THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH LAW BY VIRTUE OF THE  EUROPEAN (WITHDRAWAL) ACT 2018, AS AMENDED.  ON PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

BrandShield Systems Plc

("BrandShield" or the "Company")

Subscription to raise c.£2.68 million ($3.32 million)

Open Offer to raise up to £2.20 million

Approval of Waiver of Obligations under Rule 9 of the Takeover Code

Cancellation of admission of Ordinary Shares to trading on AIM

and

Notice of General Meeting

BrandShield Systems plc (AIM: BRSD), a leading provider of cybersecurity solutions for brand oriented digital risk protection ("DRP"), announces that it will shortly be posting a circular to shareholders (the "Circular"), an extract of which is set out below:

1.   Introduction

The Company announced today its proposals (the "Proposals") to:

·              Raise $3.32 million (£2.68 million) in a Subscription of 47,137,662 new Ordinary Shares and up to £2.20 million in an Open Offer of up to 38,669,962 new Ordinary Shares, each at 5.68 pence per Ordinary Share (in each case before expenses);

·              Seek a waiver under Rule 9 of the Takeover Code;

·              Issue New Options to Directors/Senior management, and re-price certain of the Existing Options; and

·              Cancel the admission of its Ordinary Shares to trading on AIM.

This letter sets out the background to and reasons for, and provides further details of, the Proposals.

Implementation of the Proposals, is conditional, inter alia, upon all of the Resolutions being passed at the GM to be held at 11.00 a.m. on 13 October 2023. The Notice of General Meeting convening the General Meeting at which the Resolutions will be proposed is set out at the end of this document.

Shareholders should note that unless all the Resolutions are approved at the General Meeting, the Subscription and Open Offer will not complete, and the issue of the New Options, the re-pricing of certain of the Existing Options, and the De-Listing will not occur as currently proposed.

2.   Subscription

The Company today announced a conditional Subscription to raise approximately £2.68 million ($3.32 million) (before expenses) by the issue of the Subscription Shares at the Subscription Price to the Subscribers.

The Subscription Shares will rank pari passu with the Existing Ordinary Shares. Following their issue, the Subscription Shares will represent approximately 18.40% of the Enlarged Ordinary Share Capital assuming the Open Offer is fully subscribed (21.68% of the Enlarged Ordinary Share Capital if there is no take up in the Open Offer).

In addition, Subscribers will receive 1 Subscription Warrant for every Subscription Share subscribed. The Subscription Warrants will have an exercise price of 8.52 pence per share and shall be exercisable at any time up until 4 years after Admission (16 October 2027).

Further details of the Subscription Agreements are set out in paragraph 5.1 of Part III of this document.

The Subscribers are as follows:

¹ Joseph Haykov is participating in the Subscription via his investment vehicle, Cloak, LLC.

The Subscription is conditional on, amongst other things: (a) the Subscription Agreements having become unconditional and not having been terminated in accordance with their terms, (b) all of the Resolutions being passed at the General Meeting and (c) Admission having become effective by no later than 8.00 a.m. on 16 October 2023 or such later time as the Company and the respective Subscribers may agree.

The Subscription by Joseph Haykov (via Cloak, LLC) was brokered by Mr Subramanian Subbiah under a broking agreement, as set out in paragraph 5.2 of Part III of this document. Mr Subbiah will receive, conditional on Admission, Broker Warrants as follows:

-     3,123,580 Broker Warrants to subscribe for Ordinary Shares at an exercise price of 5.68 pence and an exercise period ending 4 years following Admission (16 October 2027).

-     Up to a further 4,685,370 Broker Warrants to subscribe for Ordinary Shares at an exercise price of 8.52 pence and an exercise period ending 4 years following the date on which Cloak, LLC's Subscription Warrants are exercised ; the actual number issued will be determined in proportion to the number of Subscription Warrants exercised by Joseph Haykov (through Cloak, LLC) of  the aggregate number of Subscription Warrants issued to him.

3.   Details of the Open Offer

Qualifying Shareholders are being offered the opportunity to apply for Open Offer Shares on the basis of:

1 Open Offer Share for every 2 Existing Ordinary Shares held at the Issue Price of 5.68 pence          per share

In addition, successful applicants under the Open Offer will be issued with Open Offer Warrants, being warrants to subscribe for new Ordinary Shares. The Open Offer Warrants are exercisable within 4 years of issuance (on a monthly basis) at a price of 8.52 pence per Ordinary Share. The Open Offer Warrants will be issued on the basis of 1 Warrant for every 1 Open Offer Share successfully subscribed.

Whilst not members of the Concert Party, William Currie Investments Limited ("WCIL") and Sir Terence Leahy, by virtue of their participation in the Subscription, would have been deemed not to be independent for the purposes of the  Waiver Resolution. However, as all Shareholders who did not participate in the Subscription are able to participate on identical terms, and to at least the same extent (as a % of their holding of Existing Ordinary Shares) as WCIL and Sir Terence Leahy via the Open Offer, WCIL and Sir Terence Leahy will be able to vote on the Waiver Resolution.

The Open Offer is conditional on all Resolutions being passed at the General Meeting, and Admission. It is expected that Admission will occur and dealings in the Open Offer Shares will commence on 16 October 2023. If such condition is not fulfilled on or before 8.00 a.m. on 16 October 2023 (or such later date as the Company may reasonably decide) application monies are expected to be returned without interest and any Open Offer Entitlements admitted to CREST will be disabled.

Assuming full take-up under the Open Offer, the issue of the Open Offer Shares will raise gross proceeds of approximately £2.20 million for the Company. The Open Offer Shares will, upon issue, rank pari passu all respects with the Company's existing Ordinary Shares including the right to receive all dividends and other distributions declared, made or paid after their date of issue.

Holdings of Existing Ordinary Shares in certificated and uncertificated form will be treated as separate holdings for the purpose of calculating entitlements under the Open Offer, as will holdings under different designations and in different accounts.

Qualifying Shareholders should be aware that the Open Offer is not a rights issue. Accordingly, Qualifying Non-CREST Shareholders should note that their Application Forms are not negotiable documents and cannot be traded. Qualifying Non-CREST Shareholders should note that applications in respect of Open Offer Entitlements may only be made by the Qualifying Non-CREST Shareholder originally entitled, or by a person entitled by virtue of a bona fide market claim in accordance with paragraph 3.1(b) of Part IV of this document.

Application will be made for the Open Offer Entitlements in respect of Qualifying CREST Shareholders to be admitted to CREST. It is expected that such Open Offer Entitlements will be admitted to CREST at 8.00 a.m. on 21 September 2023. Applications through the means of the CREST system may only be made by the Qualifying CREST Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim.

Qualifying Non-CREST Shareholders will receive an Application Form with this circular which sets out their entitlement to Open Offer Shares as shown by the number of Open Offer Entitlements allocated to them. Qualifying Non-CREST Shareholders should note that the Application Form is not a negotiable document and cannot be traded.

For Qualifying Non-CREST Shareholders, completed Application Forms, accompanied by full payment, should be returned by post or by hand (during normal business hours only) to Link Group, Corporate Actions,  Central Square, 29 Wellington Street, Leeds LS1 4DL so as to arrive as soon as possible and in any event so as to be received no later than 11.00 a.m. on 5 October 2023. For Qualifying CREST Shareholders the relevant CREST instructions must have been settled as explained in this circular by no later than 11.00 a.m. on 5 October 2023.

If applications are made for less than all of the Open Offer Shares available, then the lower number of Open Offer Shares will be issued, and any outstanding Open Offer Entitlements will lapse.

Further information on the Open Offer and the terms and conditions on which it is made, including the procedure for application and payment, are set out in Part IV of this circular.

Members of the Concert Party and Subscribers - who in aggregate hold 92,991,950 Existing Ordinary Shares amounting to 54.59% of the Existing Ordinary Share Capital - have undertaken not to subscribe for shares in the Open Offer. As such there are 38,669,962 shares the subject of the Open Offer, which equates to 1 Open Offer Share for every 2 Existing Ordinary Shares (i.e 50% of each of these Shareholders' holdings) being made available to them in the Open Offer

Warrants to subscribe for Ordinary Shares

The Open Offer Warrants will be issued to successful applicants under the terms of the Open Offer on the basis of 1 Warrant for every 1 Open Offer Share subscribed. The maximum number of Open Offer Warrants that may be issued under the Open Offer (and corresponding Ordinary Shares to be allotted pursuant to the exercise of the Warrants) is 38,669,962.

The Open Offer Warrants will be exercisable at the subscription price of 8.52 pence per Ordinary Share on a monthly basis from time to time until the Lapse Date and if not exercised prior to that date shall lapse. The minimum number of Warrants that may be exercised at any one time is 1,000 Warrants (if the holder holds less than 1,000 Warrants then the entire lesser amount).

No exercise of the Open Offer Warrants shall be permitted where such exercise would result in any person or persons acquiring or increasing control of the Company within the meaning given in sections 181 and 182 of the FSMA, without the relevant regulatory approval of such acquisition or increase of control having first been obtained and not having expired prior to such exercise.

The Open Offer Warrants will be exercisable immediately from the date of issue but will not be listed or admitted to trading. Definitive certificates in respect of the Warrants are expected to be dispatched within 10 days of Admission.

Upon exercise of the Open Offer Warrants, the resulting new Ordinary Shares will be credited as fully paid and will rank pari passu in all respects with the Company's existing Ordinary Shares including the right to receive all dividends and other distributions declared, made or paid after their date of issue.

4.   Reasons for the Subscription, Open Offer, De-Listing and Use of funds

The funds secured in the Subscription and Open Offer will enable the Company to continue accelerating its growth in securing new clients and increasing its Annualised Recurring Revenue.  In tandem, efforts will continue to reduce operational cash burn and therefore increase gross profit margins further and at a higher level of revenues. These additional funds will be used to expand both the sales team footprint and permit additional marketing spend to reinforce the positive results we are seeing from such activity.  The Company announced improvements in gross margin in its recent interim results, highlighting the increase to 68% in the 6 month period to June 2023, up from 58% in 2022 and 55% in 2021.  Against that context, and in a sector in which the Company believes is ripe for securing market share, the Board believes aggressive targeting of growth of the top line should continue to be the over-riding strategy.  The Directors believe that reducing relative costs remains important in order to secure a cash flow positive outcome in 2024. The Company continually scans the competitive landscape in the digital risk protection market, and is convinced of the opportunities that exist to both penetrate the increasing market size and to concurrently penetrate the existing market through targeting clients from competitors.  The Directors believe that the De-Listing will assist in improving margins further and allow the executive to focus on operational excellence without the additional legal and regulatory burdens imposed through our current listed status. 

5.   Issue of New Options and Re-pricing of Existing Options for Directors and employees

5.1  New Options - Yoav Keren/Yuval Zantkeren

It is proposed that New Options will be awarded to Yoav Keren and Yuval Zantkeren as set out in the table below:

†The number of New Options to be granted as set out in the table above has been calculated assuming that the Open Offer is subscribed in full, and that the Open Offer Warrants are also fully subscribed. In the event that there is no take up in the Open Offer, 5,081,730 and 5,081,730 of the 5.68p and 8.52p New Options respectively would not be issued to the Founders. The actual number of New Options to be issued as result of the Open Offer, to maintain the Founders' fully diluted shareholdings to under 10% of the Fully Diluted Share Capital, will be proportionate to the take up in the Open Offer.

The aim of granting the New Options is to provide a meaningful incentive to the Founders to create value in the BrandShield business. The quantum of New Options to be granted is such that the Founders will (upon the exercise of all options held by them) each own under 10% of the Fully Diluted Share Capital, in the event that that all existing and proposed warrants and options in the Company are fully exercised.

The exercise prices for the New Options range from 5.68 pence to 25 pence. The reason for the spread of prices is to ensure that the grant of the New Options adheres to Israeli Tax Law requirement that the holding will be under 10% at any level of exercise of options and warrants as if all holders of options and warrants up to that level have exercised.

In order to comply with Section 102 of the Israeli Income Tax Ordinance the Founders will need to ensure that each of their respective shareholdings (together with outstanding options held by them) is under 10% of the Fully Diluted Share Capital of the Company at any time. This may involve, as required, the forfeiture by them of Existing Options or New Options. Further details of Section 102 are set out in paragraph 6 of Part III of this document.

The exercise period shall be 10 years from Admission (being 16 October 2033).

The grant of the New Options is conditional upon the Resolutions being approved by Shareholders at the General Meeting and Admission taking place.

Since BrandShield listed on AIM via a Reverse Takeover transaction in December 2020 the key executives and founders have delivered strong and consistent growth in terms of Annualised Recurring Revenue ("ARR") and customer numbers, including securing contracts with some of the world's leading companies in a range of sectors.  ARR has increased from approximately $2.87m at the time of admission to trading on AIM in December 2020 to approximately $9.71m as at the end of June 2023, representing compound annualised growth in ARR of c60.3%.  Despite this growth the share price has performed poorly on the AIM market and successive fundraises have been conducted at prices considerably lower than the original price at which BrandShield joined the market in December 2020 of 20p per share. This has led to sustained dilution of the Founders' equity position in particular and it is the Board's view that it is essential to incentivise both the Founders and key revenue generating executives in an appropriate but fair manner that aligns their interests with those of wider Shareholders.

As such, the Independent Directors believe that the introduction of the New Options achieves that alignment and provides a mechanism for those individuals to maintain a significant position in the Company, should they choose to exercise their options at various prices.  Around 50% of the New Options are set at the Subscription Price, with the balance set at exercise prices between 50% (8.52p) and 340% (25p) above the Subscription Price. 

5.2 Grant of New Employee Options - Ravit Freedman and other employees

It is proposed that New Employee Options over up to 19,680,800 Ordinary Shares are awarded to employees, including a Director, Ravit Freedman, (200,000 options), conditional upon Admission.

14,970,800 of these options will have an exercise price of 5.68 pence per share, and 4,710,000 of these options will have an exercise price of 8.52 pence per share, and an exercise period of 10 years.

The number of New Employee Options to be granted has been calculated assuming that the Open Offer is subscribed in full, and that the Open Offer Warrants are fully subscribed. In the event that there is no take up in the Open Offer, 2,034,700 and 2,034,740 of the 5.68p and 8.52p New Employee Options respectively would not be issued.

5.3 Amendment to terms of Existing Options for Directors and employees

It is proposed that a total of 9,304,909 Existing Options held by employees, and 649,000 Existing Options held by Ravit Freedman, and 3,127,196 Existing Options held by each of Yoav Keren and Yuval Zantkeren, will be re-priced.

Employee options have been used by the Board as a means of incentivising employees, by giving them a stake in the business. Options are typically awarded following a probationary period. However, many of these options have been issued historically at exercise prices significantly higher than the current share price, and at present are not serving the purpose for which they were intended.

In order to comply with the Israeli Tax Authorities ruling (Ruling no. 911), if a re-pricing of "out of the money" options is performed, ALL existing options must be re-priced to the same price, and therefore all the above Existing Options (being those which are "out of the money") will be repriced to the Issue Price of 5.68 pence, subject to Admission.

It is proposed that all of the above options (which will amount to 7.68 per cent of the Enlarged Ordinary Share Capital (following Admission) will, subject to Admission, be repriced to 5.68 pence per share.

Further details of the Existing Options held by employees and Directors, which are to be re-priced, are set out in paragraph 2 of Part III of this document.

In addition, 925,236 Existing Options, including 263,037 held by each of Yoav Keren and Yuval Zantkeren, and 399,162 held by other employees have expiry dates of 31 December 2023. It is proposed that the expiry dates are extended to 31 December 2028.

5.4 Amendments to exercise periods of Existing Warrants

It is proposed that all Existing Warrants whose expiry date is before 1 December 2026 (details of which are set out in paragraph 3 of Part III of this document) have their exercise periods extended to 1 December 2026.

Of the warrants (with an exercise price of 20 pence and an exercise period ending 4 February 2025) issued in the February 2022, 1,785,714 are held by WCIL. The extension of the exercise period of these warrants is a related party transaction (see paragraph 6 below).

As part of Mr Subbiah's Broking Arrangement, New Enterprise Limited will receive the above warrant extension. Given this extension, it was felt appropriate by the Board to extend all other warrants with an exercise period ending prior to 1 December 2026 out to the same point.

6.   Related Party Transactions

There are four related party transactions under Rule 13 of the AIM Rules, these are:

(i) Subscription by William Currie Investment Limited ("WCIL")

As WCIL holds 21,846,087 Existing Ordinary Shares, representing 12.83% of the current issued share capital, it is a related party of the Company pursuant to the AIM Rules. Consequently, the participation of WCIL in the Subscription (including the issue of the Subscription Warrants) constitutes a related party transaction for the purposes of AIM Rule 13. The Directors (all of whom are independent of WCIL) consider, having consulted with SPARK, the Company's nominated adviser, that the terms of WCIL's participation in the Subscription are fair and reasonable in so far as Shareholders are concerned.

(ii) Issue of the New Options to Yoav Keren, Yuval Zantkeren and Ravit Freedman

Yoav Keren, Yuval Zantkeren and Ravit Freedman are Directors and, as such, each is a related party pursuant to the AIM Rules. Consequently, the issue of the New Options and New Employee Options to them constitute related party transactions for the purposes of AIM Rule 13. The Directors (excluding Yoav Keren, Yuval Zantkeren and Ravit Freedman) consider, having consulted with SPARK, the Company's nominated adviser, that the terms of the grant of New Options and New Employee Options are fair and reasonable in so far as Shareholders are concerned.

(iii) Amendment to the exercise price and/or exercise period of Existing Options to Directors

Yoav Keren, Yuval Zantkeren and Ravit Freedman are Directors and, as such, each is a related party pursuant to the AIM Rules. Consequently, the amendment to the exercise price of 3,127,196, 3,127,196 and 649,000 Existing Options held by them respectively (and in the case of Yoav Keren and Yuval Zantkeren, the extension of the exercise period of 263,037 Options each) constitute related party transactions for the purposes of AIM Rule 13. The Directors (excluding Yoav Keren, Yuval Zantkeren and Ravit Freedman) consider, having consulted with SPARK, the Company's nominated adviser, that the terms of the amendments to the Existing Options to Directors are fair and reasonable in so far as Shareholders are concerned.

(iv) Extension to the exercise period of warrants held by WCIL

As stated in (i) above, WCIL is a related party of the Company pursuant to the AIM Rules. Consequently, the extension of the exercise period of 1,785,714 warrants held by WCIL constitutes a related party transaction for the purposes of AIM Rule 13. The Directors (all of whom are independent of WCIL) consider, having consulted with SPARK, the Company's nominated adviser, that the terms of the extension of the expiry date of the warrants are fair and reasonable in so far as Shareholders are concerned.

7.   Implications of the Proposals under the Code

The Takeover Code (the "Code") applies to BrandShield. Under Rule 9 of the Code, any person who acquires an interest in shares which, taken together with shares in which that person or any person acting in concert with that person is interested, carry 30% or more of the voting rights of a company which is subject to the Code is normally required to make an offer to all the remaining shareholders to acquire their shares.

Similarly, when any person, together with persons acting in concert with that person, is interested in shares which in the aggregate carry not less than 30% of the voting rights of such a company but does not hold shares carrying more than 50% of the voting rights of the company, an offer will normally be required if such person or any person acting in concert with that person acquires a further interest in shares which increases the percentage of shares carrying voting rights in which that person is interested.

7.1  The Concert Party

The issue of the Subscription Shares, the New Options, the Subscription Warrants and the Broker Warrants to members of the Concert Party gives rise to certain considerations under the City Code. Rule 9 of the City Code is designed to prevent the acquisition of control of a company to which the City Code applies without a general cash offer being made to all shareholders of that company.

Joseph Haykov and Gigi Weiss are members of a Concert Party which was deemed to exist at the time of the reverse takeover of BrandShield Limited into Two Shields Investments plc on 1 December 2020.

Under Rule 9 of the City Code ("Rule 9"), when:

i.  any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which (together with shares in which persons acting in concert with him are interested) carry 30% or more of the voting rights of a company; or

ii. a person, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30% but does not hold shares carrying more than 50% of the voting rights of a company and such person, or persons acting in concert with him, acquires an interest in other shares which increases the percentage of shares carrying voting rights in which he is interested;

then, in either case, an offer under Rule 9 must be made in cash at the highest price paid by the person required to make the offer, or any person acting in concert with such person, for any interest in shares of the company during the 12 months prior to the announcement of the offer.

Accordingly, the participation by Joseph Haykov (via Cloak, LLC) and Gigi Levi Weiss in the Subscription would normally give rise to an obligation on the Concert Party to make a general offer to all Shareholders.

Additionally, the exercise of (i) the Subscription Warrants by Joseph Haykov (via Cloak, LLC) and/or Gigi Weiss, and/or (ii) New Options by  Yoav Keren and/or Yuval Zantkeren and/or (iii) Broker Warrants by Subramanian Subbiah, whilst the Concert Party's holding of voting rights is less than 50%, would also normally give rise to an obligation on the Concert Party to make a general offer to all Shareholders. The Company has agreed with the Panel that the persons set out in the Tables below are acting in concert in relation to the Company.

Following Admission, the members of the Concert Party will be interested in 89,347,341 Ordinary Shares, representing between 34.88% (assuming full take up in the Open Offer) and 41.08% (assuming no take up in the Open Offer) of the voting rights of the Company. Assuming exercise in full by the members of the Concert Party of the Existing Options, Existing Warrants, New Options, Subscription Warrants and Broker Warrants (and assuming that no other person exercises any options or any other right to subscribe for shares in the Company), the members of the Concert Party would be interested in between 180,867,647 Ordinary Shares (assuming no take up in the Open Offer, and representing 58.54% of the voting rights of the Company in the Fully Diluted Share Capital and 201,194,567 Ordinary Shares, representing approximately 54.67% of the voting rights of the Company in the Fully Diluted Share Capital assuming full take up in the Open Offer).

Tables showing the respective individual interests in shares of the members of the Concert Party at Admission and following the exercise of the Existing Options, Existing Warrants, New Options, Subscription Warrants and Broker Warrants held by them is set out below - with Table 1 showing a situation where the Open Offer is fully subscribed by non-Concert Party members and Table 2  showing a situation where there is no take up in the Open Offer by non-Concert Party members.

Table 1 : showing Concert Party holding assuming the Open Offer is fully subscribed by non-Concert Party members

Notes:

₁ Up to 10,163,460 of the New Options to each of Yoav Keren and Yuval Zantkeren will be issued dependent on, and proportionate to, the take up in the Open Offer to each maintain a fully diluted shareholding of under 10%. (In the event that there is no take up of the Open Offer none of the 10,163,460 will be issued - as set out in Table 2 below; in the case of a full take up all 10,163,460 New Options will be issued).

₂ the above table assumes the Open Offer is fully subscribed. Up to 10,163,460 of the New Options awarded to Yoav Keren and Yuval Zantkeren will be issued dependent on the level of take up in the Open Offer).

₃ In order to comply with Section 102 of the Israeli Tax Ordinance the Founders will need to ensure each of their shareholdings is under 10% of the Fully Diluted Share Capital at any point in time. They have indicated a current intention to forfeit Options, if required, to ensure this threshold is not exceeded.

₄assuming no options or warrants held by persons other than members of the Concert Party are exercised.

Table 2 : showing Concert Party holding assuming NO take up in the Open Offer by non-Concert Party members

₁ the above table assumes that there is no take up in the Open Offer.

₂ In order to comply with Section 102 of the Israeli Tax Ordinance the Founders will need to ensure each of their shareholdings is under 10% of the fully diluted share capital at any point in time. They have indicated a current intention to forfeit Options, if required, to ensure this threshold is not exceeded.

₃assuming no options or warrants held by persons other than members of the Concert Party are exercised.

7.2  Waiver of Rule 9 of the City Code

Following Admission, the members of the Concert Party will be interested in shares carrying more than 30% of the voting rights of the Company, but will not hold shares carrying more than 50% of the voting rights of the Company. For so long as they continue to be acting in concert, any acquisition that increases their aggregate interest in shares will be subject to the provisions of Rule 9.

The exercise by the members of the Concert Party of the warrants and options described above would normally trigger an obligation for an offer to be made under Rule 9. However, the Panel has agreed to waive this obligation such that there will be no requirement for an offer to be made in respect of the exercise of such warrants and options.

If the members of the Concert Party were to exercise their Existing Options, Existing Warrants, New Options, Subscription Warrants and Broker Warrants in full (and assuming that no other person exercises any options or any other right to subscribe for shares in the Company), the members of the Concert Party would hold shares carrying more than 50% of the voting rights of the Company and (for so long as they continue to be acting in concert) could accordingly increase their aggregate interests in shares without incurring any obligation to make an offer under Rule 9, although individual members of the Concert Party will not be able to increase their percentage interests in shares through or between a Rule 9 threshold without Panel consent.

The Panel has agreed to waive the obligation to make an offer that would otherwise arise under Rule 9 as a result of the Proposals, subject to the approval of Independent Shareholders. Accordingly, Resolution 1 is being proposed at a general meeting of the Company and will be taken on a poll.

None of the members of the Concert Party are able to vote on the Rule 9 Waiver but may exercise their voting rights in respect of Resolutions 2, 3 and 4.

In the event that the Proposals are approved, the Concert Party will not be restricted from making an offer for the Ordinary Shares in the Company.

Your attention is drawn to Parts II and III of this document which set out certain further information and financial information that is required to be disclosed in this document pursuant to the rules contained in the Takeover Code.

Under Rule 25.2 of the Takeover Code, only the Independent Directors are able to make a recommendation to the Independent Shareholders with respect to the proposed Waiver Resolution. The Independent Directors believe that the Proposals are in the best interests of the Company and hereby recommend that Independent Shareholders vote in favour of the Waiver Resolution. SPARK Advisory Partners Limited, as the Company's independent financial adviser, has provided formal advice to the Independent Directors that it considers the terms of the Proposals to be fair and reasonable and in the best interests of Shareholders and the Company as a whole. In providing this advice, SPARK Advisory Partners Limited has taken into account the Independent Directors' commercial assessments.

7.3  Intentions of the Concert Party

At present the Company is a leading provider of cybersecurity solutions for brand oriented digital risk protection. The Concert Party confirms its intention will be to support BrandShield's strategy as described in "Future Strategy of the Company" set out in paragraph 8 below.

Immediately following the De-Listing, there will be no market facility for dealing in the Ordinary Shares, and no price will be publicly quoted for the Ordinary Shares. The Company intends to review the options available for allowing dealing in the Company's shares, for example by provision of a matched bargain facility or periodic share auctions, however there is no guarantee that one will be put in place. Any update will be made via the Company's website address (www.brandshield.com).

Other than the De-Listing, the Concert Party has confirmed that no changes will be made regarding:

i.        the future business of the Company, including its research and development functions;

ii.       the continued employment of the employees and management of the Company and of its subsidiaries, including any material change in the conditions of employment or in the balance of the skills and functions of the employees and management;

iii.      its strategic plans for the Company, which will therefore have limited repercussions on employment and on the locations of its places of business, including on the location of its headquarters and headquarters functions;

iv.      employer contributions into the Company's pension schemes (including with regard to current arrangements for the funding of any scheme deficit), the accrual of benefits for existing members, and the admission of new members; and

v.       the redeployment of the fixed assets of the Company.

7.4  Views of the Independent Directors

The Independent Directors support the Concert Party's stated intentions for the business and its employees. The Independent Directors firmly believe that the Proposals are in the interests of both the Company and its Shareholders. Although the Board is acutely aware that some Shareholders will be concerned about a de-listing from AIM and the consequent reduction in immediate liquidity it sees no prospect in the near to medium term for the Company to achieve a valuation that reflects its actual performance and future potential, demonstrated through sustained growth of ARR and continued penetration of a fast-growing market.  BrandShield has been recognised independently as one of the leading players in the Digital Risk Protection sector (Frost and Sullivan Report 2022) and the Independent Directors believe that all its Shareholders will be far more likely to achieve a positive outcome as a de-listed company where it is likely to command higher valuations based on realistic ARR multiples.  In short, the Board believes the proposals are significantly more likely to result in a positive outcome for all its stakeholders, including employees and Shareholders. In considering this, the Independent Directors have given due consideration to the assurances relating to the Company, including those given to its employees regarding the implementation of the Proposals.

8.   FUTURE STRATEGY OF THE COMPANY AND USE OF PROCEEDS

The existing strategy of the Company has delivered continual and material increases in clients serviced and revenue generated.  Annual Recurring Revenue has increased from around $2.87m at the time of admission to trading on AIM in December 2020 to nearly $10m at present. Over this period, client numbers have increased from 74 to around 210. The strategy going forwards will be the continued targeting of market share in a growing sector and the striving for operational excellence within the Company.  Funds will be used to increase the sales footprint of BrandShield and to reinforce our marketing spend in areas that we know yields results.  This will be within the backdrop of our more recent efforts to reduce operational cash burn where efficiencies can be found without prejudicing either capability or slowing growth.  The costs of Cloud computing will continue to be targeted closely and Research and Development efforts will continue to be targeted at optimal automation of tasks within our leading edge, AI based platform. The Board believes that the implementation of BrandShield 3.0, the UI interface with our customers, will be a step change in capability from our clients and this will be enhanced incrementally to continue to improve functionality.  The optimisation of the enforcement element of the Company has yielded considerable efficiencies and this process will continue. 

The Board believes that continued growth of client numbers, revenue and margins will be best done in a de-listed environment where the senior management can focus more of its capacity on the core business without the distractions of the additional legal, regulatory burden and cost implications of being a quoted company. The Board also believes that BrandShield is a fast-growing company in a fast-growing sector and the valuation attributed to it by the London markets makes it vulnerable to acquisitive suitors.  The Board believes strongly that if any acquisition of BrandShield is considered by other parties, that a considerably higher valuation would be secured in a de-listed environment than if it remained quoted, a situation that would benefit all our Shareholders despite the reduction in immediate liquidity caused by a de-listing. 

9.   De-Listing

9.1  Reasons for the De-Listing

The Board has conducted a review of the benefits and drawbacks to the Group retaining its listing on AIM and maintaining its existing corporate structure. The Board believes that the De-Listing is in the best interests of the Company and its Shareholders as a whole. In reaching this conclusion, the Board has considered the following key factors:

·              there is, and has been for some time, a lack of liquidity in the Ordinary Shares such that there is a very limited market for the Ordinary Shares;

·              there is limited trading of the Ordinary Shares. Over the past 12 months 45,436,247 Ordinary Shares were traded representing approximately 27 per cent. of the current issued share capital and giving an average daily volume of approximately 195,005 Ordinary Shares. Accordingly, the costs associated with maintaining the AIM quotation are considered by the Directors to be disproportionately high when compared to the benefits of being listed on AIM, even though these costs have been, so far as reasonably possible, controlled and minimised by the Company. The Board believes that these funds could be better utilised for the benefit of the Company.

·              the management time significant associated additional advisor costs  and the legal and regulatory burden associated with maintaining the Company's admission to trading on AIM is, in the Directors' opinion, disproportionate to the benefits to the Company.

·              despite demonstrating consistent growth in customer numbers and ARR, alongside maintaining a proactive investor relations programme, the share price performance and subsequent valuation placed on BrandShield since its listing on AIM has reduced in a sustained manner.  High growth businesses such as BrandShield will seek to raise expansion capital in order to take advantage of growth opportunities as and when they present themselves.  The Board's focus since listing has been the acquisition of new customers and the subsequent growth of its top line revenue as the Company expands to reach critical mass.  Fundraises have been conducted at ever-increasing discounts to the original listing price and this has been deeply frustrating to the Board, Founders and our Shareholders.  This is despite the fact that the underlying shareholder base has transformed over the listing period and has been enhanced through material stakes being built up by a small and focused number of institutional investors.  This change in the shareholder base has not managed to insulate the share price from downward pressure created by generally low volumes of trading across the Aim market. The Board does not believe that it is right to expose our existing Shareholders further to future dilution based valuation multiples that it does not believe reflect a realistic valuation of BrandShield. 

The Board therefore believes that the interests of all Shareholders will be better served in an off-market context whereby the Company can continue to focus on high growth levels and the potential to provide all Shareholders with a liquidity event that fairly reflects the true value of the business and its global significance in this sector. 

·              BrandShield Shareholders, whilst recognising and being willing to accept the risks associated with remaining as an investor in an unlisted company, who anticipate realising greater value in their BrandShield Shares in the future, may wish to remain as Shareholders in BrandShield.

9.2  Effect of De-Listing

The principal effects of the De-Listing will be that:

·              Shareholders will no longer be able to buy and sell Ordinary Shares through a public stock market, further reducing the liquidity in the Ordinary Shares; the Company intends to review the options available for allowing dealing in the Company's shares, for example by provision of a matched bargain facility or periodic share auctions, however there is no guarantee that one will be put in place.

·              the Company will no longer be required to announce material events or interim results;

·              the Company will no longer be required to comply with many of the corporate governance requirements applicable to companies traded on AIM;

·              the Company will no longer be subject to the Disclosure Guidance and Transparency Rules and will therefore no longer be required to disclose major shareholdings in the Company;

·              the Company will no longer be subject to the AIM Rules, with the consequence that Shareholders will no longer be afforded the protections given by the AIM Rules. Such protections include a requirement to obtain shareholder approval for reverse takeovers and fundamental changes in the Company's business and to announce, inter alia, certain substantial and/ or related party transactions; and

·              the De-Listing may have either positive or negative taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent adviser immediately.

Shareholders should note that the City Code will continue to apply to the Company following the De-Listing. The Company will also continue to be bound by the Companies Act (which requires Shareholders' approval for certain matters) following the De-Listing.

9.3  De-Listing Process

Under the AIM Rules, the De-Listing can only be effected by the Company after securing a special resolution of Shareholders in a general meeting and the expiry of a period of 20 clear Business Days from the date on which notice of the De-Listing is given to the London Stock Exchange.

In addition, a period of at least five clear Business Days following Shareholders' approval of the De-Listing is required before the De-Listing may become effective. The Resolutions seek (amongst other matters) the approval of Shareholders for the De-Listing. Assuming that the Resolutions are approved, it is proposed that the De-Listing will take place by 7.00 a.m. on 23 October 2023.

9.4  Ordinary Share dealing Prior to De-Listing

If Shareholders wish to buy or sell Ordinary Shares on AIM they must do so prior to the De-Listing becoming effective. As noted above, in the event that Shareholders approve the De-Listing, it is anticipated that the last day of dealings in the Ordinary Shares on AIM will be 20 October 2023 and that the effective date of the Cancellation will be 23 October 2023.

9.5  Ordinary Share dealing following De-Listing

Immediately following the De-Listing, there will be no market facility for dealing in the Ordinary Shares, and no price will be publicly quoted for the Ordinary Shares. The Company intends to review the options available for allowing dealing in the Company's shares, for example by provision of a matched bargain facility or periodic share auctions, however there is no guarantee that one will be put in place. Any update will be made via the Company's website address (www.brandshield.com).

10.  Current Trading and Future Prospects

The Company published its financial results for the six month period ended 30 June 2023 on 19 September 2023. The Company's highlights and outlook sections are detailed below:

"Financial highlights

·      H1 2023 Annual Recurring Revenue₁ ("ARR") up 46% to $9.71m (H1 2022: $6.67m)

·      Positive momentum continued with the August 2023 ARR figure reaching $9.85m, up 36% vs. $7.26m in August 2022.

·      Delivered revenue growth of 56.3% to $4.42m in H1 2023 (H1 2022: $2.83m)

·      Loss for the period decreased by 53% to $2.05m in H1 2023 (H1 2022: $4.37m)

·      As part of operational improvements Gross profit increased from 48% in H1 2022 and 54% in December 2022 to 68% in H1 2023

·      Cash of $1.35m at period end (31 Dec 2022: $2.60m)

¹Annual Recurring Revenue is a non-GAAP measure and an industry specific measure

Operational highlights

·      Strong new business momentum achieved in the first half of 2023, with the Company securing 45 new customer wins in the period to take its total number of customers to 209. This growth continued post-period end, and as at end of August 2023, BrandShield services 214 customers.

·      Ongoing sales and marketing initiatives continues to support the growth in the Company's customer footprint, expanding the Group's presence across in key growth sectors such as pharmaceutical, retail, ecommerce and finance.

·      BrandShield consolidated its position as one of the leading Digital Risk Protection Provider

o  BrandShield named the third best DRP service provider globally in a 2022 review by Frost & Sullivan ("F&S") the global business consultancy group.

o  BrandShield cognised with the 2023 Global Digital Risk Protection New Product Innovation and Best Practices Award by Frost & Sullivan.

Post period-end and Outlook

·      The Company has made a solid start to H2 2023 and look forward to reporting another period of both operational and financial progress.

·      Recent focus on reducing cash burn is having a marked impact on gross margins as the Company continues to grow towards becoming cash flow positive".

The Directors of the Company can confirm that, since the date of publication of these financial results, there has been no significant change in the trading or financial position of the Company.

Following the Proposals, the Company intends to continue operating as it has done over the Company's last financial year and carry out the same activities, and to retain the same business strategy that it did as a quoted public company. Based on current market conditions, the Company does not envisage any significant changes to the Company's trading position once the Proposals are completed.

11.  Proposals to be voted on at the General Meeting

For the purposes of effecting the Proposals, the Resolutions will be proposed at the General Meeting. Set out at the end of this document is a notice convening the General Meeting to be held at 11.00 a.m. on 13 October 2023 at the offices of Edwin Coe LLP, 2 Stone Buildings, Lincoln's Inn, London, WC2A 3TH. The full texts of the Resolutions are set out in that notice.

The Resolutions, which are summarised below, are necessary for the implementation of the Proposals.

Resolution 1 (Ordinary Resolution)

THAT the waiver granted by the Takeover Panel of the obligation that would otherwise arise on the Concert Party, both individually and collectively, to make an offer to the shareholders of the Company pursuant to Rule 9 of the Takeover Code as a result of the Proposals is hereby approved.

Note: In order to comply with the Takeover Code, this Resolution will be taken on a poll of Independent Shareholders.

Resolution 2 (Ordinary Resolution)

Conditional upon the passing of Resolutions 1, 3 and 4, this ordinary resolution will grant the Directors authority to allot New Ordinary Shares for the purposes of the Open Offer, to the extent existing authorities are insufficient. The authority given by this Resolution will expire on the earlier of 16 October 2024 or the date of the Company's next annual general meeting.

Resolution 3 (Special Resolution)

Conditional on the passing of Resolutions 1, 2 and 4, this special resolution will grant the Directors authority to disapply the statutory pre-emption rights in respect of the allotment of the new Ordinary Shares to be allotted pursuant to Resolution 2 in connection with the Open Offer. The authority given by this Resolution will expire on the earlier of 16 October 2024 or the date of the Company's next annual general meeting.

Resolution 4 (Special Resolution)

Conditional on the passing of Resolutions 1, 2 and 3 that the cancellation of the admission of the Ordinary Shares to trading on AIM is approved.

12.  Action to be taken

General Meeting

The appointment of a proxy will not preclude you from attending and voting in person at the General Meeting or any adjournment thereof, if you so wish and are so entitled.

If your proxy appointment has not been submitted by 11.00 a.m. on 11 October 2023, your vote in relation to the Resolutions will not count.

You can vote either:

•        by logging on to www.signalshares.com and following the instructions.

•        you may request a hard copy Form of Proxy directly from the registrars. Link Group on Tel: 0371 664 0300. Calls are charged at the standard geographical rate and may vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 09:00 -17:30, Monday to Friday excluding public holidays in England and Wales. The Form of Proxy should be completed and returned in accordance with the instructions printed thereon so as to arrive at the Company's Registrars, Link Group, Central Square, 29 Wellington Street, Leeds, LS1 4DL by 11.00 a.m. on 11 October 2023.

•        in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures set out in the notes to the Notice of General Meeting.

13.  Recommendation

In respect of Resolution 1, the Independent Directors, having been so advised by SPARK Advisory Partners, the Company's Financial and Nominated Adviser, considers that the Proposals are fair and reasonable and in the best interests of Shareholders and the Company as a whole and accordingly recommend that Independent Shareholders vote in favour of the Rule 9 Waiver. In providing its advice to the Independent Directors, SPARK Advisory Partners has taken into account the Independent Directors' commercial assessments. Accordingly, the Independent Directors recommend that Independent Shareholders vote in favour of Resolution 1 as they intend to do in relation to their respective shareholdings.

All the Directors recommend that Shareholders vote in favour of Resolutions 2 to 4 (inclusive) as they intend to do in relation to their respective shareholdings.

Yours faithfully

Azriel Moscovici

Chairman

Enquiries:

About BrandShield

Brandshield is a provider of cybersecurity solutions from brand protection to online threat hunting. BrandShield detects online threats and takes them down. The Company's client base is a growing list of organisations including Fortune 500 and FTSE100 companies. By utilising AI and big-data analysis, BrandShield monitors, detects, and removes online threats facing companies. These threats include social phishing, executive impersonation, fraud, brand abuse, and counterfeits.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

The Company reserves the right to alter the date and times referred to above and to accept applications under the Open Offer at any time prior to 5 October 2023. If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by announcement through a Regulatory Information Service.

All times are references to London time.

All events in the above timetable following the GM are conditional, inter alia, upon the approval of all the Resolutions.

The De-Listing requires the approval of not less than 75 per cent. of the votes cast by Shareholders at the General Meeting.

If you have any questions on the procedure for acceptance and payment, you should contact Link Group on +44 (0) 371 664 0321. Calls are charged at the standard geographic rate and will vary by provider. Calls from outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 9.00 a.m. - 5.30 pm, Monday to Friday excluding public holidays in England and Wales. Please note that Link Group cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.

DEFINITIONS

The following shall apply throughout this document unless the context otherwise requires:-

All references in this document to specified times are to London time.

All references in this document to ''£'' or ''pence'' are to the lawful currency of the United Kingdom.

All references in this document to ''

All references to legislation in this document are to English legislation unless the contrary is indicated.

Documents Published on the Company's Website

Copies of the following documents will be made available at the website address www.brandshield.com. from the date of posting of the Circular up to the date of the General Meeting:

(a)        the Memorandum and Articles of Association of the Company;

(b)        the audited accounts of the Company for the years ended 31 December 2021 and 31 December 2022 and the interim unaudited accounts for the six months ended 30 June 2023;

(c)        the consent letter from SPARK Advisory Partners;

(d)        the service contracts and letters of appointment of each of the Directors set out in paragraph 4 of Part III of the Circular;

(e)        the material contracts set out in paragraph 5 of Part III of the Circular; and

(f)         copies of the Circular.