TIDMICON
RNS Number : 0533I
Iconic Labs PLC
06 August 2019
6 August 2019
Iconic Labs Plc ("Iconic Labs" or the "Company")
Acquisition and Funding
Iconic Labs Plc (LSE:ICON), a multi-divisional new media and
technology business is pleased to announce that it has agreed Heads
of Terms to acquire social media agency Social Alchemist Limited
("Social Alchemist"), which will bolster Iconic Labs' offering,
build critical mass within its social media consultancy division,
enhance content generation and importantly provide proprietary
distribution channels (the "Acquisition"). The Company is also
pleased to announce that it has secured further financing for a
gross amount of up to GBP1.375 million ("the Financing"), to
provide capital to continue to resolve the outstanding legacy
issues associated with the previous operating stem cell business,
fund the cash consideration element of the Acquisition, as well as
for general working capital purposes.
Social Alchemist is a social media focussed agency with three
primary divisions which will complement and expand Iconic Labs'
current services. Firstly, it provides social media consultancy,
content production strategy and creation, primarily for white label
branded campaigns, with clients including ITV and student focused
platform TOTUM. Secondly, it operates multiple targeted social
media-based platforms such as football focussed Stray Offside which
cumulatively have over 12 million followers and provide extensive
distribution for Social Alchemists' clients. The team provides
access on these social media platforms to brands including TikTok
and Vodafone and offers creative strategies for marketing campaigns
to reach their target market/demographic. Thirdly, Social Alchemist
creates original social video production for brands with clients
including talent agency YM&U Group and brand agency Chekd
Media.
Social Alchemist was founded by Jono Yates, ex Creative Lead at
LADbible and Head of Influencer Marketing at Red Bull. He has
worked with brands including McDonald's, Pepsi and Sony and has led
award winning creative campaigns, both branded and editorial,
receiving awards at Cannes and the Drum Awards for Digital
Industries ('DADI's). Social Alchemist was started in October 2018
and has yet to produce or file any statutory accounts, however at
this time it is revenue generative, cash flow positive and
profitable. The consideration, which is undisclosed for commercial
sensitivities, is to be satisfied in cash and the issue of ordinary
shares of GBP0.0025 each in the capital of the Company.
The process to resolve the legacy debt issues attached to the
previous stem cell business is nearing completion, which means the
team can focus all its energy on building a multi-divisional new
media and technology business, as set out in its initial strategy.
The full extent of these issues was significantly more than
anticipated and, as a result, has taken considerably more of the
key management's time to identify and resolve, as well as cash
reserved for working capital. In particular, it became evident
that, despite assurances made by the previous management, a
significant amount of debt ascribed to the subsidiaries of the
Group were in fact liabilities of the Company.
The Company now believes there are approximately GBP600,000 of
legacy debts still owing, including to HMRC, which the Company
intends settling and have been accounted for in its cash-flow
forecasts. In addition, there is approximately GBP400,000 of
creditors with whom the Company is in dispute that these are
creditors of the Company. Whilst a contingency for this has been
made in the cash-flow forecasts, the Company does not anticipate
settling these. To date, the Company has spent approximately
GBP900,000 on legacy issues and the Board is confident that this
further financing will finally result in all legacy debts, which
the Company is certain are debts of the Company, being
resolved.
The Financing has been secured with the European High Growth
Opportunities Securitization Fund (the "Investor"). Under the terms
of the financing agreement ("Financing Agreement") the Investor has
agreed to provide finance to the Company over a six month period,
with six monthly tranches (a "Tranche") for the following amounts:
(i) on entering into the Financing Agreement, a net amount of
GBP225,000 is to be made available to the Company, such amount
being after having deducted a commitment fee of GBP75,000 and also
other fees and costs; (ii) on the first business day falling one
month after the date of entering into the Financing Agreement, a
net amount of GBP275,000 is to be made available to the Company;
(iii) on the first business day falling two months after the date
of entering into the Financing Agreement, a net amount of
GBP250,000 is to be made available to the Company; (iv) on the
first business day falling three months after the date of entering
into the Financing Agreement, a net amount of GBP175,000 is to be
made available to the Company; (v) on the first business day
falling four months after the date of entering into the Financing
Agreement, a net amount of GBP175,000 is to be made available to
the Company; and (vi) on the first business day falling five months
after the date of entering into the Financing Agreement a net
amount of GBP175,000 is to be made available to the Company.
The Company has agreed to certain covenants and undertakings
which it has given to the Investor. This includes, but is not
limited to, satisfying the Warrant Conditions (as defined below),
which involves the Company within three months of the date of
entering into the Financing Agreement lodging with the UKLA for its
comments a prospectus which is to then be finalised and circulated
to the Company's shareholders within six months of the date of
entering into the Financing Agreement. Provided the Company has
lodged the Prospectus with the UKLA for its comments within three
months of the date of entering into the Financing Agreement, the
Company can continue to draw down the Tranches. In return for the
draw-down of each Tranche, the Company will issue notes ("Notes")
to the Investor which will attract interest at the rate of 5% per
annum and each Note will have a duration of 12 months from the date
of its issue. The Notes can be freely transferred but will not be
listed on any financial market.
The Financing Agreement also provides for warrants to be
attached to the Notes, but these can only be attached once the
Company has issued a prospectus to its shareholders, convened a
general meeting and its shareholders having passed the necessary
resolutions to enable the Company to issue the warrants to the
Investor (the "Warrant Conditions"). Once the Warrant Conditions
have been satisfied, warrants ("Warrants") will automatically
attach to the Notes. The number of Warrants to be attached to the
Notes shall be calculated as follows: for each Note the number of
Warrants shall be 5,000 divided by 90% of the lowest closing
volume-weighted average price of Ordinary Shares ("VWAP") during
the five trading days immediately preceding the date of issue of
the Warrants.
All Warrants are freely exercisable for a period of five years
from their date of issue and are freely transferable. The exercise
price of the Warrants will be equal to the higher of the value
price ("Value Price") (calculated as 90% of the lowest daily VWAPs
of the Ordinary Shares during the five trading days immediately
preceding the exercise of the Warrants) and the nominal value of
the Ordinary Shares on the date of exercise of the Warrants. Should
the Value Price be lower than the nominal value of the Ordinary
Shares, the Company shall pay a fee to the Investor based on the
difference between the two and which can be settled by the issue of
further Ordinary Shares.
In addition, the Company has also today agreed to settle with
the Investor the remaining amounts due that were outstanding under
the previous financing agreement entered into with the Investor, by
entering into a deed of settlement ("Deed of Settlement"). This
will involve the issue of Ordinary Shares to the Investor on the
following basis:
-- 237,827,207 Ordinary Shares are to be issued to the Investor
on the sixth trading day following the entering into of the Deed of
Settlement;
-- Further Ordinary Shares are to be issued to the Investor once
the Warrant Conditions have been satisfied. The number of Ordinary
Shares to be issued will be calculated on the basis of 80% of the
lowest daily VWAPs of the Ordinary Shares during a five trading
days period relating to the relevant date and then multiplied by
the relevant amounts, which can only be determined once the VWAPs
are calculated and so it is not possible at this point in time to
determine the dilutive effect this will have.
The Company recognises that there is frustration amongst
shareholders regarding the timeline of Iconic Labs formal launch
and the financing being utilised by the Company. However, in order
to resolve the legacy issues attached to the stem cells business
and ensure that the new business strategy is implemented, the Board
has had to facilitate the historic and most recent financing
structures which has also taken considerable management time and
focus. There is considerable excitement within the Company and with
a high margin offering being delivered, the Board is confident that
it can rapidly grow revenue and build a cash generative business
that rewards shareholders for their loyalty and patience.
Iconic Labs Plc is pleased to announce that it has appointed
Crowe U.K. LLP as auditor to the Company with immediate effect.
There are no circumstances connected with the resignation of the
previous auditors which the Company considers should be brought to
the attention of shareholders or creditors of Iconic Labs.
Chief Executive Officer, John Quinlan, said: "We have an
aggressive growth strategy and Social Alchemist, our maiden
acquisition, represents a classic example of a growing and
innovative business that will add value to our offering. The
divisional structure offers online media consultancy and content
generation, but importantly distribution through its established
platforms which already connect with over 12 million people. Social
Alchemist, which has an established client list, is highly
complementary and we will benefit from synergies and scale as we
pitch for new business and look to capitalise on the huge
opportunities that both parties recognise are available in the
online digital space.
"With the additional capital we are able to focus all our
efforts on building a successful business both organically and
through selective, value accretive acquisitions. The legacy issues
attached to the old business have been greater than we anticipated
and extremely frustrating for all parties and stakeholders. We have
uncovered unforeseen subsidiary debts that are attributed to the
Company which has created significant work to solve and this has
meant that we have had to prioritise this over fully launching the
new business of Iconic Labs. However, now, with a clean slate, we
can utilise our wide industry contact base and build a profitable
business, taking advantage of a fragmented market.
"To give some clarity for shareholders, the issue and subsequent
exercise of the warrants resulting from this loan financing and the
issuance of subsequent shares attached to the warrants cannot take
place until the Company has issued an approved prospectus, convened
a general meeting and its shareholders have passed the necessary
resolutions. The anticipated timeline for obtaining an approved
prospectus and issuing it to the shareholders is within six months
of the date of the Financing Agreement and we anticipate being no
shorter than three months from that date.
"I am excited about the future and look forward to announcing
regular developments to the market. We have a number of live client
leads, as well as additional niche acquisition targets which, once
executed, will assist us in delivering our strategy of building
Iconic Labs and creating shareholder value."
Social Alchemy CEO Jono Yates said, "Iconic Labs is building a
platform that will gain critical mass and service. We know how
successful the Iconic Lab team has been in rapidly growing social
media-based business and I am delighted to bring my team to widen
the offering and pool resources to maximise on the huge
opportunities in our sector. We believe in the model set out by the
Iconic team underlined by our commitment to take equity in the
business. This is a nascent company with big ideas, and I look
forward to building a business with John and his team."
**ENDS**
For further information, please visit the Company's website
www.iconiclabs.co.uk or contact:
John Quinlan Iconic Labs Plc c/o SBP Tel: +44 (0) 20
7236 1177
Damon Heath Shard Capital Partners Tel: +44 (0) 20 7186 9950
LLP
Erik Woolgar Shard Capital Partners Tel: +44 (0) 20 7186 9950
LLP
Melissa Hancock St Brides Partners Tel: +44 (0) 20 7236 1177
Limited
Juliet Earl St Brides Partners Tel: +44 (0) 20 7236 1177
Limited
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END
ACQUNOVRKSAWRRR
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August 06, 2019 02:01 ET (06:01 GMT)
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