Conditional Placing

Microsaic Systems plc (AIM: MSYS), the developer of micro-electronic instruments and analytical solutions, is pleased to announce that it has successfully secured conditional funding commitments to raise gross proceeds of approximately £2.1 million through a placing of 169,000,000 New Ordinary Shares (the "Placing Shares") with new and existing investors at an issue price of 1.25 pence per New Ordinary Share (the "Placing Price") (the "Placing").

Highlights

• Estimated net proceeds of the Placing, approximately £1.8 million, will be used as follows:

o to satisfy consideration for the Acquisition, as announced on 12 January 2024, and subsequent recommencement of operations and their integration; and

o for general working capital and additional growth funding for the enlarged Microsaic business following the Acquisition

• The Directors have indicated their intention to participate in the Placing, which was oversubscribed prior to allocation, for a total of 11,040,000 Placing Shares
• The Placing has been supported by a range of existing and new investors, including Premier Miton
• The Placing is conditional, inter alia, on the Acquisition Agreement having been entered into and, save only for Admission, having become wholly unconditional and not having been terminated in accordance with its terms prior to Admission. The Placing is not conditional upon further shareholder approval, as the Resolutions put to the reconvened General Meeting held on 29 December 2023 were all passed by the requisite majority as previously announced

Bob Moore, Acting Executive Chairman of Microsaic Systems plc, commented:

"We would like to thank our existing shareholders and new investors for the support they have shown for the refinancing of the Company and its growth plans. We are delighted that the Company intends to retain its AIM listing and, following admission, have the necessary financing to both complete an acquisition and provide capital to invest in and develop the enlarged business. The assets being acquired are complementary to the existing Microsaic business model. Using the acquired assets, we intend to restart the manufacture of Microtox® bioreagents for water testing in the near term. Post acquisition, we will seek positive cash generation from these new activities and look to benefit from growth opportunities and potential synergies over the longer term. Microsaic's cost base has been significantly reduced and we will now operate a much leaner, more efficient model."

Turner Pope Investments (TPI) Limited ("Turner Pope" or "TPI") is acting as broker and placing agent to the Company and Singer Capital Markets Advisory LLP ("Singer Capital Markets") is acting as Nominated Adviser to the Company. Under the terms of engagement between TPI and the Company, the Company will issue warrants to subscribe for 30,712,000 New Ordinary Shares to Turner Pope's nominee exercisable at the Placing Price for 5 years from the date of admission of the Placing Shares ("Admission") (the "Broker Warrants").

This announcement should be read in full and in conjunction with the Circular dated 4 December 2023 and the subsequent regulatory announcements made by the Company. A 'Revised Indicative Timetable of Principal Events' and 'Key Statistics' summary is provided below.

Microsaic has over 20 years' experience in microelectronics and development of instrumentation. The Company has an extensive and innovative patent portfolio in industry-leading technology designed and developed for "Industry 4.0" application serving markets in diversified Industries, Human and Environmental Health. Microsaic's system solutions have enabled analytical detection and characterisation at the point-of-need, whether within a conventional laboratory setting, or within a bioprocessing facility for continuous detection of data at multiple steps in the process workflow.

Revised Indicative Timetable of Principal Events

Notes:

⁽¹⁾ All of the times referred to in this announcement refer to London time, unless otherwise stated, and are subject to change.

In the event that the Company is unable to proceed with the Placing or otherwise satisfy any of the necessary prior conditions for Restoration and Admission, then admission of the Company's shares to trading on AIM would be cancelled and a further announcement made in that regard.

Key Statistics

Notes:

⁽¹⁾ Net proceeds are stated after deduction of estimated total expenses of approximately £0.3m.

⁽²⁾ Assumes all Broker Warrants are exercised and no further issue of shares between Admission and the date of exercise.

Background to and reasons for the Placing

Information in connection with the background to and reasons for the Placing can be found within the letter from the Bob Moore, Acting Executive Chairman, to Shareholders dated 4 December 2023 and contained within the Circular of the same date. This letter should be read in conjunction with the subsequent announcements made by the Company in connection with the Acquisition and the revised fundraising target.

In summary, the Company set out to raise funds via the Placing to ensure the continuation of the Company's business activities and it is believed that the resumption of greater growth in the business is likely to require access to additional capital. After the Circular was posted to shareholders, the Company announced the Prospective Acquisition and associated Revised Fundraising. As announced on 12 January 2024, the Company confirmed that it had concluded its due diligence on the assets of the water testing business previously operated by Modern Water Limited ("Modern Water") and that the Acquisition Agreement with DeepVerge and Innovenn UK Limited (a DeepVerge subsidiary) had been signed.

Use of Proceeds

The net proceeds of the Placing are expected to be deployed as follows:

• to satisfy the cash consideration in full for the Acquisition of the assets and business of the water testing business previously operated by Modern Water pursuant to the Acquisition Agreement; and
• to support the working capital needs of the Company as enlarged by the acquired business and to promote the integration of the newly acquired assets/business.

The remaining net proceeds of the Placing, being £1.8 million (and monies to be received by the Company pursuant to the exercise, if any, of the Broker Warrants) will be used as a further working capital buffer and also in respect of certain growth initiatives - including in support of commercialisation of new products in ProteinID and PFAS detection through distribution partners, and investing in other targeted growth opportunities for both the original MSYS business and the acquired operations once restarted.

The Company intends to enter into new contractual arrangements with key customers, distributors and partners of the former Modern Water reagents business. The Company has received an indication from a key distributor that, subject to completion of the Acquisition ("Completion"), it will enter into a contract with the Company and, subject thereto, the Company anticipates being able to receive a milestone payment on the commissioning of testing equipment already in situ with certain end customers of this distributor. Subject to further evaluation of the market opportunity and any necessary amendments or updates to equipment design specifications, Microsaic also intends to seek to enter a new agreement with the outsourced manufacturer of Microtox® testing units, in order to be able to supply, install and commission additional water testing equipment where there is market appetite. As previously indicated, it may be appropriate for the Company to seek further growth capital. The enlarged and reset Company will be operating from a substantially reduced cost base using outsourced services for manufacturing and servicing of Microsaic technologies.

Principal Terms of the Placing

The Company has conditionally raised a total of approximately £2.1 million (before expenses) through the Placing of 169,000,000 Placing Shares at the Placing Price to new and existing investors.

The Placing is conditional, inter alia, upon:

• the Placing Agreement having been entered into and having become wholly unconditional in all other respects save in relation to Admission and not having been terminated in accordance with its terms prior to 16 January 2024 or such later date as may be agreed by TPI, SCM and the Company being not later than 24 January 2024 (the "Long Stop Date");
• the Acquisition Agreement having been entered into and, save only for Admission, having become wholly unconditional and not having been terminated in accordance with its terms prior to Admission;
• restoration of the Company's New Ordinary Shares to trading on AIM having occurred as described in the announcement dated 12 January 2024 and in this announcement;
• the Company allotting, subject only to Admission, the Placing Shares in accordance with the Placing Agreement and allotting the Broker Warrants; and
• Admission of the Placing Shares to trading on AIM becoming effective by no later than 8.00 a.m. on 16 January 2024 (or such later time as may be agreed between SCM, TPI and the Company being no later than 8.00 a.m. on the Long Stop Date).

The Placing Shares will be credited as fully paid and will rank pari passu in all respects with the New Ordinary Shares then in issue, including the right to receive all future distributions, declared, paid or made in respect of the New Ordinary Shares from the date of Admission. The Placing Shares will represent approximately 94.3 per cent. of the Enlarged Issued Share Capital, if no Broker Warrant are validly exercised.

Application has been made for the Placing Shares to be admitted to trading on AIM and is expected to become effective at 8.00 a.m. on 16 January 2024, provided the Annual Report and Interim Results have been published and their availability notified by way of a regulatory information service, and Restoration has occurred at 7.30 a.m. that date. The Placing Agreement also provides for Admission to otherwise occur on such later date as the Company, SCM and TPI may agree, being not later than 24 January 2024. The Placing Settlement of the Placing Shares is expected to take place within the CREST system following Admission.

It is expected that CREST accounts of the Placees who will hold their New Ordinary Shares in CREST will be credited with their Placing Shares on 16 January 2024. In the case of Placees holding Ordinary Shares in certificated form, it is expected that certificates will be dispatched during the week commencing 22 January 2024.

The Placing is not being underwritten and the Placing Shares are not subject to clawback.

Broker Warrants

In connection with the Placing, the Company has agreed to allot to JIM Nominees Limited (as nominee on behalf of TPI, acting as the Company's broker and placing agent) warrants over 30,712,000 New Ordinary Shares, exercisable in whole or in part at the Placing Price for the period up to 5:00 p.m. on the date that is 5 years from the date of Admission (the "Broker Warrant").

The allotment and issue of the Broker Warrant is subject to Admission, amongst other things.

Any New Ordinary Shares issued pursuant to the exercise of all or part of the Broker Warrants will be credited as fully paid and will rank pari passu in all respects with the New Ordinary Shares then in issue, including the right to receive all future distributions, declared, paid or made in respect of the New Ordinary Shares from the date of their admission. If the Broker Warrant is fully exercised, the number of New Ordinary Shares arising will represent approximately 14.6 per cent. of the Enlarged Issued Share Capital.

Intended Participation by Directors in the Placing

Bob Moore and Nigel Burton (the "Directors") have indicated their intention to subscribe for in aggregate, 11,040,000 Placing Shares at the Placing Price, representing 6.5 per cent. of the Placing Shares (excluding any further issuance of Ordinary Shares or the exercise of any of the Broker Warrants).

The intended aggregate participation in the Placing by the Directors will constitute a related party transaction under AIM Rule 13. Ordinarily an independent director would consult with the Company's nominated adviser to confirm whether the terms of a related party transaction are fair and reasonable in so far as shareholders are concerned. In the absence of such an independent director in the context of this related party transaction, Singer Capital Markets (acting as the Company's nominated adviser) has considered the terms of the Directors' expected participation and confirms that the terms of the transaction are fair and reasonable in so far as shareholders are concerned.

The expected participations by the Directors are included in the aggregate Placing described in this announcement as they will be confirmed shortly after the expected publication of the Report and Accounts and the Interim Results, and their notification by way of a Regulatory Information Service, later today.

Placing Agreement

The Company will enter into a Placing Agreement with each of SCM and TPI, pursuant to which SCM has agreed to act as nominated adviser in connection with, amongst other things, the Placing and TPI has agreed (as the Company's placing agent) to use reasonable endeavours to procure placees for the Placing Shares at the Placing Price. The Company has also granted the Broker Warrants to Turner Pope. The Placing Price represents a discount of approximately 70.4 per cent. to the equivalent pre-reorganised closing mid-market price on 30 June 2023, being the last day of trading prior to suspension of the Company's shares. The Placing Price was increased during the market sounding for the Placing, reflecting the demand generated.

The Placing Agreement will contain customary warranties given by the Company to SCM and TPI as to matters relating to the Company and its business and a customary indemnity given by the Company to SCM and TPI in respect of liabilities arising out of or in connection with the Placing. Each of SCM and TPI is entitled to terminate the Placing Agreement in certain circumstances prior to Admission, including circumstances where any of the warranties is found not to be true or accurate or to be misleading in any respect or on the occurrence of certain force majeure events.

Acquisition

As announced on 12 January 2024, the Company executed and exchanged the Acquisition Agreement with DeepVerge plc and Innovenn UK Limited to acquire certain assets (the "Assets") for a total consideration of £100,000, payable at Completion.

The Assets comprise the trade and all equipment used by the Modern Water business relating to the manufacturing of the Microtox® bio-reagents, related trade names, intellectual property, design and all manufacturing rights for water testing equipment using Microtox® bio-reagent as a consumable, known as the FX, LX and Continuous Toxic Measurement (CTM) machines.

Completion is subject to various conditions including Admission and the delivery of several intellectual property assignments to the benefit of the Company by no later than 24 January 2024. At Completion, the assets will be transferred to the Company and the consideration of £100,000 paid to the sellers.

Completion of the Acquisition is expected to occur by no later than 24 January 2024, following Restoration and Admission, both of which are expected on Tuesday 16 January, 2024, at 7.30 a.m. and 8.00 a.m. respectively. Completion will be confirmed by way of a separate announcement.

Current Trading

Summary information in connection with the recent historic and current trading performance of the Company is contained within the Circular. Additional detail will be made available in the Annual Report and Accounts 2022 and the Interim Results (for the first six months of 2023), both of which are expected to be published after the market close on or around 15 January 2024 (being the day immediately prior to the expected date for Restoration and Admission). Notification of the publication of these results will be made in accordance with AIM Rules.

Principal Risks and Uncertainties

The attention of Shareholders and other investors is drawn to the Principal Risks and Uncertainties set out in the Annual Report and Accounts 2022 which is expected to be published after the market close on or around 15 January 2024 (being the day immediately prior to the expected date of Restoration and Admission).

Further announcements will be made as appropriate.