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Proposed placing and subscription to raise £2 million, proposed grant of options, proposed amendment to Share Option Scheme and notice of General Meeting

Proposed placing and subscription to raise £2 million, proposed grant of options, proposed amendment to Share Option Scheme and notice of General Meeting

Cambridge, 12 August 2019: Feedback plc (AIM: FDBK, "Feedback" or the "Company"), the specialist medical imaging technology company, announces that it has conditionally raised a total of £2 million (before expenses) via a proposed placing by Peterhouse Capital Limited and Stanford Capital Partners Limited, and a subscription of a total of 166,666,667 new ordinary shares in the Company ("New Ordinary Shares"), at an issue price of 1.2 pence per New Ordinary Share (the "Issue Price"), (the "Fundraise"). The Fundraise is subject to, inter alia, the approval of shareholders at a general meeting of the Company.

Fundraise Highlights:

  • The Company has conditionally raised £2 million (before expenses) through the issue of the 166,666,667 New Ordinary Shares.
  • The Placing and the Subscription are subject to, inter alia, shareholder approval at a general meeting of the Company on 29 August 2019. If approved, the New Ordinary Shares are expected to be admitted to on AIM on 30 August 2019.
  • The Placing Price represents a discount of approximately 14.3% to the closing mid-market price of 1.4 pence per Ordinary Share on 9 August 2019.
  • The net proceeds of the Placing and the Subscription will be used:
    • To complete the development of the BleepaTM, the Company's clinical messaging product;
    • To build a Sales/support team to market and onboard users onto the BleepaTM product; and
    • For general working capital
  • The New Ordinary Shares will represent 30.78% of the issued share capital of the Company as enlarged by the Fundraise.

Dr Alastair Riddell, Non-Executive Chairman of Feedback said:

"I am delighted with the support shown by new and existing shareholders for our new product BleepaTM. This is an evolution from Cadran devised and driven by the creativity of our CEO, Tom Oakley, and developed with the assistance of our partners Future Processing. We believe BleepaTM is set to transform the outlook for the Company and could change the way medical images are communicated in everyday clinical practice on mobile devices and laptops."

Proposed Grant of Options and amendment to EMI Option Scheme

The Board believes that it is very important to incentivise key members of the management team.  In conjunction with the Fundraise, the Board therefore intends to grant Tom Oakley, CEO of Feedback, options over new ordinary shares in the Company, representing approximately 2.5 per cent. of the Company's issued share capital as enlarged by the Fundraise. The grant of options will be subject to shareholder approval at the General Meeting and, if approved, will be granted pursuant to the Company's  EMI Option Scheme.

The EMI Option Scheme currently contains a limit on the number of options that can be granted in a 10-year period of 10 per cent. of the issued share capital at the time of grant.  Including the proposed grant of options to Tom Oakley mentioned above, a total of 9.97 per cent. of the Enlarged Share Capital will have been granted under option in the last 10-year period, of which 2.26 per cent. was issued in the period but subsequently lapsed or were exercised.   Accordingly, subject to shareholder approval at the General Meeting, the Board intends to amend its EMI Option Scheme to increase the number of options that can be granted during the 10-year period from 10 per cent. to 12.5 per cent of the Company's issued share capital at the time of the grant.

Notice of General Meeting and Shareholder Circular

The Fundraise is conditional, inter alia, on the approval of shareholders of resolutions to be proposed at a general meeting of the Company to provide authority to the Directors to allot further new ordinary shares otherwise than on a pre-emptive basis.

A General Meeting of the Company will be held at the offices of Peterhouse Capital Limited, 80 Cheapside, London EC2V 6EE 1:00 p.m. on 29 August 2019, to seek this shareholder approval.  A Circular containing a Notice of General Meeting will be posted to shareholders on or around 13 August 2019 and will be available on the Company's website, www.fbkmed.com, shortly thereafter.

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Supplementary information

The above summary should be read in conjunction with the full text of this announcement.

1.   Introduction

The Company is pleased to announce that it has conditionally raised £2 million (before expenses), by way of the proposed placing and the proposed subscription, a total of 166,666,667 New Ordinary Shares at the issue price of 1.2 pence per New Ordinary Share. The net proceeds of the Placing and the Subscription will be used predominantly to initiate the roll out of BleepaTM, the Company's clinical messaging product. As previously announced, Feedback plans to establish a leading role in the medical communication market. BleepaTM, is currently in beta development and will be formally launched at NHS Expo on 4-5 September 2019 in Manchester.

The Placing and the Subscription are subject to, inter alia, the approval of Shareholders at the General Meeting. Peterhouse and Stanford Capital are acting as joint brokers in relation to the Placing

Admission of the New Ordinary Shares is expected to take place at 8:00 a.m. on 30 August 2019, should the Resolutions, further details of which can be found below, be passed at the General Meeting.

2.   Background to and reasons for the Placing and the Subscription

Recent strategic review and trading update

On 10 July 2019, Feedback announced an update on its trading for the year ended 31 May 2019.  Amongst other things, this update reported that Feedback had generated unaudited revenue of £563k which represented an increase of approximately 23 per cent. on the previous financial year (year to 31 May 2018: £458k).

The Company also announced the result of its strategic review of the Cadran portfolio.

Cadran is Feedback's established Picture Archiving and Communications System (PACS) which facilitates the review of medical imaging studies by clinicians. It is a progressive and rigorously tested Class 1 medical device with a longstanding legacy of service at NHS institutions, such as the Royal Papworth Hospital. However, it is currently positioned in a competitive market that shows little opportunity for future growth.

According to BMJ Innovations, 97% of hospital doctors routinely use WhatsApp to communicate about patients. There is an increasing trend for clinicians to use personal devices to discuss patient care and make clinical decisions, as it is more convenient and efficient than traditional methods of clinical communication. Medical images are often shared as part of these chats as photos of computer screens, and do not meet diagnostic clinical standards. This raises a number of concerns with regard to safety of patient data, breaches of GDPR and the ability to make safe clinical decisions without using clinical grade medical images.

By incorporating a dedicated, encrypted messaging function to Feedback's existing Cadran technology, the Directors believe it can become a medical communication device capable of sharing clinical grade medical imaging directly from a hospital PACS to mobile devices, ensuring the safe handling of patient data and facilitating a secure means of communication for clinicians. It is estimated that there are between 10 million and 15 million doctors globally. In the UK, across NHS hospital, community and primary care settings, there are approximately 150,000 doctors in total and over 320,000 nurses and midwives.

Any hospital that uses BleepaTM will own the chat data and the entire chat is intended to be exportable into the electronic patient record upon the patient being discharged.  The Directors believe BleepaTM will be one of a limited number of communication devices capable of displaying medical images and CE marked as a medical device.

Having undertaken a period of market research alongside NHS clinicians, the Company has decided to invest in the product enhancement of Cadran and launch the new product, BleepaTM, at NHS Expo on 4-5 September 2019 in Manchester. It is proposed to market BleepaTM using a SaaS model and charging in the order of £10 per month per user, with a 12-month minimum contract and a 3 month cancellation period.

The Company believes that there may be further opportunities for the use of BleepaTM outside the UK, both within the EU and in non-GDPR markets such as India and China.

As previously announced, the Board will continue its review of the TexRAD product portfolio. The Company intends to issue regular updates to the market on the progress of both the TexRAD review and new product opportunities.

3.   Reasons for the Placing and use of proceeds

Pursuant to the Placing and the Subscription, the Company will receive net proceeds of approximately £1.9 million.  The net Placing and Subscription funds will be used for the following purposes:

  • To complete the development of the BleepaTM product;
  • To build a Sales/support team to market and onboard users onto the BleepaTM product; and
  • For general working capital.

4.   Details of the Placing, the Subscription and Admission

The Company has conditionally raised £2 million (before expenses), representing the issue of 166,666,667 New Ordinary Shares at the Issue Price, by way of the Placing and the Subscription. The Issue Price of 1.2 pence represents a discount of 14.3 per cent. to the closing middle market price of an Ordinary Share on 9 August 2019, being the latest practicable date prior to the announcement of the Placing and the Subscription.

The Placing and the Subscription are conditional, inter alia, upon:

  • the passing of the Resolutions without amendment at the General Meeting;
  • admission of the New Ordinary Shares to trading on AIM becoming effective by not later than 8.00 a.m. on 30 August 2019 (or such later time and/or date (not being later than 31 October 2019) as Peterhouse, Stanford Capital and the Company may agree).

In addition to the above, the Placing and the Subscription are inter-conditional, and the Placing is conditional upon the Placing Agreement (as described in more detail below) becoming unconditional in all respects and not having been terminated in accordance with its terms.

The Placing and the Subscription will result in the issue of a total of 166,666,667 New Ordinary Shares, representing, in aggregate, approximately 30.87 per cent. of the Enlarged Share Capital. Such New Ordinary Shares, when issued and fully paid, will rank pari passu in all respects with the Existing Ordinary Shares and therefore will rank equally for all dividends or other distributions declared, made or paid after the relevant date of Admission.

Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM and, conditional, inter alia, on the approval of Shareholders at the General Meeting, admission of the New Ordinary Shares is expected to occur on 30 August 2019.

It is expected that CREST accounts will be credited on the day of Admission as regards the New Ordinary Shares in uncertificated form and that certificates for those shares to be issued in certificated form will be dispatched by first class post by 13 September 2019.

5.   The Placing

Pursuant to the terms of the Placing Agreement, Peterhouse and Stanford Capital, as agents for the Company, have agreed conditionally to use their reasonable endeavours to procure subscribers for the Placing Shares at the Issue Price. The Placing is not being underwritten.

The obligations of Peterhouse and Stanford Capital under the Placing Agreement are conditional, among other things, upon: (i) the passing of the Resolutions without amendment at the General Meeting; and (ii) Admission becoming effective by not later than 8.00 a.m. on 30 August 2019 (or such later time and/or date (not being later than 31 October2019) as Peterhouse, Stanford Capital and the Company may agree).

The Placing Agreement contains certain warranties and indemnities given by the Company in favour of Peterhouse and Stanford Capital as to certain matters relating to the Company's group and its business. The obligations of Peterhouse and Stanford Capital under the Placing Agreement may be terminated in certain circumstances if there occurs either a breach of any of the warranties or if a materially adverse event occurs at any time prior to Admission. If the conditions in the Placing Agreement are not fulfilled on or before the relevant date in the Placing Agreement or, if applicable, waived, then the relevant placing monies will be returned to subscribers for New Ordinary Shares without interest at their own risk.   

The Placing Agreement also provides for the Company to pay Peterhouse and Stanford Capital commissions and certain other costs and expenses incidental to the Placing and Admission.

6.   The Subscription

The Company has received letters of subscription for, in aggregate, 57,700,000 Subscription Shares.  The Subscription is conditional, among other things, upon: (i) the passing of the Resolutions without amendment at the General Meeting; and (ii) Admission becoming effective by not later than 8.00 a.m. on 30 August 2019 (or such later time and/or date (not being later than 31 October 2019) as the Company and Brokers may agree).

7.   Significant shareholder and Director subscriptions

Details of the subscriptions by Directors and persons discharging managerial responsibilities in the Subscription at the Issue Price and their resultant shareholdings on Admission are as follows:

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The subscriptions by Lindsay Melvin and Prof Rory Shaw in the Subscription are, in aggregate, deemed to be related party transactions pursuant to rule 13 of the AIM Rules for Companies. Accordingly, the Independent Directors consider, having consulted with the Company's nominated adviser, Allenby Capital, that the terms of subscription by Lindsay Melvin and Prof Rory Shaw are fair and reasonable insofar as Shareholders are concerned.

Thomas Charlton, a substantial shareholder of the Company, having an interest in approximately 23.25 per cent. of the Existing Ordinary Shares, is subscribing for 33,200,000 New Ordinary Shares, which represents an aggregate amount of £398,400 at the Issue Price, pursuant to the Subscription. Tom Charlton's participation in the Subscription constitutes a related party transaction under rule 13 of the AIM Rules. Accordingly, the Independent Directors consider, having consulted with the Company's nominated adviser, Allenby Capital, that the terms of subscription for the New Ordinary Shares by Tom Charlton are fair and reasonable insofar as Shareholders are concerned.

8.   Proposed Grant of Options and amendment to EMI Option Scheme

The Board believes that it is very important to incentivise key members of the management team.  In conjunction with the Fundraise, the Board therefore intends to grant Tom Oakley, CEO of Feedback, options over new ordinary shares in the Company ("Options"), representing approximately 2.5 per cent. of the Company's issued share capital as enlarged by the Fundraise. The grant of options will be subject to shareholder approval at the general meeting and, if approved, will be granted pursuant to the Company's Employee Share EMI Option Scheme.

The EMI Option Scheme currently contains a limit on the number of options that can be granted in a 10-year period of 10 per cent. of the issued share capital at the time of grant.  Including the proposed grant of options to Tom Oakley mentioned above, a total of 9.97 per cent. of the Enlarged Share Capital will have been granted under option in the last 10-year period, of which 2.26 per cent. was issued in the period but subsequently lapsed or were exercised.   Accordingly, subject to shareholder approval at the General Meeting, the Board intends to amend its EMI Option Scheme to increase the number of options that can be granted during the 10-year period from 10 per cent. to 12.5 per cent of the Company's issued share capital at the time of the grant.

9.   General Meeting

A notice convening a General Meeting of the Company, to be held at offices of Peterhouse Capital Limited at 80 Cheapside, London EC2V 6EE at 1:00 p.m. on 29 August 2019 will be set out in the Circular. At the General Meeting, the following Resolutions will be proposed:

  1. Resolution numbered 1 will be proposed as an ordinary resolution to grant authority to the Directors to allot the 166,666,667 New Ordinary Shares and up to an aggregate nominal value of £450,000 being equivalent to the nominal value of approximately one-third of the Enlarged Share Capital (there being no current intention to use this further authority); and
  2. Resolution numbered 2 will be proposed as a special resolution to dis-apply statutory pre-emption rights in respect of the allotment of up to 166,666,667 New Ordinary Shares and up to a further aggregate nominal value of £202,500, which is equivalent to the nominal value approximately 15 per cent. of the Enlarged Share Capital (there being no current intention to use this further authority).
  3. Resolution numbered 3 will be proposed as an ordinary resolution to grant authority to the Directors to grant options over ordinary shares equivalent to 2.5 per cent. of the Enlarged Share Capital;
  4. Resolution numbered 4 will be proposed as an ordinary resolution to increase the number of options that can be granted under the EMI Option Scheme in any 10-year period from 10 per cent. to 12.5 per cent. of the issued share capital of the Company.

Resolutions 1, 3 and 4 will be proposed as an ordinary resolutions and Resolution 2 as a special resolution.

10.  Directors' Recommendation

The Board of Feedback considers the Placing and the Subscription 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 Resolutions as they intend to do in respect of their own shareholdings of, in aggregate, 20,433,333 Ordinary Shares (representing approximately 5.47 per cent. of the Company's existing issued share capital).

11.  Total Voting Rights

On Admission, the issued share capital of the Company will consist of 539,949,917 Ordinary Shares with one voting right each. The Company does not hold any ordinary shares in treasury. Therefore, the total number of ordinary shares and voting rights in the Company will be 539,949,917.  With effect from Admission, 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.

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Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them

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About Feedback plc
Feedback plc (AIM: FDBK) is a specialist medical imaging technology company providing innovative software and systems, through its fully-owned trading subsidiary, Feedback Medical Limited. Its products advance the work of radiologists, clinicians and medical researchers by improving workflows and giving unique insights into diseases, particularly cancer. Feedback Medical works with customers globally from headquarters in the internationally renowned scientific hub of Cambridge, UK. Its proprietary technologies are TexRAD®, the quantitative texture analysis tool and Cadran, a picture archiving communication system (PACS). For more information, see www.fbkmed.com/

Issued for and on behalf of Feedback plc by Instinctif Partners.
For more information please contact: feedbackplc@instinctif.com

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