Issue of equity

DDD Group plc is pleased to announce that the Company has entered into agreements to complete a placing and subscription of, in aggregate, 24,175,000 new ordinary shares of 1 pence each (“New Shares”) at a price of 2 pence per share (“Issue Price”) (the “Equity Placing”).

Highlights

  • Equity Placing commitments for £428,000 or 21,400,000 New Shares with institutional and accredited investors arranged by Beaufort Securities Ltd.
  • Subscription agreements for £55,500 or 2,775,000 New Shares with existing holders arranged by the Company
  • The net proceeds (approx. £458,350) to be used to finance business development and licensing activities
    • Licensing activities targeted at recently launched video conferencing and soon-to-be-launched social
      photography apps for tablet, smartphone and PC
    • Planned phased increase in headcount from 17 to 20 staff in line with commercial license and development agreements

Further details of the Equity Placing are set out below.

Commenting on the transaction, Nicholas Brigstocke, Chairman of DDD said:

We are pleased to be able to announce completion of the capital raising which will assist the Company in delivering Android and iOS versions of our TriDef SmartCam products to the video conferencing and social photography markets.


Background to the Fundraising and Proposed Use of Proceeds

The Company has developed a range of intelligent video solutions that are based on patent-protected techniques. As announced in July 2014, the Company sought to complete a fundraising of up to £2.1 million to undertake its turnaround plan. This funding plan has been completed in stages based on achievement of commercial development milestones.

As part of the Company’s turnaround plan, a range of new products have now been developed that are intended for use in larger 2D markets including video conferencing, social photography and improved social media engagement for PCs, smartphones and tablets. These new products supplement the existing licensing activities in the stereoscopic 3D consumer market. The first of these products, TriDef® SmartCam was launched in late May 2015 with the first products targeting the emerging gamecasting market launched with SplitmediaLabs, an affiliate, in August 2015.

The Company will continue to service existing 3D technology licensees and is working to secure additional patent license agreements through Dominion Harbor, its IP licensing advisor, for its 2D to 3D conversion patents in the consumer and professional 2D to 3D conversion services markets. Through June 30th 2015, over 53.5 million products have been shipped including the Company’s patent protected 2D to 3D conversion technologies.

The Company expects that a successful conclusion of this financing transaction will provide sufficient working capital to complete the launch of the new social photography products into the mobile market. Specifically, the Directors plan to utilise the proceeds to meet the growth and working capital needs from currently identified opportunities during the current year, including a phased increase in headcount from 17 to 20 staff as new licensing and/or development agreements arise. The additional staff will focus primarily on software and application development and technical sales and will be based in the Company’s existing operations in the US and Australia. The balance of the Placing proceeds will
provide working capital for as-yet-unidentified opportunities in a rapidly evolving market as well as supporting ad-hoc costs incurred through the patent licensing program being managed by the Company’s patent advisor.

The Board will continue to review additional financing opportunities available to the Company as necessary including entering into strategic partnerships or additional financing on available terms. There can be no certainty that completion of additional financing will be achievable however and further announcements will be made in due course and as appropriate.

Details of the Equity Placing and Subscription

The Company will raise £483,500 (before expenses) by way of a placing of 24,175,000 New Shares arranged with Beaufort Securities Ltd at an issue price of 2 pence per share. The New Shares have been placed with a combination of institutional investors, accredited investors, and certain existing Shareholders conditional, inter alia, on the admission of the New Shares to the AIM market of the London Stock Exchange (the “Admission”).

The Placing Price represents a discount of approximately 27.3 per cent. to the closing mid-market share price of 2.75 pence per Ordinary Share on 21 September 2015 (the latest practicable date prior to the date of this announcement). The Placing Shares will represent approximately 14.7 per cent. of the issued share capital of the Company prior to the issue of the Placing Shares.

The New Shares will be issued credited as fully paid and will rank pari passu in all respects with the existing 1p ordinary shares in the Company (“Ordinary Shares”) including the right to receive and retain all dividends and other distributions declared, paid or made in respect of the Ordinary Shares after the Admission.

Three of the Directors of DDD or their affiliates have agreed to subscribe for New Shares. The nominal amount of the New Shares that they have agreed to acquire are as follows: Christopher Yewdall £10,000; Victoria Stull £8,000 and Paul Kristensen £12,500 (the “Transaction”).

The Transaction is a related party transaction for the purpose of AIM Rule 13, as certain Directors are related parties within the meaning of the AIM Rules. The Directors of the Company who are independent to this Transaction, Nicholas Brigstocke, Dr. Sanji Arisawa and Hans Snook, consider, having consulted with the Company’s nominated adviser, that the terms of the Transaction are fair and reasonable insofar as the Shareholders are concerned.

Application will be made for the Placing Shares to be admitted to trading on the AIM market (“AIM”) of London Stock Exchange plc (the “London Stock Exchange”). Settlement for the Placing Shares and Admission is expected to take place at 8.00 a.m. on 25 September 2015.

Placing Agreement

On 22 September 2015, DDD entered into a placing agreement (the “Placing Agreement”) pursuant to which Beaufort Securities Ltd. agreed conditionally, as agent for the Company, to use its reasonable endeavours to procure subscribers for the New Shares at the Issue Price.

The Placing Agreement contains warranties and indemnities from DDD in favour of Beaufort Securities Ltd. which are customary for this type of agreement. Under the Placing Agreement, DDD has agreed to pay Beaufort Securities Ltd. commission on the aggregate value of the New Shares placed and subscribed for at the Issue Price and the costs and expenses of the Placing together with any applicable VAT. Beaufort Securities Ltd will also receive 250,000 new ordinary shares of the Company (£5,000 value) for the transaction. The Placing Agreement contains provisions entitling Beaufort Securities Ltd to terminate the Placing Agreement at any time prior to Admission in certain circumstances including, amongst other things, in the event of a material breach of the warranties set out in the Placing Agreement.

APPENDIX I: Additional Disclosures

In accordance with the requirements of the Disclosure and Transparency Rules, it is expected that DDD’s issued ordinary share capital as at 25 September 2015 will consist of 178,188,572 Ordinary Shares, with voting rights based on the current Equity Placing commitments and will then increase to 190,588,572 on 6 October 2015 when the final payments are received. DDD does not hold any Ordinary Shares in Treasury; therefore, it is expected that the total number of voting rights in DDD will be as indicated on the dates above. It is expected that the above figures may be used by Shareholders 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, DDD under the Financial Conduct Authority’s Disclosure and Transparency
Rules.

The table below sets out the cumulative effect of the Equity Placing on those Directors and greater than 3% shareholders who have reported their expected holdings to the Company:

Significant and Substantial
Shareholders and Directors
Existing
shareholding
% interest in
the share
capital of
DDD prior to
the Placing
Number of
New Shares
acquired
Resultant holding
following the Placing
and subscription
% interest in
the enlarged
share capital
of DDD
following the
Placing and
Subscription
Mr. Robert Morton  13,0000,000  7.8%  5,000,000  18,000,000  9.4%
Edale Capital  5,170,000 3.1% 1,250,000 6,420,000 3.4%
Mr. Christopher Yewdall, CEO* 2,681,808 1.6% 500,000 3,181,808 1.7%
Mr. Paul Kristensen* 455,204 0.3% 625,000 1,080,204 0.6%
Miss Victoria Stull, CFO* 251,000 0.2% 400,000 651,000 0.3%

*Director of the Company