MPM.L Regulatory News (MPM)

14 June 2019

Mporium Group plc

("Mporium", the "Company or the "Group")

Update on Fundraising and Posting of Circular

Mporium Group plc (AIM:MPM), the technology firm delivering event-driven marketing, announces that it has conditionally raised a total of £1.923 million by way of subscription, mainly from existing investors for a total of 192,300,000 new ordinary shares of 0.5p each in the capital of the Company ("Ordinary Shares") (the "Subscription Shares"), at an issue price of 1 pence per Subscription Share (the "Subscription").

The Company announced that it had conditionally raised £1.5 million by way of subscription in its announcement on 11 June 2019. Subsequently, the Company has accepted additional conditional subscriptions on the same terms, totalling £0.423 million prior to close of business on 13 June 2019. As part of these additional conditional subscriptions, both Tom Smith (newly appointed Managing Director, Mporium Group plc) and Allay (UK) Ltd ("Allay"), have both invested.

Upon completion of the Subscription, the subscribing investors will also receive 192,300,000 warrants ("Warrants") exercisable between 10 December 2019 and 10 December 2021 with a subscription price of 1.5 pence per Warrant, the terms of the Warrants to be finalised and agreed with the relevant parties prior to Admission (as defined below).

The net proceeds of the Subscription will be used to restructure the business and to provide working capital.

A circular containing further details and reasons for the Subscription has today been posted to shareholders (the "Circular"). Extracts of the Circular are set out below and the Circular is available on the Company's website at www.mporium.com

Conditions of Subscription

The Subscription is conditional upon (amongst other things): (i) Shareholders approving resolutions (amongst other things) authorising and empowering the directors of the Company to allot the Subscription Shares and issue the Subscription Warrants (and / or enter into agreements or other documents relating thereto) and to disapply pre-emption rights in respect thereof at the General Meeting referred to below, (ii) the terms of the Subscription Warrants being agreed as described above, (iii) admission ("Admission") of the Subscription Shares to trading on the AIM market of London Stock Exchange plc becoming effective by 8.00 a.m. on 4 July 2019 (or such later date 4being no later than 8.00 a.m. on 24 July 2019 as the Company may in its sole discretion determine) and (iv) receipt of funds in respect of the Subscription Shares from relevant investors.

The Subscription is not being underwritten. As the fundraise is conditional on receipt of funds from investors, the Company may complete the investment with certain investors and not with others and, accordingly, there is no minimum guaranteed amount to be raised by the fundraise.

Nelius De Groot, CEO of the Company, commented:

"The Group has decided that it is necessary to narrow the focus of our business and to take the necessary steps to restructure accordingly. We are confident that under Tom's leadership, the restructured business will provide the Company with a solid foundation for future growth."

Enquiries

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

Notes to editors

About Mporium

Mporium is a technology company at the forefront of the transformation in digital marketing. Mporium's proprietary technology enables advertisers, to identify and leverage moments when there are significant changes in the levels of consumer engagement.

Based in the UK, Mporium Group plc is quoted on AIM, a market of the London Stock Exchange plc.

www.mporium.com

The following text is extracted from the Circular:

1. Introduction

On 11 June 2019, the Company announced that it had conditionally raised approximately £1.5 million by way of subscription, mainly from existing investors, for a total of 150,000,000 new Ordinary Shares, at a subscription price of 1 pence per Subscription Share.

The Company also announced that, upon completion of the Subscription, the relevant investors will also be granted Warrants over 150,000,000 Ordinary Shares exercisable between 10 December 2019 and 10 December 2021 with an exercise price of 1.5 pence per share.

In its 11 June 2019 announcement, the Company indicated that it might accept additional conditional applications for Subscription Shares prior to close of business on 13 June 2019. Since 11 June 2019, the Company has entered into conditional subscription letters with investors in respect of a further 42,300,000 Subscription Shares.

Accordingly, the total number of Subscription Shares proposed to be issued pursuant to the fundraising is 192,300,000 and the total number of proposed Warrants is 192,300,000. The gross amount conditionally raised pursuant to the proposed Subscription is £1.923 million.

Further details of the Subscription and the Warrants are set out below at section 7 headed "Details of the Fundraising".

The Fundraising is conditional upon (amongst other things) Shareholder approval which will be sought at the general meeting of the Company to be held at the Company's offices at First Floor, 106 New Bond Street, London, England, W1S 1DN at 10.00 a.m. on 2 July 2019 (the "General Meeting"). The notice of the General Meeting is set out at the end of this document.

The purpose of this letter is (i) to provide you with details of, background to and reasons for the Fundraising, (ii) to provide you with information in respect of the Resolutions to be proposed at the General Meeting and (iii) to explain why the Board believes that the Fundraising and the Resolutions are in the best interests of the Company and its Shareholders as a whole.

The actions that you should take to vote on the Resolutions, and the recommendation of the Board, are set out in paragraphs 11 and 12 respectively of this letter.

In the event that Shareholders do not approve the Resolutions, the Fundraising will not proceed and the Board will urgently need to consider alternative sources of funding, which may or may not be forthcoming. Accordingly, Shareholders are urged to vote in favour of the Resolutions in order that the Fundraising can proceed.

The contents of this document are important and I would urge you to read it carefully and in full and to complete, sign and return the enclosed Form of Proxy in accordance with the instructions given on it and in paragraph 11 below headed "Action to be Taken", as soon as possible and in any event by no later than 10.00 a.m on 28 June 2019.

2. Background on Mporium

Mporium's proprietary technology enables advertisers to identify and leverage moments when there are significant changes in the levels of consumer engagement to ultimately tailor advertising accordingly.

Mporium's IMPACT platform operates across search, social and display media advertising venues, optimising digital advertising outcomes for advertisers. Performance is achieved using a range of signals to manage in real-time the pricing, timing and selection of creative for digital advertising campaigns.

The technology operates as an overlay to existing digital campaigns and requires no technical integration. The campaign's credentials are used to connect the IMPACT platform directly to the relevant application programming interface (APIs). The technology has been deployed on behalf of brands and agencies across more than 160 countries and territories.

IMPACT monitors signals in real-time, makes informed data-driven decisions, and executes relevant actions that capitalise on the identified opportunities. Signals provide real-world events that influence consumer behaviour. Sources includes: influencers, sports events, television (both television content and adverts), news feeds, financial data and social media.

Decisions are derived using data science techniques to correlate signals with anomalies in consumer interest. Decisions are constantly refined to optimise the performance that they deliver and include the modulation of keyword bidding, turning campaigns on / off, and the switching of advertising creative. Actions represent the implementation of decisions and are executed across numerous advertising channels and third party APIs. Mporium has already operated on behalf of numerous prestigious global brands and agencies, delivering performance enhancements across digital advertising campaigns.

In November 2018, the Company established MporiumX as a performance division with the objective of driving customer leads at scale across digital channels. This allows Mporium to utilise its proprietary technology to deliver direct results and where it is paid based on performance rather than percentage of spend. This model is well-suited to deliver on well-defined direct response marketing targets.

Fast Web Media is a digital marketing agency that provides clients with a range of digital marketing services, specialising in search marketing, search engine optimisation, technical development, social media and mobile.

3. Background to the Fundraising and use of proceeds

The Board now recognises that its gross margin aspirations will take longer to achieve and that as a consequence the Company will not achieve the desired EBITDA breakeven within 2019. In this light, the Company announced on 11 June 2019 that it has initiated a major restructuring that will refocus the business on the performance-led MporiumX division, which accounted for 95% of its revenues in the first quarter of the current financial year. The Board believes in view of market conditions and the Company's resources, it would be the best course to have a single strategic and investment focus, and to reduce its cost base accordingly.

As part of this restructuring, the Company has made the decision to streamline the Mporium Agency offering in view of the significant market challenges in the way of this business. There are many additional market entrants, brands are bringing marketing capabilities in-house and margins are under pressure. Adoption of technology by agencies remains slow and their activities are orientated around a campaign mindset that results in sporadic, rather than always-on, usage.

The Company is undertaking a detailed assessment of its legacy Fast Web Media (FWM) business, to determine the appropriate course of action with respect to the business. Several new contracts with larger clients have been signed during the last 18 months, but these contracts have not yet generated the level of revenues required to make FWM profitable. 

4. Use of proceeds

Assuming all the Subscription Shares are issued, the net proceeds of the Subscription (which is expected to be approximately £1.87 million) will be used to fund the expected costs of the restructuring and to provide working capital to support the reshaped business into late 2020, assuming receipt of a significant research and development tax rebate in the third quarter of 2019.

5. Update on report and accounts

In its 11 June 2019 announcement, the Company also provided a further update regarding its audited results for the financial year ended 31 December 2018. Due to the adoption of new accounting standards, the Company and its auditors are finalising the periods for which booked revenues will be recognised under these standards. These discussions are close to resolution and, as stated in the update of 3 June 2019, the audit is being finalised and the Directors expect to announce audited results for such financial year by the end of June 2019.

6. Director change

The Company also announced on 11 June 2019 that Barry Moat had stepped down from the Board with immediate effect.

7. Details of the Fundraising

The Company proposes to raise gross proceeds of approximately £1.923 million through the issue of Subscription Shares at the Subscription Price to certain investors. The Subscription Price represents a discount of 32.2 per cent. to the closing middle market price of 1.475 pence on 10 June 2019, being the last practicable date prior to the Company's announcement of 11 June 2019. The Subscription Shares will represent 18.54 per cent. of the Company's Enlarged Share Capital immediately following Admission. 

In additional, conditional on Admission, the relevant investors will also be granted Warrants over 192,300,000 Ordinary Shares exercisable between 10 December 2019 and 10 December 2021 with an exercise price of 1.5 pence per share.

The Board believes that raising equity finance using the flexibility provided by a non-pre-emptive placing is the most appropriate and optimal structure for the Company at this time.

The Subscription Shares when issued will rank pari passu with the Ordinary Shares and will rank in full for any dividends and distributions paid or made in respect of the Ordinary Shares following Admission.

Application will be made for the Subscription Shares to be admitted to trading on AIM. It is expected that dealings in the Subscription Shares will commence on AIM on 4 July 2019.

Terms of the Subscription

Under the Subscription Letters, certain investors have conditionally agreed to subscribe for the Subscription Shares at the Subscription Price.

The Subscription is conditional upon (amongst other things):

· the passing of the Resolutions at the General Meeting

· the terms of the Warrants being agreed

· Admission becoming effective by 8.00 a.m. on 4 July 2019 (or such later date being no later than 8.00 a.m. on 24 July 2019 as the Company may in its sole discretion determine), and

· receipt of funds in respect of the Subscription Shares from the relevant investors.

The Subscription is not being underwritten. As the Fundraising is conditional on receipt of funds from investors, the Company may complete the investment with certain investors and not with others and, accordingly, there is no minimum guaranteed amount to be raised by the Company pursuant to the Fundraising.

Warrants

As indicated above, the relevant investors in the Fundraising will be granted warrants over 192,300,000 Ordinary Shares in aggregate (assuming that all of the Subscription Shares are in fact issued).

The Warrants will be issued to relevant investors, conditional on Admission, pursuant to the Warrant Instrument. Each investor will be issued with one Warrant for each Subscription Share subscribed for by him/ her. Upon exercise, each Warrant is convertible into one Ordinary Share at an exercise price of 1.5 pence per Ordinary Share.

The Warrants are exercisable at any time between 10 December 2019 and 10 December 2021 (both inclusive) (the "Exercise Period"). The Warrants are also exercisable at any time prior to or during the Exercise Period in the event of a Takeover Offer or a Scheme (as those terms are defined in the Warrant Instrument). In certain limited circumstances, the Warrants may be exercised following the expiry of the Exercise Period in accordance with the Warrant Instrument.

The Warrant Instrument contains certain provisions that allow for the adjustment of the outstanding Warrants in the event of certain share capital reorganisations of the Company. The Warrants are exercisable in whole or in part but a Warrant holder may not exercise fewer than 50,000 Warrants or, if lower, his or her aggregate holding of Warrants. The Warrants are only transferable with the prior written consent of the Company (acting in its absolute discretion).

8. Related Party Transaction

Mr. Robert Keith currently holds 67,723,598 Ordinary Shares representing 8.01 per cent. of the existing share capital and is a connected party to Charles Street International Holdings ("Charles Street"), which is a substantial shareholder of the Company for the purposes of the AIM Rules. Similarly, Allay (UK) Ltd ("Allay") are also a substantial shareholder of the Company by virtue of their holding of 211,295,513 Ordinary Shares representing 25.00 per cent. of the existing share capital.

Mr. Robert Keith and Allay have separately conditionally subscribed for 50,000,000 and 5,000,000 Subscription Shares, respectively. Being substantial shareholders, these subscriptions are considered to be related party transactions pursuant to AIM Rule 13 of the AIM Rules.

Following the Subscription, Robert Keith will hold 117,723,598 Ordinary Shares, representing 11.35 per cent. of the enlarged issued share capital, and Allay will hold 216,295,513 Ordinary Shares, representing 20.85 per cent. of the Enlarged Share Capital.

The Directors consider, having consulted with finnCap Ltd its Nominated Adviser, that the participations of Robert Keith and Allay as set out above are fair and reasonable insofar as shareholders of the Company are concerned.

9. General Meeting

A notice convening the General Meeting is set out at the end of this document. A summary and explanation of the Resolutions to be proposed at the General Meeting is set out below. Please note that the summary and explanation is not the full text of the Resolutions and Shareholders should review the full text of the Resolutions before deciding whether or not to approve them.

Resolution 1 - Authority to allot shares

The purpose of this Resolution is to provide the directors with the authority to allot the Subscription Shares and to issue the Warrants (and any Ordinary Shares to be issued on the exercise of the Warrants). Section 551 of the Act provides that the directors may not allot new shares or grant rights to subscribe for or to convert any security into shares (other than for employee share schemes) without shareholder approval. Resolution 1 proposes that authority be granted in addition to any existing authority to allot Ordinary Shares pursuant to the Fundraising and to issue the Warrants (and any Ordinary Shares to be issued upon the exercise of the Warrants).

Resolution 2 - Disapplication of pre-emption rights

Section 561(1) of the Act provides that (subject to certain exceptions) if the directors wish to allot any equity securities (as defined in section 560 of the Act) for cash, they must first be offered to existing shareholders in proportion to their existing shareholdings. The purpose of Resolution 2 is to allow the directors to allot equity securities for cash as if section 561(1) of the Act does not apply in connection with the Fundraising.

The Fundraising is conditional upon the passing of the Resolutions and, accordingly, if the Resolutions are not passed, the Fundraising will not complete. If the Resolutions are passed, the authority and power conferred will, to the extent not used, expire on the date which is three months after the date on which the resolutions are passed.

10. Importance of the vote

In the event that Shareholders do not approve the Resolutions, the Fundraising will not proceed and the Board will urgently need to consider alternative sources of funding, which may or may not be forthcoming. Accordingly, Shareholders are urged to vote in favour of the Resolutions in order that the Fundraising can proceed.

11. Action to be taken

A form of proxy for use at the General Meeting is enclosed. Whether or not you intend to attend the General Meeting in person, you are requested to complete and sign the form of proxy in accordance with the instructions printed on it and then to return it to the Company's Registrars, Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU. Completed forms of proxy should be returned to the Company's registrars so as to be received by no later than 10.00 a.m on 28 June 2019. The completion and return of a form of proxy will not preclude you from attending the General Meeting and voting in person should you so wish.

12. Recommendation

The Directors consider that the Fundraising and the Resolutions are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors unanimously recommend that you vote in favour of the Resolutions, as they intend to do in respect of their entire beneficial holdings of Ordinary Shares.

Yours sincerely

Nelius De Groot

Chief Executive Officer

DEFINITIONS

The following definitions apply throughout this document, unless the context otherwise requires: 

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

2019

Note:

Each of the times and dates in the above table is a reference to the time in London and is subject to change. If any of the above times and/or dates change, the revised times and/or dates will be notified by amendment by the Company on a regulatory information service.

FUNDRAISING STATISTICS

Note:

1 Assumes that (i) all of the Subscription Shares are issued and (ii) no other Ordinary Shares are issued between the date of this document and Admission.

2 Assumes that all of the Subscriptions Warrants are exercised in accordance with the terms of the Warrant Instrument in due course.