Sofant Technologies EIS – existing investors

This overview is provided to make it easier for you to form your own view about the opportunity. 

This deal has been arranged, reviewed and introduced by EMV Capital.

What to expect post-investment: EMV Capital and the Company are responsible for shareholder updates and communications. Your investment will be held by Mainspring Nominees and they will be responsible for all corporate resolutions and communications relating to voting and pre-emption matters.

Sofant Technologies Limited (“Sofant” or the “Company”) is developing a patented satellite communication (SatCom) and 5G antenna. The Company is backed by several financial institutions, including EMV Capital, Newable Ventures, and Scottish Enterprise (formally known as Scottish Investment Bank).

The Company prepared a Shareholder Update dated 25 January covering recent commercial developments and a plan to raise capital under an Advance Subscription Agreement (ASA) ahead of a planned £5 million Series A in Q2 – not guaranteed. 

Now that the terms of this ASA have been finalised, we are able to share this update and the investment offer with shareholders. 

Background

We have been informed by EMV Capital (acting as introducers to this opportunity) that a term sheet has now been received from a lead investor for the Series A which is targeting a close date in Q2 2024 – not guaranteed. 

Under these terms, the lead institutional investor intends to invest £1.5 million for 5% of the company on a fully diluted basis as part of a £5 million round. Management believes this should fund the business into a revenue-generating position – not guaranteed.

The indicative share price of this round would be £147.01 – a significant decrease from the previous round share price of £215.97. 

Ahead of closing the Series A funding, management wishes to secure additional investment from existing shareholders under an ASA to ensure that R&D commitments can be met in the interim.

A brief overview of the ASA

The detailed terms of the ASA are set out in the ASA document. In summary, the Company believes this ASA will be EIS-qualifying and has obtained a professional opinion to support this – consequently, Advance Assurance will not be sought. The ASA will convert under the following scenarios:

  1. Following a qualifying funding round or a sale of the business: The ASA will convert at the lower of £280.76 or a discount of 25% to the price of the qualifying funding round.
  2. At the longstop date (24 July 2024) or in the event of insolvency: The ASA will convert at the lower of £215.97 or a fully diluted pre-money valuation of £43.5 million (the post-money valuation from the last round)
Shareholder approval has already been obtained to issue the ASA and to accept the term sheet from the prospective lead investor. 

What next

Please read carefully the updates prepared by the Company and the offer introducer, EMV Capital. Should you wish to invest, please ensure you have read and understand the terms of the ASA (which is available to download) first, then you can apply online – there is no minimum investment for existing shareholders. The deadline to participate in this ASA is 29 February 2024 (5pm, cleared funds). 

Important: The information on this website is for experienced investors. It is not advice nor a research or personal recommendation to invest. If you’re unsure, please seek advice. Investments are for the long term. They are high risk and illiquid and can fall as well as rise in value, so you could get back less than you invest.

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 updates – both from the Company and EMV Capital – and the Advance Subscription Agreement – 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 Mainspring Nominees (MNL Nominees Limited - authorised and regulated by the FCA). MNL Nominees Limited will be completing the ASA 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. 

The details

Type
Single company
Sector
Technology
Target return
-
Funds raised / sought
£1.0 million sought
Minimum investment
-
Deadline
29 Feb 2024 (5pm, cleared funds)
Last updated: 19 February 2024

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