Announcement PDF RNS Number : 5571Q SEEEN PLC 31 May 2024 THIS ANNOUNCEMENT, INCLUDING ITS APPENDICES AND THE INFORMATION HEREIN, IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, RUSSIA, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN, NEW ZEALAND, SINGAPORE OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018) ("UK MAR"). IN ADDITION, MARKET SOUNDINGS (AS DEFINED IN UK MAR) WERE TAKEN IN RESPECT OF CERTAIN OF THE MATTERS CONTAINED WITHIN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF INSIDE INFORMATION (AS DEFINED UNDER UK MAR). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THOSE PERSONS THAT RECEIVED INSIDE INFORMATION IN A MARKET SOUNDING ARE NO LONGER IN POSSESSION OF SUCH INSIDE INFORMATION, WHICH IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN. 31 May 2024 SEEEN plc ("SEEEN", the "Group" or the "Company") Placing and Subscription to raise approximately £763,000 Appointment of Joint Broker Subscription for up to £325,000 of Conditional Convertible Loan Notes and related party transaction and Notice of General Meeting SEEEN plc (AIM: SEEN), the media and technology platform that delivers Key Video Moments to drive increased views and revenues across video content, is pleased to announce a conditional Placing and Subscription of a total of 25,433,326 new Ordinary Shares to raise a total of approximately £763,000 at an Issue Price of 3 p per new Ordinary Share, to be undertaken in two tranches. Capital Plus and Dowgate Capital are acting as Joint Brokers in connection with the Placing, which includes existing institutional and other investors. The Issue Price represents a discount of 7.7 per cent. to the closing mid-market price of 3.25 p per ordinary share on 30 May 2024, being the last practicable date prior to the announcement of the Placing. The Fundraising builds on customer momentum during 2024 and, in particular, additional business won from existing and new customers since the start of 2Q 2024, worth in excess of US$500,000 in annualised revenues for the Group. It is intended that the total net proceeds of the Fundraise, in conjunction with SEEEN's existing available cash, will primarily be used to seek to accelerate sales of the Group's technology products and to further develop its intellectual property (IP) to strengthen its position in key vertical markets and drive cross-selling. This includes developing solutions for the training and skills market, building on initial implementations with American Leak Detection and integrations with the Salesforce Learning Management System. The Directors believe that this represents a large and growing market, where the Group's video AI will provide a differentiator for faster training. Fuller details of the proposed use of proceeds for the Placing and Subscription are set out below. All Placees and Subscribers in the Fundraise, other than the Directors and the Proposed Director, will receive one Warrant for every one Ordinary Share subscribed for pursuant to the Fundraise, with each Warrant entitling the holder to acquire one new Ordinary Share at a price of 4.5 pence at any time in the 24-month period starting on the day following the date of the General meeting. The exercise of the Warrants will be subject to passing of the Fundraise Resolutions at the General Meeting. The Company also announces that it has conditionally raised up to £315,250 (before expenses) by way of Conditional Convertible Loan Notes ("Conditional CLNs"), conditionally subscribed for by Gresham House Asset Management Limited. The Conditional CLNs shall give Gresham House the ability, subject to certain conditions, to subscribe for up to a face value of £325,000 of fixed rate convertible loan notes at a cost of £315,250 provided that the conditions, including, inter alia, approval by the Company's shareholders of resolutions to allow the Company to allot any shares upon conversion of the Conditional CLNs and the approval of the final terms of the Conditional CLNs by the Gresham House investment committee, are satisfied on or before 29 November 2024. No offer or invitation is being made to Shareholders more generally to purchase, acquire or subscribe for any of the Conditional CLNs. It is expected that the Conditional CLNs shall have a conversion price of three pence per Ordinary Share and shall accrue interest at ten per cent. per annum. Fuller details on the Conditional CLNs can be found below. The Company also announces that, further to the Company's announcement on 1 February 2024, Michael Zigman is intended to be appointed to the Board as an Independent Non-Executive Director shortly following Second Admission. Adrian Hargrave, CEO of SEEEN plc, commented: "I am grateful to our existing and new investors who have supported the Group since its admission to AIM and this fundraise. We are committed to capitalising on the customer momentum that we have generated since our last fundraising in December 2022, especially since the release of CreatorSuite 2.0 in the middle of 2023. Today's announcement that we have secured in excess of $500,000 in additional annualised revenue for the Group this quarter reinforces our continued momentum and we anticipate further growth in our existing video commerce, SEO and social media markets. In addition, we are also launching a new product for skills and training, which we have been developing within American Leak Detection's Salesforce Learning Management System. We are excited about the growth opportunity in this market as companies seek more efficient methods to re-skill and train staff. We will continue to execute against our plan following this fundraising, including closing deals in our sales pipeline and entering into new re-selling agreements as we expect to move to cash flow breakeven during 2024 and deliver a valuable video technology platform for all our shareholders." Background to and reasons for the Fundraise SEEEN is a media and technology platform company with proprietary Artificial Intelligence (AI) technology which delivers 'Key Video Moments' to drive increased views and revenues across video content. The Group's technology takes existing video and uses AI to create new, short form video assets, in the form of Key Video Moments. SEEEN's clients monetise these Key Video Moments through a combination of video commerce, increased Search Engine Optimisation (SEO) traffic, driving more advertising sales, increased social media content production and, going forwards, improving video-based training for customer staff. SEEEN's revenue model typically comprises a combination of recurring fees and performance fees. Building on the growth in its technology business during 2023, SEEEN currently has over 40 technology-enabled customers and has a sales pipeline of over 100 opportunities in US and UK for both technology sales and YouTube Creator Services Partner business (CSP). The Directors consider that this pipeline, the Group's current cash position, plus the net proceeds of the Fundraise to accelerate the pace at which the Group will win customers across its different target markets, provides the pathway to drive the Company to cash flow breakeven during 2024. During 2024, the Company has delivered continuing customer momentum, with contracts for sports organisations such as the London Broncos and the A7FL. SEEEN has also made initial sales via re-sellers in the investor relations sector, which provides a template for such future partnerships. Since the start of 2Q 2024 in particular, SEEEN has won additional business from existing and new customers worth in excess of US$500,000 in annualised revenues for the Group. This includes approximately US$400,000 for its CSP business, demonstrating its return to growth, as well as US$100,000 for the Group's technology products from a combination of sales to new clients and cross-selling to existing clients. As part of its recent focus on the training and skills development sector, the Group has delivered initial implementations with American Leak Detection, a subsidiary of Water Intelligence plc, which is a 6.4 per cent. shareholder in the Company. This includes a new Digital Services Marketing Agreement to educate via Key Video Moments and implement Google Business Profiles and Reviews (GBP Services) at each of 40 ALD corporate owned locations, as well as a framework for managing Pay Per Click campaigns (PPC Services), leveraging the success of its previous PPC campaigns for ALD. The initial contract for GBP Services is worth approximately US$70,000 per annum in revenues to SEEEN, although this could increase further should ALD use SEEEN for PPC Services. The Digital Services Marketing Agreement is also viewed as an opportunity to provide equivalent services to ALD's network of franchisees which operate out of a further 80 locations. In addition, the Group has also completed a 'Proof of Concept' for American Leak Detection, integrating its Key Video Moments into the Salesforce Learning Management System for faster on the job training and to deliver increased first-time fixes by technicians at job sites. The Directors believe that it is in the best interests of the Group to build on the momentum from its 2024 wins and, more particularly, the wins since the start of 2Q 2024 by continuing to invest in the sales team and also completing the integration with the Salesforce Learning Management System. By doing so, the Directors believe that the Group will be able to continue the growth of its direct technology-enabled product sales, and enter into new re-seller agreements within the Group's current sizeable and growing target markets of video commerce and SEO, as well as leveraging the Salesforce Learning Management System to re-sell for training and skills. The Directors consider that the Company's strategy from now to 2025 will involve: · a focus on accelerating its technology sales, including via the use of customer case studies · growing its CSP business, focusing on publishers, sports clubs and leagues, as well as creators who are expected to benefit from SEEEN's technology · launching a Key Video Moments offering focused on training and skills development use cases In terms of ongoing KPIs, the Company is targeting overall gross margins in the region of 50% within 18 months, with technology margins at 90% and CSP margins expected to be 15-20%. The Company is targeting monthly client wins of varying contract sizes, aimed at delivering a mix of software as a service (SaaS) revenue and performance fees. Other than the development activity in respect of training and skills use cases to be funded via the net proceeds of the Fundraise, as described below, the Directors believe that the Company's development spend should be largely completed, unless fully funded by a customer project. Proposed use of Proceeds It is intended that the net proceeds of the Fundraise, in conjunction with SEEEN's existing available cash, will be used primarily to accelerate sales of the Group's technology products and to further develop its intellectual property (IP) to strengthen its position in key vertical markets and drive cross-selling, through: · Reinforcing Established Market Presence Ø Drive integrations for specific re-seller opportunities for current video commerce and CSP business, as well as the Group's new focus on training and skills Ø Additional sales and marketing, to accelerate market capture with a core focus on the US sports and publishing markets · Complete product development for training and skills development markets Ø Full integration into Salesforce's Learning Management System, allowing for a more straightforward re-sales opportunity Ø Develop application programming interface (APIs) and plug-ins for other Learning Management System offerings · IP creation Ø Deepening intellectual property for Key Video Moments, including for the training and skills development market and specific vertical markets · Additional balance sheet flexibility Ø Opportunistic product development as requested by customers Ø Stronger balance sheet for larger customer and re-seller opportunities Ø General working capital Director and connected party participation in the Fundraise As part of the Fundraise, the Directors have agreed to subscribe for an aggregate of 4,599,999 Fundraise Shares, as part of the Subscription at the Issue Price to raise £138,000 (conditional on the passing of the Fundraise Resolutions). Name Subscription Shares* Subscription Amount (£) Total Shares held % of Enlarged after Fundraising Share Capital Patrick DeSouza 2,000,000 £60,000 7,426,164 6.25% Adrian Hargrave 933,333 £28,000 1,985,747 1.67% David Anton 1,333,333 £40,000 1,333,333 1.12% Mark Williams 333,333 £10,000 333,333 0.28% * No Participating Directors will be issued with any Warrants as part of the Fundraising, unlike other participants in the Fundraising In addition, the Proposed Director Michael Zigman has agreed to subscribe for an aggregate of 1,166,666 Fundraise Shares as part of the Subscription at the Issue Price to raise £35,000 (conditional on the passing of the Fundraise Resolutions). The Proposed Director will not be issued with Warrants as part of the Fundraising, unlike other participants in the Fundraising. Appointment of Non-Executive Director Further to the Company's announcement on 1 February 2024, Michael Zigman is intended to be appointed to the Board as an Independent Non-Executive Director shortly following Second Admission. A further announcement will be made in relation to this in due course. Appointment of Joint Broker The Company has today appointed Capital Plus Partners Limited as joint broker to the Company with immediate effect. Dowgate Capital continues to act as the Company's financial adviser and joint broker and Allenby Capital continues to act as AIM nominated adviser and joint broker. Details of the Placing and Subscription The Fundraise comprises a Placing of 18,666,662 new Ordinary Shares and a Subscription for 6,766,664 new Ordinary Shares (in each case, together with the associated Warrants other than the participation by the Directors and the Proposed Director, none of whom will receive any Warrants). Of this, approximately £180,000 has been raised using the authority granted to the Board at the annual general meeting held on 26 July 2023, via the First Fundraise which comprises the proposed issue of 6,000,004 First Fundraise Shares at the Issue Price on a non-preemptive basis. Approximately a further £583,000 has been raised via the Second Fundraise, which comprises the proposed issue of 19,433,322 Second Fundraise Shares at the Issue Price, which is conditional, inter alia, on obtaining approval from Shareholders of the Fundraise Resolutions at the General Meeting, to provide sufficient authority to enable allotment of the Second Fundraise Shares and disapply statutory pre-emption rights which would otherwise apply to the allotment of the Second Fundraise Shares. The First Fundraise is not conditional on the Second Fundraise. Therefore, should the Fundraise Resolutions at the General Meeting not be passed, then the Second Fundraise will not proceed. The First Fundraise is not conditional on the Second Fundraise. Therefore, should the Fundraise Resolutions not be passed at the General Meeting, the Second Fundraise will not proceed. The First Fundraise will not be affected by the Second Fundraise failing to complete for any reason. If either of the Fundraise Resolutions to be proposed at the General Meeting is not approved by Shareholders, the Second Fundraise Shares will not be able to be allotted and any Warrants which have been issued will be incapable of being exercised. Consequently, the Company will receive significantly less money than anticipated from the Fundraise. In such circumstances, in the absence of the availability of any alternative funding solutions, the Company will have to adapt its business plans, strategy and cost base accordingly. This will both prevent the Group from completing its planned integrations for training and skills and require the Group to reduce its planned spending on sales and marketing to continue to accelerate its market capture. In such circumstances, the Group would therefore prioritise servicing and maintaining the Group's current customer base. Accordingly, the Directors consider that it is very important that Shareholders vote in favour of the Fundraise Resolutions in order that Second Admission can proceed. Summary of the Conditional CLNs Gresham House and the Company have entered into a conditional subscription agreement for the acquisition by Gresham House of the Conditional CLNs. The conditional subscription agreement provides that, subject to the satisfaction of various conditions, Gresham House may subscribe for the total amount of the Conditional CLNs (being a face value of £325,000 at a cost of £315,250). The conditions to subscription include: (a) resolutions to allot the conversion shares pursuant to the Conditional CLNs being passed without amendment (or the Company otherwise being granted authority to allot ordinary shares pursuant to a conversion of the Conditional CLNs without rights of pre-emption applying); (b) approval of the final terms of the Conditional CLNs by the Gresham House investment committee and (c) Gresham House being provided with satisfactory comfort that the Conditional CLNs qualify for VCT relief status. These conditions must be satisfied or (if capable of waiver) waived by 29 November 2024, or such later date as Gresham House and the Company may agree, in order for the Conditional CLNs to be capable of being subscribed. It is a requirement of the terms of the conditional subscription that Gresham House's total investment in the Company shall not exceed 29.99 per cent of the Company's issued ordinary share capital. The final terms of the Conditional CLNs will themselves be subject to finalisation between the Company and Gresham House. However, under the terms of the conditional subscription agreement, it is expected that the Conditional CLNs will be subscribed at a price of 97 pence for every £1 in Conditional CLNs, will have a conversion price of 3 pence, carry a 10 per cent fixed rate coupon that will roll up and will mature five years and one day from the date of their issuance. In addition, the final version of the Conditional CLN instrument is expected to include further customary provisions. A further announcement will be made at the point when the final version of the Conditional CLN instrument is entered into. Related Party Transaction Gresham House is conditionally subscribing for up to £325,000 of Conditional CLNs. As Gresham House currently holds more than 10 per cent. of the Ordinary Shares, Gresham House's conditional subscription for Conditional CLNs is deemed to be a related party transaction pursuant to Rule 13 of the AIM Rules for Companies. The Directors consider, having consulted with the Company's nominated adviser, Allenby Capital, that the terms of the conditional subscription for Conditional CLNs by Gresham House are fair and reasonable insofar as Shareholders are concerned. Circular A Circular containing a Notice of General Meeting will be posted to shareholders shortly and will be made available on the Company's website at: www.seeen.com The above summary should be read in conjunction with the full text of this announcement and the Circular, extracts from which are set out in the Appendices below. Persons who have chosen to participate in the Placing will be deemed to have read and understood this announcement in its entirety (including the Appendices). All capitalised terms used throughout this announcement shall have the meanings given to such terms in the Definitions section in Appendix II to this announcement and as defined in the Circular. References to paragraphs below refer to the relevant paragraphs of the Circular and references to 'this document' refer to the Circular. References to numbered 'Parts' below refer to the relevant parts of the Circular. For the purposes of UK MAR this announcement is being made on behalf of the Company by Adrian Hargrave. For further information please contact: SEEEN, seeen.com Adrian Hargrave, CEO Tel: +44 (0)7775 701 838 Dowgate Capital (Joint Broker) Stephen Norcross Tel: +44 (0)20 3903 7721 Capital Plus Partners Ltd (Joint Broker) Jonathan Critchley / Jon Levinson Tel: +44 (0)203 821 6167 Allenby Capital Limited (Nominated Adviser and Joint Broker) Alex Brearley / George Payne / Lauren Wright (Corporate Finance) Tony Quirke / Amrit Nahal (Sales and Corporate Broking) Tel: +44 (0)20 3328 5656 Focus IR (Investor Relations) Paul Cornelius / Kat Perez Tel: +44(0)7866 384 707 seeen@focusir.com Appendix I - Extracts from the Circular 1. INTRODUCTION The Company has announced a conditional Placing and Subscription of a total of 25,433,326 new Ordinary Shares to raise a total of approximately £763,000 at the Issue Price, to be undertaken in two tranches. It is intended that the total net proceeds of the Fundraise, in conjunction with SEEEN's existing available cash, will primarily be used to seek to accelerate sales of the Group's technology products and to further develop its intellectual property (IP) to strengthen its position in key vertical markets and drive cross-selling. The First Placing Shares will be allotted under the authorities granted to the Company at its last annual general meeting, allowing the Company to allot Ordinary Shares with a nominal value of up to £9,334.58 without rights of preemption applying. The First Fundraise will therefore not be conditional upon the Fundraise Resolutions being passed at the General Meeting. However, the Second Fundraise is conditional on the Fundraise Resolutions being passed. In addition, each of the First Fundraise and the Second Fundraise will be subject to the conditions contained in the Placing Agreement, and in particular; (a) the respective Fundraise becoming unconditional in all respects; and (b) each respective Admission becoming effective on the relevant Closing Date. The Warrants issued under the First Fundraise and the Second Fundraise will, in each case, be conditional on the Fundraise Resolutions being passed at the General Meeting. The Directors will require further share authorities to grant them the necessary authorities under sections 551 and 571 (respectively) of the Companies Act, to issue and allot the Second Fundraise Shares and the Ordinary Shares which would be allotted on conversion of the Warrants and to disapply statutory pre-emption rights in respect of such allotments. These matters will require the approval of Shareholders (as is explained in full below) and the Second Fundraise is accordingly conditional inter alia on the passing of the Fundraise Resolutions at the General Meeting. The General Meeting has been convened for 11.00 a.m. on 17 June 2024 and will take place at the offices of SEEEN plc, Hones Yard, 1 Waverley Lane, Farnham, Surrey GU9 8BB for the purpose of seeking such approvals. A notice convening the General Meeting, at which the Fundraise Resolutions will be proposed, is set out at the end of this Circular. The purpose of this Circular is to: (i) give further details on the Placing and Subscription, including the background to and reasons for the Fundraise Resolutions; (ii) explain why the Board considers the Fundraise to be in the best interests of the Company and the Shareholders as a whole and why the Directors unanimously recommend that the Shareholders vote in favour of the Fundraise Resolutions, as they intend to do in respect of their own Existing Ordinary Shares; and (iii) convene the General Meeting to obtain Shareholder approval for the Fundraise Resolutions. If the Fundraise Resolutions are passed at the General Meeting on 17 June 2024, completion of the Second Fundraise Second and Second Admission are expected to take place on or around 19 June 2024. Both Capital Plus and Dowgate Capital are acting as joint brokers to the Company in relation to the Placing. Capital Plus will be acting as broker in respect of the First Placing and Capital Plus and Dowgate Capital will be acting as joint brokers in respect of the Second Placing. Allenby Capital is acting as nominated adviser to the Company in relation to the Fundraise. The Placing is subject to the conditions and termination rights set out in the Placing Agreement between the Company, Capital Plus and Dowgate Capital. Shareholders should read the whole of this Circular and not simply rely only upon the information set out in Part I (Letter from the Non-Executive Chairman of SEEEN plc) of this document. 2. BACKGROUND TO AND REASONS FOR THE PLACING AND PROPOSED USE OF PROCEEDS 2.1 Background to and reasons for the Placing SEEEN is a media and technology platform company with proprietary Artificial Intelligence (AI) technology which delivers 'Key Video Moments' to drive increased views and revenues across video content. The Group's technology takes existing video and uses AI to create new, short form video assets, in the form of Key Video Moments. SEEEN's clients monetise these Key Video Moments through a combination of video commerce, increased Search Engine Optimisation (SEO) traffic, driving more advertising sales, increased social media content production and, going forwards, improving video-based training for customer staff. SEEEN's revenue model typically comprises a combination of recurring fees and performance fees. Building on the growth in its technology business during 2023, SEEEN currently has over 40 technology-enabled customers and has a sales pipeline of over 100 opportunities in US and UK for both technology sales and YouTube Creator Services Partner business (CSP). The Directors consider that this pipeline, the Group's current cash position, plus the net proceeds of the Fundraise to accelerate the pace at which the Group will win customers across its different target markets, provides the pathway to drive the Company to cash flow breakeven during 2024. During 2024, the Company has delivered continuing customer momentum, with contracts for sports organisations such as the London Broncos and the American 7s Football League. SEEEN has also made initial sales via re-sellers in the investor relations sector, which provides a template for such future partnerships. Since the start of 2Q 2024 in particular, SEEEN has won additional business from existing and new customers worth in excess of US$500,000 in annualised revenues for the Group. This includes approximately US$400,000 for its CSP business, demonstrating its return to growth, as well as US$100,000 for the Group's technology products from a combination of sales to new clients and cross-selling to existing clients. As part of its recent focus on the training and skills development sector, the Group has delivered initial implementations with American Leak Detection, a subsidiary of Water Intelligence plc, which is a 6.4 per cent. shareholder in the Company. This includes a new Digital Services Marketing Agreement to educate via Key Video Moments and implement Google Business Profiles and Reviews (GBP Services) at each of 40 ALD corporate owned locations, as well as a framework for managing Pay Per Click campaigns (PPC Services), leveraging the success of its previous PPC campaigns for ALD. The initial contract for GBP Services is worth approximately US$70,000 per annum in revenues to SEEEN, although this could increase further should ALD use SEEEN for PPC Services. The Digital Services Marketing Agreement is also viewed as an opportunity to provide equivalent services to ALD's network of franchisees which operate out of a further 80 locations. In addition, the Group has also completed a 'Proof of Concept' for American Leak Detection, integrating its Key Video Moments into the Salesforce Learning Management System for faster on the job training and to deliver increased first-time fixes by technicians at job sites. The Directors believe that it is in the best interests of the Group to build on the momentum from its 2024 wins and, more particularly, the wins since the start of 2Q 2024 by continuing to invest in the sales team and also completing the integration with the Salesforce Learning Management System. By doing so, the Directors believe that the Group will be able to continue the growth of its direct technology-enabled product sales, and enter into new re-seller agreements within the Group's current sizeable and growing target markets of video commerce and SEO, as well as leveraging the Salesforce Learning Management System to re-sell for training and skills. The Directors consider that the Company's strategy from now to 2025 will involve: · a focus on accelerating its technology sales, including via the use of customer case studies · growing its CSP business, focusing on publishers, sports clubs and leagues, as well as creators who are expected to benefit from SEEEN's technology · launching a Key Video Moments offering focused on training and skills development use cases In terms of ongoing KPIs, the Company is targeting overall gross margins in the region of 50% within 18 months, with technology margins at 90% and CSP margins expected to be 15-20%. The Company is targeting monthly client wins of varying contract sizes, aimed at delivering a mix of software as a service (SaaS) revenue and performance fees. Other than the development activity in respect of training and skills use cases to be funded via the net proceeds of the Fundraise, as des