market for the mid to long term, the Company has initiated plans for regulatory approval of TexRAD® with the US FDA including 510k as a medical device and CFR Chapter 21 part 11 compliance for use in clinical trials of drug candidates for FDA marketing approval. The net proceeds of the Placing and Subscription will be used, in part, to fund regulatory consultant commission costs in respect of the regulatory approvals.

The Company also intends to use the net proceeds of the Placing and Subscription to develop its partnership with Imaging Endpoints, its US imaging company partner. The Company believes that development of this partnership will result in maximising its sales in the US.

As previously announced, Feedback's strategic business plan is focused on capitalising on the considerable investments made to date and it has identified additional staffing required to deliver future major growth. A portion of the proceeds of the Placing and Subscription will be used to facilitate two to three new staff appointments in support of each of its products and to support US regulatory approvals. .

3. Current Trading and Prospects

As announced on 3 October 2018, in the year to 31 May 2018, Feedback invoiced sales of £771k, a 51% increase on the previous year (FY 2017: £508k), leading to recognised revenue in the year of £458k (FY 2017: £466k). This 51% increase in invoiced sales is a result of the Company's investment in its employees with training and recruitment of four new hires. The associated recruitment, restructuring and other costs have meant that the Company's operating loss has risen to £750k (FY 2017: £300k). However, the investment has led to significant improvement in sales performance and anticipated long term growth.

This improved sales performance has continued into the first quarter of the current financial year, with a 100% increase in invoiced sales of both TexRAD® and Cadran product licences in the first quarter to £236k, compared to £117k in the first quarter of FY 2018. International sales accounted for most of this growth, increasing by over 200%. Importantly, this has been achieved with improved cost control in this financial year. Feedback's prudent accounting policy is to spread the income from its software licence and support sales over the duration of the contract, usually one to two years. The Company's balance sheet contains a deferred revenue asset to reflect this.

The Company intends to release its Annual Report and Accounts for the year ended 31 May 2018 prior to 30 November 2018.

4. Details of the Placing and Admission

A total of £832,000 (before expenses), representing the issue of 55,466,666 new Ordinary Shares at the Issue Price, has been raised by way of the Placing utilising the Company's existing share authorities put in place at the Company's general meeting held on 22 June 2018. The Placing is conditional, inter alia, upon the Placing Agreement becoming unconditional in all respects and not having being terminated in accordance with its terms; and admission of the Placing Shares to trading on AIM.

The Company is also proposing to raise £543,000 (before expenses) by way of the Subscription at the Issue Price. The Subscription is conditional, inter alia, upon the passing of the Resolutions without amendment at the General Meeting.

The Placing and Subscription will result in the issue of a total of 91,666,666 New Ordinary Shares, representing, in aggregate, approximately 24.56% of the Enlarged Share Capital. Such new Ordinary Shares, when issued and fully paid, will rank pari passu in all respects with the Existing Ordinary Shares and therefore will rank equally for all dividends or other distributions declared, made or paid after the relevant date of Admission.

Application has been made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM and admission of the Placing Shares is expected to occur on 31 October 2018.

It is expected that CREST accounts will be credited on the day of First Admission as regards the Placing Shares in uncertificated form and that certificates for those shares to be issued in certificated form will be dispatched by first class post by 14 November 2018.

Application will also be made to the London Stock Exchange for the Subscription Shares to be admitted to trading on AIM and, conditional inter alia on the approval of Shareholders at the General Meeting, admission of the Subscription Shares is expected to occur on 16 November 2018.

It is expected that CREST accounts will be credited on the day of Second Admission as regards the Subscription Shares in uncertificated form and that certificates for those shares to be issued in certificated form will be dispatched by first class post by 30 November 2018.

5. Related Party Transactions

Dr Alastair Riddell, Executive Chairman of the Company, has conditionally subscribed for 1,000,000 Subscription Shares (representing £15,000 at the Issue Price). Lindsay Melvin, Chief Financial Officer of the Company, has conditionally subscripted for 600,000 Subscription Shares (representing £9,000 at the Issue Price). Simon Sturge, a Non-Executive Director of the Company has conditionally subscribed for 5,333,333 Subscription Shares (representing approximately £80,000 at the Issue Price). The directors' participation in the Subscription constitutes a related party transaction under rule 13 of the AIM Rules.

Tom Charlton, a substantial shareholder of the Company, having an interest in approximately 24.09% of the voting rights of the Company, has subscribed for 14,000,000 Subscription Shares (representing £210,000 at the Issue Price). Tom Charlton's participation in the Subscription constitutes a related party transaction under rule 13 of the AIM Rules.

Timothy Irish, the Independent Director, having consulted with the Company's nominated adviser Allenby Capital, considers that the terms of the participation of Dr Alastair Riddell, Lindsay Melvin, Simon Sturge and Tom Charlton in the Subscription to be are fair and reasonable insofar as the Shareholders are concerned.

6. General Meeting

A notice convening the General Meeting will be included in the Circular. The General Meeting of the Company is to be held at the offices of Peterhouse Capital Limited at New Liverpool House, 15 Eldon St, London EC2M 7LD at 10:00 a.m. on 15 November 2018.

At the General Meeting, Shareholders will consider the following resolutions:

a. an ordinary resolution to grant the Directors authority to allot the Subscription Shares; and

b. a special resolution to disapply Shareholders' statutory pre-emption rights which would otherwise apply to the allotment of the Subscription Shares.

7. Directors' Recommendation

The Directors consider the Placing and Subscription, and the Resolutions to be in the best interests of the Company and its Shareholders as a whole and unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting as they intend to do in respect of their own beneficial holdings which amount to, in aggregate, 13,500,000] Ordinary Shares, representing approximately 4.79% of the Existing Ordinary Shares.

8. Total Voting Rights

Upon First Admission, the Company's issued ordinary share capital will consist of 337,083,251 Ordinary Shares with one voting right each. The Company does not hold any ordinary shares in treasury. Therefore, the total number of ordinary shares and voting rights in the Company will be 337,083,251. With effect from First Admission, this figure may be used by Shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

Upon Second Admission, the Company's issued share capital will consist of 373,283,251 Ordinary Shares with one voting right each. The Company does not hold any ordinary shares in treasury. Therefore, the total number of ordinary shares and voting rights in the Company will be 373,283,251. With effect from Second Admission, this figure may be used by Shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Notes:

(1) Certain of the dates in the above timetable are subject to change at the discretion of Allenby Capital, Peterhouse, Stanford Capital Partners and the Company.

(2) References to time in this Circular are to London time except when otherwise stated.

(3) If any of the above times and/or dates change, the revised time(s) and/or date(s) will be notified to Shareholders by announcement through a Regulatory Information Service.

PLACING STATISTICS

IMPORTANT NOTICE

No action has been taken by the Company, Allenby Capital, Peterhouse or Stanford Capital Partners or any of their respective affiliates, that would, or which is intended to, permit a public offer of the Placing Shares or Subscription Shares in any jurisdiction or the possession or distribution of this announcement or any other offering or publicity material relating to the Placing Shares or Subscription Shares in any jurisdiction where action for that purpose is required. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions. Persons into whose possession this announcement comes shall inform themselves about, and observe such restrictions.

No prospectus will be made available in connection with the matters contained in this announcement and no such prospectus is required (in accordance with the Prospectus Directive) to be published.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY, IS NOT INTENDED TO AND DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER OR INVITATION TO PURCHASE OR SUBSCRIBE FOR, UNDERWRITE, SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO PURCHASE OR SUBSCRIBE, SELL, ACQUIRE, DISPOSE OF THE PLACING SHARES OR SUBSCRIPTION SHARES OR ANY OTHER SECURITY IN THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR IN ANY JURISDICTION IN WHICH, OR TO ANY PERSONS TO WHOM, SUCH OFFERING, SOLICITATION OR SALE WOULD BE UNLAWFUL.

No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by the Company, Allenby Capital, Peterhouse or Stanford Capital Partners or any of their respective affiliates or any of their respective directors, officers, employees, advisers or representatives (collectively, "Representatives") as to or in relation to the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefor is expressly disclaimed.

This announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in the Placing Shares or Subscription Shares. Any investment decision to buy Placing Shares or Subscription Shares in the Placing must be made solely on the basis of publicly available information, which has not been independently verified by Allenby Capital, Peterhouse or Stanford Capital Partners.

This announcement contains certain forward-looking statements, beliefs or opinions, with respect to certain of the Company's current expectations and projections about future prospects, developments, strategies, performance, anticipated events or trends and other matters that are not historical facts. These forward-looking statements, which sometimes use words such as "aim", "anticipate", "believe", "intend", "plan", "estimate", "expect" and words of similar meaning, include all matters that are not historical facts and reflect the directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. Statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this announcement is subject to change without notice and, except as required by applicable law, neither the Company, Allenby Capital, Peterhouse nor Stanford Capital Partners nor any of their respective affiliates nor any of their respective Representatives assumes any responsibility or obligation to update, amend or revise publicly or review any of the forward-looking statements contained in this announcement. You should not place undue reliance on forward-looking statements, which speak only as of the date of this announcement. Any indication in this announcement of the price at which Placing Shares or Subscription Shares have been bought or sold in the past cannot be relied upon as a guide to future performance. No statement in this announcement is or is intended to be a profit forecast or profit estimate or to imply that the earnings of the Company for the current or future financial years will necessarily match or exceed the historical or published earnings of the Company. Past performance of the Company cannot be relied on as a guide to future performance and persons reading this announcement are cautioned not to place undue reliance on such forward-looking statements.

The price of Ordinary Shares and any income from them may go down as well as up and investors may not get back the full amount invested on disposal of the Ordinary Shares.

The Placing Shares and Subscription Shares to be issued pursuant to the Placing will not be admitted to trading on any stock exchange other than the AIM Market operated by the London Stock Exchange.

Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement.

DEFINITIONS