Sofant Technologies EIS – existing investors

Sofant Technologies Limited (“Sofant” or the “Company”) has developed a proprietary, highly efficient radio platform that aims to significantly reduce the power consumption of future wireless communication systems. This could be particularly relevant for satellite communications and high frequency 5G/6G applications where power consumption and coverage are the most critical challenges.

The Company is currently in pre-commercial sales phase. It is backed by several financial institutions, including Scottish Enterprise (formerly Scottish Investment Bank), EMV Capital, and Newable Ventures.

Wealth Club has introduced an experienced operating partner, Rene Schuster, to the Company, to help maximise the commercial opportunities. Rene has an extensive network in the telecommunications sector and could help the leadership team with their sales efforts.  

Existing shareholders have the opportunity to invest now, at a discount to the expected Series A valuation under an Advance Subscription Agreement (ASA).

The Company has prepared an Investor Presentation setting out the investment details. There is no minimum for existing investors and you can apply online. Before investing, please read carefully the Investor Presentation and the Terms of the ASA to ensure you are comfortable with the significant risks.

The deadline to participate in this ASA is 27 September 2024 (5pm, cleared funds). 

Commercial update summary

Shortly after the February investor update, Sofant’s board turned down a term sheet from an established institutional investor for a new £5 million round priced at £147.01 (the previous equity round in October 2023 was at £215.97/share) as it believed this materially undervalued the Company.

Since then, the Company has reported commercial progress on numerous fronts:

• Sofant continue to make progress against milestones on the European Space Agency contract which has received a further £350k in non-dilutive funding with up to a further £1 million expected to be unlocked by Q1 2025 – subject to performance.
• Early commercial discussions continue both with multinational SatCom companies Viasat (where Sofant’s technology is due to be field tested in Q1 2025) and SES (to test Sofant’s technology and explore potential co-development opportunities) and with UK and US defence agencies.
• NSSIF (the National Security Strategic Investment Fund) has issued Sofant with a letter of intent for an investment of up to £2 million as part of the planned Series A.

Management reports that £1.5 million was raised in the ASA round communicated in February 2024. Shares were issued in July 2024 at £170.08, equivalent to a reference share price of £226.77 less the 25% ASA discount.

Please refer to the latest shareholder update for further details. 

Investment round summary

Sofant is planning a £5 million to £6 million Series A round targeted for Q4 2024. If successful, management forecasts this round to provide 14 months of runway and enable the business to commence commercial sales in Q2 2025/Q3 2025 – not guaranteed.

The round is expected to be completed at a premium to the current fully diluted valuation of £38.3 million (£226.77 per share) – not guaranteed.

NSSIF has issued a letter of intent to invest up to £2 million – not guaranteed.

Ahead of launching the Series A round to new investors, management is offering existing investors the opportunity to invest at a discount under an ASA.

Advance Subscription Agreement

A brief overview of the ASA is below. 

Investment under this ASA is expected to convert to Ordinary Shares (the only class of share currently in issue):

• On completion of a qualifying financing round of more than £1 million the ASA, converting at a 15% discount to the financing round (subject to a maximum price of £226.77)
• If no qualifying financing round completes before the long stop date (27 March 2025) the ASA will convert at £192.75 per share (15% discount to the reference share price of £226.77) 

The investment is expected to be EIS qualifying. Management has not sought Advance Assurance for this ASA round on the basis that there have been no material changes to the business since issuing EIS3 certificates to investors in February 2024. Shares will be issued within the current tax year.

Management has received an opinion from their tax advisors to ensure that the ASA structure is EIS qualifying.

Shortly ahead of conversion, the ASA conversion price will be confirmed.

Risks – important 

This is a single-company offer with no diversification. It involves investing in an early-stage, unproven, loss-making business, which is by nature high-risk and prone to failure. There is a risk that the capital raised may not be sufficient to achieve the Company’s objectives. You could lose the amount you invest.

Like all investments available through Wealth Club, it is only for experienced investors happy to make their own investment decisions without advice.

There is no ready market for unlisted EIS shares: they are illiquid and hard to sell and value. There will need to be an exit for you to receive a realised return on your investment.

Exits are likely to take considerably longer than the three-year minimum EIS holding period; equally, an exit within three years could impact tax relief. The value of tax benefits depends on circumstances and tax rules can change. 

Before you invest, please carefully read the Shareholder Update, Investor Presentation and terms of the ASA – alongside the Wealth Club Risks and Commitments.

Structure and fees

Investors will pay no direct initial or ongoing charges to invest. Fundraising costs are being met by the Company. Wealth Club will be entitled to a performance fee on exit. 

Wealth Club investors will invest using a nominee structure. This service is provided by Wealth Club’s subsidiary companies Wealth Club Asset Management Limited (authorised and regulated by the FCA) and Wealth Club Nominees Limited. Wealth Club Nominees Limited will be completing the share subscription documentation on investors’ behalf.

Please refer to the Schedule of Charges for more details on charges.

All the services Wealth Club and, where applicable, its subsidiaries provide are governed by the Terms and Conditions of the Wealth Club Services.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.