11 June 2018
GoTech Group
plc
(“GoTech” or the
“Company”)
Adjournment of
General Meeting,
Proposed NEX
admission - Investment Strategy Clarification and Risk Factors
GoTech announces that its general meeting (“General Meeting”),
convened to be held at 11 a.m. today
has been adjourned. As part of the Company’s application for its
ordinary shares of 0.1 pence each
(“Ordinary Shares”) to be admitted to trading on the NEX Exchange
Growth Market (“NEX”) as an investment vehicle, the Company has
made minor amendments to its proposed investment strategy, further
details of which are set out below.
The adjourned General Meeting will now be held on 15 June 2018 at 11.00
a.m. at the offices of Peterhouse Capital Limited, New
Liverpool House, 15 Eldon Street, London EC2M 7LD. A copy of this announcement
will be posted to shareholders tomorrow and will be made available
on the Company’s website https://www.gotechgroup-plc.com/. Votes
that have been cast will remain valid, but shareholders may change
their votes if they so wish or alternatively may cast their votes
if they have not yet done so. Shareholders should refer to the
voting instructions enclosed in the circular which was dated
24 May 2018 and posted to
shareholders on 25 May 2018, a copy
of which is available on the Company’s website at:
https://www.gotechgroup-plc.com/.
The Company’s proposed admission to trading on NEX is
conditional, inter alia, on all resolutions being approved
at the General Meeting to take place on 15
June 2018 (“General Meeting”) and the cancellation of
admission of its Ordinary Shares to trading on AIM (“Cancellation”)
occurring.
As detailed in the Company's
circular and announcement of 24 May
2018, trading in the Company’s Ordinary Shares on AIM will
be suspended with effect from 7.30am
on 21 June 2018 pursuant to AIM Rule
15. Subject to the relevant resolution being passed at the General
Meeting, it is expected that Cancellation will take effect at
7.00 a.m. on 25 June 2018. It
is anticipated that dealings in the Company's Ordinary Shares on
NEX will commence at 8.00 a.m. on
25 June 2018.
Investment Strategy Process
Clarified
In conjunction with the Company’s application for its Ordinary
Shares to be admitted to trading on NEX, the Company would like to
clarify its Investment Strategy further, pursuant to the legal
obligations with respect to investing in cannabis quoted and listed
companies.
The Company at this stage with will not focus on mainland
Europe until the regulatory status
of the medicinal cannabis industry becomes more developed. In due
course and with increased Company resources, the Company may review
the status of mainland Europe and
consult Shareholders as appropriate.
The Company will be responsible for commissioning appropriate
legal due diligence on prospective investments.
External advisers and investment professionals will be engaged
as necessary to assist with the sourcing and due diligence of
prospective opportunities. The Directors will also consider
appointing additional directors with relevant experience if the
need arises.
As part of each investment analysis, Malcolm Burne (to be appointed as a director of
the Company in conjunction with the proposed admission to NEX),
with the assistance of the Board, will liaise with and where
necessary, instruct National or Foreign Counsel to produce a legal
opinion relating to the terms and lawfulness of the Company’s
proposed investment. The Board will review the Counsel’s opinion to
identify whether the investment is in line with a legal opinion to
be given by UK Counsel in relation to the same matter. The
Board will heed the advice provided by Foreign and UK Counsel, and
where the advice given reflects any negatives, regulatory risks, or
otherwise advised, will decline the proposed investment. In
particular, the Board will seek to ensure that there is as little
risk as possible of breaching the Proceeds of Crime Act 2002 (“POCA
2002”), The Misuse of Drugs Act 1971 (“MDA 1971”), The Misuse of
Drugs (Designation) Order 2001 (“MDDO 2001”) and The Misuse of
Drugs Regulations 2001 (S.I. 2001/3998) (“MDR 2001”). The Board
will also seek to avoid any risk of breaching Money Laundering
Legislation and will seek to ensure that any prospective future
dividends will not contravene any laws, having particular regard to
whether there may be any breach of POCA 2002.
Once the Board, led by Malcolm
Burne, has completed due diligence on a prospective
investment, it will opine on its findings in a comprehensive
report. The Independent Non-Executive Director (as required by the
NEX Rules) will in turn provide their comments and recommendations
to the Board as to whether the Company should pursue the
prospective investment.
The Company will endeavour to follow good corporate governance,
in that it will continually monitor changes in activities of its
investee companies, and especially those investee company shares
that will be held long term. The Board will, in particular, assess
the credibility of the investee company directors. There is a vast
array of recently quoted and listed companies that fall within the
Company’s investment strategy targets. The Company will monitor and
engage with investee companies. This will allow the Company to
improve its understanding of investee companies and their
governance structures. To this end, meeting with management of
investee companies will take place regularly to review management
process and best practices in, amongst other things, regulatory
questions pertaining to the Investment Strategy. At a minimum, the
Company would expect companies to comply with the accepted
corporate governance standard in their domestic country.
In compliance with Rule 51 of the NEX Exchange Rules, if the
Company (as an Investment Vehicle) has not substantially
implemented its investing policy after the period of one year
following Admission, it will seek Shareholder approval in respect
of the subsequent year for the further pursuit of its investment
strategy.
Pursuant to Rule 52 of the NEX Exchange Rules, the Company (as
an Investment Vehicle), is required to substantially implement its
investment strategy within a period of two years following
Admission. In the event that the Company has not undertaken a
transaction constituting a Reverse Takeover under Rule 57 of the
NEX Exchange Rules, or if it has otherwise failed to substantially
implement its investment strategy within such two-year period, NEX
Exchange will suspend trading of the Company’s Issued Share Capital
in accordance with Rule 78 of the NEX Exchange Rules. If suspension
occurs, the Directors will consider returning the Company’s cash to
Shareholders after deducting all related expenses. However, in the
case of the Company, NEX considers the two years’ period to have
commenced on 20 December 2017, the
date on which the Company became an AIM Rule 15 cash shell.
RISK FACTORS
1. Risks relating to the investment in
target companies whose main activities include Cannabis production
and research and development thereof
The Company and its shareholders may
be at risk of committing offences under POCA 2002
Even with the Company taking all precautions to ensure that it
and the target companies in which it invests comply fully with all
applicable regulations and legislation in relation to cannabis
(both in the UK and in the relevant foreign jurisdiction applicable
to a target company), there are no guarantees that the activities
of the Company and a target company will always be deemed lawful if
there are any changes in the applicable law.
The Company will take all precautions possible to ensure that it
does not at any time contravene POCA 2002. Contravention of POCA
2002 carries potential criminal liability.
The Company’s reputation may be
damaged
Damage to the Company’s reputation can be the result of the
actual or perceived occurrence of any number of events, and could
include negative publicity, whether true or not. This may arise as
a consequence of investing in companies that are involved in the
production and the research and development of medicinal cannabis,
cannabis being a Class B drug within the UK.
The increased usage of social media and other web-based tools
used to generate, publish and discuss user-generated content and to
connect with other users has made it increasingly easier for
individuals and groups to communicate and share opinions and views
in regards to the Company and its activities, along with those
activities of certain target companies in which the Company
invests.
Reputation loss may result in decreased investor confidence,
increased challenges in developing and maintaining community
relations, banking relationships etc. and thereby having a material
adverse impact on the financial performance, financial conditions,
cash flows and growth prospects of the Company.
The Company, or the Medicinal Cannabis
industry more generally, may receive unfavourable publicity or
become subject to negative consumer perception
The Company believes that the medicinal cannabis industry is
highly dependent upon consumer perception regarding the medical
benefits, safety, efficacy and quality of the cannabis distributed
for medical purposes to such consumers. Consumer perception of a
target company’s products can be significantly influenced by
scientific research or findings, regulatory investigations,
litigation, political statements, media attention and other
publicity (whether or not accurate or with merit) regarding the
consumption of cannabis products for medical purposes, including
unexpected safety or efficacy concerns arising with respect to the
products of a target company or its competitors.
There can be no assurance that future scientific research,
findings, regulatory proceedings, litigation, media attention or
other research findings or publicity will be favourable to the
medicinal cannabis market or any particular product, or consistent
with earlier publicity. Future research reports, findings,
regulatory proceedings, litigation, media attention or other
publicity that are perceived as less favourable than, or that
question, earlier research reports, findings or publicity could
have a material adverse effect on the demand for a target company’s
products and the business, results of operations and financial
condition of a target company and therefore materially adversely
affect the Company’s return on investment.
Furthermore, adverse publicity reports or other media attention
regarding the safety, efficacy and quality of cannabis for medical
purposes in general, or a target company’s products specifically,
or associating the consumption of cannabis with illness or other
negative effects or events, could have such a material adverse
effect. Such adverse publicity reports or other media attention
could arise even if the adverse effects associated with such
products resulted from consumers’ failure to consume such products
legally, appropriately or as directed.
Cannabis plant may not be approved for
medicinal use in all (or any) jurisdictions
Medical regulatory authorities in many jurisdictions require
carefully conducted studies (clinical trials) in hundreds to
thousands of human subjects to determine the benefits and risks of
a possible medication. In many jurisdictions, researchers have not
conducted sufficient large-scale clinical trials that show that the
benefits of the cannabis plant (as opposed to its cannabinoid
ingredients) outweigh its risks in patients it's meant to
treat.
2. Risks relating to regulatory
matters
Laws, regulations and guidelines may
change in ways that the Company has not predicted
The laws, regulations and guidelines applicable to the medicinal
cannabis industry may change in ways currently unforeseen by the
Company.
The Company’s operations and investments into quoted or approved
and properly licensed companies lawfully producing and/or
conducting research into cannabis are subject to laws, regulations
and guidelines. If there are any changes to such laws, regulations
or guidelines, which are matters beyond the Company’s control, the
Company may incur significant costs in complying with or is unable
to comply with such changes. This may have a material adverse
effect on the Company’s business, financial condition and results
of operations.
Regulatory Compliance Risks and
maintaining a bank account
Failure to comply with regulations may result in additional
costs for corrective measures, penalties or in restrictions of
operations. In addition, changes in regulations, more vigorous
enforcement thereof or other unanticipated events could require
extensive changes to operations, increased compliance costs or give
rise to material liabilities, which could have a material adverse
effect on the business, results of operations and financial
condition, and, therefore, on the Company’s prospective
returns.
As a result of perceived reputational risk and regulatory risks,
the Company, in the medicinal cannabis sector, may in the future
have difficulty in maintaining its current bank accounts,
establishing further bank accounts, or other business
relationships.
Environmental Regulations and
Risks
The operations of some target companies will be subject to
environmental regulation in the various jurisdictions in which they
operate. These regulations mandate, among other things, the
maintenance of air and water quality standards and land
reclamation. They also set forth limitations on the generation,
transportation, storage and disposal of solid and hazardous waste.
Environmental legislation is evolving in a manner which will
require stricter standards and enforcement, increased fines and
penalties for non-compliance, more stringent environmental
assessments of proposed projects and a heightened degree of
responsibility for companies and their officers, directors and
employees. There is no assurance that future changes in
environmental regulation, if any, will not adversely affect the
business, financial condition and operating results of a target
company, and therefore have a material adverse effect on the
Company’s return on investment.
Changes to safety, health and
environmental regulations could have a material effect on future
operations of target companies
Safety, health and environmental legislation will affect nearly
all aspects of a target company’s operations including product
development, working conditions, waste disposal and emission
controls. Compliance with safety, health and environmental
legislation can require significant expenditures and failure to
comply with such safety, health and environmental legislation may
result in the imposition of fines and penalties, the temporary or
permanent suspension of operations, clean-up costs resulting from
contaminated properties, damages and the loss of important permits.
Exposure to these liabilities arises not only from a target
company’s existing operations but from operations that have been
closed or sold to third parties. A target company could also be
held liable for worker exposure to hazardous substances and for
accidents causing injury or death. There can be no assurances that
a target company will at all times be in compliance with all
safety, health and environmental regulations or that steps to
achieve compliance would not materially adversely affect a target
company’s business, and therefore have a material adverse effect on
the Company’s return on investment.
Safety, health and environmental laws and regulations are
evolving in all jurisdictions. The Company is not able to determine
the specific impact that future changes in safety, health and
environmental laws and regulations may have on a target company’s
operations and activities, and its resulting financial position;
however, the Company anticipates that capital expenditures and
operating expenses will increase in the future as a result of new
and increasingly stringent safety, health and environmental
regulation. Further changes in safety, health and environmental
laws, new information on existing safety, health and environmental
conditions or other events, including legal proceedings based upon
such conditions on an inability to obtain necessary permits, may
require increased financial reserves or compliance expenditures or
otherwise have a material adverse effect on a target company, and
therefore have a material adverse effect on the Company’s return on
investment.
Terms defined in the Circular to Shareholders dated 24 May 2018, have the same meaning in this
announcement.
For further information, please
visit www.gotechgroup-plc.com or contact:
Rupert Horner |
GoTech Group plc |
Tel: +44 (0) 787 257 1312 |
|
|
|
Virginia Bull
James Reeve
Liz Kirchner |
Allenby Capital Limited (AIM
Nominated Adviser and Joint Broker) |
Tel: +44 (0) 20 3 328 5656 |
|
|
|
Duncan Vasey
Lucy Williams |
Peterhouse Capital Limited (AIM
Joint Broker) |
Tel: +44 (0) 20 7220 9797 |
Guy Miller |
Peterhouse Capital Limited
(Corporate Adviser for NEX Admission) |
Tel: +44 (0) 20 7469 0930 |