The People's Operator plc 

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

Subscriptions, Share Reorganisation, Directorate Change,

Trading Update & Notice of General Meeting

TPO, the cause-based commercial mobile virtual network operator, is pleased to announce that it has secured a proposal for major investment and funding from WWW Holding Company Limited ("WWW"), the majority owner of LycaMobile, the world's largest international mobile virtual network operator.

The Company announced on 19 July 2018 that:

·    it was in discussions with a third party regarding a potential investment in the Company;

·    the Company had received an initial advance from the third party and, while these discussions were continuing, it was the third party's intention to continue to provide bridging finance to the Company; and

·   it was anticipated that this bridging finance would ultimately be converted to equity as part of any further potential investment by the third party.

The third party referred to in that announcement is WWW. WWW is a private company incorporated in the United Kingdom. WWW is a non-trading company and its primary asset is a majority shareholding in part of the Lyca group of companies. Lyca Group, founded in 2002, is a group of individual companies that operate businesses in telecommunications, international money remittance, media, healthcare, hospitality, and IT. Lyca Group's main business is Lycamobile, a global MVNO telecommunications provider for domestic and international calls, data, and broadband. Lycamobile partners with over 200 global telecommunications carriers, is present in 23 countries and serves over 15 million customers.

WWW agreed to provide working capital of up to £50,000 per calendar week to the Company as bridging finance while discussions continued. This bridging finance, which is currently repayable on demand, is ongoing pending the General Meeting.

Share Reorganisation

The Company currently has 3,021,340,043 Existing Ordinary Shares in issue, each of which has a nominal value of £0.0001. The volume weighted average price per share during the period from 22 June 2018 to 29 June 2018 (the last day on which the Existing Ordinary Shares were traded on AIM) was £0.000074. The Company is not permitted by law to issue shares at an issue price which is below their nominal value.

A further consequence of having a very large number of shares in issue, with a very low market share price, is that small share trades can result in large percentage movements in the market share price which results in considerable share price volatility. The Board also believes that the bid-offer spread on shares priced at low absolute levels can be disproportionate to the market share price, to the detriment of Shareholders.

In order to (i) reduce the number of shares in issue, (ii) create a nominal value for a share which should be significantly below the price at which shares trade and (iii) attempt to reduce the likelihood of there being large dealing spreads in the shares, thereby reducing the likelihood of share price volatility, the Board is proposing the consolidation, subdivision and re-designation of the Existing Ordinary Shares ("Share Capital Reorganisation"). The Share Capital Reorganisation will involve the following steps:

·    every 2,000 Existing Ordinary Shares as at 6.00 p.m. on the Record Date will be consolidated into one ordinary share of £0.20; and

·    each such ordinary share of £0.20 will then be sub-divided and re-designated into one New Ordinary Share and 1,900 Deferred Shares of £0.0001.

No Shareholder will, pursuant to the Share Capital Reorganisation, be entitled to receive a fraction of a New Ordinary Share and where, as a result of the consolidation, sub-division and re-designation of Existing Ordinary Shares described above, any Shareholder would otherwise be entitled to receive a fraction of a New Ordinary Share in respect of his holding of Existing Ordinary Shares at the Record Date (a "Fractional Shareholder"), the Existing Ordinary Shares representing that fractional entitlement will be re-designated as Deferred Shares. This means that Fractional Shareholders will not have resultant proportionate holdings of New Ordinary Shares exactly equal to their proportionate holdings of Existing Ordinary Shares.

Assuming no further Existing Ordinary Shares are issued before the General Meeting, that Resolution 1 is passed and that the Share Capital Reorganisation occurs, prior to the issue of any shares to WWW the Company will have a maximum of 1,510,637 New Ordinary Shares each in issue. This figure is adjusted from the simple mathematical total of 1,510,670 to take account of the 33 consolidated shares lost by virtue of fractional shareholdings.

The WWW Subscription

The Company proposes to raise up to £1.3 million (before expenses) pursuant to:

·        an allotment of 645,000 New Ordinary Shares to WWW at a price of £0.10 per New Ordinary Share; and

·        the allotment to WWW of £1,235,500 nominal value of Convertible Loan Notes.

Further details of the issue of New Ordinary Shares and the terms of the Convertible Loan are set out below.

The net proceeds of the WWW Subscription (after repaying the bridging financing previously received from WWW) will be used to invest in product development and in implementing synergies within the operating systems of the Company and Lycamobile to reduce operating costs and increase sales

WWW will on completion of the WWW Subscription enter into a relationship agreement in a customary form with the Company and its nominated advisor, finnCap Ltd.

Following completion of the WWW Subscription, the Non-Executive Directors of the Company will continue to serve on the Board, with Sam Tillotson continuing in his Executive Director role as CEO. In addition, on completion of the WWW Subscription and under WWW's right to nominate up to two Board members, Haresh Daswani will join the Board as an Executive Director. Mr. Daswani has nearly two decades of investment banking, corporate finance and private equity experience having worked in the M&A and Financial Sponsors teams at Goldman Sachs, Deutsche Bank and Dresdner Kleinwort and the private equity team at Man Group. Mr. Daswani also spent time working in M&A in India and Singapore at Avista Houlihan Lokey. Mr Daswani will join TPO to drive its global revenue and cost-saving strategic initiatives.

The following disclosures in relation to Haresh Daswani (aged 40) are made in accordance with Schedule 2(g) and Rule 17 of the AIM Rules.

Mr Daswani does not hold any Ordinary Shares in the Company.

Terms of the WWW Subscription and Convertible Loan Stock Instrument

The 645,000 New Ordinary Shares to be allotted to WWW will represent, on issue, approximately 29.92 per cent. of the enlarged issued share capital of the Company.

The Convertible Loan Stock to be allotted to WWW will be constituted pursuant to the Convertible Loan Stock Instrument.

The principal terms of the Convertible Loan Stock are as follows:

·    The Convertible Loan Stock will bear interest at a rate of six per cent. per annum. If interest cannot be paid in cash due to the terms of the Intercreditor Agreement or the Company's working capital position, the Company may pay interest by way of issue of PIK Notes.

·    The Convertible Loan Stock is repayable on the fifteenth anniversary of the date of the Convertible Loan Stock Instrument.

·    The Convertible Loan Notes will be unsecured and subject to the terms of the Intercreditor Agreement.

·    The Convertible Loan Notes will be convertible by the holder at any time, in whole or in part, into New Ordinary Shares at a price of £0.10 per New Ordinary Share.

·    The Convertible Loan Stock is freely transferrable.

·    The Convertible Loan Stock will be not admitted to trading on any exchange

Following exercise of the conversion rights attaching to the £1,235,500 Convertible Loan Notes to be subscribed for by WWW pursuant to the WWW Subscription, WWW would hold approximately 89.59 per cent. of all the New Ordinary Shares, assuming WWW retained the 645,000 New Ordinary Shares to be issued to it pursuant to the WWW Subscription and the Company issued no further New Ordinary Shares.

Working Capital Facility

Subject to completion of the WWW Subscription, WWW will agree to provide further working capital to the Company pursuant to the Working Capital Facility, unrelated to the funds to be derived from the Subscription and the Convertible Loan Notes, on the following terms:

·    The Company will be entitled to draw on up to £215,000 each calendar month, payable on the first day of each month starting in January 2019, for a period not exceeding 12 months.

·    The principal sums so borrowed will accrue interest at a rate of 6 per cent. per annum.

·    The Company shall pay on ongoing fee equal to 4 per cent. of the amounts outstanding to the Company's Existing Lender, Barclays Bank plc, annually. The payment of such fee may be satisfied by the Company via issue of Convertible Loan Stock (rather than cash).

·    The Company's obligations in respect of the principal sum so borrowed and any outstanding interest will be secured over all of the Company's and certain of its subsidiaries' assets. This security will be subordinate to the security granted to Barclays Bank plc.

·    The principal amounts borrowed under the Working Capital Facility will be due for repayment on 1 June 2022 or earlier at the Company's discretion (subject, in each case to the terms of the Intercreditor Agreement). Interest will be satisfied in kind by the issue of Convertible Loan Stock.

Current Trading

The disposal of the Company's US assets to Ting Inc., as approved at the general meeting of the Company held on 25 June 2018, is scheduled for completion at the end of December 2018

The Company's UK business has been maintained over the past six months in line with the restrictions placed on the Company by its financial situation and the consequent reduction in marketing spend.

Release of 2017 Full Year Results and 2018 Interim Results and Lifting of Suspension

The Board believes that following shareholder approval of the Resolutions at the General Meeting, it will be able to approve the release of the full year results for the 12 months ended 31 December 2017 and the interim results for the six months ended 30 June 2018. Following the release of these results the Company will apply to AIM for the suspension of trading in the Company's shares to be lifted.

Posting of Circular and Notice of General Meeting

A circular (the "Circular"), containing a notice convening the General Meeting to be held at the offices of the Company at Unit 53, The Chocolate Studios, 7 Shepherdess Place, London N1 7LJ at 11.00 a.m. on 20 December 2018 (the "Notice"), will be posted to shareholders today and will be available on the Company's website at https://www.thepeoplesoperator.com/documentcentre/ . The General Meeting has been convened to consider and if thought fit approve the Resolutions set out in the Circular and Notice (the "Resolutions").

The Directors consider the Resolutions to be set out in the Circular and Notice to be in the best interests of the Company and the shareholders as a whole. The Directors who hold Ordinary Shares intend to vote in favour of the Resolutions in respect of their shareholdings, representing in aggregate approximately 10.27 per cent. of the Company's current issued share capital as at the date of this announcement.

The Board believes that whilst there may be alternative sources of funding available to the Company, there is no guarantee of this and there is no guarantee that WWW will continue to extend funding to the Company. It is therefore of critical importance that Shareholders vote in favour of Resolutions 1 and 2. Absent of being able to raise additional funds, the Company will have insufficient working capital to continue to trade and, in the absence of any other source of funding, there may be no alternative but to initiate insolvency proceedings.

Expected Timetable of Principal Events

Further information on the business to be proposed at the General Meeting is set out below.

Unless otherwise defined herein, capitalised terms used in this announcement shall have the same meanings as defined in the Circular containing notice of the General Meeting, a copy of which will be available on the Company's website https://www.thepeoplesoperator.com/documentcentre/

For further details, please contact:

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

The following text has been extracted from the Circular:

General Meeting

I am writing to provide you with details of a general meeting of the Company to be held at the Company's registered office at Unit 53, The Chocolate Studios, 7 Shepherdess Place, London N1 7LJ on 20 December 2018 at 11.00 a.m.

The purpose of the General Meeting is to consider and if thought fit approve the following Resolutions:

·        a resolution to consolidate, sub-divide and re-designate the Company's Existing Ordinary Shares of £0.0001 such that, for every 2,000 Existing Ordinary Shares held, a Shareholder will receive one New Ordinary Share of £0.01 and 1,900 Deferred Shares of £0.0001 each; and

·          a resolution to authorise the Directors to (i) allot 645,000 New Ordinary Shares to WWW for £64,500, (ii) allot up to £3,900,000 nominal value of Convertible Loan Notes and New Ordinary Shares on conversion of such Convertible Loan Notes, and to dis-apply pre-emption rights in respect of such allotments.

The Notice of General Meeting is set out in the Circular.

1.            Background to the proposals

The Company announced on 8 June 2018 that it had entered into an agreement to transfer the subscribers of the Company's US subsidiary to a third party, and this agreement was approved by Shareholders at a general meeting of the Company held on 25 July 2018 (the "Disposal"). The Company made clear at the time that a proportion of the proceeds of the Disposal were intended to be used to repay a proportion of the Company's outstanding debt to the Existing Lender.

The Company announced on 15 June 2018 that the Existing Lender had requested that all proceeds from the Disposal and the related release of deposits should be placed into a security realisation account only to be released on the basis that the Company could demonstrate that it could raise further funds to invest in its UK business. The Company further announced that it was urgently seeking bridge funding pending receipt of the proceeds of the Disposal.

The Company announced on 26 June 2018 that it would not be able to publish its annual audited accounts for the year ended 31 December 2017 ("FY17") by 30 June 2018. This delay was because the Company remained in discussion with the Existing Lender regarding the use of proceeds from the Disposal, whilst also urgently continuing to seek bridge funding to cover the period to receipt of such proceeds. Until those discussions were concluded and resolved, the Company's auditor would be unable to sign off on the Company's FY17 accounts.

On 2 July 2018 the Company announced that it had requested that trading in the Company's Existing Ordinary Shares on AIM be suspended pending publication of the FY17 accounts, following which the Company would request the suspension to be lifted. As of the date of the Circular the suspension remains in place.

The Company announced on 19 July 2018 that:

·          it was in discussions with a third party regarding a potential investment in the Company;

·          the Company had received an initial advance from the third party and, while these discussions were
continuing, it was the third party's intention to continue to provide bridging finance to the Company; and

·        it was anticipated that this bridging finance would ultimately be converted to equity as part of any further potential investment by the third party.

The third party referred to in that announcement is WWW. Further information on WWW is given in section 3 below. WWW agreed to provide working capital of up to £50,000 per calendar week to the Company as bridging finance while discussions continued. This bridging finance, which is currently repayable on demand, is ongoing pending the General Meeting and further details are given in section 4 below. The Company has, at the date of the Circular, already received £850,000 in interim funding from WWW and expects to receive a further £100,000 in interim funding by the time of the General Meeting.

If Resolutions 1 and 2 are approved, the Company currently believes that it will be in a position to approve and publish its FY17 accounts and its interim accounts for the six months ended 30 June 2018. Following this it is the intention of the Board to request that the AIM suspension be listed and for the Company's shares to resume trading.

2.            Share Capital Reorganisation

2.1          Background to and reasons for the Share Capital Reorganisation

The Company currently has 3,021,340,043 Existing Ordinary Shares in issue, each of which has a nominal value of £0.0001. The volume weighted average price per share during the period from 22 June 2018 to 29 June 2018 (the last day on which the Existing Ordinary Shares were traded on AIM) was £0.000074. The Company is not permitted by law to issue shares at an issue price which is below their nominal value.

A further consequence of having a very large number of shares in issue, with a very low market share price, is that small share trades can result in large percentage movements in the market share price which results in considerable share price volatility. The Board also believes that the bid-offer spread on shares priced at low absolute levels can be disproportionate to the market share price, to the detriment of Shareholders.

In order to (i) reduce the number of shares in issue, (ii) create a nominal value for a share which should be significantly below the price at which shares trade and (iii) attempt to reduce the likelihood of there being large dealing spreads in the shares, thereby reducing the likelihood of share price volatility, the Board is proposing the consolidation, subdivision and re-designation of the Existing Ordinary Shares ("Share Capital Reorganisation"). The Share Capital Reorganisation will involve the following steps:

·          every 2,000 Existing Ordinary Shares as at 6.00 p.m. on the Record Date will be consolidated into one ordinary share of £0.20; and

·         each such ordinary share of £0.20 will then be sub-divided and re-designated into one New Ordinary Share and 1,900 Deferred Shares of £0.0001.

No Shareholder will, pursuant to the Share Capital Reorganisation, be entitled to receive a fraction of a New Ordinary Share and where, as a result of the consolidation, sub-division and re-designation of Existing Ordinary Shares described above, any Shareholder would otherwise be entitled to receive a fraction of a New Ordinary Share in respect of his holding of Existing Ordinary Shares at the Record Date (a "Fractional Shareholder"), the Existing Ordinary Shares representing that fractional entitlement will be re-designated as Deferred Shares. This means that Fractional Shareholders will not have resultant proportionate holdings of New Ordinary Shares exactly equal to their proportionate holdings of Existing Ordinary Shares.

Assuming no further Existing Ordinary Shares are issued before the General Meeting, that Resolution 1 is passed and that the Share Capital Reorganisation occurs, prior to the issue of any shares to WWW the Company will have a maximum of 1,510,637 New Ordinary Shares each in issue. This figure is adjusted from the simple mathematical total of 1,510,670 to take account of the 33 consolidated shares lost by virtue of fractional shareholdings.

2.2          Rights attaching to the New Ordinary Shares

Each New Ordinary Share will carry the same rights under the Existing Articles as each Existing Ordinary Share does at present under the Existing Articles, including the rights in respect of voting and the entitlement to receive dividends.

2.3          Rights attaching to the Deferred Shares

Each Deferred Share will have very limited rights and will effectively be valueless. CREST accounts of Shareholders will not be credited in respect of any entitlement to Deferred Shares and no share certificates will be issued in respect of Deferred Shares.

The Deferred Shares will have the rights and restrictions as set out in the Existing Articles, which do not entitle their holders to receive notice of or attend and vote at any general meeting of the Company or to receive a dividend or other distribution. A Deferred Share will entitle its holder to receive an amount equal to its nominal value (£0.0001) on a winding up of the Company after the holders of New Ordinary Shares have received the sum of £10 for each New Ordinary Share held by them and the holder of a Deferred Share will have no other right to participate in the assets of the Company.

A Deferred Share is liable to be repurchased, with the aggregate price payable for all of the Deferred Shares repurchased at that time being £0.01.

2.4          Conditionality

The Share Capital Reorganisation is conditional on the passing of Resolution 1.

2.5          Share certificates and CREST accounts

If you hold a share certificate in respect of your Existing Ordinary Shares, your certificate will no longer be valid from the time that the proposed Share Capital Reorganisation becomes effective. If you hold 2,000 or more Existing Ordinary Shares on the Record Date you will be sent a new share certificate evidencing the New Ordinary Shares to which you are entitled under the Share Capital Reorganisation. Such certificates are expected to be dispatched no later than 8 January 2019 by first class post at the risk of the Shareholder. Upon receipt of the new certificate, you should destroy any old certificates. Pending the dispatch of the new certificates, transfers of certificated New Ordinary Shares will be certified against the Company's share register.

If you hold your Existing Ordinary Shares in uncertificated form, you should expect to have your CREST account credited with the New Ordinary Shares to which you are entitled on implementation of the Share Capital Reorganisation on 20 December 2018 or as soon as practicable after the Share Capital Reorganisation becomes effective.

2.6          Taxation

The following statements are intended only as a general guide to the current tax position under UK taxation law and practice. They relate only to certain limited aspects of the UK tax position for individual Shareholders who are the beneficial owners of Existing Ordinary Shares and who are resident and domiciled in the UK for tax purposes and who hold their shares in the Company as an investment (and not as securities to be realised in the course of a trade). The following is not, and is not intended to be, an exhaustive summary of the tax consequences of acquiring, holding and disposing of Existing Ordinary Shares or New Ordinary Shares and it does not constitute advice. If you are in any doubt as to your tax position or are subject to tax in any jurisdiction other than the UK, you should consult, and rely upon the advice of, a duly authorised professional adviser.

The proposed Share Capital Reorganisation should constitute a reorganisation of the Company's share capital for the purposes of section 126 of the Taxation of Chargeable Gains Act 1992. For the purposes of UK taxation of chargeable gains, to the extent that you receive New Ordinary Shares under the proposed Share Capital Reorganisation, you should not be treated as making a disposal of any of your Existing Ordinary Shares or an acquisition of New Ordinary Shares. The New Ordinary Shares will be treated as the same asset as, and as having been acquired at the same time and for the same aggregate cost as, the holding of Existing Ordinary Shares from which they derive.

No liability to stamp duty or stamp duty reserve tax should be incurred by a holder of Existing Ordinary Shares as a result of the proposed Share Capital Reorganisation.

3.            Information with respect to WWW

WWW is a private company incorporated in the United Kingdom. WWW is a non-trading company and its primary asset is a majority shareholding in part of the Lyca group of companies. Lyca Group, founded in 2002, is a group of individual companies that operate businesses in telecommunications, international money remittance, media, healthcare, hospitality, and IT. Lyca Group's main business is Lycamobile, a global MVNO telecommunications provider for domestic and international calls, data, and broadband. Lycamobile partners with over 200 global telecommunications carriers, is present in 23 countries and serves over 15 million customers.

4.            The WWW Subscription and Working Capital Facility

4.1          Overview

The Company proposes to raise £1,300,000 (before expenses) pursuant to:

·          an allotment of 645,000 New Ordinary Shares to WWW at a price of £0.10 per New Ordinary Share; and

·          the allotment to WWW of £1,235,500 nominal value of Convertible Loan Notes.

The terms of the WWW Subscription are set out in further detail in section 4.5 below. WWW has also agreed in principle to make available Working Capital Facility to the Company, further details of which are set out in section 4.6 below.

The Company has, at the date of the Circular, already received £850,000 in interim funding from WWW and expects to receive a further £100,000 in interim funding by the time of completion of the WWW Subscription following approval by Shareholders at the General Meeting. The interim funding payments will be repaid by way of set off against payments which WWW is required to make pursuant to the WWW Subscription.

4.2          Use of proceeds

The net proceeds of the WWW Subscription (after repaying the bridging financing previously received from WWW) will be used to invest in product development and in implementing synergies in the operating systems of the Company and Lycamobile to reduce operating costs and increase sales.

4.3          The Company's strategy following the WWW Subscription

The Company's overall intention is to invest in product development with a view to scaling the TPO brand in Europe and in other appropriate territories in the rest of the world. The Company proposes to utilise Lycamobile's wide-ranging telecommunications infrastructure from its global points of sale to its customer services management, through to its back office administrative systems.

The Company has agreed to enter into an agreement with WWW and finnCap (with effect from completion of the WWW subscription and to be referred to as a relationship agreement) which includes provisions to regulate the use of WWW's shareholding. The agreement contains general assurances as to the independence of the Company, whereby WWW undertakes to ensure, so far as is within its power, that the Company is capable at all times of carrying on its business independently of WWW and its affiliates, and agrees to support and uphold the standards of best practice regarding substantial shareholders as required by the London Stock Exchange and the FCA (including the independence provisions set out in the FCA's UK Listing Rules). The parties also agree that all transactions and relationships between WWW, their affiliates and the Company will be at arm's length and on a normal commercial basis. WWW further agrees that:

·          it shall (and shall use reasonable endeavours to procure that its affiliates shall) exercise its voting rights to procure that at all times at least two of the non-executive directors of the Company shall be independent of WWW and its affiliates;

·          it shall not (and shall take all reasonable steps to ensure that none of its affiliates shall), save with the prior written consent of finnCap, exercise their voting rights in favour of any proposed amendment to the Articles which violates the terms of the relationship agreement;

·          save with the prior written consent of finnCap, it shall not (and shall procure its affiliates shall not) exercise voting rights in respect of any transaction between the Company and WWW (or its affiliates) or in respect of any resolution required pursuant to the AIM Rules where the AIM Team of the London Stock Exchange requires WWW (or any of its affiliates) abstain from voting;

·          it shall not (and shall procure that its affiliates shall not) vote in favour of any resolution put to the Company to remove the Company from AIM except to the extent such removal is approved by a majority of the independent Directors (or in certain other limited circumstances); and

·          any proposed transaction between WWW and its related and/or connected parties on the one hand and the Company on the other hand shall be conditional upon the prior approval by a majority of the independent directors.

The provisions of the agreement remain in full force and effect for so long as WWW retains shares carrying more than 20 per cent. of the voting rights in the Company and the share capital of the Company remains admitted to trading on AIM.

4.4          Composition of the Board following completion of the WWW Subscription

Following completion of the WWW Subscription, the Non-Executive Directors of the Company will continue to serve on the Board, with Sam Tillotson continuing in his Executive Director role as CEO. In addition, on completion of the WWW Subscription and under WWW's right to nominate up to two Board members, Haresh Daswani will join the Board as an Executive Director. Mr. Daswani has nearly two decades of investment banking, corporate finance and private equity experience having worked in the M&A and Financial Sponsors teams at Goldman Sachs, Deutsche Bank and Dresdner Kleinwort and the private equity team at Man Group. Mr. Daswani also spent time working in M&A in India and Singapore at Avista Houlihan Lokey . Mr Daswani will join TPO to drive its global revenue and cost-saving strategic initiatives.

4.5          Terms of the WWW Subscription

The 645,000 New Ordinary Shares to be allotted to WWW will represent, on issue, approximately 29.92 per cent. of the issued share capital of the Company.

The Convertible Loan Stock to be allotted to WWW will be constituted pursuant to the Convertible Loan Stock Instrument.

The principal terms of the Convertible Loan Stock are as follows:

·          The Convertible Loan Stock will bear interest at a rate of six per cent. per annum. If interest cannot be paid in cash due to the terms of the Intercreditor Agreement or the Company's working capital position, the Company may pay interest by way of issue of PIK Notes

·          The Convertible Loan Stock is repayable on the fifteenth anniversary of the date of the Convertible Loan Stock Instrument (together with any interest thereon), with the Company being required to repay them earlier (at twice their nominal amount plus accrued interest) upon the occurrence of certain specified events, including but not limited to: (i) certain insolvency events relating to the Company or its group; (ii) the New Ordinary Shares ceasing to be admitted to trading; and (iii) the issue of a prior ranking instrument

·          The Convertible Loan Stock will be unsecured and subject to the terms of the Intercreditor Agreement

·         The Convertible Loan Stock will be convertible by the holder at any time, in whole or in part, into New Ordinary Shares at a price of £0.10 per New Ordinary Share.

·          The Convertible Loan Stock will be freely transferable

·          The Convertible Loan Stock will be not admitted to trading on any exchange

Following, exercise of the conversion rights attaching to the £1,235,500 Convertible Loan Notes to be subscribed for by WWW pursuant to the WWW Subscription, WWW would hold approximately 89.59 per cent. of all the New Ordinary Shares, assuming WWW retained the 645,000 New Ordinary Shares to be issued to it pursuant to the WWW Subscription and the Company issued no further New Ordinary Shares.

The City Code on Takeovers and Mergers, to which the Company is subject, includes provisions which would require WWW to make an offer for the entire issued share capital of the Company not held by it and its associates if WWW were to acquire shares which, when aggregated with shares held by it and its associates, would lead to WWW holding shares carrying 30 per cent. or more of the voting rights exercisable at a general meeting of the Company. Any such offer would have to be made at the highest price at which WWW had acquired shares during the prior 12 month period. In certain circumstances the relevant provisions of the City Code on Takeovers and Mergers may be waived with the consent of the Takeover Panel and with the approval of a resolution of the Company's shareholders (on which WWW and its associates would not be permitted to vote). There is no guarantee that the Takeover Panel will grant such a waiver.

4.6          The Working Capital Facility

Subject to completion of the WWW Subscription occurring, WWW has in principle agreed to provide further working capital to the Company pursuant to the Working Capital Facility, unrelated to the funds to be derived from the Subscription and the Convertible Loan Notes. Although the final terms of the Working Capital Facility are to be agreed, it is anticipated that it will include the following terms:

·          The Company will be entitled to draw on up to £215,000 each calendar month, payable on the first day of each month starting in January 2019, for a period not exceeding 12 months.

·          The principal sums so borrowed will accrue interest at a rate of 6 per cent. per annum.

·          The Company shall pay an ongoing fee equal to 4 per cent. of the amounts outstanding to the Existing Lender payable annually. The payment of such fee may be satisfied by the Company via the issue of Convertible Loan Stock (rather than cash).

·          The Company's obligations in respect of the principal sum so borrowed and any outstanding interest will be secured over all of the Company's and certain of its subsidiaries' assets. This security will be subordinate to the security granted to the Existing Lender pursuant to the Intercreditor Agreement.

·          The principal amounts borrowed under the Working Capital Facility will be due for repayment on 1st June 2022 or earlier at the Company's discretion (subject in each case to the terms of the Intercreditor Agreement). Interest will satisfied in kind by the issue of Convertible Loan Stock.

4.7          Conditionality

The WWW Subscription and the entry into of the Working Capital Facility are conditional upon, among other things, the Share Reorganisation taking effect and Resolutions 1 and 2 being passed, in each case by no later than 20 December 2018.

In addition, the WWW Subscription is conditional upon the Company and WWW agreeing the final terms of:

·       the Working Capital Facility;

·       the security agreements pursuant to which the borrowings under the Working Capital Facility are to be secured; and

·        an intercreditor agreement to be entered into between the Company, WWW and the Existing Lender.

The net proceeds of the WWW Subscription (after repaying the bridging financing previously received from WWW) and the initial drawdown under the Working Capital Facility are payable to the Company by close of business on 20 December 2018.

5.            Current trading

The sale of the Company's US subscribers as approved at the General Meeting held on 25 June 2018 will be completed at the end of December 2018. The Company's UK business has been maintained over the past six months in line with the restrictions placed on the Company by its financial situation and the consequent reduction in marketing spend. The Company is currently involved in discussions with Barclays plc, its sole current secured creditor, regarding a possible renegotiation of the terms of its outstanding loan in the light of the proposed new investment by WWW.

6.            Business of the General Meeting

At the General Meeting the following resolutions will be proposed:

Resolution 1 - Consolidation, subdivision and re‑designation of Existing Ordinary Shares

Resolution 1 will be proposed as a special resolution of the Company. Resolution 1 approves the consolidation, subdivision and re‑designation of every 2,000 Existing Ordinary Shares into one New Ordinary Share and 1,900 Deferred Shares in the capital of the Company.

Resolution 2 - Authority to allot New Ordinary Shares and Convertible Loan Stock

Resolution 2 will be proposed as a special resolution to enable the Directors to allot 645,000 New Ordinary Shares to WWW for cash, to authorise the Directors to allot up to £3,900,000 in nominal value of Convertible Loan Stock, to allot New Ordinary Shares on exercise of conversion rights in respect of the Convertible Loan Stock and to dis-apply pre-emption rights with respect to any such allotments.

It should be noted that, pursuant to the WWW Subscription, WWW will only subscribe for £1,235,500 nominal value of Convertible Loan Stock. However, subject to the passing of Resolution 2, the Directors would be authorised to allot up to a further £2,664,500 nominal of Convertible Loan Stock to such person(s) as they may, in their discretion, determine.

In order to give effect to the Share Capital Reorganisation and the WWW Subscription, Resolutions 1 and 2, which will be proposed as Special Resolutions, need to be approved by not less than 75 per cent. of the votes cast on them at the General Meeting.

At the end of the Circular you will find notice convening a General Meeting to be held at the Company's registered office at Unit 53, The Chocolate Studios, 7 Shepherdess Place, London N1 7LJ on 20 December 2018 at 11.00 a.m. at which the Resolutions set out in the Notice of General Meeting will be proposed.

7.            Action to be taken by Shareholders

A form of proxy is enclosed for use by Shareholders at the General Meeting. If you are a Shareholder, you are requested to complete, sign and return the form of proxy, whether or not you intend to be present at the meeting, and return it to the Company's Registrars, Link Asset Services, 34 Beckenham Road, Beckenham, Kent BR3 4TU to be received no later than 11.00 a.m. on 18 December 2018. Alternatively, if you hold your shares in CREST, you may appoint a proxy electronically through the CREST system. The registrars must receive your proxy appointment by no later than 11.00 a.m. on 18 December 2018.

The completion and return of a Form of Proxy will not prevent you from attending the General Meeting and voting in person should you subsequently wish to do so.

8.            Recommendation

The Directors consider that the Share Capital Reorganisation, the proposed subscription by WWW for the New Ordinary Shares, the proposed subscription by WWW for Convertible Loan Notes and the incurring by the Company of borrowings under the Working Capital Facility to be in the best interests of the Company and its Shareholders as a whole.

Accordingly, the Directors unanimously recommend that you vote in favour of each of the Resolutions to be proposed at the General Meeting, as they intend to do or procure to be done in respect of their own and their connected persons' beneficial holdings, amounting, in aggregate, to 310,495,133 Existing Ordinary Shares, which represents approximately 10.27 per cent. of the Company's existing issued share capital.

The Board believes that whilst there may be alternative sources of funding available to the Company, there is no guarantee of this and there is no guarantee that WWW will continue to extend funding to the Company. It is therefore of critical importance that Shareholders vote in favour of Resolutions 1 and 2. Absent of being able to raise additional funds, the Company will have insufficient working capital to continue to trade and, in the absence of any other source of funding, there may be no alternative but to initiate insolvency proceedings.