TIDMMSYS
RNS Number : 4850V
Microsaic Systems plc
04 December 2023
4 December 2023
Microsaic Systems plc
("Microsaic" or the "Company")
Publication of Circular and Notice of General Meeting
Further to the announcement on 13 November 2023 regarding the
Company's intention to raise funds subject to, inter alia, the
restoration of its Ordinary Shares to trading on AIM (the
"Fundraising"), the Company today announces that it has posted a
circular and notice of general meeting to shareholders convening a
General Meeting ("General Meeting"), together with a form of
proxy.
The Company is seeking Shareholder approval to take the
necessary steps to enable the Fundraising to take place, which
requires the passing of resolutions to enable a re-organisation of
the Company's share capital, to provide authority to issue new
shares and to wave pre-emption rights, and the adoption of new
articles of association.
Completion of the Fundraising remains conditional upon, inter
alia, the publication of both the FY22 audited annual accounts on a
going concern basis (the "Annual Report") and the interim results
for the six months ended 30 June 2023 (the "Interim Results"), the
Company will still need to table a cancellation resolution (the
"Cancellation Resolution") in case the resolutions to enable the
Fundraising are not passed, or if for any other reason the
Fundraising does not complete.
If the relevant resolutions are approved by the required
majorities, with firm commitments obtained from investors prior to
the General Meeting then being subject only to Admission of the new
ordinary shares to be issued in connection with the Fundraising
(the "Fundraising Shares"), the cancellation of admission to
trading of the Company's ordinary shares on AIM would only be
implemented in the event that the restoration to trading of the
ordinary shares on AIM and admission of the Fundraising Shares did
not become effective on or before 22 December 2022.
The General Meeting will be held at 9:30 a.m. on 19 December
2023 at the offices of Turner Pope Investments at 8 Frederick's
Place, London, EC2R 8AB.
The Chairmans's letter from the Circular is reproduced in full
below and provides further information in relation to the proposed
Fundraising and the business of the General Meeting.
Enquiries:
Microsaic Systems plc
Bob Moore
Executive Chairman +44 (0)1483 751 577
Singer Capital Markets
(Nominated Adviser) +44 (0)20 7496 3000
Aubrey Powell / Angus Campbell
Turner Pope Investments (TPI) Limited
(Broker)
Andy Thacker / James Pope +44 (0) 20 3657 0050
LETTER FROM THE CHAIRMAN OF MICROSAIC SYSTEMS PLC
Dear Shareholders
Share consolidation and sub-division of share capital
(to enable issue of the Fundraising Shares at an appropriate
price)
Authority to issue and allot Ordinary Shares;
Waiver of Pre-emption Rights
(both in connection with proposed Fundraising)
Adoption of New Articles of Association
Alternate Cancellation of admission to trading on AIM
(only in the event that the Fundraising fails)
Notice of General Meeting
1. Introduction
The Company announced on 3 November 2023 that it was evaluating
alternatives including discussions with several parties about
strengthening the Company's balance sheet, with the aim of
concluding a fundraising within its available cash runway, which by
that date had been extended to mid-November. Despite several
expressions of interest, none of the discussions reached a
successful conclusion with the Company's cost base at that time.
The Company therefore began a very significant, rapid cost
reduction exercise, including regrettably a consultation period
with employees which is likely to result in all staff being made
redundant. The cost reduction plans announced also included the
Company's intention to cancel admission to trading of its Ordinary
Shares on AIM ("Cancellation"), subject to Shareholder approval at
a general meeting.
The Company has since been engaged in further funding
discussions which involve raising funds subject to restoration of
the Ordinary Shares to trading on AIM, as notified on 13 November
2023. The Company is now therefore seeking Shareholder approval to
take the necessary steps to enable the Fundraising to take place,
which requires the passing of the Fundraising Resolutions (as
described in paragraph 2 below).
Given that Completion of the Fundraising remains conditional
upon, inter alia, the publication of both the FY22 audited annual
accounts on a going concern basis (the "Annual Report") and the
interim results for the six months ended 30 June 2023 (the "Interim
Results"), the Company will still need to table the Cancellation
Resolution in case the Fundraising Resolutions are not passed, or
if for any other reason the Fundraising does not Complete. If the
Fundraising Resolutions are approved by the required majorities of
Shareholders, with firm commitments obtained from investors prior
to the General Meeting then being subject only to Admission of the
Fundraising Shares (i.e. assuming restoration to trading on AIM
will have occurred), the Cancellation Resolution (if it becomes
effective) would only be implemented in the event that the
restoration to trading of the Ordinary Shares on AIM and Admission
of the Fundraising Shares did not become effective on or before 22
December 2023.
The Company is seeking Shareholders' approval for the
consolidation and sub-division of share capital, the adoption of
the New Articles (setting out, in particular, the rights and
restrictions of the Deferred Shares), the authority to allot
shares, the disapplication of pre-emption rights and for
Cancellation (if needed) at the general meeting which has been
convened for 9:30 a.m. on 19 December 2023 at the offices of Turner
Pope Investments at 8 Frederick's Place, London, EC2R 8AB (the
"General Meeting"). If the approvals are given for the Fundraising,
Completion is expected to take place on 21 December 2023.
The Resolutions to approve the consolidation and sub-division of
share capital (Resolutions 1 and 2) and to grant the Directors
authority to allot shares (Resolution 4) require the approval of
not less than 50 per cent. of the votes cast by Shareholders
(whether present in person or by proxy) at the General Meeting.
The Resolutions to approve the adoption of the New Articles
(Resolution 3) and the disapplication of pre-emption rights
(Resolution 5) require the approval of not less than 75 per cent.
of the votes cast by Shareholders (whether present in person or by
proxy) at the General Meeting.
The Cancellation Resolution (Resolution 6), pursuant to Rule 41
of the AIM Rules, requires the approval of Shareholders holding not
less than 75 per cent. of the votes cast by Shareholders (whether
present in person or by proxy) at the General Meeting. Cancellation
will only take place if Admission of the Fundraising Shares does
not become effective on or before 22 December 2023.
If Admission of the Fundraising Shares does not become effective
on or before 22 December 2023 but the Cancellation Resolution is
passed at the General Meeting, it is anticipated that the
Cancellation will become effective at 7:00 a.m. on 2 January 2024.
An announcement via a Regulatory Information Service will be made
following the General Meeting to confirm the status of the
Resolutions and to reconfirm the expected timetable of events.
The purpose of this Document is to provide Shareholders with
information on the background to and reasons for the Resolutions;
to provide sufficient information to Shareholders to enable them to
understand the consequences of the Resolutions; to seek
Shareholders' approval for the Resolutions; and to provide reasons
why the Directors unanimously consider the proposed Fundraising or,
in the event that Completion does not occur, then the alternative
of Cancellation, to be in the best interests of the Company and its
Shareholders as a whole.
Shareholders should note that, unless all the Fundraising
Resolutions are passed and Admission of the Fundraising Shares
becomes effective on or before 22 December 2023, the Directors
would need to consider whether it is appropriate for the Company to
cease trading and enter into a liquidation process. It is the
Directors' opinion that any such liquidation, which is likely to be
a Creditors Voluntary Liquidation, would not result in any material
value being returned to Shareholders. Accordingly, in order for the
Company to avoid entering a possible liquidation process, it is
essential that Shareholders vote in favour of the Resolutions.
The Notice of the General Meeting is set out in Part II of this
Document.
2 Background to and reasons for the Resolutions
The Company announced on 29 June 2023 that its annual report and
accounts for the year ended 31 December 2022 (the "Annual Report")
would not be published by 30 June 2023, being the deadline for
publication under the AIM Rules. Consequently, the Company's shares
were suspended from trading on AIM with effect from 3 July 2023,
pending publication of the Annual Report. The Company also
announced that would likely need to raise further working capital
and that it therefore intended to conclude a fundraising by the end
of the third quarter.
The Company announced on 25 September 2023 that it was
evaluating alternatives, including a fundraise, and that an amount
of approximately GBP1.5 to 2.0 million would provide sufficient
funds to remain a going concern assuming a broadly unchanged cost
base.
The Company announced on 3 November 2023 that it was still
evaluating alternatives including discussions with several parties
about strengthening the Company's balance sheet with the aim of
concluding a fundraising within its extended runway to
mid-November. Despite several expressions of interest, none of the
discussions had reached a successful conclusion with the then
current cost base.
The Company therefore began a very significant cost reduction
exercise, including regrettably a consultation period with
employees which is likely to result in all staff being made
redundant with effect from 3 December 2023. The cost reduction
plans announced also included the Company's intention to cancel
admission to trading of its shares on AIM and subsequent
re-registration as a private company, in both cases subject to
Shareholder approval at a general meeting. At that time, it was
envisaged that a fundraising exercise to secure the continuation of
the business would only be possible as a private company, having
made additional cost savings from the Cancellation.
Subject to the successful conclusion of the Fundraising, which
is conditional upon the restoration of the Company's shares to
admission to trading on AIM, the cost reduction process is,
however, expected to result in the Company remaining as an
operating business, with access to sufficient resources (including
external contractors) to maintain production of the current mass
spectrometer machines and the continuation of existing trading
relationships. Ongoing activities for growth potential are expected
to include the Company's recently redesigned novel ProteinID
technology and PFAS detection technology, both of which have
undergone further successful internal testing ahead of commercial
field trials, and which the Company now expects to bring to market
through partnership approaches in 2024.
On 13 November 2023, the Company therefore announced that it had
been engaged in further funding discussions which involve raising
funds subject, inter alia, to restoration of the Company's shares
to trading on AIM. The Company is therefore seeking Shareholder
approval to consolidate and sub-divide the share capital, to adopt
the New Articles, to allot shares and to disapply pre-emption
rights to enable the issue of new Ordinary Shares for cash on a
non-pre-emptive basis in connection with the Fundraising.
It should be noted that the Fundraising is intended to ensure
the continuation of the Company's business activities and that the
Directors consider that the resumption of more material growth in
the business is likely to require access to additional capital
including the potential issue of further dilutive equity.
Share Consolidation and Sub-division
At the date of this document, there are 6,361,365,146 Existing
Ordinary Shares of 0.01 pence each in the capital of the Company in
issue. The Directors consider that the number of Existing Ordinary
Shares is unwieldly in volume. The Directors consider that the
Share Consolidation will: (1) result in a more appropriate share
capital structure for the Company which is expected to increase the
Company's share price proportionately, which may consequently
positively impact the trading activity in the Company shares; and
(2) provide the basis for enhanced perception of the Company,
improving its marketability to a wider investor group over
time.
Under the Share Consolidation, it is proposed that every 625
Existing Ordinary Shares be consolidated into one Consolidated
Ordinary Share of 6.25 pence each. Accordingly, the proportion of
Existing Ordinary Shares held by each Shareholder immediately
before the Share Consolidation will, save for fractional
entitlements (which are discussed further below), be the same as
the proportion of Consolidated Ordinary Shares held by each
Shareholder immediately after the Share Consolidation. The
Directors believe that the Share Consolidation will result in a
more appropriate number of shares in issue for the size of the
Company.
To effect the Share Consolidation, it will be necessary to issue
479 additional Existing Ordinary Shares so that the Company's
issued ordinary share capital is exactly divisible by 625. It is
proposed that these additional Existing Ordinary Shares will be
issued to the Company's share registrars on the date of the General
Meeting (assuming Resolutions 4 and 5 are passed and become
unconditional). These additional Existing Ordinary Shares would
only represent an entitlement to a fraction of a Consolidated
Ordinary Share, so this fraction would be sold subsequently
pursuant to the arrangements for fractional entitlements described
below. Following the issue of these additional shares, the issued
share capital as at close of business on the date of the General
Meeting would be 6,361,365,625 Existing Ordinary Shares.
In the event that the number of Existing Ordinary Shares held by
a Shareholder is not exactly divisible by 625, the Share
Consolidation will generate an entitlement to a fraction of a
Consolidated Ordinary Share.
The Directors propose that any such fractional entitlements will
be aggregated and sold in the market for the best price reasonably
obtainable with the net proceeds being to the benefit of the
Company. Given the small economic value of such fractional
entitlements, the Board is of the view that the distribution of the
sale proceeds to individual Shareholders would result in a
disproportionate cost to the Company.
Any Shareholder holding fewer than 625 Ordinary Shares at the
Record Date will cease to be a Shareholder.
The issued share capital of the Company immediately following
the Share Consolidation is expected to comprise 10,178,185
Consolidated Ordinary Shares.
The nominal value of the Existing Ordinary Shares is currently
0.01 pence per share, above the price at which the shares last
traded prior to suspension, and above the price at which New
Ordinary Shares are expected to be issued pursuant to the
Fundraising. As a matter of English law, the Company is unable to
issue shares at an issue price which is below their nominal value.
It is therefore proposed to sub-divide the entire ordinary share
capital immediately following the Share Consolidation, consisting
of 10,178,185 Consolidated Ordinary Shares of 6.25 pence nominal
value each, into 10,178,185 New Ordinary Shares of 0.001 pence
nominal value each and 10,178,185 Deferred Shares of 6.249 pence
nominal value each, thus enabling the Company to lawfully implement
the Fundraising at an appropriate price. As a result, the Company's
articles of association will be required to be updated to reflect
the proposed new share structure of the Company following the Share
Reorganisation and Resolution 3 proposes the adoption of the New
Articles.
Each New Ordinary Share will have the same rights (including
voting and dividend rights and rights on a return of capital) as
each Existing Ordinary Share except that they will have a nominal
value of 0.001 pence each.
The Deferred Shares will, as their name suggests, have very
limited rights (which are deferred to the New Ordinary Shares) and
will effectively carry no value as a result. Accordingly, the
holders of the Deferred Shares will not be entitled (unless they
also hold New Ordinary Shares) to receive notice of, attend or vote
at general meetings of the Company, nor be entitled to receive any
dividends or any payment on a return of capital until at least
GBP10,000,000 has been paid on each New Ordinary Share. No
application will be made for the Deferred Shares to be admitted to
trading on AIM.
The Company will also be given power to arrange for all the
Deferred Shares to be transferred to a custodian or to be purchased
for nominal consideration only, without the prior sanction of the
holders of the Deferred Shares. No share certificates for the
Deferred Shares will be issued.
A request will be made to the London Stock Exchange to reflect
on AIM the sub-division of the Existing Ordinary Shares into New
Ordinary Shares of 0.001 pence each. Each Consolidated Ordinary
Share standing to the credit of a CREST account will be subdivided
into one New Ordinary Share of 0.001 pence and one Deferred Share
of 6.249 pence at 6:00 p.m. on 19 December 2023. Only the New
Ordinary Shares will be eligible for restoration to trading on
AIM.
The entitlements to New Ordinary Shares of holders of share
options or other instruments convertible into Existing Ordinary
Shares will be adjusted in accordance with their terms to reflect
the Share Reorganisation.
Application will be made for the simultaneous cancellation of
the Existing Ordinary Shares from CREST and admission of the New
Ordinary Shares to CREST and their admission, together with the
Fundraising Shares if issued, to trading on AIM. New Ordinary
Shares may thereafter be held in and transferred via CREST. It is
expected that New Ordinary Shares which are held in uncertificated
form will be credited to the relevant CREST accounts on 20 December
2023 and admitted to trading on AIM on the next day.
Definitive share certificates in respect of those New Ordinary
Shares which will be held by Shareholders who currently hold their
Existing Ordinary Shares in certificated form are expected to be
dispatched to relevant Shareholders in the week commencing 1
January 2024. Share certificates in respect of Existing Ordinary
Shares will cease to be valid on 20 December 2023 and, pending
delivery of share certificates in respect of New Ordinary Shares,
transfers will be certified against the register.
No new certificates for the Existing Ordinary Shares will be
dispatched if the Share Reorganisation becomes effective.
Following the Share Capital Reorganisation, a new ISIN code will
be required for the New Ordinary Shares. Details of the new ISIN
code will be announced alongside the results of the General
Meeting.
Cancellation Resolution
Given that completion of any Fundraising remains conditional
upon, inter alia, the publication of both the Annual Report on a
going concern basis and the Interim Results, the Company will still
need to table an alternate resolution to approve Cancellation if
the Fundraising Resolutions are not voted for by the requisite
majorities at the General Meeting. If the Fundraising Resolutions
were to be approved, with firm commitments obtained from investors
prior to the General Meeting then being subject only to Admission
of the Fundraising Shares (itself dependent on restoration
occurring), the Cancellation Resolution will still need to be
included in the business of the General Meeting, as there remains
the possibility that Admission of the Fundraising Shares does not
become effective on or before 22 December 2023.
For these reasons, and following careful consideration, the
Directors believe that it is in the best interests of the Company
and Shareholders as a whole to seek the proposed authority to
consolidate and sub-divide the share capital, to allot shares and
to disapply pre-emption rights so as to be able to issue shares for
cash on a non-pre-emptive basis and to adopt the New Articles.
3. Board composition
The Board has confirmed its intention to use all reasonable
endeavours to recruit at least one further independent
non-executive director (INED) in the near term and at least one
executive director in the short term, to ensure full compliance
with principles 5 and 6 of the QCA Corporate Governance Code. Mr
Moore intends to return to his non-executive role as soon as
practicable but remains committed to supporting the business
through this near-term period of stabilisation and to
re-establishing growth opportunities for an incoming new
executive.
4. Additional requirements for restoration
The AIM Rules and the AIM Rules for Nominated Advisers require,
inter alia, that a Company maintains sufficient resources, systems
and controls so as to ensure its ability to comply with the AIM
Rules, and that a Company's nominated adviser is satisfied as to
the continuing suitability of an AIM issuer's shares to be admitted
to trading on AIM. Accordingly, the Company's Nominated Adviser is
conducting a further review of relevant matters in connection with
the Company's business and controls, and will make such further
enquiries of the Company and its personnel as it deems appropriate
in this regard. The Nominated Adviser's review will only complete
in parallel with the finalisation of the Fundraising. Should the
Nominated Adviser not be able to deem the Company's shares suitable
for continuing admission as a result of any material aspect of its
enquires which cannot be resolved to its satisfaction, or the
Company be unable to meet its obligations under the AIM Rules, the
Fundraising will not proceed and the Cancellation Resolution (if
passed) will be implemented.
5. Process for, and principal effects of, the Fundraising
To enable the Fundraising to proceed, the Fundraising will be
subject to obtaining fresh Shareholder authorities to allot the new
Ordinary Shares on a non pre-emptive basis. Firm commitments,
subject only to Admission of the Fundraising Shares becoming
effective (i.e. assuming restoration will occur), are intended to
be sought from investors prior to the General Meeting. Admission of
the Fundraising Shares will be conditional upon, inter alia, the
publication of both the FY22 audited annual accounts on a going
concern basis and the interim results for the six months ended 30
June 2023.
The Directors recognise that the Fundraising will result in a
high level of dilution for the Company's existing Shareholders, as
only limited value will be ascribed to the Company prior to
resolution of the uncertainty relating to its financial condition.
However, it is the Directors' opinion that equity dilution is
materially preferable to Shareholders than Cancellation of
admission to trading on AIM or potential liquidation of the
Company. A further announcement is expected to be made prior to the
General Meeting in relation to the firm commitments made in support
of the Fundraisig, which will provide Shareholders with the issue
price for the Fundraising and the amount being raised.
6. Process for, and principal effects of, the Cancellation of
admission to trading on AIM
Cancellation will only take place if Admission of the
Fundraising Shares does not become effective on or before 22
December 2023, and subject to the Cancellation Resolution being
passed. Shareholders should note that, unless all the Fundraising
Resolutions are passed, the Directors would need to consider
whether it is appropriate for the Company to cease trading and
enter into a liquidation process. It is the Directors' opinion than
any such liquidation, which is likely to be a Creditors Voluntary
Liquidation, would not result in any material value being returned
to Shareholders.
The Directors are aware that certain Shareholders may be unable
or unwilling to hold Ordinary Shares if the Cancellation is
approved and subsequently becomes effective. Such Shareholders
should be aware that the Company will evaluate a matched bargain
facility to provide periodic liquidity opportunities to
shareholders should Cancellation take place.
Under the AIM Rules, it is a requirement that the Cancellation
must be approved by Shareholders holding not less than 75 per cent.
of votes cast by Shareholders at the General Meeting. Accordingly,
the Notice of General Meeting set out in Part II of this Document
contains a special resolution to approve the Cancellation.
Furthermore, Rule 41 of the AIM Rules requires any AIM quoted
company that wishes the London Stock Exchange to cancel the
admission of its shares to trading on AIM to notify shareholders
and to inform the London Stock Exchange separately of its preferred
cancellation date at least 20 business days prior to such date.
Cancellation will not ordinarily take effect until at least five
clear Business Days have passed following the passing of the
Cancellation Resolution. In accordance with Rule 41 of the AIM
Rules, the Directors have notified the London Stock Exchange of the
Company's intention, subject to the Cancellation Resolution being
passed at the General Meeting and Admission of the Fundraising
Shares not becoming effective on or before 22 December 2023.
Accordingly, if the Fundraising Resolutions are not passed or
Admission of the Fundraising Shares does not otherwise become
effective on or before 22 December 2023 and the Cancellation
Resolution has been passed, the Cancellation will become effective
at 7:00 a.m. on 2 January 2024. If the Cancellation becomes
effective, Singer Capital Markets will cease to be the Nominated
Adviser of the Company and the Company will no longer be required
to comply with the AIM Rules.
The principal effects of the Cancellation would include the
following:
-- there would be no formal market mechanism enabling the
Shareholders to trade Ordinary Shares;
-- it is possible that, following the Cancellation, the
liquidity and marketability of the Ordinary Shares of the Company
would be further reduced and their value adversely affected;
-- the Ordinary Shares may be more difficult to sell compared to
shares of companies traded on AIM (or any other recognised market
or trading exchange);
-- in the absence of a formal market and quote, it may be
difficult for Shareholders to determine the value of their
investment in the Company at any given time;
-- the regulatory and financial reporting regime applicable to
companies whose shares are admitted to trading on AIM would no
longer apply;
-- Shareholders would no longer be afforded the protections
given by the AIM Rules, such as the requirement to be notified of
price sensitive information or certain events and the requirement
that the Company seek shareholder approval for certain corporate
actions, where applicable, including substantial transactions,
reverse takeovers, related party transactions and fundamental
changes in the Company's business, including certain acquisitions
and disposals;
-- the levels of disclosure and corporate governance within the
Company may not be as stringent as for a company quoted on AIM;
-- the Company would no longer be subject to UK MAR covering
inside information and other matters;
-- the Company would no longer be required to publicly disclose
any change in major shareholdings in the Company under the
Disclosure Guidance and Transparency Rules;
-- Singer Capital Markets will cease to be Nominated Adviser to the Company;
-- whilst the Company's CREST facility would remain in place
immediately post the Cancellation, the Company's CREST facility may
be cancelled in the future and, although the Ordinary Shares would
remain transferable, they may cease to be transferable through
CREST (in which case, Shareholders who hold Ordinary Shares in
CREST will receive share certificates);
-- stamp duty would be due on transfers of shares and agreements
to transfer shares unless a relevant exemption or relief applies to
a particular transfer; and
-- the Cancellation may have personal taxation consequences for
Shareholders. Shareholders who are in any doubt about their tax
position should consult their own professional independent tax
adviser.
The above considerations are not exhaustive, and Shareholders
should seek their own independent advice when assessing the likely
impact of the Cancellation on them.
For the avoidance of doubt, the Company will remain registered
with the Registrar of Companies in England and Wales in accordance
with and, subject to the Companies Act, notwithstanding the
Cancellation.
If Cancellation takes place and the Company were able to source
alternate funds, the Company currently intends to continue to
provide certain facilities and services to Shareholders that they
currently enjoy as shareholders of an AIM company. The Company
would, subject to continuing as a going concern:
-- continue to communicate information about the Company
(including annual accounts) to its Shareholders, as required by the
Companies Act;
-- continue, for at least 12 months following Cancellation, to
maintain its website, www.microsaic.com and to post updates on the
website from time to time, although Shareholders should be aware
that there will be no obligation on the Company to include all of
the information required under the Disclosure Guidance and
Transparency Rules, Rule 26 of the AIM Rules or to update the
website as required by the AIM Rules; and
-- evaluate whether a matched bargain facility could be made
available to shareholders who wish to buy or sell shares following
Cancellation.
There would be no change to the composition of the Board
immediately following Cancellation. Subject to the availability of
sufficient funding following Cancellation, the Board would seek to
recruit at least one further independent Non-executive Director and
to appoint at least one executive director to ensure appropriate
standards of corporate governance.
7. Transactions in the Ordinary Shares prior to and post the proposed Cancellation
7.1 Prior to Cancellation
Shareholders should note that the current suspension of the
Company's shares from admission to trading on AIM is not expected
to be lifted unless and until the material uncertainy regarding the
Company's financial position is resolved and it is clear that the
Fundraising is likely to be completed. Although the Company expects
to secure binding conditional commitments for the Fundraising prior
to the General Meeting, the publication of the Annual Report and
the Interim Results are only likely to occur shortly before the
expected restoration of the New Ordinary Shares and the admission
of the Fundraising Shares.
In the event that it becomes apparent that one or more
conditions or necessary steps prior to restoration cannot be met or
completed respectively, and are incapable of resolution such that
the Fundraising cannot complete by 22 December 2023, the suspension
of the Company's shares from trading on AIM would not be lifted and
Shareholders would not have an opportunity to trade in the
Company's Ordinary Shares prior to Cancellation.
7.2 Dealing and settlement arrangements in the event of Cancellation
The Directors are aware that Shareholders may wish to acquire or
dispose of Ordinary Shares following Cancellation. Should
Cancellation be approved by Shareholders at the General Meeting and
the Company not proceed into a liquidation process, the Company may
explore alternative 'matched bargain facilities' to enable
investors to trade in its shares following the possible
Cancellation, although the timing for implementation and details of
operation of such a facility are not yet known, and the facility
could, if implemented, be withdrawn in future at the Company's
discretion.
Full details would be made available to Shareholders on the
Company's website at https://www.microsaic.com/investors/ and
directly by letter or e-mail (where appropriate).
As noted above, if Shareholders approve the Cancellation
Resolution and the Fundraising Resolutions are not approved and/or
Admission of the Fundraising Shares does not become effective on or
before 22 December 2023, it is anticipated that the suspension of
the Company's shares from admission to trading on AIM would not be
lifted prior to admission being cancelled, and that the effective
date of Cancellation would be 2 January 20234.
8. Recent historical trading, financial performance and position
The Company's trading performance improved in 2022 against the
prior year, with higher sales and reduced losses.
The unaudited revenues for the year were GBP1.57m, representing
an uplift from the GBP906k achieved in 2021. However, of this
revenue, sales to the related party DeepVerge plc ("DeepVerge") or
its subsidiaries totalled GBP1,248,828 (plus VAT), of which they
have only settled GBP118,659 (plus VAT) leaving a balance of
GBP1,130,169 (plus VAT) outstanding. On 19 April 2023, DeepVerge
announced that it could not meet its obligation to creditors and
that a payment plan had been tentatively agreed with Microsaic.
However, on 26 June 2023, DeepVerge plc announced that it would no
longer be in a position to support its subsidiaries and was
anticipating a sale or liquidation of these assets. The impact of
this on the Company has been recognised as an adjusting event after
the reporting date with GBP1,130,169 charged as an impairment of
related party debt. Excluding revenues from DeepVerge, revenues for
2022 were only GBP318,869, significantly below the prior year. Only
5 units were shipped in 2022 before year end, compared to 19 in
2021. The results for 2022 and the prospects for 2023 and beyond
therefore need to be considered on the basis that no further
payments and no further revenues are expected to be received from
DeepVerge or its subsidiaries.
Gross margin rose to 61%, up from 42% (restated) in the previous
year. This is attributed to the higher margins achieved on new
business development which began in April 2022.
The Adjusted EBITDA loss for the year was GBP2.04m, an increase
from the GBP1.77m adjusted EBITDA loss in 2021. This includes the
above-mentioned costs in relation to the impairment of related
party debt of GBP1.13m (2021: GBPnil). Adjusted EBITDA as a measure
of underlying operating profit or loss is calculated by adding back
professional fees relating to corporate activities and share based
payments to EBITDA.
Unaudited revenues for the first half of 2023 were approximately
GBP390k, with losses before tax of GBP1.1m. Further details will be
published prior to readmission of the share to trading on AIM.
9. Current Trading, Strategy and Prospects
The supply chain issues which hindered production in 2022 were
resolved, enabling production to be restarted in May 2023, with 7
units expected to be shipped by the end of 2023. As of November
2023, there is an equipment sales pipeline of approximately 19
units in addition to service and spares revenue. Although it is
unlikely that all of these prospective sales will become firm
orders in the short-term, the Board considers that the Company's
cost base, excluding costs attributable to remaining a public
company, are a level such that they can be supported by a similar
level of unit sales to 2022 and 2023. The Fundraising is intended
to raise sufficient funds for the Company to remain public and to
continue trading in the short-term, assuming only a low level of
sales. Higher sales of existing products will require careful
management of working capital but the minimum net proceeds of the
Fundraising are expected to provide an element of contingency
should this arise. A downside sensitivity has also been analysed
assuming no unit sales and income arising from contracted service
revenue only, which supports the adoption of the going concern
basis of preparation of the Annual Report, assuming the minimum net
proceeds from the Fundraising are attained.
A further modest cash inflow of up to c. GBP250,000 may be
received in 2024 in the event that the Company is successful in its
latest R&D tax credit claim, although the benefit of this could
be offset by other contingencies (including the possibility of a
fine from the London Stock Exchange in relation to the timing of
disclosure of the amount outstanding from DeepVerge plc). At the
date of this document there is no certainty on either matter and
neither is included in the Company's working capital assessment,
save for a general contingencies allowance.
The Board has conducted a thorough assessment of the Company's
cash reserves and has made due and careful enquiry as to the
Company's working capital requirements. As of 31 December 2022, the
Company had GBP1.2 million (31 December 2021: GBP3.5 million) in
cash and bank balances. As at 12 November 2023, the cash and bank
balances had fallen to GBP83k, which is in line with recent
communications on the cash runway. As a result, the Board now
anticipates a significant challenge managing working capital over
the next 12 months, and the Board recognises that there will be
material uncertainty over the going concern status of the Company
in the very near-term if the proposed Fundraising does not
complete.
Therefore, Shareholders should be aware of the material
uncertainty surrounding the potential need for additional funding
to remain a going concern and the associated risks involved
including the uncertain level of sales to be completed. The Company
will actively monitor and assess its financial position to ensure
that it can meet the demands of its plans effectively.
The very significant cost reduction exercise announced on 3
November 2023 is expected to result in the Company remaining as an
operating business, with access to sufficient resources (including
external contractors) to maintain production of the current mass
spectrometer machines and the continuation of existing trading
relationships, but in a very different position to that expected at
the start of 2023. Following this significant reorganisation, the
Board will focus on stabilising the business whilst commercialising
the Company's ProteinID and PFAS detection technologiesand
exploring the potential for growth including exploring potential
business combinations and seeking additional capital to fund
further recovery and growth. The Company's cost-cutting and working
capital plans assume only a very limited number of unit sales of
existing on-market technology, together with some contracted
service revenues from the support of units already operated by end
customers.
In addition to the financial risks outlined above, the
significant reorganisation of the business means that the Company
faces higher operational risks including the loss of key employees
and consultants and subsequent difficulty in recruiting suitable
replacements, and the risk that sales growth is too slow. The
Company's growth trajectory and the pursuit of a cash flow positive
position are likely to necessitate additional funding from sources
such as debt or equity. These considerations pose risks to the
Company's ability to sustain its operations as a going concern.
As at the date of this document, there are no active discussions
with regard to other corporate developments, save for those with
prospective partners for taking new product applications to market.
However, the Company may resume dialogue with prospective providers
of further funding for the business, which includes financial
backers of potentially complementary businesses, it is likely that
additional capital may also be needed in that context. There can be
no certainty of any transaction or associated fundraising ensuing
in this regard.
10. General Meeting
The General Meeting will be held at the offices of Turner Pope
Investments (TPI) Limited, 8 Frederick's Place, London, EC2R 8AB,
at 9:30 a.m. on 19 December 2023, at which the following
Resolutions will be proposed:
Resolution 1 is an ordinary resolution that every 625 Existing
Ordinary Shares be consolidated into one Consolidated Ordinary
Share of 6.25p each. The effect of Resolution 1 would be that the
6,361,365,625 then issued Existing Ordinary Shares of 0.01p as at
7:59 p.m. on the date of the General Meeting would be consolidated
into 10,178,185 Consolidated Ordinary Shares of 6.25p each. The
Directors consider that the Share Consolidation will result in a
more appropriate share capital structure for the Company.
Resolution 2 is an ordinary resolution (conditional upon the
passing of Resolution 1) and in accordance with section 618 of the
Companies Act 2006 ("Act"), with effect from 8:00 p.m. on the date
of the General Meeting every one Consolidated Ordinary Share of
6.25 pence be sub-divided into one New Ordinary Share of 0.001
pence, such New Ordinary Share having the same rights and being
subject to the same restrictions as the Existing Ordinary Shares as
set out in the Company's articles of association for the time
being, and one Deferred Share of 6.249 pence, such Deferred Shares
having the same rights and being subject to the same restrictions
as the existing deferred shares of 0.24 pence in the capital of the
Company as set out in the Company's articles of association for the
time being (but with a different nominal value).
Resolution 3 is a special resolution (conditional upon the
passing of Resolution 1 and 2) to adopt the New Articles to include
the Deferred Shares' rights and restrictions and requires the
approval of not less than 75 per cent. of the votes cast by
Shareholders (whether present in person or by proxy) at the General
Meeting.
Resolution 4 is an ordinary resolution to authorise the
directors of the Company to allot shares in the Company (and rights
over such shares) up to an aggregate nominal amount of GBP2,000
being equal to 200,000,000 New Ordinary Shares and requires the
approval of not less than 50 per cent. of the votes cast by
Shareholders (whether present in person or by proxy) at the General
Meeting.
Resolution 5 is a special resolution (conditional on the passing
of Resolution 4), to empower the directors of the Company to issue
and allot 200,000,000 New Ordinary Shares on a non-pre-emptive
basis and requires the approval of not less than 75 per cent. of
the votes cast by Shareholders (whether present in person or by
proxy) at the General Meeting.
Resolution 6 (the Cancellation Resolution) is a special
resolution to approve Cancellation if the Fundraising and
restoration of Shares to trading on AIM do not take place.
Resolution 6 is conditional, pursuant to Rule 41 of the AIM Rules,
upon the approval of Shareholders holding not less than 75 per
cent. of the votes cast by Shareholders (whether present in person
or by proxy) at the General Meeting. Cancellation will only take
place if, for any reason, Admission of the Fundraising Shares does
not become effective on or before 22 December 2023.
11. Action to be taken in relation to the General Meeting
A Form of Proxy is enclosed with this Document for use in
connection with the General Meeting.
You are strongly encouraged to complete, sign and return your
Form of Proxy in accordance with the instructions printed thereon
so as to be received, by post or, during normal business hours
only, by hand to Neville Registrars Limited, Neville House,
Steelpark Road, Halesowen, B62 8HD, as soon as possible but in any
event so as to arrive by not later than 9:30 a.m. on 15 December
2023 (or, in the case of an adjournment of the General Meeting, not
later than 48 hours before the time fixed for the holding of the
adjourned meeting (excluding any part of a day that is not a
Business Day)).
Appointing a proxy in accordance with the instructions set out
above will enable your vote to be counted at the General Meeting in
the event of your absence. The completion and return of a Form of
Proxy will not preclude you from attending and voting in person at
the General Meeting, or any adjournment thereof, should you wish to
do so.
12. Recommendation
The Directors unanimously consider the Fundraising, or in the
event that Completion does not occur then the alternative of
Cancellation, to be in the best interests of the Company and its
Shareholders as a whole and, therefore, unanimously recommend that
you vote in favour of the Resolutions at the General Meeting as
Nigel Burton (being the Director who is interested in Ordinary
Shares) intends to vote, or procure the vote in respect of, in
aggregate, 300,500,000 Ordinary Shares to which he is beneficially
entitled (equivalent to 480,800 New Ordinary Shares and
representing approximately 4.72 per cent. of the total voting
rights in the Company's share capital).
Certain principal Shareholders have also indicated verbally that
they are supportive of the Resolutions.
Yours faithfully,
Bob Moore
Acting Executive Chairman
DEFINITIONS
The following definitions apply throughout this Document, unless
the context requires otherwise:
"Admission" admission of the relevant shares
to trading on AIM becoming effective
in accordance with the AIM Rules;
"AIM" AIM, the market operated by the London
Stock Exchange;
"AIM Rules" the rules and guidance for companies
whose shares are admitted to trading
on AIM entitled "AIM Rules for Companies"
published by the London Stock Exchange,
as amended from time to time;
"AIM Rules for Nominated the rules and guidance for nominated
Advisers" advisers published by the London
Stock Exchange, as amended from time
to time, under which a nominated
adviser has obligations owed separately
and distinctly to the London Stock
Exchange;
"Annual Report" the audited annual report and accounts
for the year ended 31 December 2022,
previously due to have been published
by 30 June 2023;
"Business Day" a day (excluding Saturdays, Sundays
and public holidays in England and
Wales) on which banks are generally
open for the transaction of normal
banking business in London;
"Cancellation" the cancellation of admission of
the Existing Ordinary Shares or New
Ordinary Shares to trading on AIM
in accordance with Rule 41 of the
AIM Rules, subject to the Cancellation
Resolution becoming effective;
"Cancellation Resolution" Resolution 6 set out in the Notice
of General Meeting;
"Company" or "Microsaic Microsaic Systems plc, a company
Systems plc" incorporated in England and Wales
with registered number 03568010 and
having its registered office at GMS
House, Boundary Road, Woking, Surrey,
GU21 5BX;
"Companies Act" the Companies Act 2006 (as amended
from time to time);
"Completion" Admission of the Fundraising Shares
becoming effective;
"Consolidated Ordinary Shares" the ordinary shares in the capital
of the Company of 6.25 pence each
(expected to be 10,178,185 of such
shares) immediately following the
Share Consolidation becoming effective
;
"CREST" the relevant system (as defined in
the CREST Regulations) in respect
of which Euroclear UK & International
Limited is the operator (as also
defined in the CREST Regulations);
"CREST Regulations" the Uncertificated Securities Regulations
2001 (SI2001/3755) (as amended from
time to time);
"Deferred Shares" the deferred shares in the capital
of the Company of 6.249 pence each
(expected to be 10,178,185 of such
shares) immediately following the
Share Capital Reorganisation becoming
effective;
"Directors" or "Board" the directors of the Company, whose
names are set out in Part I of this
Document;
"Disclosure Guidance and the disclosure rules and transparency
Transparency Rules" rules made by the UK Financial Conduct
Authority pursuant to section 73A
of FSMA;
"Existing Ordinary Shares" the existing ordinary shares in the
capital of the Company of 0.01 pence
each;
"Interim Results" the unaudited financial results for
the six months ended 30 June 2023,
originally due to have been published
by 30 September 2023;
"FSMA" the Financial Services and Markets
Act 2000 (as amended from time to
time);
"Fundraising" the proposed fundraising by the Company
to raise at not less than GBP0.6
million in net proceeds for the Company;
"Fundraising Resolutions" Resolutions 1 to 5 set out in the
Notice of General Meeting;
"Fundraising Shares" the New Ordinary Shares to be issued
in connection with the Fundraising;
"General Meeting" the general meeting of the Company
convened for 9:30 a.m. on 19 December
2023 and any adjournment thereof,
Notice of which is set out in Part
II of this Document;
"Group" Microsaic Systems plc and its subsidiary
undertakings (as such term is defined
in section 1162 of the Companies
Act) from time to time;
"London Stock Exchange" London Stock Exchange plc;
"New Articles" the amended articles of association
of the Company proposed to be adopted
pursuant to Resolution 3 set out
in the Notice of General Meeting;
"New Ordinary Shares" the Ordinary Shares in the capital
of the Company of 0.001 pence each
assuming completion of the Share
Capital Reorganisation;
"Notice of General Meeting" the notice of the General Meeting
or which is set out in Part II of this
"Notice" Document;
"Ordinary Shares" the ordinary shares in the capital
of the Company from time to time;
"Registrars" Neville Registrars Limited of Neville
House, Steelpark Road, Halesowen,
B62 8HD;
"Regulatory Information has the meaning given to it in the
Service" AIM Rules for any of the services
approved by the London Stock Exchange
for the notification of AIM announcements
and included within the list maintained
on the website of the London Stock
Exchange;
"Resolutions" the resolutions to be proposed at
the General Meeting in the form set
out in Part II and "Resolution" means
any one of them;
"Share Capital Reorganisation" the proposed Share Consolidation
and Sub-division;
"Share Consolidation" the proposed consolidation of every
625 Existing Ordinary Shares into
one Consolidated Ordinary Share;
"Sub-division" the proposed sub-division of the
Consolidated Ordinary Shares into
10,178,185 New Ordinary Shares of
0.001 pence each and 10,178,185 Deferred
Shares of 6.249 pence each;
"Shareholders" holders of Ordinary Shares from time
to time and "Shareholder" means any
one of them;
"Singer Capital Markets" Singer Capital Markets Advisory LLP,
registered in England and Wales with
registered number OC364131 and whose
registered office is at One Bartholomew
Lane, London, EC2N 2AX;
"Turner Pope Investments" Turner Pope Investments (TPI) Limited,
registered in England and Wales with
registered number 09506196, and whose
registered office is at 8 Frederick's
Place, London, England, EC2R 8AB;
"UK MAR" Regulation (EU) (No 596/2014) of
the European Parliament and of the
Council of 16 April 2014 on market
abuse to the extent that it forms
part of the domestic law of the United
Kingdom including by virtue of the
European Union (Withdrawal) Act 2018
(as amended by virtue of the European
Union (Withdrawal Agreement) Act
2020);
"United Kingdom" or "UK" the United Kingdom of Great Britain
and Northern Ireland; and
a reference to "GBP", "pence" pounds sterling, being the lawful
or "p" currency of the UK.
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END
MSCGZMGZMFMGFZZ
(END) Dow Jones Newswires
December 04, 2023 02:00 ET (07:00 GMT)
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