Anoto

REG

NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, BELARUS, HONG KONG, JAPAN, CANADA, NEW ZEALAND, RUSSIA, SINGAPORE, SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE SUCH PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

Anoto Group AB ("Anoto" or the “Company") hereby informs that the Board of Directors has resolved to carry out a directed share issue amounting to approximately SEK 15 million, a rights issue amounting to approximately SEK 50 million and a set-off issue amounting to approximately SEK 21 million. The issues are being carried out in order to strengthen the Company's financial position and to implement the Company's business plan. The rights issue is covered by subscription and guarantee undertakings amounting to in total 100 percent. The rights issue, the directed share issue and the set-off issue are subject to approval by an Extraordinary General Meeting.

Background and Rationale

Anoto is a global Swedish technology company in digital writing and drawing. The Company develops and manufactures smart pens and related software using its proprietary technology. Anoto bridges the analogue and digital worlds with its solution, pattern recognition, optics and image processing. Anoto's business idea is to offer an intuitive digital pen that works easily, connecting the art and experience of writing on paper with instant usability on digital devices. The Company has two main business areas: B2C (Livescribe) and B2B (Enterprise Forms). Enterprise Solutions offers digital pens for professional and legal purposes, such as signatures, forms and documents while Livescribe is aimed at consumers who want to use digital pens for note-taking, meetings, messaging and creative applications. Anoto’s sales of hardware and software generate two different types of revenue streams; one-off revenue per digital pen sold from Livescribe and subscription fees from Enterprise Forms.

Over the last year the Company has recruited a new management team with experience from building and scaling companies on an international scale as well as with a long track-record of successful product launches within the consumer sector. The new management team has, together with the Board of Directors, developed a new consumer centric strategy that is focused on growth and profitability and that includes new product launches including improved supporting software. As a first step, Anoto will launch its new product LivePen in November of 2024. The LivePen is an affordable digital pen that comes along with the accompanying LivePen app. The app allows users to instantly transfer their handwritten notes into digital form, creating a seamless integration between traditional writing and digital platforms. A key part of Anoto's new strategy is to use a data-driven approach to understand user experiences and feedback. By analysing how users interact with the LivePen and the app, Anoto can continuously improve its products and services. This approach will inform future developments in both the pen and software segments, ensuring that products meet user needs and expectations.

The demand for digital pens is expected to be strong and grow over the coming years, and Anoto sees a high potential for the LivePen as well as for the next-generation of digital pens and supporting software where, inter alia, Artificial intelligence (AI) powered handwriting and orientation recognition will be central. In order to capture these growth opportunities, the Company will need to build inventory and invest in marketing for LivePen with the accompanying LivePen app as well as invest in research and development for the next generation of digital pens. In order to facilitate growth, the Company also has a need to strengthen its financial position by reducing debt and improving its working capital.

In view of the above, the Board of Directors has resolved to carry out a directed share issue of approximately SEK 15 million (the “Directed Issue”), a right issue of approximately SEK 50 million, which is covered by subscription and guarantee undertakings amounting to in total 100 percent (the “Rights Issue”), and a set-of issue of approximately SEK 21 million (the “Set-off Issue”) (and together with the Directed Issue and the Rights Issue the “Issues”).

The proceeds from the Issues amounts to approximately SEK 86 million before transaction related costs. Of the issue proceeds, approximately SEK 40.0 million relates to set-off of loans in the Issues. The Company intends to use the net proceeds expected to be received in connection with the New Share Issues for the following purposes and in the order of priority set out below.

The Directed Issue

• Manufacturing                                                    approximately 47 per cent
• Selling, general and administrative expenses        approximately 35 per cent
• Marketing                                                          approximately 7 per cent

Rights issue

• Manufacturing                                                    approximately 62 per cent
• Selling, general and administrative expenses        approximately 27 per cent
• Marketing                                                          approximately 7 per cent
• General corporate purpose                                  approximately 4 per cent

Directed Issue

The Board of Directors of Anoto has, with deviation from the shareholders' preferential rights, resolved on the issue of no more than 125,043,750 new ordinary shares at a subscription price of SEK 0.12 per share. Payment for the subscribed shares shall be made through payment in cash or through set-off of claim. The Directed Issue provides the Company with proceeds of a total of approximately SEK 15 million before transaction related. The Directed Issue is subject to the approval by an Extraordinary General Meeting, which is scheduled to be held on 26 November 2024 (the “EGM”). The new shares have been subscribed for by institutional and other qualified investors. Payment for the subscribed shares shall be made no later than on 27 November 2024.

The reason for the deviation from the shareholders' preferential rights is that the Company is in great need of capital and the Board of Directors believes that the expected issue proceeds in a timely and cost-effective manner will enable the Company to (i) ensure continued operations until a rights issue has been completed, and (ii) diversify and strengthen the Company's shareholder base with institutional investors, which justifies the issue's deviation from the shareholders' preferential rights. The Directed Issue will, unlike the Rights Issue, broaden the shareholder base and provide the Company with new reputable owners, which the Board of Directors believes will strengthen the liquidity of the share and be favorable for the Company. In light of the above, the Board of Directors has made the assessment that the Directed Issue with deviation from the shareholders' preferential rights is favorable for the Company and in the best interest of the Company's shareholders.

The subscription price has been determined through arm's length negotiations with the subscribers in the Directed Issue. The Board of Directors has also taken into account that the Rights Issue (as described below) is carried out with a subscription price of SEK 0.12 per ordinary share and has therefore deemed it reasonable that the Directed Issue is carried out on equivalent terms.

The new shares in the Directed Issue corresponds to approximately 11.3 percent of the total number of shares in the Company after dilution, calculated on the number of shares in the Company after the completion of the Rights Issue and the Set-off Issue and assuming that the Rights Issue is fully subscribed.

Rights Issue

The Board of Directors of Anoto has resolved on the issue of no more than 414,823,830 new ordinary shares with preferential rights for the shareholders, raising proceeds of approximately SEK 50 million before transaction related costs. The Rights Issue is subject to the approval by the EGM, which is scheduled to be held on 26 November 2024.

In the Rights Issue, Anoto’s current shareholders will have a preferential right to subscribe for new shares in proportion to the number of shares held on the record date on 28 November 2024. The last day of trading in Anoto's share including the right to participate in the Rights Issue will be 26 November 2024. The subscription period is expected to run from 2 December 2024 to 16 December 2024.

One (1) share held on the record date entitles to one (1) subscription right, according to the proposed terms and conditions. Four (4) subscription rights entitle the holder to subscribe for five (5) new shares. The subscription price has been set to SEK 0.12 per share.

Shares which are subscribed for without preferential rights will be offered to current shareholders and other investors who have applied to subscribe for new shares without preferential rights. The new shares in the Rights Issue corresponds to approximately 37.6 percent of the total number of shares in the Company after dilution, calculated on the number of shares in the Company after the completion of the Directed Issue and the Set-off Issue and assuming that the Rights Issue is fully subscribed.

Set-off Issue

As previously communicated through a press release, on 27 June 2024, the Company entered into a convertible investment agreement with Mark Stolkin and DDM Debt AB, two major shareholders in Anoto, providing Anoto with a total of USD 1.5 million in the form of convertible loans (the "Investment Agreement"). The Investment Agreement has since been increased by a total of USD 0.5 million with the following investors having adhered the Investment Agreement: Gary Butcher, BLS Futures Limited, Rocco Homes Ltd, Machroes Holdings Ltd and Adrian Weller.

Under the terms of the Investment Agreement, upon the request of a lender, the outstanding loan amount, in full or in part, plus accrued interest, shall be converted into newly issued ordinary shares of the Company at a conversion price of SEK 0.42, which corresponds to the current quota value of the shares, and at a fixed exchange rate of 10.51 SEK/USD. However, in the event of a Qualified Financing Round (see further details in the press release published by the Company on 27 June 2024) the outstanding loan amounts shall automatically be converted into newly issued ordinary shares in Anoto at a conversion price corresponding to 75 percent of the subscription price in the Qualified Financing Round.

Due to the Rights Issue constituting a Qualified Financing Round, the Board of Directors has resolved on a directed issue of a total of 230,636,111 ordinary shares with payment by way of set-off to the lenders Mark Stolkin, DDM Debt AB, Gary Butcher, BLS Futures Limited, Rocco Homes Ltd., Machroes Holdings Ltd and Adrian Weller. The subscription price per ordinary share is SEK 0.09, which corresponds to 75 percent of the subscription price in the Rights Issue. The subscription price in the Set-off Issue has been determined in accordance with the Investment Agreement between Anoto and the lenders. Payment shall be made through set-off of claims in connection with subscription. The Set-off Issue is subject to the approval by the EGM, which is scheduled to be held on 26 November 2024.

The new shares in the Set-Off Issue correspond to approximately 20.9 percent of the total number of shares in the Company after dilution, calculated on the number of shares in the Company after the completion of the Directed Issue and the Rights Issue and assuming that the Rights Issue is fully subscribed.

Subscription undertakings and guarantee commitments

Anoto has received subscription undertakings amounting to approximately 30.2 percent of the Rights Issue from existing shareholders.

Furthermore, the Company has entered into underwriting agreements consisting of a so-called bottom guarantee of approximately SEK 21.2 million, corresponding to approximately 42.6 percent of the Rights Issue, and a so-called top guarantee of approximately SEK 13.6 million, corresponding to approximately 27.3 percent of the Rights Issue. The bottom guarantee ensures, provided that subscription takes place at least corresponding to the subscription undertakings, that approximately 72.7 percent of the Rights Issue is subscribed and paid. The top guarantee ensures that 100 percent of the Rights Issue is subscribed for and paid for, provided that subscriptions are at least equivalent to the subscription undertakings and the bottom guarantee.

For the guarantee undertakings a fee of 14 percent of the guaranteed amount is paid in cash compensation or in the form of new shares. The guarantee undertakings is subject to customary conditions. The guarantee undertaking is not secured through a bank guarantee, blocked funds, or pledge of collateral or similar arrangement.  

New Board Member

Adrian Weller, one of the investors in the Directed Issue and the Set-off Issue, will be proposed as a new member of the Board of Directors at the EGM scheduled to be held on 26 November 2024.

Extraordinary General Meeting

The Rights Issue is subject to approval by the EGM scheduled to be held on 26 November 2024. Notice to the EGM will be published in a separate press release later today and will be available on www.anoto.com.

Prospectus

Complete terms and conditions for the Rights Issue, as well as other information regarding the Company, will be provided in the prospectus that is planned to be published on or about 29 November 2024. The Prospectus which will be published on the Company’s website (www.anoto.com).

Advisers

Setterwalls Advokatbyrå is acting as legal advisor and Bergs Securities AB (“Bergs Securities”) is acting as Sole Global Coordinator and Bookrunner to the Company in connection with the Issues.

This information constitutes inside information as Anoto Group AB (publ) is obliged to disclose under the EU Market Abuse Regulation 596/2014. The information was provided by the contact person below for publication 25 October 2024 at 08:15 CEST.

For further information, please contact:

Kevin Adeson, Chairman of the board of Anoto Group AB (publ)

For more information about Anoto, please visit www.anoto.com or email ir@anoto.com

Anoto Group AB (publ), Reg.No. 556532-3929, Flaggan 1165, SE-116 74 Stockholm

About Anoto Group

Anoto is a publicly held Swedish technology company known globally for innovation in the area of information-rich patterns and the optical recognition of those patterns. It is a lead-er in digital writing and drawing solutions, having historically used its proprietary technology to develop smartpens and related software. These smartpens enrich the daily lives of millions of people around the world. Anoto currently has three main business lines: Livescribe retail, Enterprise Forms and OEM. Anoto also holds a stake in Knowledge AI, a leading AI based education solution company. Anoto is traded on the Small Cap list of Nasdaq Stockholm under ANOT.

IMPORTANT INFORMATION

The release, announcement or distribution of this press release may, in certain jurisdictions, be subject to restrictions. The recipients of this press release in jurisdictions where this press release has been published or distributed shall inform themselves of and follow such restrictions. The recipient of this press release is responsible for using this press release, and the information contained herein, in accordance with applicable rules in each jurisdiction. This press release does not constitute an offer, or a solicitation of any offer, to buy or subscribe for any securities in the Company in any jurisdiction where such offer would be considered illegal. This press release does not constitute an offer to sell or an offer to buy or subscribe for shares issued by the Company in any jurisdiction where such offer or invitation would be illegal. In a member state within the European Economic Area ("EEA"), shares referred to in the press release may only be offered in accordance with applicable exemptions under the Prospectus Regulation.

This press release does not constitute or form part of an offer or solicitation to purchase or subscribe for securities in the United States. The securities referred to herein may not be sold in the United States absent registration or an exemption from registration under the US Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold within the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There is no intention to register any securities referred to herein in the United States or to make a public offering of the securities in the United States. The information in this press release may not be announced, published, copied, reproduced or distributed, directly or indirectly, in whole or in part, within or into the United States, Australia, Belarus, Canada, Hong Kong, Japan, New Zealand, Russia, Singapore, South Africa, or in any other jurisdiction where such announcement, publication or distribution of the information would not comply with applicable laws and regulations or where such actions are subject to legal restrictions or would require additional registration or other measures than what is required under Swedish law. Actions taken in violation of this instruction may constitute a crime against applicable securities laws and regulations.

In the United Kingdom, this document and any other materials in relation to the securities described herein is only being distributed to, and is only directed at, and any investment or investment activity to which this document relates is available only to, and will be engaged in only with, "qualified investors" who are (i) persons having professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); or (ii) high net worth entities falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). In the United Kingdom, any investment or investment activity to which this communication relates is available only to, and will be engaged in only with, relevant persons. Persons who are not relevant persons should not take any action on the basis of this press release and should not act or rely on it.

A prospectus will be prepared in connection with the offering and admission to trading of shares in Anoto. The prospectus will be scrutinized and approved by the Swedish Financial Supervisory Authority. The Swedish Financial Supervisory Authority’s approval of the prospectus should not be understood as an endorsement of the securities being offered and admitted to trading. The prospectus will contain a description of the risks and rewards associated with an investment in Anoto and potential investors are recommended to read the prospectus in its entirety before making an investment decision.

The prospectus will be published by the Company on or around 29 November 2024 and available on the Company's website, www.anoto.com. This release is however not a prospectus in accordance to the definition in the Prospectus Regulation. In accordance with article 2 k of the Prospectus Regulation this press release constitutes an advertisement. Complete information regarding the Rights Issue can only be obtained through the Prospectus. Anoto has not authorized any offer to the public of shares or rights in any other member state of the EEA. In any EEA Member State, this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Regulation. This announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in the new shares. Any investment decision in connection with the Rights Issue must be made on the basis of all publicly available information relating to the Company and the Company's shares. Such information has not been independently verified by Bergs Securities. Bergs Securities is acting for the Company in connection with the transaction and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to its clients nor for giving advice in relation to the transaction or any other matter referred to herein.

Information to distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the shares in Anoto have been subject to a product approval process, which has determined that such shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, Distributors should note that: the price of the shares in Anoto may decline and investors could lose all or part of their investment; the shares in Anoto offer no guaranteed income and no capital protection; and an investment in the shares in Anoto is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Rights Issue.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the shares in Anoto.

Each distributor is responsible for undertaking its own target market assessment in respect of the shares in Anoto and determining appropriate distribution channels.

Attachment

• Final Project Phoenix - Launch release SWE 2024-10-25