1 December 2022

DeepMatter Group Plc

Proposed Cancellation of admission of Ordinary Shares to trading on AIM

Subscription of up to 2,500,000,000 Ordinary Shares at 0.04 pence per share to raise up

to £1.0 million

and

Notice of General Meeting

DeepMatter Group Plc (AIM: DMTR, "Deepmatter", the "Group", or the "Company"), the digital chemistry data and software company, announces the proposed cancellation of admission of its Ordinary Shares to trading on AIM ("Cancellation"), re-registration as a private limited company ("Re-registration") and adoption of new articles of association ("New Articles")

The Group also announces a subscription of new shares to raise funds of up to £1.0 million through the issue and allotment of 2,500,000,000 Subscription Shares at the issue price of 0.04 pence per Subsciption Share ("Subscription").

A circular ("Circular") will be sent to Shareholders in the coming days, setting out the background to and reasons for the proposed Cancellation and the Re-registration and associated adoption of the New Articles, and the Subscription.  The Circular will also contain a notice convening a general meeting ("General Meeting") at which Shareholders are invited to consider and, if thought fit, approve (among other matters) the proposed Cancellation and the Re-registration and associated adoption of the New Articles and the Subscription.

The Directors have undertaken a detailed review to evaluate the benefits and drawbacks to the Group of retaining the listing of the Ordinary Shares on AIM.

A key part of this has been exploring a public market fundraising.  The Directors are of the opinion that it would not be possible to raise sufficient capital in the public markets to progress the Group's growth plans.   

This review has also included, amongst other matters, the impact of the current market sentiment with regard to early stage small companies listed on the public market and their valuations and the increasing costs of maintaining a public listing.

For these reasons, the Directors have concluded that Cancellation and Re-registration and adoption of the New Articles are in the best interests of the Group. The principal Shareholders of the business are supportive of the Cancellation and Re-registration and further funding of the business, including the Subscription.

In addition to the Subcscription, the Company anticipates a more substantial capital raise being pursued as a private limited company in 2023. This capital raise is being undertaken in order to fund the long term growth ambitions of the Company.

The Group continues to expect revenue for the current financial year to be no less than £1.5m and the Group has cash and short term receivables of £0.7m.

To be passed, the Cancellation Resolution requires, pursuant to Rule 41 of the AIM Rules, the approval of not less than 75 per cent of the votes cast by Shareholders at the General Meeting. The Resolution to approve the Re-registration and the adoption of New Articles and the Resolution to issue the Subscription Shares on a non-pre-emptive basis also require the approval of not less than 75 per cent of the votes cast by Shareholders at the General Meeting. The Resolution to authorise the Directors to allot the Subscription Shares in connection with the Subscription requires the approval of not less than 50 per cent of the votes cast by Shareholders at the General Meeting.

Should the Cancellation be approved by Shareholders at the General Meeting, the Company has concluded it will put in place a Matched Bargain Facility and will appoint Asset Match (www.assetmatch.com) to facilitate trading in the Ordinary Shares. Asset Match, a firm authorised and regulated by the Financial Conduct Authority, will operate an electronic off-market dealing facility for the ordinary shares. This facility will allow shareholders and new investors to trade Ordinary Shares by matching buyers and sellers through periodic auctions. Investors can register their interest for further information on the Asset Match auction process by emailing info@assetmatch.com. Full details will be made available to Shareholders on the Company's website at www.deepmatter.io once the Cancellation has been approved by Shareholders at the General Meeting.

The General Meeting will be held at the offices of Canaccord Genuity, 88 Wood Street, London, EC2V 7QR at 14:00 p.m. on 19 December 2022.

The notice convening the General Meeting and setting out the Resolutions to be considered at it will be set out in the Circular which is expected to be posted to Shareholders on the 2 December 2022, draft extracts of which can be found in Appendix I to this announcement.

Capitalised terms in this announcement, unless otherwise defined, have the same meaning as will be set out in the Circular.

The Subscription

It is anticipated that the Subscription Shares will all have been conditionally applied for largely by existing investors. The Subscription Shares will, when issued, rank pari passu in all respects with the existing Ordinary Shares in issue at the date of the Circular. 

The Subscription is conditional on the passing of Resolutions 1, 2 3 and 4 at the General Meeting.

Following the Cancellation, the Subscription Shares shall be issued as follows: (i) first, the Non-VCT/EIS Subscription Shares shall be issued to investors (other than those seeking EIS or VCT relief), and (ii) second, the VCT/EIS Subscription Shares shall be allotted and issued to all those investors who are seeking EIS or VCT relief.

The proceeds of the Subscription are intended to be used by the Group to fund:

·    working capital and corporate purposes;

·    investment in third-party partnerships in data, integration and automation;

·    investment in the Group's technology and employee base; and

·    accelerated adoption and conversion of the trial user base to recurring revenues.

Shareholders should note that, unless the Fundraising Resolutions are passed at the General Meeting, the Subscription cannot be implemented. In such circumstances, the Company will not receive the proceeds of the proposed Subscription. If this were to happen, the Directors would have to immediately re-evaluate the strategy and outlook of the Group.

If the Subscription does not proceed and alternative immediate funding is not obtained in the limited timeframe available, the Directors would need to consider whether it is appropriate for the Group to cease trading and enter into a liquidation process. Accordingly, it is very important that Shareholders vote in favour of the Fundraising Resolutions.

Based on the current cash resources of the Group, and expected revenue, the Directors believe that the Group has sufficient financial resources to fund the business through to early 2023. In the event that the Subscription does not proceed, the Directors would have a limited timeframe in which to take any remedial actions and take measures to raise further funds. It is for this reason that Company is seeking Shareholders' approval for the Subscription at the General Meeting.

Directors' and related parties' participation in the Subscription

As part of the Subscription, certain Directors and their persons/companies closely associated have agreed to conditionally subscribe for Subscription Shares at the Issue Price. Details of the Subscription Shares for which the Directors and their persons/companies closely associated have subscribed and their resultant shareholdings are displayed below.

* Mirko Walter is an employee of Springer-Verlag GmbH and a Director.  Springer-Verlag GmbH is an existing shareholder and is the participant in the Subscription. Mr Walter is therefore non-beneficially interested in the Ordinary Shares held by Springer-Verlag GmbH and the Subscription Shares being subscribed for by Springer-Verlag GmbH

In addition to the above, Richard Griffiths and David Norwood have agreed to subscribe for 750,000,000 and 547,500,000 Subscription Shares respectively pursuant to the Subscription at the Issue Price. Following the allotment and issue of such Subscription Shares, Mr Griffiths will have an interest in 1,792,928,550 Ordinary Shares, representing 27.4 per cent. of the Enlarged Share Capital, and Mr Norwood will have an interest in 991,380,771 Ordinary Shares, representing 15.2 per cent. of the Enlarged Share Capital.

Alan Aubrey, Mark Warne, Fraser Benson and Mirko Walter and their persons closely associated are considered a "related party" (as defined by the AIM Rules) of the Company by virtue of being directors of the Company. Both Richard Griffiths and David Norwood are considered to be a "related party" (as defined by the AIM Rules) of the Company by virtue of being an existing substantial shareholder in the Company.

The Directors (excluding Alan Aubrey, Mark Warne, Fraser Benson and Mirko Walter) consider, having consulted with Canaccord Genuity, the Company's Nominated Adviser for the purposes of the AIM Rules, that the terms of the related party subscriptions set out above are fair and reasonable insofar as the shareholders of the Company are concerned.

Expected Timetable of Principal Events

Notes:

(1)           All of the times referred to in this Document refer to London time, unless otherwise stated.

(2)           Each of the times and dates in the above timetable is subject to change. If any of the above times and/or dates change, the revised times and dates will be notied to Shareholders by an announcement through a Regulatory Information Service.

(3)           All events listed in the above timetable following the General Meeting are conditional on the passing at the General Meeting of the Resolutions

Recommendation

The Directors consider that the Cancellation and the Re-registration and adoption of the New Articles and the Subscription are in the best interests of the Company and its Shareholders as a whole and, therefore, unanimously recommend that you vote in favour of the Resolutions at the General Meeting as Alan Aubrey, Mark Warne, Fraser Benson, Bryn Roberts and Laurence Ede (being the Directors who are interested in Ordinary Shares) intend to vote, or procure the vote, in respect of, in aggregate, 230,992,484 Ordinary Shares to which they are benecially entitled.

Certain principal shareholders have also indicated they are supporting of the Resolutions.

A copy of the Circular and the New Articles will be made available on the Group's website at www.deepmatter.io in the coming days.

For more information contact

DeepMatter Group Plc

Mark Warne, Chief Executive                                                                                                     0141 548 8156

Fraser Benson, Chief Financial Officer                    

                                                                               
Canaccord Genuity Limited (Nominated Adviser and Broker)                                    
Bobbie Hilliam                                                                                                                                   020 7523 8000

Meare Consulting                                                                                                                          
Adrian Duffield                                                                                                                                 07990 858548

About DeepMatter Group plc 

DeepMatter's SmartChemistry® platform enables scientists across a range of industries, including pharma, biotech, agri-science, scientific publishers and contract research organisations (CROs), to easily capture, access and exploit the vast amounts of data created in chemical reactions.  

DeepMatter integrates its proprietary chemistry data and proprietary software to significantly improve productivity, efficiency, discovery, safety and sustainability of chemical reactions for its customers.

DeepMatter's SmartChemistry® platform capitalises on the combination of its cloud technology, low cost-sensors, connectivity to laboratory hardware and high-performance computing trends such as artificial intelligence (AI).

Visit: www.deepmatter.io and follow @deepmattergroup

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF REGULATION (EU) NO 596/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL OF 16 APRIL 2014 ON MARKET ABUSE (MARKET ABUSE REGULATION) AS RETAINED AS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 AS AMENDED.

UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

APPENDIX I - EXTRACTS FROM THE DRAFT CIRCULAR TO SHAREHOLDERS

Background to and reasons for the Cancellation and Re-registration

The Directors have undertaken a review to evaluate the benets and drawbacks to the Company and its Shareholders of retaining the listing of the Ordinary Shares on AIM. This review has included, amongst other matters, the impact of the current geopolitical situation, the compatibility of the requirements for transparency within public markets and client discretion, the public market share trading and valuation volatility of the Company and the increasing costs of maintaining a public listing. For these reasons, the Directors have concluded that the Cancellation and Re-registration are in the best interests of the Company and its Shareholders as a whole. Further details of the background to and reasons for the Cancellation and Re-registration are set out below.

·          The Directors believe that a number of factors have impaired investor sentiment towards the Company, including, amongst others: (a) current market conditions; and (b) short term UK market volatility.

·          The Directors believe that having access to capital in the near to medium-term is prudent to ensure that the Company can capitalise successfully on future opportunities and growth. The Directors have come to the conclusion that it is not possible to raise sufficient capital in the public markets to progress the Company's growth plans.

·          More generally, the UK small and micro-cap public markets have had a signicant change in sentiment over the past few years and the Directors believe that the Company's current public market valuation does not reect the underlying potential of the business with the result that growth prospects are more readily accessible and managed in a private market environment.

·          There has been limited liquidity in the Ordinary Shares for some time and, as a result, the Directors believe that continued admission to trading on AIM no longer sufciently provides the Company with the advantage of providing access to capital in the medium to longer-term, nor in the opinion of the Directors, provides liquidity to investors. As a result, the Directors have concluded that the most likely source of future funds would be through private capital.

·          The cost, management time and the legal and regulatory burden associated with maintaining the Company's admission to trading on AIM is, in the Directors' opinion, disproportionate to the benets of the Company's continued admission to trading on AIM.

Following careful consideration, the Directors believe that it is in the best interests of the Company and Shareholders to seek the proposed Cancellation and Re-registration.

In addition, in connection with the Re-registration, it is proposed that the New Articles be adopted to reect the change in the Company's status to a private limited company. The principal effects of the Re-registration and the adoption of the New Articles on the rights and obligations of Shareholders and the Company are summarised in the Circular to be post to Shareholders.

Process for, and principal effects of, the Cancellation

The Directors are aware that certain Shareholders may be unable or unwilling to hold 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 AIM Rules, the Company is required to give at least 20 clear Business Days' notice of Cancellation. Additionally, Cancellation will not take effect until at least ve clear Business Days have passed following the passing of the Cancellation Resolution. If the Cancellation Resolution is passed at the General Meeting, it is proposed that the last day of trading in Ordinary Shares on AIM will be 4 January 2023 and that the Cancellation will take effect at 7:00 am on 5 January 2023.

The principal effects of the Cancellation will include the following:

·          there will be no formal market mechanism enabling the Shareholders to trade Ordinary Shares;

·          it is possible that, following the publication of this Document, the liquidity and marketability of the Ordinary Shares is reduced and their value adversely affected (however, as set out above, the Directors believe that the existing liquidity in the Ordinary Shares is in any event limited);

·          the Ordinary Shares may be more difcult to sell compared to shares of companies traded on AIM (or any other recognised market or trading exchange);

·          in the absence of a formal market and quote, it may be difcult for Shareholders to determine the market value of their investment in the Company at any given time;

·          the regulatory and nancial reporting regime applicable to companies whose shares are admitted to trading on AIM will no longer apply;

·          Shareholders will no longer be afforded the protections given by the AIM Rules, such as the requirement to be notied of price sensitive information or certain events and the requirement that the Company seek shareholder approval for certain corporate actions, where applicable, including substantial transactions, reverse takeovers, related party transactions and fundamental changes in the Company's business, including certain acquisitions and disposals;

·          the levels of disclosure and corporate governance within the Company may not be as stringent as for a company quoted on AIM;

·          the Company will no longer be subject to UK MAR regulating inside information and other matters;

·          the Company will no longer be required to publicly disclose any change in major shareholdings in the Company under the Disclosure Guidance and Transparency Rules;

·          Canaccord Genuity will cease to be nominated adviser to the Company;

·          whilst the Company's CREST facility will remain in place immediately post the Cancellation, the Company's CREST facility may be cancelled in the future and, although the Ordinary Shares will remain transferable, they may cease to be transferable through CREST (in which case, Shareholders who hold Ordinary Shares in CREST will receive share certicates);

·          stamp duty will be due on transfers of shares and agreements to transfer shares unless a relevant exemption or relief applies to a particular transfer; and

·          the Cancellation and Re-registration may have personal taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent tax adviser.

The above considerations are not exhaustive, and Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation on them.

For the avoidance of doubt, the Company will remain registered with the Registrar of Companies in England and Wales in accordance with and, subject to the Companies Act, notwithstanding the Cancellation and Re-registration.

The Company currently intends to continue to provide certain facilities and services to Shareholders that they currently enjoy as shareholders of an AIM company. The Company will:

·          continue to communicate information about the Company (including annual accounts) to its Shareholders, as required by the Companies Act; and

·          continue, for at least 12 months following the Cancellation, to maintain its website, www.deepmatter.io and to post updates on the website from time to time, although Shareholders should be aware that there will be no obligation on the Company to include all of the information required under the Disclosure Guidance and Transparency Rules, Rule 26 of the AIM Rules or to update the website as required by the AIM Rules.

There will be no change to the composition of the Board immediately following the Cancellation and Re- registration.

The Resolutions to be proposed at the General Meeting include the adoption of the New Articles, with effect from the Re-registration. A summary of the principal differences between the Current Articles and the proposed New Articles is included in Part II of this Document. A copy of the New Articles can be viewed at www.deepmatter.io/investors

Transactions in the Ordinary Shares prior to and post the proposed Cancellation

Prior to Cancellation

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

Dealing and settlement arrangements

The Directors are aware that Shareholders may wish to acquire or dispose of Ordinary Shares in the Company following the Cancellation. Should the Cancellation be approved by Shareholders at the General Meeting, the Company will has concluded it will put in place a matched bargain facility and will appoint Asset Match (www.assetmatch.com) to facilitate trading in the Ordinary Shares on a matched bargain basis following Cancellation ("Matched Bargain Facility"). Asset Match, a firm authorised and regulated by the Financial Conduct Authority, will operate an electronic off-market dealing facility for the Ordinary Shares. This facility will allow existing shareholders of the Company and new investors to trade Ordinary Shares by matching buyers and sellers through periodic auctions. Investors can register their interest for further information on the Asset Match auction process by emailing info@assetmatch.com.

The Asset Match trading facility operates under its own code of practice which governs the behaviour of participants and the running of the 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 pass this information through a non-discretionary algorithm that determines a "market-derived" 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. A comprehensive list of stockbrokers who have signed up to access the Asset Match platform is available on request.

Full details will be made available to Shareholders on the Company's website at www.deepmatter.io and directly by letter or e-mail (where appropriate). Shareholders may contact Asset Match in relation to any queries regarding trading via the secondary market trading facility by emailing dealing@assetmatch.com.

If put in place, Shareholders should also be aware that any such Matched Bargain Facility could also be withdrawn at a later date. Further details will be communicated to the Shareholders at the relevant time.

If Shareholders wish to buy or sell Ordinary Shares on AIM they must do so prior to the Cancellation becoming effective. As noted above, in the event that Shareholders approve the Cancellation, it is anticipated that the last day of dealings in the Ordinary Shares on AIM will be 4 January 2023 and that the effective date of the Cancellation will be 5 January 2023

Current Trading, Strategy and Prospects

On 26 October 2022, the Company announced a significant multi-year agreement with Merck and published a trading update with recent nancial performance and a revenue forecast for the full year 2022 which is reproduced below:

"DeepMatter Group Plc announces that after nine months of the financial year and having now signed a material agreement with Merck (see separate statement), the Group expects revenue for the current financial year to be no less than £1.5m, an increase of over 50% year on year (2021: £1.0m).

 DeepMatter has secured three strategically important multi-year collaborations during the current financial year and as anticipated continues to see a strengthening of its sales pipeline following a strong first half.  The Merck collaboration has the potential to become one of the Group's largest to date.

 These collaborations bring future revenue visibility and opportunities to grow the revenue opportunity from existing customers as well as new customers.  They include technology access fees, collaboration fees and royalties.

 As stated in the Group's H1 results, DeepMatter is investing in product enhancements, strengthening its team, pursuing machine learning (ML) and artificial intelligence (AI) based R&D activities that create new intellectual property (IP).  It also continues to assert its IP rights which have the potential to contribute to long term value creation.  The Directors remain in regular contact with the Group's major shareholders who are supportive.  Deepmatter held cash balances of £0.7m at 30 September 2022, with costs remaining in line with those reported at the time of Group's H1 results."

In addition to the Subscription proposed to take place as soon as practicable after the Cancellation, the Company anticipates it will pursue a more substantial capital raise as a private limited company in 2023.  This capital raise is being undertaken in order to fund the long term growth ambitions of the Company.

Re-registration

As set out above, following the Cancellation, the Directors believe that the requirements and associated costs of the Company maintaining its public company status will be difcult to justify and that the Company will benet from the more exible requirements and lower costs associated with private limited company status. It is therefore proposed to re-register the Company as a private limited company. In connection with the Re-registration, it is proposed that the New Articles be adopted to reect the change in the Company's status to a private limited company. The principal effects of the Re-registration and the adoption of the New Articles on the rights and obligations of Shareholders and the Company are summarised in the Circular to be sent to Shareholders.

An application will be made to the Registrar of Companies for the Company to be re-registered as a private limited company. Re-registration will take effect when the Registrar of Companies issues a certicate of incorporation on Re-registration. The Registrar of Companies will issue the certicate of incorporation on Re-registration when it is satised that no valid application can be made to cancel the resolution to re- register as a private limited company or that any such application to cancel the resolution to re-register as a private limited company has been determined and conrmed by the Court.

Takeover Code

The Takeover Code applies to all offers for companies which have their registered ofces in the United Kingdom, the Channel Islands or the Isle of Man if any of their equity share capital or other transferable securities carrying voting rights are admitted to trading on a regulated market or a multilateral trading facility in the United Kingdom or on any stock exchange in the Channel Islands or the Isle of Man.

The Takeover Code also applies to all offers for companies (both public and private) which have their registered ofces in the United Kingdom, the Channel Islands or the Isle of Man and which are considered by the Panel to have their place of central management and control in the United Kingdom, the Channel Islands or the Isle of Man, but in relation to private companies only if one of a number of conditions are met, including that any of the company's equity share capital or other transferable securities carrying voting rights have been admitted to trading on a regulated market or a multilateral trading facility in the United Kingdom or on any stock exchange in the Channel Islands or the Isle of Man at any time in the preceding 10 years.

Following the Cancellation and the Re-registration, the Takeover Code will continue to apply for a period of ten years from the Cancellation provided that the Company is considered by the Takeover Panel to have its place of central management and control in the United Kingdom (or the Channel Islands or the Isle of Man). This is known as the "residency test". The way in which the test for central management and control is applied for the purposes of the Takeover Code may be different from the way in which it is applied by the United Kingdom tax authorities, HMRC. Under the Takeover Code, the Takeover Panel looks to where the majority of the Directors are resident, amongst other factors, for the purposes of determining where the Company has its place of central management and control.

Based on the current composition of the Board, the residency test will be satisfied and the Takeover Code will continue to apply to the Company following the Cancellation and the Re-registration. However, the Takeover Code could cease to apply to the Company in the future if any changes to the composition of the Board result in the majority of the Directors not being resident in the United Kingdom, Channel Islands and Isle of Man.

Process for Cancellation

Under the AIM Rules, it is a requirement that the Cancellation must be approved by Shareholders holding not less than 75 per cent. of votes cast by Shareholders at the General Meeting. Accordingly, the Notice of General Meeting set out in Part III 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 notied the London Stock Exchange of the Company's intention, subject to the Cancellation Resolution being passed at the General Meeting, to cancel the Company's admission of the Ordinary Shares to trading on AIM on 5 January 2023. Accordingly, if the Cancellation Resolution is passed, the Cancellation will become effective at 7:00 a.m. on 5 January 2023. If the Cancellation becomes effective, Canaccord Genuity will cease to be nominated adviser of the Company and the Company will no longer be required to comply with the AIM Rules.

The information below set out in accordance with the requirement of the EU Market Abuse Regulation provides further detail.