NetScientific plc

("NetScientific", the "Group" or the "Company")

PDS Biotech Completes $35 Million Financing Agreement Led By Horizon Technology Finance

NetScientific plc (AIM: NSCI), the international life sciences and sustainability technology investment and commercialisation Group, announces that its portfolio company, PDS Biotechnology Corporation (Nasdaq: PDSB), announced that it has entered into a debt financing agreement led by Horizon Technology Finance Corporation (NASDAQ: HRZN) ("Horizon") to provide up to a $35.0 million term loan.

As part of the financing, PDS Biotech received an initial tranche of $25 million at the close. The Company has an option to receive an additional $10 million. Each advance of the loan will be repaid in 48 monthly payments consisting of 24 monthly payments of interest only, followed by 24 monthly payments of principal and accrued interest. In connection with the financing, PDS Biotech issued Horizon warrants to purchase up to 4% of the loan amount, 381,625 of its common shares at an exercise price of $3.6685 per share. Proceeds will be used to support the ongoing clinical development of PDS0101 and other product candidates within the company's pipeline and for general working capital purposes.

Frank Bedu-Addo, Chief Executive Officer of PDS Biotech said: "We are pleased to partner with Horizon, a leading specialty finance company that has an extensive history of supporting innovative life science companies.

"We anticipate a number of important milestones across our oncology and infectious disease programs. This transaction immediately strengthens our balance sheet and provides the financial resources necessary to advance the company's clinical pipeline.  We look forward to our meeting with the U.S. Food and Drug Administration this quarter to discuss the registrational trial design for our lead program."

Dr. Ilian Iliev, CEO of NetScientific, commented: "PDS is an outlier In the context of challenging biotech capital market conditions. This $35m venture debt package by a leading institution is a significant validation of the PDS team's credibility and the validity of their investment and corporate development approach. This loan framework further extends PDS' runway, and provides the certainty needed for the continued execution of their ambitious clinical pipeline. We are looking forward to PDS' further clinical results announcements and progress in their discussions with the FDA."

Further information with respect to the debt financing agreement with Horizon is contained in a report that has been filed on Form 8-K by PDS Biotechnology with the Securities and Exchange Commission and is appended to this announcement and can be viewed here: Inline XBRL Viewer (sec.gov)

The full text of the announcement from PDS Biotechnology is available online here: PDS Biotech - PDS Biotech - PDS Biotech Completes $35 Million Financing Agreement Led By Horizon Technology Finance

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About NetScientific

NetScientific plc (AIM: NSCI) is a holding company, that invests in, develops, commercialises and realises shareholder value in life sciences/healthcare, sustainability and technology companies, which offer significant growth potential predominately in the UK, EU and USA.

With the acquisition of EMV Capital in August 2020 and further investment activities, the Group more than doubled its portfolio from 8 to 22 companies. These are held as direct subsidiary and minority stakes, through balance sheet investment or capital under advisory, varying from start-up private companies to publicly listed equities. 

NetScientific delivers shareholder returns through a proactive and hands-on management approach to their portfolio companies; identifying, investing in, and helping to build game-changing companies. The Group targets value inflection points and the release of value through partial or full exits from trade sales, public listings, or equity sales. The Company has a strong transatlantic and growing international presence, providing attractive expansion prospects. 

NSCI can deploy a capital-light investment structure; utilising the power of the PLC Brand, and the NetScientific balance sheet to anchor future investments and achieve a multiplier effect by attracting 3rd party investment for the portfolio companies. 

NetScientific is headquartered in London, United Kingdom, and was admitted to trading on AIM, a market operated by the London Stock Exchange, in 2013 (website: netscientific.net).

Appendix

Venture Loan and Security Agreement

On August 24, 2022, PDS Biotechnology Corporation (the "Company"), as borrower (the "Borrower"), entered into that certain Venture Loan and Security Agreement (the "Loan and Security Agreement") by and among Borrower, PDS Operating Corporation, as guarantor ("Guarantor", including the Borrower and any subsidiary of the Borrower party thereto from time to time, collectively, the "Loan Parties" and each individually a "Loan Party") , the persons party thereto from time to time as lenders (collectively, the "Lenders"), and Horizon Technology Finance Corporation, as a lender and collateral agent for itself  and the other Lenders (in such capacity, the "Collateral Agent").

Term loan Amounts. The Loan and Security Agreement provides for the following six (6) separate and independent term loans: (a) a term loan in the amount of $7,500,000 ("Loan A"), (b) a term loan in the amount of $10,000,000 ("Loan B"), (c) a term loan in the amount of $3,750,000 ("Loan C"), (d) a term loan in the amount of $3,750,000 ("Loan D"), (e) a term loan in the amount of $5,000,000 ("Loan E"), and (f) a term loan in the amount of $5,000,000 ("Loan F") (with each of Loan A, Loan B, Loan C, Loan D, Loan E, and Loan F, individually a "Loan" and, collectively, the "Loans").  Loan A, Loan B, Loan C, and Loan D are committed Loans and shall be made available to Borrower upon entering into the Loan and Security Agreement.  Loan E and Loan F are uncommitted Loans that may be advanced by the Lenders upon their discretion prior to July 31, 2023 upon the satisfaction by Borrower and Guarantor of certain agreed upon conditions precedents. Borrower may only use the proceeds of the Loans for working capital or general corporate purposes.

Maturity. Each Loan matures on the forty-eight (48)-month anniversary following the applicable Funding Date (defined as any date on which a Loan is made to or on account of the Borrower under the Loan and Security Agreement) (the "Maturity Date") unless accelerated pursuant to agreed upon events of default. All amounts outstanding under each Loan will be due and payable upon the earlier of the Maturity Date or the acceleration of the loans and commitments upon an event of default.

Interest Rate. The principal balance of each Loan bears a floating interest. The interest rate is calculated initially and, thereafter, each calendar month as the sum of (a) the per annum rate of interest from time to time published in The Wall Street Journal as contemplated by the Loan and Security Agreement, or any successor publication thereto, as the "prime rate" then in effect, plus (b) 5.75%; provided that, in the event such rate of interest is less than 4.00%, such rate shall be deemed to be 4.00% for purposes of calculating the interest rate. Interest is payable on a monthly basis based on each Loan principal amount outstanding the preceding month.

Amortization. Each Loan shall commence amortization upon the date set forth on the promissory note executed in connection with the respective Loan, upon which the Borrower is required to commence making equal payments of principal plus accrued interest on the outstanding principal amount of the respect Loan (the "Loan Amortization Date"), and continuing thereafter on the first business day of each calendar month through the Maturity Date.

Prepayment Premium. The Borrower may, at its option upon at least ten (10) business days' written notice to the Lenders, prepay all (and not less than all) of the outstanding Loan by simultaneously paying to each Lender an amount equal to (i) any accrued and unpaid interest on the outstanding principal balance of the Loans; plus (ii) an amount equal to (A) if such Loan is prepaid on or before the Loan Amortization Date applicable to such Loan, three  percent (3%) of the then outstanding principal balance of such Loan, (B) if such Loan is prepaid after the Loan Amortization Date applicable to such Loan, but on or before the date that is twelve (12) months after such Loan Amortization Date, two percent (2%) of the then outstanding principal balance of such Loan, or (C) if such Loan is prepaid more than twelve (12) months after the Loan Amortization Date but prior to the stated Maturity Date applicable to such Loan, one percent (1%) of the then outstanding principal balance of such Loan; plus (iii) the outstanding principal balance of such Loan; plus (iv) all other sums, if any, that shall have become due and payable hereunder.  No prepayment premium will be applied to any outstanding balance of any Loan paid on the stated Maturity Date.

Security. The Borrower's obligations are secured by a security interest in all of the Loan Parties' respective rights, title, interests, claims and demands in, to and under all of the Loan Parties respective  properties and other assets, subject to limited exceptions and excluding the Loan Parties' intellectual property.

Covenants; Representations and Warranties; Other Provisions. The Loan and Security Agreement contains customary representations, warranties and covenants, including covenants by the Loan Parties limiting additional indebtedness, liens, including on intellectual property, guaranties, mergers and consolidations, substantial asset sales, investments and loans, certain corporate changes, transactions with affiliates and fundamental changes.

Default Provisions. The Loan and Security Agreement provides for events of default customary for term loans of this type, including but not limited to non-payment, breaches or defaults in the performance of covenants, insolvency, and bankruptcy by and/or of the Company.

Warrants

In connection with the entry into the Loan and Security Agreement, the Company has issued to Horizon Technology Finance Corporation and Powerscourt Investments XXV, LP warrants (each, individually, a "Warrant" and, collectively, the "Warrants") to purchase an aggregate number of shares of the Company's Common Stock (as defined below) for each Loan as follows: (a) for Loan A an amount that is equal to $300,000 divided by the warrant price for such Warrant, (b) for Loan B an amount that is equal to $400,000 divided by the warrant price for such Warrant, (c) for Loan C an amount that is equal to $150,000 divided by the warrant price for such Warrant, (d) for Loan D an amount that is equal to $150,000 divided by the warrant price for such Warrant, (e) for Loan E an amount that is equal to $200,000 divided by the warrant price for such Warrant, and (f) for Loan F an amount that is equal to $200,000 divided by the warrant price for such Warrant.

The Warrants, which are exercisable for an aggregate of 381,625 shares, will be exercisable for a period beginning on the Date of Grant and ending on the earlier of (A) ten (10) years from the Date of Grant, and (B) the closing of (A) (i) the sale, lease, exchange, conveyance or other disposition of all or substantially all of the Company's property or business, or (ii) its merger into or consolidation with any other corporation (other than a wholly-owned subsidiary of the Company), or any transaction (including a merger or other reorganization) or series of related transactions, in which more than 50% of the voting power of the Company is disposed of, in each case, for cash or for marketable securities meeting all of the following requirements: (1) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is then current in its filing of all required reports and other information under the Securities Act of 1933, as amended, and the Exchange Act, (2) the class and series of shares or other security of the issuer that would be received by the holder of a Warrant in connection with a merger were such holder to exercise or convert such Warrant on or prior to the closing thereof is then traded on a national securities exchange or over-the-counter market, (3) the issuer thereof has a market cap of at least $750,000,000 and (4) such holder would not be restricted by contract or by applicable federal and state securities laws from publicly re-selling, within six (6) months and one day following the closing of such acquisition, all of the issuer's shares and/or other securities that would be received by such holder in such merger were such holder to exercise or convert a Warrant in full on or prior to the closing of such merger. Each Warrant will be exercisable at a per-share exercise price of $3.6685, which is equal to the 10 day average closing price prior to June 16, 2022, the date on which the term sheet relating to the Loan and Security Agreement was entered into, subject to certain adjustments as specified in the Warrants.

The foregoing descriptions of the Loan and Security Agreement and the Warrants are qualified in their entirety by reference to the Loan and Security Agreement and the form of Warrant each of which will be filed as exhibits to the Company's quarterly report on Form 10-Q for the quarter ending September 30, 2022.

Sales Agreement

On August 24, 2022, the Company entered into an At Market Issuance Sales Agreement (the "Sales Agreement") with B. Riley Securities, Inc. and BTIG, LLC (each an "Agent" and collectively the "Agents") with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.00033 per share (the "Common Stock"), having an aggregate offering price of up to $50.0 million (the "Placement Shares") through or to the Agents, as sales agents or principals. The issuance and sale, if any, of the Placement Shares by the Company under the Sales Agreement is subject to the effectiveness of the Company's registration statement on Form S-3 (File No. 333-267041), which was filed with the Securities and Exchange Commission on August 24, 2022.

Upon delivery of a placement notice and subject to the terms and conditions of the Sales Agreement, the Agents may sell the Placement Shares by any method permitted by law deemed to be an "at the market" offering as defined in Rule 415 of the Securities Act of 1933, as amended, including, without limitation, sales made through The Nasdaq Capital Market or on any other existing trading market for the Common Stock. The Agents will use commercially reasonable efforts to sell the Placement Shares from time to time, based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company will pay the Agents a commission equal to three percent (3%) of the gross sales proceeds of any Placement Shares sold through the Agents under the Sales Agreement, and also has provided the Agents with customary indemnification and contribution rights.

The Company is not obligated to make any sales of the Common Stock under the Sales Agreement. The offering of Placement Shares pursuant to the Sales Agreement will terminate upon the earlier of (i) the sale of all Placement Shares subject to the Sales Agreement or (ii) termination of the Sales Agreement in accordance with its terms.

DLA Piper LLP (US), counsel to the Company, has issued a legal opinion relating to the Placement Shares. A copy of such legal opinion, including the consent included therein, is attached as Exhibit 5.1 hereto.

The foregoing description of the Sales Agreement is qualified in its entirety by reference to the full text of the Sales Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy the securities discussed herein, nor shall there be any offer, solicitation, or sale of the securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.

The information provided in Item 1.01 of this Current Report on Form 8-K regarding the Warrants is incorporated by reference into this Item 3.02.

On August 24, 2022, the Company issued a press release regarding the Loan and Security Agreement. A copy of the press release is filed as Exhibit 99.1 hereto and incorporated herein by reference.