Proposed Firm Placing and Open Offer

Posted: 20/06/2013

THIS ANNOUNCEMENT IS RESTRICTED AND IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, SOUTH AFRICA, THE REPUBLIC OF IRELAND OR AUSTRALIA OR NEW ZEALAND OR ANY OTHER STATE OR JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

Forbidden Technologies plc (AIM:FBT), the AIM-quoted owner and developer of the market leading Cloud video platform, FORscene, announces a firm placing and open offer to raise up to GBP9.0 million (before expenses) to provide capital for the Companys expansion and to cement the Companys position at the forefront of global video editing technology.

The Company announces a conditional Firm Placing of 40,000,000 new Ordinary Shares at 20 pence each to raise gross funds of GBP8.0 million by a means of a placing by Cenkos Securities which was significantly oversubscribed. In addition, in order to provide Qualifying Shareholders with an opportunity to subscribe for new Ordinary Shares at the same price, the Company announces a proposed Open Offer to raise up to a further GBP1.0 million (before expenses).

Highlights

• Proceeds – Up to GBP9.0 million (before expenses) will be raised by way of a conditional Firm Placing with certain existing and new investors and an Open Offer to Qualifying Shareholders, both at a price of 20 pence per Ordinary Share.
• Use of Funds – Funds will be used to expand upon Forbiddens marketing of its technological leading platform. In addition, these funds will aid the Company to support distributors in providing after-sales service to end customers and to provide additional working capital as the business itself continues to develop new customer relationships. The Company also intends to make new appointments that will strengthen the senior management team.
• Open Offer – Up to GBP1.0 million (before expenses) will be raised from an Open Offer at the Issue Price (being 20 pence) (representing a discount of 20 per cent. to the closing middle market price of 25 pence on 19 June 2013). Qualifying Shareholders will be provided with a basic entitlement of 1 new Ordinary Share for every 5 existing Ordinary Shares. In addition, an Excess Application Facility will be made available.
• Qualifying Shareholders – Any Shareholders on the register of members at 5pm on 18 June 2013 excluding any Overseas Shareholders.
• Notice of GM – Firm Placing and Open Offer subject to approval of Shareholders at a General Meeting to be held on Monday 15 July 2013.
• Admission – Admission of the First Placing Shares and Open Offer Shares expected on 16 July 2013 and Admission of the Second Placing Shares expected on 17 July 2013.

Stephen Streater, Chief Executive Office of the Company said:

“I am delighted that we have raised GBP8 million through this oversubscribed placing, which has included support from many new investors. I am glad to be providing existing Qualifying Shareholders with the opportunity to participate through the Open Offer at the same price, enabling us to raise up to a further GBP1 million. I believe that this fund raising transforms the opportunities available to the Company by providing Forbidden with a much increased pool of funds from which to invest in marketing and development. This also proves that technology companies have access to capital in the UK and that AIM is serving its purpose.

I look forward to the next phase of the Companys growth with great enthusiasm.”

For more information, please visit www.forbidden.co.uk or contact:

Forbidden Technologies plc
Stephen Streater, CEO
Tel: +44 (0)20 8879 7245

Cenkos Securities plc, Nominated Adviser and Broker
Adrian Hargrave, Corporate Finance
Alex Aylen, Sales
Tel: +44 (0)20 7397 8900

Bishopsgate Communications
Nick Rome / Sam Allen / Matthew Low
Tel: +44 (0)20 7562 3350
forbidden@bishopsgatecommunications.com

Notes for editors

About Forbidden Technologies

Forbidden Technologies plc (AIM: FBT, www.forbidden.co.uk) floated in February 2000.

The Company develops and markets a powerful cloud video platform, FORscene, which is used by broadcasters, in professional web video, in education and by consumers. FORscene is one of the worlds most advanced browser-based and mobile applications.

Introduction

Forbidden has announced a conditional Firm Placing of 40,000,000 new Ordinary Shares at 20 pence per share each to raise GBP8.0 million (before expenses) by means of a placing by Cenkos Securities.

In addition, in order to provide Qualifying Shareholders with an opportunity to participate in the proposed issue of new Ordinary Shares at the Issue Price, Qualifying Shareholders with be entitled to subscribe for an aggregate of 5,000,000 new Ordinary Shares, pursuant to the terms of the Open Offer to raise up to an additional GBP1.0 million (before expenses). The Open Offer provides Qualifying Shareholders with an opportunity to participate in the proposed issue of the Open Offer Shares on a pre-emptive basis whilst providing the Company with additional capital to invest in its business.

Accordingly, assuming that the Open Offer is subscribed in full, the Company will raise an aggregate of GBP9.0 million (before expenses) by the issue of 45,000,000 new Ordinary Shares, of which GBP8.0 million (before expenses) will be raised from the Firm Placing, and GBP1.0 million (before expenses) will be raised under the Open Offer.

The Firm Placing and Open Offer are conditional, amongst other things, on the passing of the Resolutions by Shareholders at the General Meeting. If the Resolutions are passed and assuming receipt of HMRC Assurances in relation to the First Placing Shares, the new Ordinary Shares relating to the Firm Placing and Open Offer will be allotted (in each case subject to their respective Admissions) shortly after the General Meeting.

Reasons for the Firm Placing and Open Offer and Use of Proceeds

Forbidden has been a publicly quoted company since 2000, focusing on the development and marketing of its cloud video platform, FORscene. During this time, FORscene has been developed into one of the worlds most advanced browser-based and mobile applications for video editing and is sold through various channels to professional users and consumers. Over the last two years the Company has entered into significant contracts with third parties to use FORscene, most notably for the Summer Olympics in 2012, as well as recent distribution agreements with Atos, EVS, deltatre and Key Code Media inc for the use of FORscene in a range of marketplaces and geographies. The Board believes that these initial contracts demonstrate the quality of the Companys technology and the opportunity to benefit from its commercialisation on a wider scale. This belief is further reinforced by trends in the marketplace that have led to professional users becoming interested in cloud based solutions that will reduce the cost of their workflows whilst improving the timeliness of delivery and without impacting the quality of production. In order to benefit from this opportunity, the Board believes that the Company requires additional capital to market Forbiddens technology, to support distributors in providing after-sales service to end customers and to provide additional working capital. In addition, the Company intends to make new appointments that will strengthen the senior management team and assist the Company in the development of relationships with Tier One market participants. A strong balance sheet will assist Forbidden in demonstrating that it is a credible partner to the Tier One market participants.

Although the proceeds from the Firm Placing will be sufficient for the Company in the short and medium term, the Board believes that Shareholders should also have the opportunity to participate in the Fundraising in order to benefit from the Issue Price discount and to reduce dilution of their interests in the Company. Therefore, the Company is proposing to raise up to GBP1 million (before expenses) with Qualifying Shareholders entitled to apply for Open Offer Shares in excess of their Open Offer Entitlement. In order to maximise the Open Offer Entitlements of other Shareholders, Stephen Streater, the Companys Chief Executive Officer and largest shareholder, does not intend to subscribe for Open Offer Shares but reserves the right to do so in the event of a shortfall of subscriptions under the Open Offer.

Current Trading and Prospects

On 25 April 2013, the Company stated that sales in the first quarter were significantly ahead of the same period in 2012. In addition to this, Forbidden has entered into various agreements with distributors which it expects will result in additional new end-users for FORscene in the second half of 2013 and beyond. The Company remains in active negotiations with other parties to integrate FORscene with their solutions and the Board remains hopeful that it will be in a position to announce new agreements for the Companys technology in the second half of 2013.

Principal Terms of the Firm Placing

The Company has conditionally raised GBP8.0 million (before expenses) by the conditional Firm Placing of 40,000,000 New Ordinary Shares at the Issue Price to the Firm Placees.

In connection with the Firm Placing and Open Offer, the Company and Cenkos Securities have entered into a placing and open offer agreement, pursuant to which, subject to certain conditions, Cenkos Securities has agreed to use its reasonable endeavours to procure subscribers for the Placing Shares at the Issue Price and to act as agent in relation to the Open Offer. The Company has given Cenkos Securities customary warranties and indemnities relating to the Company and the Firm Placing and Open Offer. The Firm Placing and Open Offer are not underwritten.

So that certain investors are able to take advantage of VCT/EIS tax treatment, the Firm Placing will comprise two tranches of First Placing Shares and Second Placing Shares respectively, with the Open Offer shares being included in the First Admission.

The Firm Placing is conditional, inter alia, upon:

1. the passing of all of the Resolutions;
2. the Firm Placing and Open Offer Agreement becoming or being declared unconditional in all respects and not having been terminated in accordance with its terms prior to the First Admission and Second Admission (as the case may be); and
3. for the First Placing Shares, First Admission becoming effective by no later than 8.00 a.m. on 16 July 2013 and, for the Second Placing Shares, Second Admission becoming effective by no later than 8.00 a.m. on 17 July 2013 or such later time and/or date (being no later than 8.00 a.m. on 14 August 2013) as Cenkos Securities and the Company may agree.

If any of the conditions are not satisfied or where appropriate, waived, the Firm Placing Shares will not be issued and all monies received from the Firm Placees will be returned to them (at the Firm Placees risk and without interest) as soon as possible thereafter.

The Firm Placing Shares are not subject to clawback and are not part of or subject to any condition related to the Open Offer.

The Firm Placing Shares (and the Open Offer Shares) will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

Application will be made to the London Stock Exchange for the Admission of the Firm Placing Shares to trading on AIM. It is expected that First Admission will occur and that dealings will commence at 8.00 a.m. on 16 July 2013 at which time it is also expected that the First Placing Shares will be enabled for settlement in CREST. It is expected that Second Admission will occur and that dealings will commence at 8.00 a.m. on 17 July 2013 at which time it is also expected that the Second Placing Shares will be enabled for settlement in CREST.

Principal Terms of the Open Offer

The Terms of the Open Offer are set out in full in a Circular, which is to be sent to all Qualifying Shareholders, and are summarised below.

A total of 5,000,000 new Ordinary Shares will be offered to Qualifying Shareholders for subscription pursuant to the Open Offer at the Issue Price, payable in full on acceptance. Any Open Offer Shares not subscribed for by Qualifying Shareholders will be available to Qualifying Shareholders under the Excess Application Facility. The balance of any Open Offer Shares not subscribed for under the Excess Application Facility will not be available to Firm Placees under the Firm Placing.

Qualifying Shareholders may apply for Open Offer Shares under the Open Offer at the Issue Price on the following basis:

1 Open Offer Share for every 5 Existing Ordinary Shares

registered in their name on the Record Date. Entitlements of Qualifying Shareholders will be rounded down to the nearest whole number of Open Offer Shares. Fractional entitlements which would otherwise arise will not be issued to the Qualifying Shareholders but will be made available under the Excess Application Facility. The Excess Application Facility enables Qualifying Shareholders to apply for any number of Excess Shares in excess of their Open Offer Entitlement. Not all Shareholders will be Qualifying Shareholders. Shareholders who are located in, or are citizens of, or have a registered office in certain overseas jurisdictions will not qualify to participate in the Open Offer.

Valid applications by Qualifying Shareholders will be satisfied in full up to their Open Offer Entitlements as shown on the Application Form for certificated Shareholders. Applicants will be entitled to apply for less or more than their entitlements under the Open Offer but the Company cannot guarantee that any application for Excess Shares under the Excess Application Facility will be satisfied as this will depend in part on the extent to which other Qualifying Shareholders apply for less than or more than their own Open Offer Entitlements. The Excess Shares will only be available to those Shareholders who take up all of their basic entitlements. The Company may satisfy valid applications for Excess Shares of applicants in whole or in part but reserves the right not to satisfy any excess above any Open Offer Entitlement. The Board may scale back applications made in excess of Open Offer Entitlements on such basis as it reasonably considers to be appropriate.

Application has been made for the Open Offer Entitlements to be admitted to CREST. It is expected that such Open Offer Entitlements will be credited to CREST on 20 June 2013. The Open Offer Entitlements will be enabled for settlement in CREST until 11.00 a.m. on 11 July 2013. Applications through the CREST system may only be made by the Qualifying CREST Shareholder originally entitled or by a person entitled by virtue of bona fide market claims. The Open Offer Shares must be paid in full on application. The latest time and date for receipt of completed Application Forms or CREST application and payment in respect of the Open Offer is 11.00 a.m. on 11 July 2013. The Open Offer is not being made to certain Overseas Shareholders.

Qualifying Shareholders should note that the Open Offer is not a rights issue and therefore the Open Offer Shares which are not applied for by Qualifying Shareholders will not be sold in the market for the benefit of the Qualifying Shareholders who do not apply under the Open Offer. The Application Form is not a document of title and cannot be traded or otherwise transferred.

Further details of the Open Offer and the terms and conditions on which it is being made, including the procedure for application and payment, will be set out in the Circular and in the accompanying Application Form.

The Open Offer is conditional on the Firm Placing becoming or being declared unconditional in all respects and not being terminated before First Admission. The principal conditions to the Firm Placing are:

1. the passing of all of the Resolutions at the General Meeting;
2. the Firm Placing and Open Offer Agreement having become unconditional; and
3. in respect of the First Placing Shares, First Admission becoming effective by no later than 8.00 a.m. on 16 July 2013 or such later date (being no later than 8.00 a.m. on 13 August 2013) as Cenkos Securities and the Company may agree.

Accordingly, if these conditions are not satisfied or waived (where capable of waiver), the Open Offer will not proceed and the Open Offer Shares will not be issued and all monies received by Capita Registrars will be returned to the applicants (at the applicants risk and without interest) as soon as possible thereafter. Any Open Offer Entitlements admitted to CREST will thereafter be disabled.

The Open Offer Shares (and the Firm Placing Shares) will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

Application will be made to the London Stock Exchange for the admission of the Open Offer Shares which are subscribed for to trading on AIM. It is expected that Open Offer Admission will occur and that dealings will commence at 8.00 a.m. on 16 July 2013 at which time it is also expected that the Open Offer Shares will be enabled for settlement in CREST.

General Meeting

The Directors do not currently have authority to allot all of the new Ordinary Shares and, accordingly, the Board is seeking the approval of Shareholders to allot the new Ordinary Shares at the General Meeting.

The Circular will include a notice convening the General Meeting, which is to be held at Tuition House, 27-37 St Georges Rd, Wimbledon SW19 4EU at 2.30 p.m. on 15 July 2013. At the General Meeting, the following Resolutions will be proposed:

• Resolution 1, which is a special resolution to increase the Companys authorised share capital to GBP1,600,000;
• Resolution 2, which is conditional on the passing of Resolution 1 and is an ordinary resolution to authorise the Directors to allot relevant securities up to an aggregate nominal amount of GBP360,000, being equal to 45,000,000 new Ordinary Shares (i.e. the maximum number of new Ordinary Shares available under the Firm Placing and Open Offer); and
• Resolution 3, which is conditional on the passing of Resolutions 1 and 2 and is a special resolution to authorise the Directors to issue and allot 45,000,000 new Ordinary Shares pursuant to the Firm Placing and Open Offer on a non-pre-emptive basis.

The authorities to be granted pursuant to the Resolutions 2 and 3 shall expire on whichever is the earlier of the conclusion of the Annual General Meeting of the Company to be held in 2014 or the date falling 15 months from the date of the passing of the Resolutions (unless renewed, varied or revoked by the Company prior to or on that date) and shall be in addition to the Directors authorities to allot relevant securities and dis-apply statutory pre-emption rights granted at the Companys Annual General Meeting held earlier this year.

Action to be taken

In respect of the General Meeting

A Form of Proxy for use by Shareholders at the General Meeting will be sent to Shareholders together with the Circular. Whether or not a shareholder intends to be present at the General Meeting, he/she is requested to complete and return the Form of Proxy in accordance with the instructions printed thereon. To be valid, completed Forms of Proxy must be received by Capita Registrars at PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU not later than 2.30 p.m. on 13 July 2013, being 48 hours before the time appointed for holding the General Meeting. Completion of a Form of Proxy will not preclude Shareholders from attending the meeting and voting in person if they so choose.

In respect of the Open Offer

Qualifying non-CREST Shareholders wishing to apply for Open Offer Shares or the Excess Shares must complete a non-CREST Application Form which will be enclosed with the Circular and return it with the appropriate payment to Capita Registrars at Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, so as to arrive no later than 11.00 a.m. on 11 July 2013.

Any Shareholder not wishing to apply for any Open Offer Shares under the Open Offer should not complete or return the Application Form. Shareholders are nevertheless requested to complete and return the Form of Proxy.

No Application Form will be sent to Qualifying CREST Shareholders. Qualifying CREST Shareholders will have Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to their stock accounts in CREST.

Qualifying CREST Shareholders who are CREST sponsored members should refer to their CREST sponsors regarding the action to be taken in connection with this document and the Open Offer.

Undertakings

Forbidden has received irrevocable undertakings to vote in favour of the Resolutions from Directors and certain other Shareholders who hold, in aggregate, more than 75 per cent. of the Existing Ordinary Shares.

Recommendation

The Directors believe that the Firm Placing and Open Offer and the passing of the Resolutions are in the best interests of the Company and Shareholders, taken as a whole. The Directors unanimously recommend the Shareholders to vote in favour of the Resolutions.

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