Adgorithms Ltd.

07/16/2019 | Press release | Distributed by Public on 07/16/2019 00:17

Proposed Cancellation of trading on AIM

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE EU MARKET ABUSE REGULATION (596/2014). UPON THE PUBLICATION OF THE ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN

16 July 2019

Albert Technologies Ltd.

('Albert Technologies', the 'Company' or the 'Group')

Proposed cancellation of admission to trading on AIM

Albert Technologies today announces that it is proposing to cancel the admission to trading on AIM of its Ordinary Shares.

A circular will shortly be published and sent to all Shareholders setting out further details of the Delisting and the implications for Shareholders. The Circular will also contain a notice convening an Extraordinary General Meeting which is to be held at Bryan Cave Leighton Paisner LLP, Adelaide House, London Bridge, London, United Kingdom EC4R 9HA at 10 am on 20 August 2019, at which the approval of Shareholders of the Delisting will be sought. In the event that Shareholders approve the Delisting it is anticipated that trading in the Ordinary Shares on AIM will cease at close of business on 27 August 2019 and cancellation of admission to trading on AIM of the Ordinary Shares will become effective at 7:00 a.m. UK time on 28 August 2019.

Commenting on the proposal, Or Shani, CEO of Albert Technologies said:

'Albert is a very different company to the one that listed on AIM four years go. The Company is now an early-stage disruptive technology company, targeting the enterprise market, and operating in an emerging technology environment. Albert has trebled its revenues from 2017 to 2018 and growth continues but with an immature revenue pipeline it is difficult to forecast with the accuracy the public market requires.

'To support further growth, it will be necessary to seek additional funds and the Directors believe that it is in the best interests of the Company to secure a strategic or financial investor with knowledge of the company's core markets, who can assist the Company with accelerating the distribution of the company's proprietary technology, expand its revenue growth and increase its market penetration in the enterprise market. These types of investors are unlikely to be forthcoming whilst the company remains admitted to trading on AIM.'

Lisa Gordon, Chair of Albert Technologies, said:

'The Directors believe the current market valuation does not reflect the Albert's market opportunity, the value of its technology, its current and potential client list, and the overall progress we have made in the enterprise market in the last two years. On the contrary, the Board believes it negatively impacts the company's business, its potential for growth and our ability to raise necessary further funding through the public markets is significantly constrained. As a result, we do not believe that remaining listed on AIM is in the best interests of the Company and its shareholders'.

Attached below are extracts from the Chair's letter contained in the Circular.

For further information, please visit www.albert.ai or contact:

Albert Technologies Ltd

Or Shani, Chief Executive Officer

Yoram Freund, Chief Financial Officer

https://albert.ai/

Tel: +972 3537 7137

Cantor Fitzgerald Europe (Nominated Adviser and Broker)

Philip Davies Corporate Finance

William Goode

Caspar Shand-Kydd Equity sales

Arthur Gordon

+44 (0)20 7894 7000

The Nisse Consultancy(Media Relations)

Jason Nisse +44 (0)7769 688618

This announcement has been released by Yoram Freund, CFO, on behalf of the Company.

Introduction

The Board is proposing a resolution to approve the Cancellation at the Extraordinary General Meeting to be held at 10 am on 20 August 2019. The Directors unanimously consider that the proposed Cancellation to be in the best interests of the Company and its Shareholders as a whole, and unanimously recommend that shareholders vote in favour of the Cancellation at the Extraordinary General Meeting. A notice convening the Extraordinary General Meeting has been sent to all shareholders.

The Cancellation is conditional, pursuant to Rule 41 of the AIM Rules, upon the approval of not less than 75% of the votes cast by Shareholders (whether present in person or by proxy) at the Extraordinary General Meeting, notice of which is set out at the end of this document.

In accordance with Rule 41 of the AIM Rules, the Company has notified the London Stock Exchange of the date of the proposed Cancellation.

Overview of the Company and Financial Performance

Founded in 2010, the Company is a global software company and the creator of 'Albert' - the first-ever fully autonomous cross-channel artificial intelligence marketing platform. Albert is a cloud-based artificial intelligence platform that plugs into a digital marketer's existing tech stack and operates it.The Company's strategy is focused on deploying Albert as a SaaS product ('Software as a Service') for brands and agencies.

The Company's Research & Development team is based in Israel and its Sales and Marketing functions are based in the United States of America.

The Company announced its full year results for the year ended 31 December 2018 on 26 March 2019. A copy of those full year results and audited accounts are available on the Company's website at: http://www.albert.ai.The financial highlights from those accounts included:

· the Company's revenues increasing to $4.6m, (2017: $1.7m);

· average monthly revenue per client increased by a multiple of 1.5, year on year;

· an adjusted EBITDA* loss of $12.2m (2017: $11.4m);

· operating loss of $12.7m (2017: $11.8m); and

· following a fundraise in June 2018 which raised net of $16.8m, the net cash position of the Company at year end was $15.4m (2017: $11.1m).

The 2018 operationalhighlights included:

· the Company expanding its services with Enterprise clients and agencies over the period, for example:

- the number of Enterprise clients increased by a factor of four;

- the Company made progress in direct activity with top global agencies; and

- the Company expanded its relationship and service offering with existing enterprise clients;

· the Company employed additional staff, mainly account management functions, to support its Enterprise clients' activities. The Company now employs 114 people globally; and

· the Company transiting its internal culture from a tech-centric focus to a broader sales and marketing culture in order to provide enterprise-grade service to its clients.

On 28 May 2019, the Company announced an update on trading for the first four months of the current financial year and advised that revenue growth for the year to date had been slower than anticipated. This was principally due to a longer ramp up time with Enterprise clients.

Additionally, in that announcement it was noted that:

· in taking into account the performance for the start of the year, and the fact that a number of Enterprise clients' sales, onboarding and expansion of their activities took longer to implement than the Company's previous roster of midsize and small businesses, the Board anticipated that revenues for 2019 were unlikely to reach market expectations at that time, which forecasted revenues to be more than double than the revenues received in 2018;

· the Board expected growth to improve over the next months based on its assessment of the Company's existing client base and the pipeline of opportunities for sales;

· the Board expected that the final position for 2019 would show significant improvement over the position and performance achieved by the Company in 2018 and that the Company would meet its revised revenue expectations. However, it was also noted that it was difficult to accurately predict short-term revenue outcomes for the Company;

· the Company maintained strict cash control and had taken active steps to reduce the Company's cost base and that the Company would continue to do so in order to align the Company's cost base with the Company's growth pace and to preserve cash; and

· the Board was confident about the longer-term market opportunities for the Company and its continued prospects.

Since the May announcement, the Company has made progress by entering into new agreements with new and existing Enterprise clients. While these new agreements are not expected to have a material impact on the Company's current year forecasts, these agreements do support and underpin the Board's expectation that the revised 2019 revenue forecasts will be achieved.

As at 30 June 2019, the Company has a cash balance of approximately $9m and has sufficient working capital for approximately ten to twelve months based on current financial projections. Accordingly, to support further growth and to potentially take the Company through to a positive cash position, the Board believes it will be necessary to seek additional funds in the near future of an amount of not less than $10m.

Background to, and reasons for, the Cancellation

The Board is of the opinion that the Company, as currently constituted, has an entirely different financial and business profile to that which existed at the time of the Company's IPO in 2015.

The Company is now an early-stage disruptive technology company, targeting the Enterprise market, and operating in an emerging technology environment. At this stage of the Company's development and having regard to its Enterprise client pipeline, the Company's revenue growth is difficult to forecast with high levels of accuracy and the Board is of the opinion that operating losses will continue to be incurred by the Company due to the ongoing investment required to develop its business within the Enterprise market. To support further growth, the Board believes it will be necessary to seek additional funds in the near future of an amount of not less than $10m.

The Board is of the opinion that the Company's current market valuation does not reflect the Company's market opportunity, the value of its technology, its current and potential client list, and the overall progress the Company has made in the Enterprise market in the last two years. In coming to this opinion, the Board also took into account the revised market forecasts for 2019 revenue. It is the Board's view that the current market valuation negatively impacts the Company's business, its potential for growth, and its future financing prospects.

It is also the Board's view, which is supported by recent discussions held with some of the Company's major independent shareholders, that the Company's ability to raise necessary further funding through the public markets, is significantly constrained.

Therefore, the Directors believe that it is in the best interests of the Company to secure a strategic or financial investor with knowledge of the Company's core markets, who can assist the Company with accelerating the distribution of the Company's proprietary technology, expand its revenue growth and increase its market penetration in the Enterprise market.

Following initial consultations with a number of financial advisers and potential partners, mainly in the United States of America, the Directors are of the opinion that these types of investors are unlikely to be forthcoming whilst the Company remains admitted to trading on AIM, as the vast majority of such potential investors invest in companies at our stage, only if privately held.

After careful consideration of all the above circumstances and issues, the Directors have reached the conclusion that the public market is not an optimal environment for the Company to succeed. In reaching this conclusion, the Directors have considered, in addition to the above reasons, the following further factors:

· the performance of the Company's share price, which has been disappointing in recent months;

· to support future growth, it would be in the best interests of the Company to raise additional funding from strategic investors who are active in the markets in which the Company and its technology operates, and given that in the Directors' opinion, it is likely that the Ordinary Shares will remain undervalued whilst publicly traded; and

· approximately 80% of the Company's current issued share capital is held by the Company's management (including ex-management) and three largest external Shareholders, resulting in a limited free float and liquidity in the Ordinary Shares with the consequence that the AIM listing of the Ordinary Shares does not, in itself, offer investors the opportunity to trade in meaningful volumes or with frequency within an active market.

Therefore, following careful consideration of all the above factors, the Directors believe that it is in the best interests of the Company and its Shareholders as a whole to seek the proposed Cancellation at the earliest opportunity.

Process for, and principal effects of, the Cancellation

The Directors are aware that certain Shareholders may be unable or unwilling to hold directly or indirectly Ordinary Shares in the event that the Cancellation is approved and becomes effective. Such Shareholders should consider selling their interests in the market prior to the Cancellation becoming effective.

Under the Israeli Companies Law, 5759-1999, and the regulations promulgated thereunder as shall be in effect from time to time (the 'Companies Law'), the Company is required to give at least 35 clear calendar days' notice of the Extraordinary General Meeting. Under the AIM Rules, the Company is required to give at least 20 clear Business Days' notice of the Cancellation. Additionally, the Cancellation will not take effect until at least five clear Business Days have passed following the passing of the resolution for the Cancellation. If the resolution for the Cancellation is passed at the Extraordinary General Meeting, it is proposed that the last day of trading in Ordinary Shares on AIM will be 27 August 2019 and that the Cancellation will take effect at 7.00 am on 28 August 2019.

The principal effects that the Cancellation will have on Shareholders include the following:

(a) there will no longer be a formal market mechanism enabling Depository Interest Holders to trade their Depository Interests on AIM (or any other recognised market or trading exchange);

(b) in the absence of a formal market and quote, it may be more difficult for Shareholders and Depository Interest Holders to determine the market value of their investment in the Company at any given time;

(c) while the Ordinary Shares and Depositary Interests will remain freely transferable pursuant to the Articles of Association of the Company and a secondary market trading facility is intended to be set up through Asset Match following Cancellation (see below for further details), the Ordinary Shares and Depositary Interests may be more difficult to sell compared to shares of companies traded on AIM (or any other recognised market or trading exchange); and

(d) the Company will no longer be subject to the AIM Rules and, accordingly, Shareholders will no longer be afforded the protections given by the AIM Rules. In particular, the Company will not be bound to:

(i) make any public announcements of material events, or to announce interim or final results; comply with any of the corporate governance practices applicable to AIM companies; announce substantial transactions and related party transactions; or comply with the requirement to obtain shareholder approval for reverse takeovers and fundamental changes in the Company's business;

(ii) Cantor Fitzgerald will cease to be the nominated adviser and sole broker to the Company; and

(iii) the Cancellation might have either positive or negative taxation consequences for Shareholders and Depository Interest Holders (Shareholders or Depository Interest Holders who are in any doubt about their tax position should consult their own professional independent adviser immediately).

Under the current circumstances, the Company may not undertake a buyback of the Ordinary Shares (in connection with the Cancellation or otherwise) due to restrictions under the Israeli Companies Law prohibiting Israeli companies from repurchasing their shares, unless certain profitability and creditworthiness conditions are met.

At this stage, the Company anticipates that it will retain an appropriate number of independent Non-Executive Directors on its Board following the Cancellation and continue to follow customary corporate governance practices.

The Company intends to continue to maintain the Company's website (http://www.albert.ai) and to post updates on that website from time to time, although Shareholders should be aware that there will be no obligation on the Company to include the information required under AIM Rule 26 or to update the website as required by the AIM Rules.

The Company will remain registered with the Israeli Registrar of Companies in accordance with and subject to the Companies Law, notwithstanding the Cancellation. Shareholders should also note that the Takeover Code does not apply to the Company. Although, the current Articles do contain similar protections as set out in the Takeover Code in the event that there is an offer to acquire the Ordinary Shares of the Company, the Company's current intention is to remove those protections from the Articles after the Cancellation, subject to the requisite approval of the Company's Shareholders.

Following the Cancellation, it will still be possible to hold Depository Interests in CREST.

Transactions in Ordinary Shares

Shareholders should note that they are able to trade in the Ordinary Shares on AIM prior to the Cancellation.

The Board is aware that the proposed Cancellation, should it be approved by Shareholders at the Extraordinary General Meeting, would make it more difficult to buy and sell Ordinary Shares in the Company following the Cancellation. Therefore, the Company has arranged a secondary market trading facility to assist Shareholders to trade in the Ordinary Shares, and this will be put in place from the day of Cancellation.

Secondary market trading facility

The secondary market trading facility will be provided by Asset Match and will be reviewed on an annual basis. This facility will allow existing shareholders of the Company, and new investors, to trade Ordinary Shares by matching buyers and sellers through periodic auctions. Asset Match operates an open auction system where volumes of bids and offers at different prices are displayed on its website together with the closing date of the auction. At the end of each auction period Asset Match passes this information through a non-discretionary algorithm that determines a 'fair' share price based on supply and demand and allocates transactions accordingly. Bids and offers may be made and withdrawn at any time before the closing date of each auction.

Shareholders will continue to be able to hold their shares in uncertificated form (i.e. in CREST) and should check with their existing stockbroker whether they are willing or able to trade in unquoted shares. Shareholders wishing to trade shares through Asset Match must do so through a stockbroker and a comprehensive list of stockbrokers who have signed up to access the Asset Match platform is available on request.

Should the Cancellation become effective and the Company put in place the secondary market trading facility, details will be made available to Shareholders on the Company's website at http://www.albert.ai and directly by letter or e-mail (where appropriate).

Further information about the secondary market trading facility, including indicative prices and a history of transactions, will be available on the Asset Match website which is located at www.assetmatch.com.

Should Cancellation proceed, Shareholders may contact Asset Match in relation to any queries regarding trading via the secondary market trading facility by emailing [email protected].

Shareholders should note that there can be no guarantee that the secondary market trading facility will be available on a continuous basis or at all, and that any transfer of shares may be subject to the approval by the Board, not to be unreasonably withheld.

Process for Cancellation

Under the AIM Rules, it is a requirement that the Cancellation must be approved by not less than 75% of votes cast by Shareholders at an Extraordinary General Meeting. Accordingly, the Notice of Extraordinary General Meeting set out at the end of this document contains a special resolution to approve the Cancellation.

Furthermore, Rule 41 of the AIM Rules requires any AIM company that wishes the London Stock Exchange to cancel the admission of its shares to trading on AIM to notify shareholders and to separately inform the London Stock Exchange of its preferred cancellation date at least 20 Business Days prior to such date. In accordance with AIM Rule 41, the Directors have notified the London Stock Exchange of the Company's intention, subject to the resolution being passed at the Extraordinary General Meeting, to cancel the Company's admission of the Ordinary Shares to trading on AIM on 28 August 2019. Accordingly, if the resolution for the Cancellation is passed the Cancellation will become effective at 7.00 am on 28 August 2019. If the Cancellation is approved, Cantor Fitzgerald will cease to be nominated adviser and the sole broker of the Company and the Company will no longer be required to comply with the AIM Rules.

Recommendation

The Directors consider that the Cancellation is in the best interests of the Company and its Shareholders as a whole and therefore unanimously recommend that you vote in favour of the Cancellation, as they have undertaken to do in respect of their own beneficial holdings, representing approximately 30% in aggregate of the issued share capital of the Company.