Placing to raise £5.75 million and notice of GM

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

Forbidden Technologies plc (AIM: FBT), the developer and seller of cloud video platform technology using its patented Blackbird technology, is pleased to announce an oversubscribed placing of 115,000,000 new ordinary shares of 0.8 pence each in the Company (“Placing Shares”) at a price of 5 pence per share (the “Placing Price”) to raise GBP5.75 million before expenses (the “Placing”), to be undertaken in two tranches. The Placing was conducted by Allenby Capital Limited (“Allenby Capital”).

Transaction Highlights

— The Placing Shares have been placed with existing and new institutional and other investors, including existing shareholders, certain Directors and family of the Directors.

— Directors and family of the Directors have subscribed for GBP750,000.
— Of the funds raised, GBP4,102,630 is conditional, inter alia, on the approval of shareholders, at a general meeting of the Company to be held at 10:00 a.m on 25 June 2018 (the “GM” or “General Meeting”), of a resolution (the “Resolution”) to provide authority to the Directors to allot new ordinary shares otherwise than on a pre-emptive basis, further details of which are set out below.

— The Placing Shares will represent approximately 39 per cent of the issued share capital of the Company as enlarged by the issue of the Placing Shares.

— The net proceeds of the Placing, which will be approximately GBP5.45 million, will be used to resource larger infrastructure contracts, to further strengthen the commercial team, to open up the Blackbird platform via API interfaces, enhance the value of the Company’s IP portfolio and strengthen the Company’s balance sheet.

Commenting on the placing, Ian McDonough, CEO of Forbidden Technologies plc said: “I am delighted to announce a very successful fundraising which will significantly strengthen the Company’s balance sheet. We are now well placed to pursue the realisation of the full value of Blackbird. This funding comes on the back of strong growth momentum year to date. Our sales growth for the period to the end of April 2018 is up 80% vs. the same period in 2017, with more than half of the new invoiced sales coming from infrastructure contracts.”

A circular (the “Circular”), containing information in relation to the Placing and a notice convening the General Meeting, is expected to be sent to shareholders today. The General Meeting will be held at 10.00 a.m. on 25 June 2018 at Tuition House, 27-37 St. George’s Road, Wimbledon, London SW19 4EU. The Circular will also shortly be posted on the Company’s website: www.forbidden.co.uk.

Further details of the Placing are set out below.

Enquiries
Forbidden Technologies plc
Ian McDonough, CEO
Jonathan Lees, Finance Director
Tel: +44 (0)20 8879 7245

Allenby Capital Limited (Nominated Adviser and Broker)
Nick Naylor
John Depasquale
Nicholas Chambers
Tel: +44 (0)20 3328 5656

About Forbidden Technologies plc

Forbidden Technologies plc (AIM: FBT, www.forbidden.co.uk) floated in February 2000. Forbidden develops, markets and licenses a powerful cloud video platform using our patented Blackbird technology. The technology underpins multiple applications which are used by rights holders, broadcasters, sports and news video specialists, post-production houses, other mass market digital video channels, and corporations.

The Blackbird technology allows full visibility on multi-location digital content, improves time to market for live content such as video clips and highlights for social media distribution, and results in much more effective monetisation.

To find out more about Blackbird Forte and Blackbird Ascent contact commercial@blackbird.video or visit www.blackbird.video

Blackbird(R) is a registered trademark of Forbidden Technologies plc

Further details of the Placing

The information contained below has been extracted from, and should be read in conjunction with, the Circular. Terms defined in the Circular shall have the same meanings where used in this announcement.

1. Introduction
The Company has conditionally raised GBP5.75 million (before expenses) by way of the Placing of 115,000,000 new Ordinary Shares at the Placing Price in two tranches: the First Placing Shares and the Second Placing Shares.

The placing of the Second Placing Shares is conditional, inter alia, upon Shareholders passing the Resolution at the General Meeting. The Directors intend to vote in favour of the Resolution in respect of their own beneficial holdings in the Company which amount in aggregate to 65,814,290 Ordinary Shares and represent approximately 36.46 per cent. of the Company’s Existing Ordinary Shares.

The Directors believe that the Placing is the most appropriate way to raise additional funds for Forbidden. The Directors consider that the Placing provides greater certainty than other available means of raising additional funds in a timely fashion and minimises transactional costs.

2. Current trading and prospects
Ian McDonough joined the Company as CEO on 1 September 2017. Ian has strengthened the team against a much more intensively targeted sales strategy focused against the Company’s real market strengths in live and remote applications. The team now includes experienced sales resources based in the USA and Europe, and experienced senior marketing and product management heads.

The Company’s strategic focus is to sell Blackbird(R) solutions as part of the core media infrastructure requirements of the companies in its targeted market segments. The Board believes Blackbird is the only codec in the world that has been specifically designed for manipulating video in the cloud. Consequently, it has some very significant points of difference from the competition and advantages for potential customers. The strategy is to sell Blackbird in a SaaS model, with recurring revenues, against specific key verticals where Forbidden can add real value to its customers’ media solutions. The Company will also be exploring other technology licensing and strategic partnering opportunities which the Board believes will enhance the value of Blackbird. Forbidden’s recurring revenue from infrastructure sales has increased from 28% of invoiced sales reported in 2016 to over 50% in the period to 30 April 2018.

The current financial year has started strongly. As announced at the AGM on 30 April 2018, first quarter invoiced sales were showing a high double-digit growth versus last year. This growth has continued and management accounts up to 30 April 2018 show an 80% year on year growth for invoiced sales with North American sales up 150%, live sport up 100% and broadcast post production up 28%. There was also a 35% growth in deferred income at 30 April 2018 versus the year-end.

The Board is confident that the business is now well placed, and has the right leadership and team, to make real progress in realising full value from the Blackbird technology and platform.

3. Details of the Placing and use of proceeds
Under the Placing, the Company has conditionally raised GBP5.75 million (before expenses) through a placing of 115,000,000 Ordinary Shares at 5 pence per share with institutional and other investors including the Investing Directors. The Company has entered into a Placing Agreement with Allenby Capital under which Allenby Capital has agreed to use its reasonable endeavours to procure Placees for the Placing Shares at the Placing Price. The Placing has not been underwritten. The net proceeds of the Placing, which will be approximately GBP5.45 million, will be used to resource larger infrastructure projects, strengthen the commercial team to accelerate growth, open up the Blackbird platform via API interfaces, enhance the value of the Company’s IP portfolio and strengthen the Company’s balance sheet.

The Placing Shares will represent approximately 39 per cent. of the Enlarged Share Capital. The Placing Price represents a discount of approximately 7.41 per cent. to the closing mid-market price on AIM of 5.4 pence per Existing Ordinary Share on 1 June 2018, being the last dealing day prior to publication of this document.

The Company currently has limited authority to issue new Ordinary Shares for cash on a non-pre-emptive basis. Accordingly, the Placing is being conducted in two tranches.

The first tranche of the Placing, to raise a total of GBP1,647,370 by the issue of 32,947,400 Ordinary Shares (being the First Placing Shares) at 5 pence each, has been carried out within the Company’s existing share allotment authorities. Application has been made for the First Placing Shares to be admitted to trading on AIM and it is expected that their admission to AIM will take place on 7 June 2018. The allotment of the First Placing Shares is conditional, inter alia, upon First Admission and the Placing Agreement becoming unconditional in respect of the First Placing Shares and not being terminated in accordance with its terms prior to First Admission.

The second tranche of the Placing, to raise a total GBP4,102,630 by the issue of 82,052,600 Ordinary Shares (being the Second Placing Shares) at 5 pence each, is conditional upon, inter alia, the passing of the resolution to be put to shareholders of the Company at the General Meeting (granting the Directors authority to allot new Ordinary Shares otherwise than on a pre-emptive basis). In addition, the allotment of the Second Placing Shares is conditional, inter alia, on the Placing Agreement becoming unconditional in respect of the Second Placing Shares and not being terminated in accordance with its terms prior to Second Admission. It is expected that Second Admission will take place on 26 June 2018.

The Placing Agreement contains, inter alia, customary undertakings and warranties given by the Company in favour of Allenby Capital as to the accuracy of information contained in this document and other matters relating to the Company. Allenby Capital may terminate the Placing Agreement in specified circumstances prior to Admission, including, inter alia, for material breach of the Placing Agreement or any other warranties contained in it and in the event of certain force majeure events occurring.

The Placing Agreement is conditional so far as concerns the Second Placing upon, inter alia, Shareholders passing the Resolution at the General Meeting and Second Admission occurring by not later than 8.00 a.m. on 26 June 2018 (or such later time and/or date as the Company and Allenby Capital may agree, not being later than 8.00 a.m. on 10 July 2018). If such condition is not satisfied or, if applicable, waived, the Second Placing will not proceed.

The Placing Shares will be issued credited as fully paid and will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive dividends and other distributions declared on or after the date on which they are issued.

It is expected that CREST accounts will be credited on the relevant day of Admission and that share certificates (where applicable) will be despatched within 10 working days of Admission.

4. Related party transactions
Miton Group plc (“Miton”), which currently owns 26,927,128 Ordinary Shares representing 14.92 per cent. of the Company’s issued share capital at the date of this Circular, has agreed to subscribe for 30,839,600 Second Placing Shares as part of the second tranche of the Placing. As a substantial shareholder of the Company, Miton is to be treated as a ‘related party’ in accordance with the AIM Rules and its participation is a related party transaction pursuant to Rule 13 of the AIM Rules. The Independent Directors (being the Directors not participating in the Placing), having consulted with Allenby Capital, consider the participation of Miton in the Placing to be fair and reasonable insofar as Shareholders are concerned.

The following Directors have agreed to subscribe for a total of 15,000,000 Second Placing Shares as part of the second tranche of the Placing:

At the date of this No. of Second Following Second Admission
Circular Placing Shares
—————————- ————— ——————————
Investing Number Percentage Number of Percentage
Director of Ordinary of Existing Ordinary of Enlarged
Shares Ordinary Shares held Share Capital
held Shares
David Main* 535,714 0.30 500,000 1,035,714 0.35
Ian McDonough
* 1,262,862 0.70 14,000,000 15,262,862 5.17
Stephen Streater 63,985,714 35.45 500,000 64,485,714 21.82

*Including family interests

As directors of the Company, the Investing Directors are each to be treated as a ‘related party’ in accordance with the AIM Rules. Accordingly, the participation of the Investing Directors in the Placing is a related party transaction pursuant to Rule 13 of the AIM Rules. The Independent Directors of the Company, having consulted with Allenby Capital, consider the participation of the Investing Directors in the Placing to be fair and reasonable insofar as Shareholders are concerned.

5. Application for Admission to AIM
Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is anticipated that Admission will become effective and that dealings in the First Placing Shares will commence at 8:00 a.m. on 7 June 2018 and that Admission will become effective and dealings in the Second Placing Shares will commence at 8:00 a.m. on 26 June 2018.

6. Recommendation
The Board considers the Placing to be in the best interests of the Company and its Shareholders as a whole and therefore the Directors unanimously recommend that Shareholders vote in favour of the Resolution to be proposed at the General Meeting, as they intend to do in respect of their aggregate holding of 65,814,290 Existing Ordinary Shares, representing approximately 36.46 per cent. of the Company’s existing share capital.

Total Voting Rights

On First Admission, the Company will have 213,433,599 ordinary shares of 0.8p each in issue, each with one voting right. There are no shares held in treasury. Therefore, the Company’s total number of ordinary shares and voting rights on First Admission will be 213,433,599.

The above figure of 213,433,599 may be used by shareholders following First Admission as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules.

On Second Admission, the Company will have 295,486,199 ordinary shares of 0.8p each in issue, each with one voting right. There are no shares held in treasury. Therefore, the Company’s total number of ordinary shares and voting rights on Second Admission will be 295,486,199.

The above figure of 295,486,199 may be used by shareholders following Second Admission as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules.

MAR

The Market Abuse Regulations (EU) No. 596/2014 (MAR) became effective from 3 July 2016. Market soundings, as defined in MAR, were taken in respect of the Placing with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the “Product Governance Requirements”), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the “Target Market Assessment”). Notwithstanding the Target Market Assessment, investors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; Placing Shares offer no guaranteed income and no capital protection; and an investment in Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the Target Market Assessment, only investors who have met the criteria of professional clients and eligible counterparties have been procured. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to Placing Shares.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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