Non-dilutive loan note subscription

15 July 2021

FOR IMMEDIATE RELEASE

Nanoco Group plc

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

Non-dilutive loan note subscription for £3.15 million

Nanoco Group plc (LSE: NANO), a world leader in the development and manufacture of cadmium-free quantum dots and other specific nanomaterials emanating from its technology platform, today announces the completion of a non-dilutive subscription for loan notes by its major shareholders, raising gross proceeds of £3.15 million (the 'Loan Notes').

Highlights

·    Non-dilutive subscription for 4,500,000 Loan Notes by Lombard Odier Asset Management (Europe) Limited ('Lombard Odier') and ORA Capital Limited (a company associated with Richard Griffiths), together the Company's 'Major Shareholders', raising £3.15m gross, on commercially advantageous terms for Nanoco

·    Excellent progress expanding product and customer portfolio - actively engaged with five customers on eight different materials including the customer announced on 5 July 2021

·    Confidence remains high in the strength of the Company's case in the litigation against Samsung and of a favourable and transformative outcome for shareholders

·    The proceeds from the Subscription extend Nanoco's organic business cash runway beyond the point of visibility on commercial production orders and key dates in the Samsung litigation process

Background to and benefits of the subscription for the Loan Notes

The Group continues to make excellent progress in expanding its product and customer portfolio of nano-materials for use in infra-red sensing applications. Since 2018 Nanoco has expanded its engagement from one customer and one material development programme to five customers on eight different materials today. The Company is working to deliver its ultimate goal of offering multiple materials to fill each of the major potential device operating wavelengths to the market.

The Group announced one such example on 5 July 2021 in a new development agreement with a very significant Asian Chemical company that supplies materials to various major electronics markets. Roadmaps already published by another customer for their own devices suggest commercial production orders may be placed with Nanoco during 2023 with potential visibility in late 2022, subject to the successful delivery of all intervening technical milestones and final production validation of the Company's materials manufactured at its Runcorn site.

On 28 June 2021, the Company announced that it had petitioned the Court in the Eastern District of Texas (the 'Court') to defer the expected trial date for its litigation against Samsung for the alleged wilful infringement of the Company's IP. The Company was seeking a delay until after the outcome of the inter partes reviews (IPRs) of the patents in the case is known, expected by May 2022. This petition has now been granted and has a number of benefits for Nanoco including the resolution of the majority of issues relating to patent validity in advance of the Court case. This will allow Nanoco to focus its trial efforts on the question of infringement and any resulting damages. The Group now expects the trial to be held in late 2022 and remains confident in the strength of Nanoco's case and a favourable and transformative outcome for shareholders.

To underpin both the organic and litigation opportunities set out above, the Company's Major Shareholders have subscribed for an aggregate of 4,500,000 Loan Notes on the terms set out below. This extends the cash runway for the Group's organic business activities beyond the points when the Company expects visibility on commercial production orders, the expected initial findings for the IPRs, and the verdict in the re-scheduled trial.

Details of the non-dilutive subscription for the Loan Notes

The Loan Notes are unsecured and have a nominal value of £1 each, an arrangement fee of 1.4% of the nominal amount and are repayable three years from completion which is expected to take place prior to 31 July 2021. The subscription price of 70p represents a discount to the nominal value of £1 equivalent to 12% interest per annum. The Company may redeem the Loan Notes at any time prior to their maturity at 80% of nominal value during the first year of the term; 90% at any time in year two, and 100% at any time in year three. In the event of a successful outcome to the litigation or a change of control of the Company, the Loan Note holders are entitled to a success bonus of 105% of the nominal value of the Loan Notes Subscribed.

Importantly, the terms of the subscription for the Loan Notes ensure that there is no dilution for equity holders at this transformational point in the Company's value. The terms of the subscription are superior to all of the offers received in the independent tender exercise carried out to select the litigation funding partner. The Subscription will not materially alter the economic impact on the Group of any litigation award and the Board still expects that Nanoco will retain around 50% of a modest award from the litigation, rising to around 80% of a more substantial award.

The Board has therefore concluded that the Loan Notes represent good commercial value for the Company, are on fair market terms, and are in the best interests of shareholders.

Brian Tenner, Chief Executive Officer of Nanoco Group said:

"The Group is expanding its nano-material offering to an increasing number of global customers focused on infra-red sensing applications in a number of significant electronics markets. It is encouraging that a major customer has published its own development roadmap which suggests commercial production orders for Nanoco in 2023, in addition to the new strategic customer announced on 5 July 2021. This is an exciting and critical time for the continued funding of our organic operations.

"We are also very pleased with the progress of our litigation against Samsung. We have simplified our route forward and significantly enhanced the prospects of a successful outcome noting that operational trading companies which actually practise their IP, such as Nanoco, typically enjoy higher success rates at trial than those who do not. In addition, the support of the litigation funding partner will ensure that the Loan Note funds can be focused solely on exploiting existing organic commercial opportunities.

"The Loan Notes will not only enable us to address these commercial opportunities, but also maintain our balance sheet during the lawsuit against Samsung as a fully operational business, rather than as an IP shell. It also adds stability to the business and allows us to retain the extensive experience and skills of our smaller focused team. The support of our Major Shareholders is very welcome and the Loan Notes will maximise our chances of delivering significant organic value and litigation upside value to all shareholders from the expected commercial and litigation success in the coming years."

- Ends -

For further information, please contact:

Nanoco Group PLC:                                                                             +44 (0) 161 603 7900

Brian Tenner, CEO

Liam Gray, Company Secretary

Caroline Watson, Investor Relations Manager

[email protected]

Peel Hunt (Corporate Broker):

Edward Knight                                                                                      +44 (0) 207 418 8900

Nick Prowting

MHP Communications:                                                                      +44 (0) 203 128 8788

Reg Hoare

Giles Robinson

Pete Lambie

[email protected]

The person responsible for arranging for the release of this announcement on behalf of Nanoco is Liam Gray, Company Secretary.

MAR

The information contained within this announcement is considered by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014.  Upon the publication of this announcement via a Regulatory Information Service, this inside information will be considered to be in the public domain.

FORWARD LOOKING STATEMENTS

This announcement (including information incorporated by reference in this announcement) and other information published by Nanoco may contain statements about Nanoco that are or may be deemed to be forward looking statements.  Such statements are prospective in nature.  All statements other than historical statements of facts may be forward looking statements.  Without limitation, statements containing the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or "considers" or other similar words may be forward looking statements.

Forward looking statements inherently contain risks and uncertainties as they relate to events or circumstances in the future.  Important factors such as business or economic cycles, the terms and conditions of Nanoco's financing arrangements, tax rates, or increased competition may cause Nanoco's actual financial results, performance or achievements to differ materially from any forward looking statements.  Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof.  Nanoco disclaims any obligation to update any forward looking or other statements contained herein, except as required by applicable law.

Notes for editors:

About Nanoco Group plc

Nanoco (LSE: NANO) harnesses the power of nano-materials. Nano-materials are materials with dimensions typically in the range 1 - 100 nm. Nano-materials have a range of useful properties, including optical and electronic. Quantum dots are a subclass of nano-material that have size-dependent optical and electronic properties. The Group produces quantum dots. Within the sphere of quantum dots, the Group exploits different characteristics of the quantum dots to target different performance criteria that are attractive to specific markets or end-user applications such as the Display and Electronics markets. One of the interesting properties of quantum dots is photoluminescence: the emission of longer wavelength light upon excitation by light of a shorter wavelength. The colour of light emitted depends on the particle size. Nanoco's CFQD^® quantum dots are free of cadmium and other toxic heavy metals and can be tuned to emit light at different wavelengths across the visible and infrared spectrum, rendering them useful for a wide range of applications including displays, lighting and biological imaging.

Nanoco was founded in 2001 and is headquartered in Manchester, UK, with a US subsidiary, Nanoco Inc., in Concord, MA. Nanoco continues to build out a world-class, patent-protected IP portfolio generated both by its own innovation engine, as well as through acquisition.

Nanoco is listed on the Main Market of the London Stock Exchange and trades under the ticker symbol NANO. For further information please visit: www.nanocotechnologies.com.