Disposal, Loan Conversion, New Project Win & TVR

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018.  Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

15 November 2023

Insig AI plc

("Insig AI" or the "Company")

Disposal, Conversion of Convertible Loan and Related Party Transactions, New Project Win and Total Voting Rights

Insig AI plc (AIM: INSG), the data science and machine learning group, is pleased to announce the disposal of its legacy subsidiaries, Sport in Schools Limited ("Sport in Schools") and The Elms Group Limited ("Elms Group") for a total consideration of £500,000 (the "Disposal"), as well as a new project win.

Disposal of Sports in Schools Limited and The Elms Group Limited

On 14 November 2023, the Company's 85.87% owned subsidiary, Pantheon Leisure plc ("Pantheon"), entered into a sale agreement for Sports in Schools and Elms Group with Haygreen Limited for a total cash consideration payable of £300,000 (the "Cash Consideration"). Haygreen Limited is a newly incorporated company wholly owned by Jason O'Connor, a current director of Sports in Schools.

Sports in Schools generated a profit before tax of approximately £31,000 during the year ended 31 March 2023 whilst Elms Group generated a loss before tax of approximately £12,000 during the same period.

Pursuant to the Disposal and in addition to the Cash Consideration, Sports in Schools has declared a dividend payable to Patheon of approximately £262,000 of which approximately £210,000 will be used by Pantheon to partially settle an intra-group loan provided by Insig AI plc. The remaining £52,000 will be used by Pantheon to fully settle an intra-group loan directly with Sport in Schools.

Insig AI will use the Cash Consideration  for general working capital purposes.

As previously announced on 12 September 2022, Richard Bernstein entered into a convertible loan agreement with the Company for a total consideration of £0.75 million, secured against the ordinary shares of Westside Sports Limited owned by the Company, which had interests in Ultimate Player Limited, Pantheon Leisure plc, Sports in Schools Limited and The Elms Group Limited. Upon completion of the Disposal, Richard Bernstein has agreed to revise the terms of the Convertible Loan including releasing the security held over West Sports Limited.

Related Party Transactions

The Disposal to Haygreen Limited, a company controlled by a related party of the Company will constitute a related party transaction under the AIM Rules. Under AIM Rule 13, all the directors of Insig AI (the "Directors") are considered to be independent in respect of the Disposal. Having consulted with the Company's nominated adviser, the Directors consider that the terms of the Disposal are fair and reasonable insofar as the Company's shareholders are concerned.

Following the Disposal, the Company and Mr Bernstein have agreed to revised terms for the Convertible Loan which includes the release of security over Westside Sports Limited and a new conversion price of 20.0 pence per ordinary share of 1 pence each in the Company ("Ordinary Share"), being a 21.2 per cent. premium to the closing price on 14 November 2023. The Directors (excluding Richard Bernstein), having consulted with Zeus Capital Limited, the Company's nominated adviser, consider that the terms of the Convertible Loan are fair and reasonable insofar as the Company's shareholders are concerned.

Conversion of Convertible Loan and Total Voting Rights

The Company has also received notice from Richard Bernstein to convert the current balance of the Convertible Loan, being £785,076 (inclusive of accrued interest) into 3,925,380 Ordinary Shares at a conversion price of 20.0 pence per ordinary share (the "Conversion").

Following the Conversion, Mr Bernstein will be interested in 19,925,380 Ordinary Shares in the Company which equates to 18.4% of the total voting rights of the Company.

As a result of the Conversion, an application has been made to the London Stock Exchange for admission of the 3,925,380 Ordinary Shares to trading on AIM ("Admission"). It is expected that Admission will become effective on 21 November 2023.

Following Admission, the total number of Ordinary Shares in issue will be 109,601,025. The Company currently holds 1,205,888 Ordinary Shares in treasury. As such, the total number of voting rights in the Company will be 108,395,137.

The above figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules. 

New project win

The Company is also pleased to announce that it has entered into a commitment to provide a scalable and automated solution to a US and European based provider of Collateralised Loan Obligations and structured credit products with assets under management of more than £3 billion.

The commitment of work is for an initial sum of £60,000 to commence immediately, with the opportunity for further follow-on projects. Insig AI will provide a central database allowing for the development and application of machine learning methods. The commitment of work also involves integrating Insig AI's data analytics software into the launch of a potential new fund, which could provide longer term recurring revenue streams for the Company.

Executive Chairman, Richard Bernstein commented: "We are pleased to have disposed of the legacy business at a multiple of more than 25 times historic pre-tax profits. This enables us to fully focus on our machine learning capabilities. In addition, whilst an initial £60,000 customer commitment is welcome, we're excited to now have the opportunity to substantially develop and deepen this new client relationship."

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Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them: