Update on Equity Fundraising

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THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY. IT IS NOT AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY NEW ORDINARY SHARES OF KRM22 PLC WHETHER IN THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR OTHERWISE OR IN ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THE INFORMATION COMMUNICATED IN THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014 AND UPON PUBLICATION OF THE ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

KRM22 plc
("KRM22", the "Group" or the "Company")

Update on Equity Fundraising

KRM22 plc (AIM: KRM), the technology and software investment company focused on risk management for capital markets, announces that, further to its announcement of 7 May 2020, the Company is in discussions with its shareholders and certain other investors regarding an equity fundraising (the "Fundraise"). The Company is pleased to confirm that it has received a firm commitment for an equity investment of approximately £1.0m at 30 pence per share in the Fundraise. This exceeds the Company's original target for the Fundraise. The Company remains in dialogue with other existing and new potential investors regarding additional investment to add to the total funds raised and a further announcement will be made once the investor road show has concluded and the Fundraise has completed which is expected on 14 May 2020.  

The proceeds of the Fundraise will go to strengthen the Company's working capital facilities and accelerate the Group's growth.

finnCap Ltd is acting as nominated adviser, broker and sole bookrunner in connection with the Fundraise. The Fundraise is not underwritten.

In addition to the Fundraise the Company has reached agreement with its existing debt provider Harbert, that it may, at its own election draw down a further £500,000 conditional on completion of the Fundraise. However, depending on the final proceeds raised in the Fundraise the Company may choose not to draw down on the facility at this time.

Final Results and Current Trading

The Company expects to report its audited results for the year ended 31 December 2019 ("FY19") during the course of the week commencing 18 May 2020. In the results, the Company expects to report the following, remaining subject to audit.

As announced in the trading update of 2 April 2020, the Company has continued to see strong interest in its risk management offerings and continues to be in advanced stages of negotiation with regards to a number of multi-year contracts. One of these contracts is with a UK based global brokerage firm which is expected imminently and two further contracts are with Tier-1 banks and if all are signed, are expected to increase ARR by an aggregate of over £0.6m ARR and account for non-recurring revenue of over £0.2m. However, as previously detailed it has also seen that the sales cycles for contracts has extended as a result of COVID-19. The Company remains encouraged by the fact that existing and new potential customers continue to remain engaged in discussions on new business, however the time to complete the negotiations can be unpredictable. Despite this, pursuant to the actions taken by the Board to reduce costs, the Board still expects to be adjusted EBITDA positive by 31 December 2020.

KRM22 has made a number of acquisitions since inception and these acquisitions have comprised of a purchase price that includes an initial consideration and deferred contingent consideration (satisfied in cash or shares at the Company's discretion). The Company acquired Prime Analytics in September 2018 and despite the progress made by the Group, the Board does not expect that the milestones attached to the two deferred consideration payments of US$1.5m each in FY19 and FY20 will be met and has therefore written back the discounted value of the deferred consideration in FY19. Similarly, the Company acquired Object+ in May 2019 and it is not expected that the milestones attached to the first deferred consideration payment of US$0.6m will be met and and the Company has therefore excluded this element of consideration from the fair value of the total consideration that could have been for the acquisition of Object+.

Director Participation

Keith Todd, Executive Chairman and CEO of the Company, has informed the Board of his intention to participate in the Fundraise and to make a further equity investment of £100,000 in the Company.  Mr Todd will irrevocably commit to subscribe for those new ordinary shares following the publication of the Company's final results, which is expected in the week commencing 18 May 2020. A further announcement will be made when the subscription is complete.

For further information please contact:

KRM22 plc                                                                               [email protected]

Keith Todd CBE, Executive Chairman and CEO

Kim Suter, CFO

finnCap Ltd (Nominated Adviser and Sole Broker)         +44 (0)20 7220 0500

Carl Holmes / Kate Bannatyne / Matthew Radley

Alice Lane / Sunila de Silva (ECM)

About KRM22 plc

KRM22 is a closed-ended investment company which listed on AIM on 30 April 2018. The Company has been established with the objective of creating value for its investors through the investment in, and subsequent growth and development of, target companies in the technology and software sector, with a focus on risk management in capital markets.

Through its investments and the Global Risk Platform, KRM22 helps capital market companies reduce the cost and complexity of risk management. The Global Risk Platform provides applications to help address firms' regulatory, market, technology and operations risk challenges and to manage their entire enterprise risk profile.

Capital markets companies' partner with KRM22 to optimise risk management systems and processes, improving profitability and expanding opportunities to increase portfolio returns by leveraging risk as alpha.

KRM22 PLC is quoted on AIM and the Group is headquartered in London, with offices in several of the world's major financial centres.

See more about KRM22 at KRM22.com.

IMPORTANT NOTICES

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

This Announcement should be read in its entirety. In particular, you should read and understand the information provided in this "Important Notices" section of this Announcement.

This Announcement does not constitute a prospectus for the purposes of the Prospectus Rules of the FCA, nor does it comprise an admission document prepared in accordance with the AIM Rules. Accordingly, this Announcement has not been approved by or filed with the FCA.

finnCap, which is authorised and regulated in the United Kingdom by the FCA, is acting as nominated adviser, broker and sole bookrunner to the Company for the purposes of the AIM Rules exclusively for the Company and no one else and will not be responsible to any other person for providing protections afforded to their customers nor for providing advice in relation to the contents of this Announcement. No representation, warranty, express or implied, is made by finnCap for the accuracy of any information or opinions contained in this Announcement or the omission of any material information, nor has finnCap authorised the contents of this Announcement for any purpose and no liability whatsoever is accepted by finnCap. finnCap expressly disclaims all and any responsibility or liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this Announcement.

 Forward-Looking Statements

This Announcement contains forward-looking statements. These statements relate to the Group's future prospects, developments and business strategies. Forward-looking statements are identified by their use of terms and phrases such as "potential", "estimate", "expect", "may", "will" or the negative of such terms and phrases, variations or comparable expressions, including references to assumptions. The forward-looking statements in this Announcement are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. These forward-looking statements speak only as at the date of this Announcement. No statement in this Announcement is intended to constitute a profit forecast or profit estimate for any period. Neither the Directors nor the Company undertake any obligation to update forward-looking statements other than as required by the AIM Rules or by the rules of any other securities regulatory authority, whether as a result of new information, future events or otherwise.