Cambridge Cognition Holdings plc (LON:COG, which develops and markets neuroscience technology to assess brain health, is pleased to announce a conditional Placing and Subscription to raise gross proceeds of £1.4 million through the issue of 7,000,000 new ordinary shares at a price of 20 pence per Ordinary Share. The Fundraising comprises 6,450,000 placing shares and 550,000 subscription shares. Admission of the New Ordinary Shares is subject to, inter alia, shareholder approval at a general meeting of the Company, notice of which will be sent to shareholders shortly.
finnCap Ltd is acting as nominated adviser and joint broker, alongside Dowgate Capital Limited who will also be acting as joint broker in connection with the Placing (finnCap and Dowgate together, the “Joint Brokers”). Neither the Placing nor the Subscription has been underwritten.
Dr Matthew Stork, Chief Executive Officer, Cambridge Cognition said:
“We are excited that this fundraising, provided by both existing and new shareholders, will support commercialisation of our recently launched products and enable us to accelerate development of our digital and voice solutions. This is tangible progress as we become a digital health business with multiple product lines.”
Details of the Fundraising
· Director participation of £60,000
· General Meeting to be held at the offices of the Company at Tunbridge Court, Bottisham, Cambridge CB25 9TU 11:00 a.m. on 9 March 2020
· Admission of the New Ordinary Shares is expected to be on 10 March 2020
· In addition to shareholder approval to be sought at the General Meeting, the Fundraising is also conditional upon Admission to trading becoming effective, and upon the placing agreement between the Company and the Joint Brokers (the “Placing Agreement“) not being terminated in accordance with its terms
· The New Ordinary Shares, when issued, will represent approximately 22.5 per cent. of the Company’s issued share capital prior to the Fundraising. The Issue Price of 20 pence per New Ordinary Share represents a discount of approximately 33.3 per cent. to the closing mid-market price of 30 pence per Ordinary Share on 18 February 2020, being the last trading day immediately preceding the date of this Announcement
· The net proceeds of the Fundraising will provide the Company with sufficient capital to drive significant growth in the business and the directors expect the Company to be profitable by Q4 2020.
Reasons for the Fundraising and use of proceeds
Whilst the Company continues to make good commercial progress, the business now requires additional funding to finalise commercialisation of recently developed products, accelerate development of new products and strengthen the balance sheet.
In particular the funds will be used to develop additional modules, wearable contract requirements, complete development of voice product, spin out the digital phenotyping programme and invest in further sales and marketing resource.
The Directors believe the net proceeds of the Fundraise will be sufficient to execute on their growth strategy and accordingly do not anticipate the need to explore any additional funding through a debt facility.
Current trading and Prospects
As announced earlier today, the preliminary results for the year ended 31 December 2019 are expected to be released on 24 March 2020 and the following key figures, subject to audit, are expected to be included in that report:
· Revenue of £5.04 million (2018: £6.13 million)
· Post tax loss for the year of £2.90 million (2018: £1.44 million loss)
· Cash balance of £0.90 million at 31 December 2019 (31 December 2018: £1.11 million)
· Contracted order book of £5.68 million (31 December 2018: £6.08 million)
While trading in the core business was disappointing, 2019 was a year of transition as the Company continued to deliver on its strategy to become a digital health business with multiple product lines. The Company is targeting the fast growth, overlapping electronic clinical outcomes assessment (eCOA) and digital health markets for central nervous systems disorders.
Sales of digital solutions doubled from 2018 to 2019 with a large £1.3 million order taken early in the year. The Company also completed the development and took orders for two new solutions in 2019. NeuroVocalix™, its patented automatic voice-based system for measuring cognition, completed a proof-of-concept trial with data from 2,868 people in Q2 2019. The Company’s new, configurable eCOA product was launched in Q4 2019.
With a shift in focus from research and development to commercialisation throughout the latter half of 2019, together with the launch of these new products and an expected improvement in its core business, the Company is positioned for growth in 2020. While sales and marketing spending is being increased, R&D and overall administrative costs are being significantly reduced and the Company continues to expect to achieve profitability in Q4 2020 and to deliver further growth in subsequent years
Trading conditions improved in late 2019 and have continued into 2020 with the first two months of the year delivering significant growth on the prior year. With the much-strengthened balance sheet, the Directors remain confident in the outlook for 2020 and beyond.
General Meeting and Shareholder Approval
For the New Ordinary Shares to be admitted to trading on AIM, Shareholder approval is required:
a) by way of ordinary resolution to give the Directors authority to allot the New Ordinary Shares; and
b) by way of a special resolution to dis-apply statutory pre-emption rights in respect thereof.
The authorities referred to above are in addition to the Company’s existing general shareholder authorities to allot Ordinary Shares for cash on a non-pre-emptive basis.
In order to obtain the necessary shareholder approval, a General Meeting of the Company is to be held at the offices of the Company at Tunbridge Court, Bottisham, Cambridge CB25 9TU 11:00 a.m. on 9 March 2020 at which the Resolutions will be proposed. A Circular and notice of General Meeting will today be sent to shareholders. The Circular and notice of General Meeting will also be made available on the Company’s website at www.cambridgecognition.com.
Directors’ Participation and Related Party Transactions
The participation in the Fundraising by Nicholas Walters, Steven Powell, Matthew Stork and Debra Leeves (the “Participating Directors“) for 100,000, 75,000, 75,000 and 50,000 Ordinary Shares respectively are related party transactions under Rule 13 of the AIM Rules as they are Directors of the Company. The Independent Director of the Company, having consulted with finnCap in its capacity as the Company’s nominated adviser for the purposes of the AIM Rules, consider the terms on which the Participating Directors have participated in the Fundraising are fair and reasonable insofar as the Company’s shareholders are concerned.
The participating Directors’ interests as at the date of this announcement and immediately following completion of the Fundraising are as follows:
|Name||Existing beneficial interest in Ordinary Shares||Existing shareholding||New Ordinary Shares subscribed for||Beneficial interest in Enlarged Share Capital||% of Enlarged Share Capital|
|Debra Leeves||Non-Executive Director||0||50,000||50,000||0.2%|
Expected Timetable of Principal Events
|Announcement of the Fundraising||19 February 2020|
|Posting of the Circular and Form of Proxy||19 February 2020|
|Trade Date in respect of the Placing*||6 March 2020|
|Latest time and date for receipt of CREST proxy instructions and registration of online votes from Shareholders for General Meeting||6 March 2020|
|Latest time and date for receipt of Forms of Proxy||6 March 2020|
|General Meeting||11:00 a.m. 9 March 2020|
|Settlement Date in respect of the Placing*||8:00 a.m. 10 March 2020|
|Expected date for Admission and commencement of dealings in the New Ordinary Shares on AIM||8:00 a.m. 10 March 2020|
*Trade date and settlement are subject to the passing of the resolutions at the General Meeting
Application will be made for the new Ordinary Shares to be admitted to trading on the AIM market (“AIM“) of the London Stock Exchange. Settlement for the new Ordinary Shares and Admission is expected to take place at 8.00 a.m. on 10 March 2020. The Fundraising is conditional, inter alia, upon passing of the Resolutions at the General Meeting, Admission becoming effective and the conditions in the Placing Agreement between the Company and the Joint Brokers being satisfied by 8.00 a.m. on 10 March 2020 (or such later date as the Company and the Joint Brokers agree, being not later than 8.00 a.m. on 24 March 2020) and the Placing Agreement not being terminated in accordance with its terms.
On Admission the Company’s issued share capital will comprise of 31,170,093 Ordinary Shares, with no Ordinary Shares held in treasury. Therefore, the total number of Ordinary Shares in the Company with voting rights will be 31,170,093. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA’s Disclosure Guidance and Transparency Rules.