TIDMBRSD
RNS Number : 0466N
Brandshield Systems PLC
20 September 2023
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 AMED. ON PUBLICATION OF THIS ANNOUNCEMENT VIA A
REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO
BE IN THE PUBLIC DOMAIN.
BrandShield Systems Plc
("BrandShield" or the "Company")
Subscription to raise c.GBP2.68 million ($3.32 million)
Open Offer to raise up to GBP2.20 million
Approval of Waiver of Obligations under Rule 9 of the Takeover
Code
Cancellation of admission of Ordinary Shares to trading on
AIM
and
Notice of General Meeting
BrandShield Systems plc (AIM: BRSD), a leading provider of
cybersecurity solutions for brand oriented digital risk protection
("DRP"), announces that it will shortly be posting a circular to
shareholders (the "Circular"), a n extract of which is set out
below:
1. Introduction
The Company announced today its proposals (the "Proposals")
to:
-- Raise $3.32 million (GBP2.68 million) in a Subscription of
47,137,662 new Ordinary Shares and up to GBP2.20 million in an Open
Offer of up to 38,669,962 new Ordinary Shares, each at 5.68 pence
per Ordinary Share (in each case before expenses);
-- Seek a waiver under Rule 9 of the Takeover Code;
-- Issue New Options to Directors/Senior management, and
re-price certain of the Existing Options; and
-- Cancel the admission of its Ordinary Shares to trading on AIM.
This letter sets out the background to and reasons for, and
provides further details of, the Proposals.
Implementation of the Proposals, is conditional, inter alia,
upon all of the Resolutions being passed at the GM to be held at
11.00 a.m. on 13 October 2023. The Notice of General Meeting
convening the General Meeting at which the Resolutions will be
proposed is set out at the end of this document.
Shareholders should note that unless all the Resolutions are
approved at the General Meeting, the Subscription and Open Offer
will not complete, and the issue of the New Options, the re-pricing
of certain of the Existing Options, and the De-Listing will not
occur as currently proposed.
2. Subscription
The Company today announced a conditional Subscription to raise
approximately GBP2.68 million ($3.32 million) (before expenses) by
the issue of the Subscription Shares at the Subscription Price to
the Subscribers.
The Subscription Shares will rank pari passu with the Existing
Ordinary Shares. Following their issue, the Subscription Shares
will represent approximately 18.40% of the Enlarged Ordinary Share
Capital assuming the Open Offer is fully subscribed (21.68% of the
Enlarged Ordinary Share Capital if there is no take up in the Open
Offer).
In addition, Subscribers will receive 1 Subscription Warrant for
every Subscription Share subscribed. The Subscription Warrants will
have an exercise price of 8.52 pence per share and shall be
exercisable at any time up until 4 years after Admission (16
October 2027).
Further details of the Subscription Agreements are set out in
paragraph 5.1 of Part III of this document.
The Subscribers are as follows:
Name of Subscriber Amount subscribed Number of Number of Subscription
Subscription Warrants
Shares
Joseph Haykov (1) GBP1,774,193 31,235,801 31,235,801
($2,200,000)
------------------ -------------- -----------------------
William Currie Investments
Limited ("WCIL") GBP403,226 7,099,045 7,099,045
($500,000)
------------------ -------------- -----------------------
Sir Terence Leahy GBP403,226 7,099,045 7,099,045
($500,000)
------------------ -------------- -----------------------
Gigi Levi Weiss GBP96,774 1,703,771 1,703,771
($120,000)
------------------ -------------- -----------------------
Total GBP2,677,419 47,137,662 47,137,662
($3,320,000)
------------------ -------------- -----------------------
(1) Joseph Haykov is participating in the Subscription via his
investment vehicle, Cloak, LLC.
The Subscription is conditional on, amongst other things: (a)
the Subscription Agreements having become unconditional and not
having been terminated in accordance with their terms, (b) all of
the Resolutions being passed at the General Meeting and (c)
Admission having become effective by no later than 8.00 a.m. on 16
October 2023 or such later time as the Company and the respective
Subscribers may agree.
The Subscription by Joseph Haykov (via Cloak, LLC) was brokered
by Mr Subramanian Subbiah under a broking agreement, as set out in
paragraph 5.2 of Part III of this document. Mr Subbiah will
receive, conditional on Admission, Broker Warrants as follows:
- 3,123,580 Broker Warrants to subscribe for Ordinary Shares at
an exercise price of 5.68 pence and an exercise period ending 4
years following Admission (16 October 2027).
- Up to a further 4,685,370 Broker Warrants to subscribe for
Ordinary Shares at an exercise price of 8.52 pence and an exercise
period ending 4 years following the date on which Cloak, LLC's
Subscription Warrants are exercised ; the actual number issued will
be determined in proportion to the number of Subscription Warrants
exercised by Joseph Haykov (through Cloak, LLC) of the aggregate
number of Subscription Warrants issued to him.
3. Details of the Open Offer
Qualifying Shareholders are being offered the opportunity to
apply for Open Offer Shares on the basis of:
1 Open Offer Share for every 2 Existing Ordinary Shares held at
the Issue Price of 5.68 pence per share
In addition, successful applicants under the Open Offer will be
issued with Open Offer Warrants, being warrants to subscribe for
new Ordinary Shares. The Open Offer Warrants are exercisable within
4 years of issuance (on a monthly basis) at a price of 8.52 pence
per Ordinary Share. The Open Offer Warrants will be issued on the
basis of 1 Warrant for every 1 Open Offer Share successfully
subscribed.
Whilst not members of the Concert Party, William Currie
Investments Limited ("WCIL") and Sir Terence Leahy, by virtue of
their participation in the Subscription, would have been deemed not
to be independent for the purposes of the Waiver Resolution.
However, as all Shareholders who did not participate in the
Subscription are able to participate on identical terms, and to at
least the same extent (as a % of their holding of Existing Ordinary
Shares) as WCIL and Sir Terence Leahy via the Open Offer, WCIL and
Sir Terence Leahy will be able to vote on the Waiver
Resolution.
The Open Offer is conditional on all Resolutions being passed at
the General Meeting, and Admission. It is expected that Admission
will occur and dealings in the Open Offer Shares will commence on
16 October 2023. If such condition is not fulfilled on or before
8.00 a.m. on 16 October 2023 (or such later date as the Company may
reasonably decide) application monies are expected to be returned
without interest and any Open Offer Entitlements admitted to CREST
will be disabled.
Assuming full take-up under the Open Offer, the issue of the
Open Offer Shares will raise gross proceeds of approximately
GBP2.20 million for the Company. The Open Offer Shares will, upon
issue, rank pari passu all respects with the Company's existing
Ordinary Shares including the right to receive all dividends and
other distributions declared, made or paid after their date of
issue.
Holdings of Existing Ordinary Shares in certificated and
uncertificated form will be treated as separate holdings for the
purpose of calculating entitlements under the Open Offer, as will
holdings under different designations and in different
accounts.
Qualifying Shareholders should be aware that the Open Offer is
not a rights issue. Accordingly, Qualifying Non-CREST Shareholders
should note that their Application Forms are not negotiable
documents and cannot be traded. Qualifying Non-CREST Shareholders
should note that applications in respect of Open Offer Entitlements
may only be made by the Qualifying Non-CREST Shareholder originally
entitled, or by a person entitled by virtue of a bona fide market
claim in accordance with paragraph 3.1(b) of Part IV of this
document.
Application will be made for the Open Offer Entitlements in
respect of Qualifying CREST Shareholders to be admitted to CREST.
It is expected that such Open Offer Entitlements will be admitted
to CREST at 8.00 a.m. on 21 September 2023. Applications through
the means of the CREST system may only be made by the Qualifying
CREST Shareholder originally entitled or by a person entitled by
virtue of a bona fide market claim.
Qualifying Non-CREST Shareholders will receive an Application
Form with this circular which sets out their entitlement to Open
Offer Shares as shown by the number of Open Offer Entitlements
allocated to them. Qualifying Non-CREST Shareholders should note
that the Application Form is not a negotiable document and cannot
be traded.
For Qualifying Non-CREST Shareholders, completed Application
Forms, accompanied by full payment, should be returned by post or
by hand (during normal business hours only) to Link Group,
Corporate Actions, Central Square, 29 Wellington Street, Leeds LS1
4DL so as to arrive as soon as possible and in any event so as to
be received no later than 11.00 a.m. on 5 October 2023. For
Qualifying CREST Shareholders the relevant CREST instructions must
have been settled as explained in this circular by no later than
11.00 a.m. on 5 October 2023.
If applications are made for less than all of the Open Offer
Shares available, then the lower number of Open Offer Shares will
be issued, and any outstanding Open Offer Entitlements will
lapse.
Further information on the Open Offer and the terms and
conditions on which it is made, including the procedure for
application and payment, are set out in Part IV of this
circular.
Members of the Concert Party and Subscribers - who in aggregate
hold 92,991,950 Existing Ordinary Shares amounting to 54.59% of the
Existing Ordinary Share Capital - have undertaken not to subscribe
for shares in the Open Offer. As such there are 38,669,962 shares
the subject of the Open Offer, which equates to 1 Open Offer Share
for every 2 Existing Ordinary Shares (i.e 50% of each of these
Shareholders' holdings) being made available to them in the Open
Offer
Warrants to subscribe for Ordinary Shares
The Open Offer Warrants will be issued to successful applicants
under the terms of the Open Offer on the basis of 1 Warrant for
every 1 Open Offer Share subscribed. The maximum number of Open
Offer Warrants that may be issued under the Open Offer (and
corresponding Ordinary Shares to be allotted pursuant to the
exercise of the Warrants) is 38,669,962.
The Open Offer Warrants will be exercisable at the subscription
price of 8.52 pence per Ordinary Share on a monthly basis from time
to time until the Lapse Date and if not exercised prior to that
date shall lapse. The minimum number of Warrants that may be
exercised at any one time is 1,000 Warrants (if the holder holds
less than 1,000 Warrants then the entire lesser amount).
No exercise of the Open Offer Warrants shall be permitted where
such exercise would result in any person or persons acquiring or
increasing control of the Company within the meaning given in
sections 181 and 182 of the FSMA, without the relevant regulatory
approval of such acquisition or increase of control having first
been obtained and not having expired prior to such exercise.
The Open Offer Warrants will be exercisable immediately from the
date of issue but will not be listed or admitted to trading.
Definitive certificates in respect of the Warrants are expected to
be dispatched within 10 days of Admission.
Upon exercise of the Open Offer Warrants, the resulting new
Ordinary Shares will be credited as fully paid and will rank pari
passu in all respects with the Company's existing Ordinary Shares
including the right to receive all dividends and other
distributions declared, made or paid after their date of issue.
4. Reasons for the Subscription, Open Offer, De-Listing and Use of funds
The funds secured in the Subscription and Open Offer will enable
the Company to continue accelerating its growth in securing new
clients and increasing its Annualised Recurring Revenue. In tandem,
efforts will continue to reduce operational cash burn and therefore
increase gross profit margins further and at a higher level of
revenues. These additional funds will be used to expand both the
sales team footprint and permit additional marketing spend to
reinforce the positive results we are seeing from such activity.
The Company announced improvements in gross margin in its recent
interim results, highlighting the increase to 68% in the 6 month
period to June 2023, up from 58% in 2022 and 55% in 2021. Against
that context, and in a sector in which the Company believes is ripe
for securing market share, the Board believes aggressive targeting
of growth of the top line should continue to be the over-riding
strategy. The Directors believe that reducing relative costs
remains important in order to secure a cash flow positive outcome
in 2024. The Company continually scans the competitive landscape in
the digital risk protection market, and is convinced of the
opportunities that exist to both penetrate the increasing market
size and to concurrently penetrate the existing market through
targeting clients from competitors. The Directors believe that the
De-Listing will assist in improving margins further and allow the
executive to focus on operational excellence without the additional
legal and regulatory burdens imposed through our current listed
status.
5. Issue of New Options and Re-pricing of Existing Options for Directors and employees
5.1 New Options - Yoav Keren/Yuval Zantkeren
It is proposed that New Options will be awarded to Yoav Keren
and Yuval Zantkeren as set out in the table below:
Name of Option Number of New Options Exercise Prices
holder
Yoav Keren up to 12,961,260 5.68p
up to 11,885,500 8.52p
326,850 10.5p
Total 40,120 14p
259,750 15p
798,650 20p
89,910 25p
up to 26,362,040
---------------------- ----------------
Yuval Zantkeren up to 12,961,260 5.68p
up to 11,885,500 8.52p
326,850 10.5p
Total 40,120 14p
259,750 15p
798,650 20p
89,910 25p
up to 26,362,040
---------------------- ----------------
The number of New Options to be granted as set out in the table
above has been calculated assuming that the Open Offer is
subscribed in full, and that the Open Offer Warrants are also fully
subscribed. In the event that there is no take up in the Open
Offer, 5,081,730 and 5,081,730 of the 5.68p and 8.52p New Options
respectively would not be issued to the Founders. The actual number
of New Options to be issued as result of the Open Offer, to
maintain the Founders' fully diluted shareholdings to under 10% of
the Fully Diluted Share Capital, will be proportionate to the take
up in the Open Offer.
The aim of granting the New Options is to provide a meaningful
incentive to the Founders to create value in the BrandShield
business. The quantum of New Options to be granted is such that the
Founders will (upon the exercise of all options held by them) each
own under 10% of the Fully Diluted Share Capital, in the event that
that all existing and proposed warrants and options in the Company
are fully exercised.
The exercise prices for the New Options range from 5.68 pence to
25 pence. The reason for the spread of prices is to ensure that the
grant of the New Options adheres to Israeli Tax Law requirement
that the holding will be under 10% at any level of exercise of
options and warrants as if all holders of options and warrants up
to that level have exercised.
In order to comply with Section 102 of the Israeli Income Tax
Ordinance the Founders will need to ensure that each of their
respective shareholdings (together with outstanding options held by
them) is under 10% of the Fully Diluted Share Capital of the
Company at any time. This may involve, as required, the forfeiture
by them of Existing Options or New Options. Further details of
Section 102 are set out in paragraph 6 of Part III of this
document.
The exercise period shall be 10 years from Admission (being 16
October 2033).
The grant of the New Options is conditional upon the Resolutions
being approved by Shareholders at the General Meeting and Admission
taking place.
Since BrandShield listed on AIM via a Reverse Takeover
transaction in December 2020 the key executives and founders have
delivered strong and consistent growth in terms of Annualised
Recurring Revenue ("ARR") and customer numbers, including securing
contracts with some of the world's leading companies in a range of
sectors. ARR has increased from approximately $2.87m at the time of
admission to trading on AIM in December 2020 to approximately
$9.71m as at the end of June 2023, representing compound annualised
growth in ARR of c60.3%. Despite this growth the share price has
performed poorly on the AIM market and successive fundraises have
been conducted at prices considerably lower than the original price
at which BrandShield joined the market in December 2020 of 20p per
share. This has led to sustained dilution of the Founders' equity
position in particular and it is the Board's view that it is
essential to incentivise both the Founders and key revenue
generating executives in an appropriate but fair manner that aligns
their interests with those of wider Shareholders.
As such, the Independent Directors believe that the introduction
of the New Options achieves that alignment and provides a mechanism
for those individuals to maintain a significant position in the
Company, should they choose to exercise their options at various
prices. Around 50% of the New Options are set at the Subscription
Price, with the balance set at exercise prices between 50% (8.52p)
and 340% (25p) above the Subscription Price.
5.2 Grant of New Employee Options - Ravit Freedman and other
employees
It is proposed that New Employee Options over up to 19,680,800
Ordinary Shares are awarded to employees, including a Director,
Ravit Freedman, (200,000 options), conditional upon Admission.
14,970,800 of these options will have an exercise price of 5.68
pence per share, and 4,710,000 of these options will have an
exercise price of 8.52 pence per share, and an exercise period of
10 years.
The number of New Employee Options to be granted has been
calculated assuming that the Open Offer is subscribed in full, and
that the Open Offer Warrants are fully subscribed. In the event
that there is no take up in the Open Offer, 2,034,700 and 2,034,740
of the 5.68p and 8.52p New Employee Options respectively would not
be issued.
5.3 Amendment to terms of Existing Options for Directors and
employees
It is proposed that a total of 9,304,909 Existing Options held
by employees, and 649,000 Existing Options held by Ravit Freedman,
and 3,127,196 Existing Options held by each of Yoav Keren and Yuval
Zantkeren, will be re-priced.
Employee options have been used by the Board as a means of
incentivising employees, by giving them a stake in the business.
Options are typically awarded following a probationary period.
However, many of these options have been issued historically at
exercise prices significantly higher than the current share price,
and at present are not serving the purpose for which they were
intended.
In order to comply with the Israeli Tax Authorities ruling
(Ruling no. 911), if a re-pricing of "out of the money" options is
performed, ALL existing options must be re-priced to the same
price, and therefore all the above Existing Options (being those
which are "out of the money") will be repriced to the Issue Price
of 5.68 pence, subject to Admission.
It is proposed that all of the above options (which will amount
to 7.68 per cent of the Enlarged Ordinary Share Capital (following
Admission) will, subject to Admission, be repriced to 5.68 pence
per share.
Further details of the Existing Options held by employees and
Directors, which are to be re-priced, are set out in paragraph 2 of
Part III of this document.
In addition, 925,236 Existing Options, including 263,037 held by
each of Yoav Keren and Yuval Zantkeren, and 399,162 held by other
employees have expiry dates of 31 December 2023. It is proposed
that the expiry dates are extended to 31 December 2028.
5.4 Amendments to exercise periods of Existing Warrants
It is proposed that all Existing Warrants whose expiry date is
before 1 December 2026 (details of which are set out in paragraph 3
of Part III of this document) have their exercise periods extended
to 1 December 2026.
Of the warrants (with an exercise price of 20 pence and an
exercise period ending 4 February 2025) issued in the February
2022, 1,785,714 are held by WCIL. The extension of the exercise
period of these warrants is a related party transaction (see
paragraph 6 below).
As part of Mr Subbiah's Broking Arrangement, New Enterprise
Limited will receive the above warrant extension. Given this
extension, it was felt appropriate by the Board to extend all other
warrants with an exercise period ending prior to 1 December 2026
out to the same point.
6. Related Party Transactions
There are four related party transactions under Rule 13 of the
AIM Rules, these are:
(i) Subscription by William Currie Investment Limited
("WCIL")
As WCIL holds 21,846,087 Existing Ordinary Shares, representing
12.83% of the current issued share capital, it is a related party
of the Company pursuant to the AIM Rules. Consequently, the
participation of WCIL in the Subscription (including the issue of
the Subscription Warrants) constitutes a related party transaction
for the purposes of AIM Rule 13. The Directors (all of whom are
independent of WCIL) consider, having consulted with SPARK, the
Company's nominated adviser, that the terms of WCIL's participation
in the Subscription are fair and reasonable in so far as
Shareholders are concerned.
(ii) Issue of the New Options to Yoav Keren, Yuval Zantkeren and
Ravit Freedman
Yoav Keren, Yuval Zantkeren and Ravit Freedman are Directors
and, as such, each is a related party pursuant to the AIM Rules.
Consequently, the issue of the New Options and New Employee Options
to them constitute related party transactions for the purposes of
AIM Rule 13. The Directors (excluding Yoav Keren, Yuval Zantkeren
and Ravit Freedman) consider, having consulted with SPARK, the
Company's nominated adviser, that the terms of the grant of New
Options and New Employee Options are fair and reasonable in so far
as Shareholders are concerned.
(iii) Amendment to the exercise price and/or exercise period of
Existing Options to Directors
Yoav Keren, Yuval Zantkeren and Ravit Freedman are Directors
and, as such, each is a related party pursuant to the AIM Rules.
Consequently, the amendment to the exercise price of 3,127,196,
3,127,196 and 649,000 Existing Options held by them respectively
(and in the case of Yoav Keren and Yuval Zantkeren, the extension
of the exercise period of 263,037 Options each) constitute related
party transactions for the purposes of AIM Rule 13. The Directors
(excluding Yoav Keren, Yuval Zantkeren and Ravit Freedman)
consider, having consulted with SPARK, the Company's nominated
adviser, that the terms of the amendments to the Existing Options
to Directors are fair and reasonable in so far as Shareholders are
concerned.
(iv) Extension to the exercise period of warrants held by
WCIL
As stated in (i) above, WCIL is a related party of the Company
pursuant to the AIM Rules. Consequently, the extension of the
exercise period of 1,785,714 warrants held by WCIL constitutes a
related party transaction for the purposes of AIM Rule 13. The
Directors (all of whom are independent of WCIL) consider, having
consulted with SPARK, the Company's nominated adviser, that the
terms of the extension of the expiry date of the warrants are fair
and reasonable in so far as Shareholders are concerned.
7. Implications of the Proposals under the Code
The Takeover Code (the "Code") applies to BrandShield. Under
Rule 9 of the Code, any person who acquires an interest in shares
which, taken together with shares in which that person or any
person acting in concert with that person is interested, carry 30%
or more of the voting rights of a company which is subject to the
Code is normally required to make an offer to all the remaining
shareholders to acquire their shares.
Similarly, when any person, together with persons acting in
concert with that person, is interested in shares which in the
aggregate carry not less than 30% of the voting rights of such a
company but does not hold shares carrying more than 50% of the
voting rights of the company, an offer will normally be required if
such person or any person acting in concert with that person
acquires a further interest in shares which increases the
percentage of shares carrying voting rights in which that person is
interested.
7.1 The Concert Party
The issue of the Subscription Shares, the New Options, the
Subscription Warrants and the Broker Warrants to members of the
Concert Party gives rise to certain considerations under the City
Code. Rule 9 of the City Code is designed to prevent the
acquisition of control of a company to which the City Code applies
without a general cash offer being made to all shareholders of that
company.
Joseph Haykov and Gigi Weiss are members of a Concert Party
which was deemed to exist at the time of the reverse takeover of
BrandShield Limited into Two Shields Investments plc on 1 December
2020.
Under Rule 9 of the City Code ("Rule 9"), when:
i. any person acquires, whether by a series of transactions over
a period of time or not, an interest in shares which (together with
shares in which persons acting in concert with him are interested)
carry 30% or more of the voting rights of a company; or
ii. a person, together with persons acting in concert with him,
is interested in shares which in aggregate carry not less than 30%
but does not hold shares carrying more than 50% of the voting
rights of a company and such person, or persons acting in concert
with him, acquires an interest in other shares which increases the
percentage of shares carrying voting rights in which he is
interested;
then, in either case, an offer under Rule 9 must be made in cash
at the highest price paid by the person required to make the offer,
or any person acting in concert with such person, for any interest
in shares of the company during the 12 months prior to the
announcement of the offer.
Accordingly, the participation by Joseph Haykov (via Cloak, LLC)
and Gigi Levi Weiss in the Subscription would normally give rise to
an obligation on the Concert Party to make a general offer to all
Shareholders.
Additionally, the exercise of (i) the Subscription Warrants by
Joseph Haykov (via Cloak, LLC) and/or Gigi Weiss, and/or (ii) New
Options by Yoav Keren and/or Yuval Zantkeren and/or (iii) Broker
Warrants by Subramanian Subbiah, whilst the Concert Party's holding
of voting rights is less than 50%, would also normally give rise to
an obligation on the Concert Party to make a general offer to all
Shareholders. The Company has agreed with the Panel that the
persons set out in the Tables below are acting in concert in
relation to the Company.
Following Admission, the members of the Concert Party will be
interested in 89,347,341 Ordinary Shares , representing between
34.88% (assuming full take up in the Open Offer) and 41.08%
(assuming no take up in the Open Offer ) of the voting rights of
the Company. Assuming exercise in full by the members of the
Concert Party of the Existing Options , Existing Warrants , New
Options, Subscription Warrants and Broker Warrants (and assuming
that no other person exercises any options or any other right to
subscribe for shares in the Company), the members of the Concert
Party would be interested in between 180,867,647 Ordinary Shares
(assuming no take up in the Open Offer, and representing 58.54% of
the voting rights of the Company in the Fully Diluted Share Capital
and 201,194,567 Ordinary Shares, representing approximately 54.67%
of the voting rights of the Company in the Fully Diluted Share
Capital assuming full take up in the Open Offer).
Tables showing the respective individual interests in shares of
the members of the Concert Party at Admission and following the
exercise of the Existing Options, Existing Warrants, New Options,
Subscription Warrants and Broker Warrants held by them is set out
below - with Table 1 showing a situation where the Open Offer is
fully subscribed by non-Concert Party members and Table 2 showing a
situation where there is no take up in the Open Offer by
non-Concert Party members.
Concert Number % Subscription Ordinary % of Existing Maximum Maximum Maximum
Party of Existing of Shares Shares Ordinary Options number Number of % of
Member Ordinary current held Share and of Shares Ordinary Ordinary
Shares issued post Capital Existing arising from Shares held Share
Ordinary Admission post Warrants exercise of by Concert Capital
Share Admission Existing Party held
Capital Options, Member by
Existing Concert
Warrants, Party
New Options, Member
Subscription
Warrants,
and Broker
Warrants
Yoav
Keren 11,888,670 6.98% 11,888,670 4.64% 7,885,800 26,362,040 46,136,510 12.54%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
Yuval
Zantkeren 11,888,670 6.98% - 11,888,670 4.64% 7,885,800 26,362,040 46,136,510 12.54%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
Gigi
Levi
Weiss 5,413,626 3.18% 1,703,771 7,117,397 2.78% - 1,703,771 8,821,168 2.40%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
New
Enterprise
Ltd 11,558,235 6.79% - 11,558,235 4.51% 2,603,024 - 14,161,259 3.85%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
Leelavthi
Subbiah 3,275,329 1.92% - 3,275,329 1.28% - - 3,275,329 0.89%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
Harel
Kodesh 1,381,761 0.81% - 1,381,761 0.54% - - 1,381,761 0.38%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
Afterdox
and
Afterdox
Partners 10,003,127 5.87% - 10,003,127 3.91% - - 10,003,127 2.72%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
Joseph
Haykov 998,351 0.59% 31,235,801 32,234,152 12.58% - 31,235,801 63,469,953 17.25%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
Subramanian
Subbiah - 0.00% - - 0.00% - 7,808,950 7,808,950 2.12%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
Total 56,407,769 33.12% 32,939,572 89,347,341 34.88% 18,374,624 93,472,602 201,194,567 54.67%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
Table 1 : showing Concert Party holding assuming the Open Offer
is fully subscribed by non-Concert Party members
Notes:
Up to 10,163,460 of the New Options to each of Yoav Keren and
Yuval Zantkeren will be issued dependent on, and proportionate to,
the take up in the Open Offer to each maintain a fully diluted
shareholding of under 10%. (In the event that there is no take up
of the Open Offer none of the 10,163,460 will be issued - as set
out in Table 2 below; in the case of a full take up all 10,163,460
New Options will be issued).
the above table assumes the Open Offer is fully subscribed. Up
to 10,163,460 of the New Options awarded to Yoav Keren and Yuval
Zantkeren will be issued dependent on the level of take up in the
Open Offer).
In order to comply with Section 102 of the Israeli Tax Ordinance
t he Founders will need to ensure each of their shareholdings is
under 10% of the Fully Diluted Share Capital at any point in time.
They have indicated a current intention to forfeit Options, if
required, to ensure this threshold is not exceeded.
assuming no options or warrants held by persons other than
members of the Concert Party are exercised.
Table 2 : showing Concert Party holding assuming NO take up in
the Open Offer by non-Concert Party members
Concert Number % of Subscription Ordinary % of Existing Maximum Maximum Maximum
Party of Existing current Shares Shares Ordinary Options number Number % of
Member Ordinary issued held Share and of Shares of Ordinary Ordinary
Shares Ordinary post Capital Existing arising Shares Share
Share Admission post Warrants from held by Capital
Capital Admission exercise Concert held
of Existing Party by
Options, Member Concert
Existing Party
Warrants, Member
New Options, (2)(3)
Subscription
Warrants,
and Broker
Warrants
Yoav Keren 11,888,670 6.98% 11,888,670 5.47% 7,885,800 16,198,580 35,793,050 11.64%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
Yuval
Zantkeren 11,888,670 6.98% - 11,888,670 5.47% 7,885,800 16,198,580 35,793,050 11.64%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
Gigi Levi
Weiss 5,413,626 3.18% 1,703,771 7,117,397 3.27% - 1,703,771 8,821,168 2.85%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
New
Enterprise
Ltd 11,558,235 6.79% - 11,558,235 5.31% 2,603,024 - 14,161,259 4.58%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
Leelavthi
Subbiah 3,275,329 1.92% - 3,275,329 1.51% - - 3,275,329 1.06%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
Harel
Kodesh 1,381,761 0.81% - 1,381,761 0.64% - - 1,381,761 0.45%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
Afterdox
and
Afterdox
Partners 10,003,127 5.87% - 10,003,127 4.60% - - 10,003,127 3.24%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
Joseph
Haykov 998,351 0.59% 31,235,801 32,234,152 14.82% - 31,235,801 63,469,953 20.54%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
Subramanian
Subbiah - 0.00% - - 0.00% - 7,808,950 7,808,950 2.53%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
Total 56,407,769 33.12% 32,939,572 89,347,341 41.08% 18,374,624 73,145,682 180,867,647 58.54%
------------ --------- ------------- ------------ ---------- ----------- ------------- ------------ ---------
the above table assumes that there is no take up in the Open
Offer.
In order to comply with Section 102 of the Israeli Tax Ordinance
t he Founders will need to ensure each of their shareholdings is
under 10% of the fully diluted share capital at any point in time.
They have indicated a current intention to forfeit Options, if
required, to ensure this threshold is not exceeded.
assuming no options or warrants held by persons other than
members of the Concert Party are exercised.
7.2 Waiver of Rule 9 of the City Code
Following Admission, the members of the Concert Party will be
interested in shares carrying more than 30% of the voting rights of
the Company, but will not hold shares carrying more than 50% of the
voting rights of the Company. For so long as they continue to be
acting in concert, any acquisition that increases their aggregate
interest in shares will be subject to the provisions of Rule 9.
The exercise by the members of the Concert Party of the warrants
and options described above would normally trigger an obligation
for an offer to be made under Rule 9. However, the Panel has agreed
to waive this obligation such that there will be no requirement for
an offer to be made in respect of the exercise of such warrants and
options.
If the members of the Concert Party were to exercise their
Existing Options, Existing Warrants, New Options, Subscription
Warrants and Broker Warrants in full (and assuming that no other
person exercises any options or any other right to subscribe for
shares in the Company), the members of the Concert Party would hold
shares carrying more than 50% of the voting rights of the Company
and (for so long as they continue to be acting in concert) could
accordingly increase their aggregate interests in shares without
incurring any obligation to make an offer under Rule 9, although
individual members of the Concert Party will not be able to
increase their percentage interests in shares through or between a
Rule 9 threshold without Panel consent.
The Panel has agreed to waive the obligation to make an offer
that would otherwise arise under Rule 9 as a result of the
Proposals, subject to the approval of Independent Shareholders.
Accordingly, Resolution 1 is being proposed at a general meeting of
the Company and will be taken on a poll.
None of the members of the Concert Party are able to vote on the
Rule 9 Waiver but may exercise their voting rights in respect of
Resolutions 2, 3 and 4.
In the event that the Proposals are approved, the Concert Party
will not be restricted from making an offer for the Ordinary Shares
in the Company.
Your attention is drawn to Parts II and III of this document
which set out certain further information and financial information
that is required to be disclosed in this document pursuant to the
rules contained in the Takeover Code.
Under Rule 25.2 of the Takeover Code, only the Independent
Directors are able to make a recommendation to the Independent
Shareholders with respect to the proposed Waiver Resolution. The
Independent Directors believe that the Proposals are in the best
interests of the Company and hereby recommend that Independent
Shareholders vote in favour of the Waiver Resolution. SPARK
Advisory Partners Limited, as the Company's independent financial
adviser, has provided formal advice to the Independent Directors
that it considers the terms of the Proposals to be fair and
reasonable and in the best interests of Shareholders and the
Company as a whole. In providing this advice, SPARK Advisory
Partners Limited has taken into account the Independent Directors'
commercial assessments.
7.3 Intentions of the Concert Party
At present the Company is a leading provider of cybersecurity
solutions for brand oriented digital risk protection. The Concert
Party confirms its intention will be to support BrandShield's
strategy as described in "Future Strategy of the Company" set out
in paragraph 8 below.
Immediately following the De-Listing, there will be no market
facility for dealing in the Ordinary Shares, and no price will be
publicly quoted for the Ordinary Shares. The Company intends to
review the options available for allowing dealing in the Company's
shares, for example by provision of a matched bargain facility or
periodic share auctions, however there is no guarantee that one
will be put in place. Any update will be made via the Company's
website address (www.brandshield.com).
Other than the De-Listing, the Concert Party has confirmed that
no changes will be made regarding:
i. the future business of the Company, including its research and development functions;
ii. the continued employment of the employees and management of
the Company and of its subsidiaries, including any material change
in the conditions of employment or in the balance of the skills and
functions of the employees and management;
iii. its strategic plans for the Company, which will therefore
have limited repercussions on employment and on the locations of
its places of business, including on the location of its
headquarters and headquarters functions;
iv. employer contributions into the Company's pension schemes
(including with regard to current arrangements for the funding of
any scheme deficit), the accrual of benefits for existing members,
and the admission of new members; and
v. the redeployment of the fixed assets of the Company.
7.4 Views of the Independent Directors
The Independent Directors support the Concert Party's stated
intentions for the business and its employees. The Independent
Directors firmly believe that the Proposals are in the interests of
both the Company and its Shareholders. Although the Board is
acutely aware that some Shareholders will be concerned about a
de-listing from AIM and the consequent reduction in immediate
liquidity it sees no prospect in the near to medium term for the
Company to achieve a valuation that reflects its actual performance
and future potential, demonstrated through sustained growth of ARR
and continued penetration of a fast-growing market. BrandShield has
been recognised independently as one of the leading players in the
Digital Risk Protection sector (Frost and Sullivan Report 2022) and
the Independent Directors believe that all its Shareholders will be
far more likely to achieve a positive outcome as a de-listed
company where it is likely to command higher valuations based on
realistic ARR multiples. In short, the Board believes the proposals
are significantly more likely to result in a positive outcome for
all its stakeholders, including employees and Shareholders. In
considering this, the Independent Directors have given due
consideration to the assurances relating to the Company, including
those given to its employees regarding the implementation of the
Proposals.
8. FUTURE STRATEGY OF THE COMPANY AND USE OF PROCEEDS
The existing strategy of the Company has delivered continual and
material increases in clients serviced and revenue generated.
Annual Recurring Revenue has increased from around $2.87m at the
time of admission to trading on AIM in December 2020 to nearly $10m
at present. Over this period, client numbers have increased from 74
to around 210. The strategy going forwards will be the continued
targeting of market share in a growing sector and the striving for
operational excellence within the Company. Funds will be used to
increase the sales footprint of BrandShield and to reinforce our
marketing spend in areas that we know yields results. This will be
within the backdrop of our more recent efforts to reduce
operational cash burn where efficiencies can be found without
prejudicing either capability or slowing growth. The costs of Cloud
computing will continue to be targeted closely and Research and
Development efforts will continue to be targeted at optimal
automation of tasks within our leading edge, AI based platform. The
Board believes that the implementation of BrandShield 3.0, the UI
interface with our customers, will be a step change in capability
from our clients and this will be enhanced incrementally to
continue to improve functionality. The optimisation of the
enforcement element of the Company has yielded considerable
efficiencies and this process will continue.
The Board believes that continued growth of client numbers,
revenue and margins will be best done in a de-listed environment
where the senior management can focus more of its capacity on the
core business without the distractions of the additional legal,
regulatory burden and cost implications of being a quoted company.
The Board also believes that BrandShield is a fast-growing company
in a fast-growing sector and the valuation attributed to it by the
London markets makes it vulnerable to acquisitive suitors. The
Board believes strongly that if any acquisition of BrandShield is
considered by other parties, that a considerably higher valuation
would be secured in a de-listed environment than if it remained
quoted, a situation that would benefit all our Shareholders despite
the reduction in immediate liquidity caused by a de-listing.
9. De-Listing
9.1 Reasons for the De-Listing
The Board has conducted a review of the benefits and drawbacks
to the Group retaining its listing on AIM and maintaining its
existing corporate structure. The Board believes that the
De-Listing is in the best interests of the Company and its
Shareholders as a whole. In reaching this conclusion, the Board has
considered the following key factors:
-- there is, and has been for some time, a lack of liquidity in
the Ordinary Shares such that there is a very limited market for
the Ordinary Shares;
-- there is limited trading of the Ordinary Shares. Over the
past 12 months 45,436,247 Ordinary Shares were traded representing
approximately 27 per cent. of the current issued share capital and
giving an average daily volume of approximately 195,005 Ordinary
Shares. Accordingly, the costs associated with maintaining the AIM
quotation are considered by the Directors to be disproportionately
high when compared to the benefits of being listed on AIM, even
though these costs have been, so far as reasonably possible,
controlled and minimised by the Company. The Board believes that
these funds could be better utilised for the benefit of the
Company.
-- the management time significant associated additional advisor
costs and the legal and regulatory burden associated with
maintaining the Company's admission to trading on AIM is, in the
Directors' opinion, disproportionate to the benefits to the
Company.
-- despite demonstrating consistent growth in customer numbers
and ARR, alongside maintaining a proactive investor relations
programme, the share price performance and subsequent valuation
placed on BrandShield since its listing on AIM has reduced in a
sustained manner. High growth businesses such as BrandShield will
seek to raise expansion capital in order to take advantage of
growth opportunities as and when they present themselves. The
Board's focus since listing has been the acquisition of new
customers and the subsequent growth of its top line revenue as the
Company expands to reach critical mass. Fundraises have been
conducted at ever-increasing discounts to the original listing
price and this has been deeply frustrating to the Board, Founders
and our Shareholders. This is despite the fact that the underlying
shareholder base has transformed over the listing period and has
been enhanced through material stakes being built up by a small and
focused number of institutional investors. This change in the
shareholder base has not managed to insulate the share price from
downward pressure created by generally low volumes of trading
across the Aim market. The Board does not believe that it is right
to expose our existing Shareholders further to future dilution
based valuation multiples that it does not believe reflect a
realistic valuation of BrandShield.
The Board therefore believes that the interests of all
Shareholders will be better served in an off-market context whereby
the Company can continue to focus on high growth levels and the
potential to provide all Shareholders with a liquidity event that
fairly reflects the true value of the business and its global
significance in this sector.
-- BrandShield Shareholders, whilst recognising and being
willing to accept the risks associated with remaining as an
investor in an unlisted company, who anticipate realising greater
value in their BrandShield Shares in the future, may wish to remain
as Shareholders in BrandShield.
9.2 Effect of De-Listing
The principal effects of the De-Listing will be that:
-- Shareholders will no longer be able to buy and sell Ordinary
Shares through a public stock market, further reducing the
liquidity in the Ordinary Shares; the Company intends to review the
options available for allowing dealing in the Company's shares, for
example by provision of a matched bargain facility or periodic
share auctions, however there is no guarantee that one will be put
in place.
-- the Company will no longer be required to announce material
events or interim results;
-- the Company will no longer be required to comply with many of
the corporate governance requirements applicable to companies
traded on AIM;
-- the Company will no longer be subject to the Disclosure
Guidance and Transparency Rules and will therefore no longer be
required to disclose major shareholdings in the Company;
-- the Company will no longer be subject to the AIM Rules, with
the consequence that Shareholders will no longer be afforded the
protections given by the AIM Rules. Such protections include a
requirement to obtain shareholder approval for reverse takeovers
and fundamental changes in the Company's business and to announce,
inter alia, certain substantial and/ or related party transactions;
and
-- the De-Listing may have either positive or negative taxation
consequences for Shareholders. Shareholders who are in any doubt
about their tax position should consult their own professional
independent adviser immediately.
Shareholders should note that the City Code will continue to
apply to the Company following the De-Listing. The Company will
also continue to be bound by the Companies Act (which requires
Shareholders' approval for certain matters) following the
De-Listing.
9.3 De-Listing Process
Under the AIM Rules, the De-Listing can only be effected by the
Company after securing a special resolution of Shareholders in a
general meeting and the expiry of a period of 20 clear Business
Days from the date on which notice of the De-Listing is given to
the London Stock Exchange.
In addition, a period of at least five clear Business Days
following Shareholders' approval of the De-Listing is required
before the De-Listing may become effective. The Resolutions seek
(amongst other matters) the approval of Shareholders for the
De-Listing. Assuming that the Resolutions are approved, it is
proposed that the De-Listing will take place by 7.00 a.m. on 23
October 2023.
9.4 Ordinary Share dealing Prior to De-Listing
If Shareholders wish to buy or sell Ordinary Shares on AIM they
must do so prior to the De-Listing becoming effective. As noted
above, in the event that Shareholders approve the De-Listing, it is
anticipated that the last day of dealings in the Ordinary Shares on
AIM will be 20 October 2023 and that the effective date of the
Cancellation will be 23 October 2023.
9.5 Ordinary Share dealing following De-Listing
Immediately following the De-Listing, there will be no market
facility for dealing in the Ordinary Shares, and no price will be
publicly quoted for the Ordinary Shares. The Company intends to
review the options available for allowing dealing in the Company's
shares, for example by provision of a matched bargain facility or
periodic share auctions, however there is no guarantee that one
will be put in place. Any update will be made via the Company's
website address (www.brandshield.com).
10. Current Trading and Future Prospects
The Company published its financial results for the six month
period ended 30 June 2023 on 19 September 2023. The Company's
highlights and outlook sections are detailed below:
"Financial highlights
-- H1 2023 Annual Recurring Revenue ("ARR") up 46% to $9.71m (H1 2022: $6.67m)
-- Positive momentum continued with the August 2023 ARR figure
reaching $9.85m, up 36% vs. $7.26m in August 2022.
-- Delivered revenue growth of 56.3% to $4.42m in H1 2023 (H1 2022: $2.83m)
-- Loss for the period decreased by 53% to $2.05m in H1 2023 (H1 2022: $4.37m)
-- As part of operational improvements Gross profit increased
from 48% in H1 2022 and 54% in December 2022 to 68% in H1 2023
-- Cash of $1.35m at period end (31 Dec 2022: $2.60m)
(1) Annual Recurring Revenue is a non-GAAP measure and an
industry specific measure
Operational highlights
-- Strong new business momentum achieved in the first half of
2023, with the Company securing 45 new customer wins in the period
to take its total number of customers to 209. This growth continued
post-period end, and as at end of August 2023, BrandShield services
214 customers.
-- Ongoing sales and marketing initiatives continues to support
the growth in the Company's customer footprint, expanding the
Group's presence across in key growth sectors such as
pharmaceutical, retail, ecommerce and finance.
-- BrandShield consolidated its position as one of the leading
Digital Risk Protection Provider
o BrandShield named the third best DRP service provider globally
in a 2022 review by Frost & Sullivan ("F&S") the global
business consultancy group.
o BrandShield cognised with the 2023 Global Digital Risk
Protection New Product Innovation and Best Practices Award by Frost
& Sullivan.
Post period-end and Outlook
-- The Company has made a solid start to H2 2023 and look
forward to reporting another period of both operational and
financial progress.
-- Recent focus on reducing cash burn is having a marked impact
on gross margins as the Company continues to grow towards becoming
cash flow positive".
The Directors of the Company can confirm that, since the date of
publication of these financial results, there has been no
significant change in the trading or financial position of the
Company.
Following the Proposals, the Company intends to continue
operating as it has done over the Company's last financial year and
carry out the same activities, and to retain the same business
strategy that it did as a quoted public company. Based on current
market conditions, the Company does not envisage any significant
changes to the Company's trading position once the Proposals are
completed.
11. Proposals to be voted on at the General Meeting
For the purposes of effecting the Proposals, the Resolutions
will be proposed at the General Meeting. Set out at the end of this
document is a notice convening the General Meeting to be held at
11.00 a.m. on 13 October 2023 at the offices of Edwin Coe LLP, 2
Stone Buildings, Lincoln's Inn, London, WC2A 3TH. The full texts of
the Resolutions are set out in that notice.
The Resolutions, which are summarised below, are necessary for
the implementation of the Proposals.
Resolution 1 (Ordinary Resolution)
THAT the waiver granted by the Takeover Panel of the obligation
that would otherwise arise on the Concert Party, both individually
and collectively, to make an offer to the shareholders of the
Company pursuant to Rule 9 of the Takeover Code as a result of the
Proposals is hereby approved.
Note: In order to comply with the Takeover Code, this Resolution
will be taken on a poll of Independent Shareholders.
Resolution 2 (Ordinary Resolution)
Conditional upon the passing of Resolutions 1, 3 and 4, this
ordinary resolution will grant the Directors authority to allot New
Ordinary Shares for the purposes of the Open Offer, to the extent
existing authorities are insufficient. The authority given by this
Resolution will expire on the earlier of 16 October 2024 or the
date of the Company's next annual general meeting.
Resolution 3 (Special Resolution)
Conditional on the passing of Resolutions 1, 2 and 4, this
special resolution will grant the Directors authority to disapply
the statutory pre-emption rights in respect of the allotment of the
new Ordinary Shares to be allotted pursuant to Resolution 2 in
connection with the Open Offer. The authority given by this
Resolution will expire on the earlier of 16 October 2024 or the
date of the Company's next annual general meeting.
Resolution 4 (Special Resolution)
Conditional on the passing of Resolutions 1, 2 and 3 that the
cancellation of the admission of the Ordinary Shares to trading on
AIM is approved.
12. Action to be taken
General Meeting
The appointment of a proxy will not preclude you from attending
and voting in person at the General Meeting or any adjournment
thereof, if you so wish and are so entitled.
If your proxy appointment has not been submitted by 11.00 a.m.
on 11 October 2023, your vote in relation to the Resolutions will
not count.
You can vote either:
-- by logging on to www.signalshares.com and following the instructions.
-- you may request a hard copy Form of Proxy directly from the
registrars. Link Group on Tel: 0371 664 0300. Calls are charged at
the standard geographical rate and may vary by provider. Calls
outside the United Kingdom will be charged at the applicable
international rate. Lines are open between 09:00 -17:30, Monday to
Friday excluding public holidays in England and Wales. The Form of
Proxy should be completed and returned in accordance with the
instructions printed thereon so as to arrive at the Company's
Registrars, Link Group, Central Square, 29 Wellington Street,
Leeds, LS1 4DL by 11.00 a.m. on 11 October 2023.
-- in the case of CREST members, by utilising the CREST
electronic proxy appointment service in accordance with the
procedures set out in the notes to the Notice of General
Meeting.
13. Recommendation
In respect of Resolution 1, the Independent Directors, having
been so advised by SPARK Advisory Partners, the Company's Financial
and Nominated Adviser, considers that the Proposals are fair and
reasonable and in the best interests of Shareholders and the
Company as a whole and accordingly recommend that Independent
Shareholders vote in favour of the Rule 9 Waiver. In providing its
advice to the Independent Directors, SPARK Advisory Partners has
taken into account the Independent Directors' commercial
assessments. Accordingly, the Independent Directors recommend that
Independent Shareholders vote in favour of Resolution 1 as they
intend to do in relation to their respective shareholdings.
All the Directors recommend that Shareholders vote in favour of
Resolutions 2 to 4 (inclusive) as they intend to do in relation to
their respective shareholdings.
Yours faithfully
Azriel Moscovici
Chairman
Enquiries:
BrandShield Systems plc +44 (0)20 3143
Yoav Keren, CEO 8300
Spark Advisory Partners Limited (Nominated
Adviser) +44 (0)20 3368
Neil Baldwin / Andrew Emmott / James Keeshan 3554
Shore Capital (Joint Broker)
Toby Gibbs / James Thomas (Corporate Advisory) +44 (0)20 7408
Henry Willcocks (Corporate Broking) 4090
Vigo Consulting (Financial Public Relations)
Jeremy Garcia / Kendall Hill +44 (0)20 7390
brandshield@vigoconsulting.com 0237
About BrandShield
Brandshield is a provider of cybersecurity solutions from brand
protection to online threat hunting. BrandShield detects online
threats and takes them down. The Company's client base is a growing
list of organisations including Fortune 500 and FTSE100 companies.
By utilising AI and big-data analysis, BrandShield monitors,
detects, and removes online threats facing companies. These threats
include social phishing, executive impersonation, fraud, brand
abuse, and counterfeits.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Date and Time (2023)
Record Date for entitlement under Close of business on 18
the Open Offer September
Announcement of the Proposals including 20 September
the Subscription, the Rule 9 Waiver,
the Open Offer and the De-Listing
Ex-Entitlement Date 7.00 a.m. on 20 September
Posting of this Circular and Application 20 September
Form to Shareholders
Open Offer Entitlements credited 21 September
to stock accounts in CREST of Qualifying
CREST Shareholders 4.30 p.m. on 29 September
Latest recommended time and date
for requesting withdrawal of Open
Offer Entitlements from CREST
Latest time for depositing Open 3.00 p.m. on 2 October
Offer Entitlements into CREST
Latest time and date for splitting 3.00 p.m. on 3 October
Application Forms (to satisfy bona
fide market claims) 11.00 a.m. on 5 October
Latest time and date for receipt
of completed Application Forms and 6 October
payment in full from Qualifying
Shareholders under the Open Offer
or settlement of relevant CREST
instruction (as appropriate)
Result of the Open Offer announced
through a Regulatory Information
Service
Voting deadline ( no later than 11.00 a.m. on 11 October
48 hours before the General Meeting)
General Meeting 11.00 a.m. on 13 October
Admission of the Open Offer Shares 8.00 a.m. on 16 October
and the Subscription Shares to trading
on AIM
CREST accounts expected to be credited 16 October
for the Open Offer Shares and the
Subscription Shares in uncerti cated
form (where applicable)
Earliest date for the De-Listing 7.00 a.m. on 23 October
and cancellation of admission of
the Ordinary Shares to trading on
AIM
Posting of share certi cates and within 14 days of Admission
warrant certificates for the Open
Offer Shares and the Subscription
Shares by the Registrar (where applicable)
The Company reserves the right to alter the date and times
referred to above and to accept applications under the Open Offer
at any time prior to 5 October 2023. If any of the above times
and/or dates change, the revised times and/or dates will be
notified to Shareholders by announcement through a Regulatory
Information Service.
All times are references to London time.
All events in the above timetable following the GM are
conditional, inter alia, upon the approval of all the
Resolutions.
The De-Listing requires the approval of not less than 75 per
cent. of the votes cast by Shareholders at the General Meeting.
If you have any questions on the procedure for acceptance and
payment, you should contact Link Group on +44 (0) 371 664 0321.
Calls are charged at the standard geographic rate and will vary by
provider. Calls from outside the United Kingdom will be charged at
the applicable international rate. The helpline is open between
9.00 a.m. - 5.30 pm, Monday to Friday excluding public holidays in
England and Wales. Please note that Link Group cannot provide any
financial, legal or tax advice and calls may be recorded and
monitored for security and training purposes.
DEFINITIONS
The following shall apply throughout this document unless the
context otherwise requires:-
"2022 Options" the share options granted on 26
May 2022 by the Company to Yoav
Keren, Yuval Zantkeren and others;
"Act" the Companies Act 2006;
"acting in concert" has the meaning given to it in the
Takeover Code;
"Admission" admission of the Open Offer Shares
and Subscription Shares to trading
on AIM;
"AIM" a market operated by the London
Stock Exchange;
"AIM Rules" the "AIM Rules for Companies" published
by the London Stock Exchange from
time to time;
"Articles" the articles of association of the
Company, as amended from time to
time;
"Annualised Recurring Revenue" calculated by annualising the monthly
or "ARR" revenue on all of BrandShield's
active subscriptions for its services
in a particular month;
"Application Form" the application form for use in
"Associates" the Open Offer;
any person who, from time to time,
is connected or associated with
a Shareholder for the purposes of
sections 252 to 255 Companies Act
2006;
"Board" the board of directors of the Company,
as set out on page 13;
"Broker Warrants" the warrants to be issued to Mr
Subramanian Subbiah in respect of
his fee for brokering the subscription
by Joseph Haykov (via Cloak, LLC),
details of which are set out in
paragraph 5.2 of Part III of this
document;
"Business Day" a day, not being a public holiday,
Saturday or Sunday on which clearing
banks in London are open for business;
"City Code" or "Takeover the UK City Code on Takeovers and
Code" Mergers;
"Company" BrandShield Systems Plc;
"Concert Party" certain Shareholders, as more fully
described in paragraph 1 of Part
II of this document;
"CREST" or " CREST System" the relevant system (as de ned in
the Regulations) which enables title
to units of relevant securities
(as de ned in the Regulations) to
be evidenced and transferred without
a written instrument and in respect
of which Euroclear UK & International
Limited is the Operator (as de ned
in the Regulations);
"CREST Manual" the compendium of documents entitled
"CREST Manual" issued by Euroclear
from time to time and comprising
the CREST Reference Manual, the
CREST Central Counterparty Service
Manual, the CREST International
Manual, the CREST Rules (including
CREST Rule 8), the CREST CCSS Operating
Manual and the CREST Glossary of
Terms;
"CREST member" a person who has been admitted to
CREST as a system-member (as de
ned in the CREST Manual);
"CREST member account ID" the identi cation code or number
attached to a member account in
CREST;
"CREST participant" a person who is, in relation to
CREST, a system-participant (as
de ned in the CREST regulations);
"CREST participant ID" shall have the meaning given in
the CREST Manual issued by Euroclear;
"CREST payment" shall have the meaning given in
the CREST Manual issued by Euroclear;
"CREST Regulations" the Uncerti cated Securities Regulations
2001 (SI 2001/3755) (as amended
from time to time);
"CREST sponsor" a CREST participant admitted to
CREST as a CREST sponsor;
"CREST sponsored Member" a CREST member admitted to CREST
as a sponsored member;
"De-Listing" the proposed cancellation of admission
of the Ordinary Shares to trading
on AIM, subject to passing of Resolution
numbered 4 at the General Meeting
and in accordance with Rule 41 of
the AIM Rules;
"Directors" the directors of the Company (each
being a "Director");
"Disclosure and Transparency The Disclosure Guidance and Transparency
Rules" Rules published by the Financial
Conduct Authority from time to time;
"Disclosure date" 19 September 2023, being the latest
practicable date prior to the publication
of this document;
"Eligible Shareholders" Shareholders on the register of
members of the Company on the Record
Date;
"Enlarged Ordinary Share the enlarged issued ordinary share
Capital" capital following Admission (assuming
full subscription under the Open
Offer);
"Euroclear" Euroclear UK & International Limited;
"Existing Options" the options over 27,968,483 Ordinary
Shares in issue at the date of this
document, as set out in more detail
in paragraph 2 of Part III;
"Existing Ordinary Share the existing issued share capital
Capital" or "Existing Ordinary of the Company, being 170,331,874
Shares" Ordinary Shares as at the date of
this document;
"Existing Warrants" the warrants over 12,122,247 Ordinary
Shares in issue at the date of this
document, which entitle the holders
to subscribe for Ordinary Shares,
as set out in more detail in paragraph
3 of Part III;
"Form of Proxy" or "Proxy the individual form of proxy for
Form" use by Ordinary Shareholders in
connection with the General Meeting;
"Founders" Yoav Keren and Yuval Zantkeren;
"FSMA" the Financial Services and Markets
Act 2000, as amended from time to
time;
"Fully Diluted Share Capital" the issued share capital of the
Company assuming (i) completion
of the Open Offer and Subscription,
and (ii) exercise of all of the
Existing Options, the Existing Warrants,
the New Options, the Subscription
Warrants, the Open Offer Warrants
and the Broker Warrants;
"General Meeting" or "GM" the general meeting of the Company
convened for 11.00 a.m. on 13 October
2023, notice of which is set out
at the end of this document (including
any adjournment of such meeting);
"Group" the Company and its subsidiary undertakings
(as defined in the Act);
"Independent Directors" the Directors (excluding Yoav Keren,
Yuval Zantkeren and Harel Kodesh
who are members of the Concert Party);
"Independent Shareholders" Shareholders who are entitled to
vote on the Waiver Resolution, namely
Shareholders who are not members
of the Concert Party;
"ISIN" International Securities Identi
cation Number;
"Lapse Date" the date on which an Open Offer
Warrant lapses, being the date that
"LTIP" or "Long Term Incentive is 4 years after the issue of the
Plan" Open Offer Shares;
the long term incentive plan of
the Company, adopted on 1 December
2020;
"LTIP Options" the options granted pursuant to
the LTIP;
"Money Laundering Regulations" The Money Laundering, Terrorist
Financing and Transfer of Funds
(Information on the Payer) Regulations
2017 (as amended and supplemented);
"New Options" the new unapproved share options
over up to 52,724,080 to be granted
to Yoav Keren and Yuval Zantkeren,
as set out in paragraph 5 of Part
I of this document;
"New Employee Options" the new share options over up to
19,680,800 Ordinary Shares to be
granted to employees including 200,000
to Ravit Freedman;
"Notice of General Meeting" the Notice of General Meeting set
out at the end of this document;
"Official List" the official list of the FCA;
"Open Offer" the invitation to Qualifying Shareholders
to subscribe for Open Offer Shares
at the Issue Price on the terms
of and subject to the conditions
set out or referred to in Part IV
"Open Offer Entitlement" of this document;
with respect to each Qualifying
Shareholder, the pro rata entitlement
to apply to subscribe for 1 Open
"Open Offer Warrants" Offer Share for every 2 Existing
Ordinary Shares held by them on
the Record Date pursuant to the
Open Offer;
"Open Offer Shares" up to 38,669,962 warrants which
entitle the holders to subscribe
for Ordinary Shares to be issued
on a 1:1 basis to subscribers for
"Overseas Shareholders" the Open Offer Shares;
the up to 38,669,962 New Ordinary
Shares to be issued pursuant to
the Open Offer subject to, inter
alia, the passing of the Resolutions
at the General Meeting;
a Shareholder who has a registered
address outside the United Kingdom,
or who is a citizen or resident
of, or is incorporated or registered
in, a country other than the United
Kingdom, or who is holding Ordinary
Shares for the bene t of such a
person (including, without limitation
and subject to certain exceptions,
custodians, nominees, trustees and
agents);
"Ordinary Shareholders" holders of Ordinary Shares;
"Ordinary Shares" ordinary shares of 1 penny each
in the capital of the Company;
"Placing" the institutional placing of 29,166,667
new ordinary shares of 1 penny each
in the capital of the Company in
November 2022 as more fully detailed
in paragraph 5.4 of Part III of
"Placing Agreement" this document;
the placing agreement entered into
by the Company and Shore Capital
Stockbrokers Limited dated 28 November
2022 in respect of the Placing;
"Proposals" together the Subscription, the Open
Offer, the Rule 9 Waiver, the De-Listing,
the issue of the New Options, the
re-pricing of certain of the Existing
Options and the amendments to the
exercise period of certain of the
Existing Warrants, all as described
in this document;
"Record Date" 18 September 2023;
"Registrar " Link Group, Central Square, 29 Wellington
Street, Leeds, LS1 4DL ;
"Register" the register of members of the Company;
"Retail Investors" eligible investors (being existing
Qualifying Shareholders) in the
Open Offer;
"Qualifying CREST Shareholders" Qualifying Shareholders whose Existing
Ordinary Shares on the register
of members of the Company on the
Record Date are held in uncertificated
form on CREST;
"Qualifying Non-CREST Shareholders" Qualifying Shareholders whose Existing
Ordinary Shares on the register
of members of the Company on the
Record Date are held in certificated
"Qualifying Shareholders" form;
holders of Existing Ordinary Shares
on the register of members of the
Company on the Record Date for the
"Resolutions" Offer (other than certain Overseas
Shareholders);
"Restricted Jurisdictions" the resolutions to be tabled at
the General Meeting;
each and any of the United States,
Australia, Canada, Hong Kong, Japan,
New Zealand and the Republic of
South Africa and any other jurisdiction
where the extension or the availability
of the Placing would breach any
applicable law;
"Rule 9 Waiver" the waiver by the Panel of the obligations
that would otherwise arise on the
Concert Party to make a general
offer for the Company under Rule
9 of the Takeover Code as a consequence
of the allotment and issue of the
Subscription Shares and the exercise
by them of New Options, Subscription
Warrants and Broker Warrants pursuant
to the Proposals, granted by the
Panel conditional upon the passing
of the Waiver Resolution by Independent
Shareholders voting on a poll, further
details of which are set out in
paragraph 6 of Part I of this document;
"Shareholders" the holders of Ordinary Shares and
"Shareholder" shall mean any one
of them;
"Subscribers" the subscribers in the Subscription
as set out in paragraph 2 of Part
I of this document;
"Subscription" the conditional Subscription for
the Subscription Shares at the Subscription
Price;
"Subscription Agreements" the respective agreements entered
into between (1) the Company and
(2) the Subscribers, as more fully
detailed in paragraph 5.1 of Part
III of this document;
"Subscription Price" or 5.68 pence per Subscription Share
"Issue Price" and Open Offer Share;
"Subscription Shares" the 47,137,662 new Ordinary Shares
that are the subject of the Subscription;
"Subscription Warrants" the 47,137,662 warrants which entitle
the holders to subscribe for Ordinary
Shares to be issued on a 1:1 basis
to subscribers for the Subscription
Shares;
"Takeover Panel" or "Panel" the UK Panel on Takeovers and Mergers;
"UK" or "United Kingdom" the United Kingdom of Great Britain
and Northern Ireland; and
"Waiver Resolution" the Resolution numbered 1 in the
Notice of General Meeting, being
an ordinary resolution to be voted
on by the Independent Shareholders
(on a poll) at the General Meeting.
All references in this document to specified times are to London
time.
All references in this document to "GBP" or "pence" are to the
lawful currency of the United Kingdom.
All references in this document to "$" or "cent" are to the
lawful currency of the United States of America.
All references to legislation in this document are to English
legislation unless the contrary is indicated.
Documents Published on the Company's Website
Copies of the following documents will be made available at the
website address www.brandshield.com. from the date of posting of
the Circular up to the date of the General Meeting:
(a) the Memorandum and Articles of Association of the Company;
(b) the audited accounts of the Company for the years ended 31
December 2021 and 31 December 2022 and the interim unaudited
accounts for the six months ended 30 June 2023;
(c) the consent letter from SPARK Advisory Partners;
(d) the service contracts and letters of appointment of each of
the Directors set out in paragraph 4 of Part III of the
Circular;
(e) the material contracts set out in paragraph 5 of Part III of the Circular; and
(f) copies of the Circular.
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London Stock Exchange. RNS is approved by the Financial Conduct
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Policy.
END
MSCPPUMPBUPWUQU
(END) Dow Jones Newswires
September 20, 2023 02:29 ET (06:29 GMT)
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