Intellego Technologies

In August 2022, Intellego entered into an agreement to acquire all shares in Daro Group for a total purchase price of GBP 6.5 million, equivalent to approximately SEK 81 million (the “Acquisition”). The payment was to be made in various installments, both through cash payments and payments with Intellego shares, as communicated via a press release on 23 August 2022. The sellers of Daro Group (the “Sellers”) have asked to modify the payment structure and to receive a larger amount of Intellego shares instead of cash. Through discussions, Intellego and Daro Group has also reached the conclusion that it will provide the best long term value for the business that the remaining payment to the Sellers is settled amounting to a total of SEK 23,175,767.86. The remaining purchase price shall be paid partly in cash, amounting to SEK 9,281,740.86, and the remaining amount of SEK 13,894,027.00 to be paid in Intellego shares. As previous communicated via a press release on 23 August 2022, the Sellers may receive an earn-out consideration in cash and Intellego shares at a later stage provided the Daro Group achieves set growth targets. In light of this, the Board of Directors, together with its bank and financing partners, has decided that, despite Intellego’s strong current liquid position, the best way to pay the remaining amount to the Sellers is through a direct cash issue of shares directed to investors and a directed set-off issue of shares directed to the Sellers. In light of this, the Board has today, with support of the authorization granted by the Annual General Meeting on 24 May 2024, resolved on a directed issue of shares of approximately SEK 9.0 million to cover the cash part of the payment (the “Cash Issue”) and a directed set-off issue to the Sellers for payment in Intellego shares of approximately SEK 13.9 million (the “Set-Off Issue”). The subscription price in both the Cash Issue and the Set-Off Issue corresponds to the closing price of the Company’s shares on Nasdaq First North Growth Market today, 13 November 2024. The subscription price has been determined through a negotiation procedure at arm’s length between the Company, the subscribers in the Cash Issue and the Sellers.

Background
In August 2022, Intellego entered into an agreement to acquire all shares in Daro Group for a total purchase price of GBP 6.5 million, equivalent to approximately SEK 81 million. The payment for the Acquisition was to be made in various installments, both through cash payments and payments with Intellego shares. The remaining part of the purchase price to be paid amounts to GBP 1,668,027.04, corresponding to SEK 23,175,767.86. In addition, if the Daro Group achieves set growth targets the Sellers may receive an earn-out consideration in cash and Intellego shares, as communicated by the Company via a press release on 23 August 2022.

The Sellers have asked to modify the payment structure and to receive a larger amount of Intellego shares instead of cash. Through discussions, Intellego and Daro Group has also reached the conclusion that it will provide the best long term value for the business that the remaining payment to the Sellers is settled. The remaining purchase price shall be paid partly in cash, amounting to SEK 9,281,740.86, and the remaining amount of SEK 13,894,027.00, to be paid in Intellego shares through set-off of the Sellers’ claim against the Company.

The Board has decided to accommodate the Sellers’ request for cash payment and payment in Intellego shares. The Board believes it is advantageous to pay part of the remaining purchase price in the form of shares in the Company via the Set-Off Issue rather than through cash payment. Furthermore, the Board considers it beneficial for the Company to carry out the Cash Issue so that the Company’s working capital is not negatively affected. Through the Cash Issue and the Set-Off Issue, Intellego will pay the entire remaining portion of the purchase price for the Acquisition.

In light of this, the Board of Directors has resolved on the Cash Issue and the Set-off Issue (the Cash Issue and the Set-Off Issue are collectively referred to as the “Directed Issues”).

The Directed Issues
The Board of Directors of Intellego has, in response to the Sellers’ request, today resolved to carry out the Cash Issue of 342,202 shares and the Set-Off Issue of 528,290 shares. The subscription price in the Directed Issues has been set at SEK 26.3 per share. Through the Cash Issue, Intellego receives approximately SEK 9.0 million before issue costs and through the Set-Off Issue, Intellego receives approximately SEK 13.9 million by offsetting part of the Sellers’ claims on the Company. The total issue costs for the Directed Issues amounts to approximately SEK 0.4 million. The proceeds from the Cash Issue will be used to pay the cash part of the remaining part of the purchase price for the Acquisition to the Sellers. The Directed Issues were resolved by the Board of Directors with support of the authorization granted by the Annual General Meeting on 24 May 2024.

The Cash Issue has been directed to both external investors and existing shareholders. The following persons have participated in the Cash Issue: Furulunds Jordbruk HB, Sandante Invest AB, Mats-Ola Andersson, Henric Blomstberg and Tommy Ure. The Set-Off Issue has been directed to the Sellers, Colin Winton Douglas, David Stewart Paterson Douglas, Jonathan Windsor Morgan, Douglas Commercial Consulting Limited, William Robert Tovey, James Dogeron Douglas, Alisdair John Douglas, Edward Tolchard, Joanna Catherine Douglas, Surval Education Limited and Mark William Malley who are all existing shareholders in Intellego. The existing shareholders’ participation in the Cash Issue has been deemed to be of great importance for the successful completion of the Cash Issue and their participation has also enabled the Cash Issue to be carried out on favorable terms. The existing shareholders’ participation in the Set-Off Issue has been deemed to be necessary to pay the remaining purchase price from the Acquisition by set-off of the Sellers’ claims against the Company. The presence of existing shareholders among those entitled to subscribe in the Directed Issues has thus been in the best interest of all shareholders. None of the Company’s major shareholders participate in the Directed Issues and none of the subscribers in the Directed Issues are related parties to the Company.

The subscription price per share, which has been determined through a negotiation procedure at arm’s length between the Company and the subscribers in the Directed Issues, corresponds to the closing price of the Company’s share on Nasdaq First North Growth Market today, 13 November 2024.

Motives and considerations for the Directed Issues
The Company’s Board of Directors has made an overall assessment and carefully considered the possibility of raising capital through a rights issue, but has concluded that a rights issue compared to a directed share issue (i) would take significantly longer to complete and thus entail a risk for the execution of the capital raise and an increased general market risk exposure, (ii) would require significant underwriting undertakings from an underwriting syndicate given the prevailing volatility in the market, which would entail additional costs and/or further dilution depending on the type of compensation paid for such underwriting undertakings, (iii) would likely need to be made at a lower subscription price given the discount levels for rights issues carried out in the market recently, (iv) would not be suitable for the Board’s purposes with the Directed Issues to pay the remaining part of the purchase price rather than to raise new capital for the Company and (v) unlike a rights issue, the Directed Issues is expected to broaden the shareholder base to some extent and provide the Company with new capital-strong and strategic owners. In view of the above, the Company’s Board of Directors has made the assessment that directed share issues with deviation from the shareholders’ preferential rights are the most favorable alternative for Intellego and is in the best interest of all shareholders. The Board of Directors therefore makes the assessment that the above reasons for deviating from the shareholders’ preferential rights outweigh the main rule that share issues shall be carried out with preferential rights for the shareholders.

As the subscription price in the Directed Issues has been determined through a negotiation procedure at arm’s length between the subscribers in the Directed Issues and the Company and corresponds to the closing price of the Company’s share on Nasdaq First North Growth Market today, 13 November 2024, it is the assessment of the Board of Directors that the subscription price reflects current demand and market conditions and is thus to be considered to be market conformant.

The new shares are expected to be admitted to trading on Nasdaq First North Growth Market as soon as possible after the Directed Issues has been registered with the Swedish Companies Registration Office.

Shares and share capital
The Directed Issues entails that the total number of shares and votes in Intellego increases by 870,492, from 28,789,186 to 29,659,678, and that the share capital increases by approximately SEK 31,089.00, from approximately SEK 1,028,185.23 to approximately SEK 1,059,274.23, which entails a dilution effect for existing shareholders of approximately 2.93 percent based on the total number of shares and votes in the Company after the exercise of warrants of series TO 2021/2024B, communicated via a press release on 25 October 2024, and after the Directed Issues.

Advisors
Fredersen Advokatbyrå is acting as the Company’s legal advisor in connection with the Directed Issues. Mangold Fondkommission AB is the issuing agent in the Directed Issues.

IMPORTANT INFORMATION
The publication, announcement or distribution of this press release may, in certain jurisdictions, be subject to legal restrictions and persons in the jurisdictions where this press release has been published or distributed should inform themselves about and observe such legal restrictions. The recipient of this press release is responsible for using this press release and the information contained herein in accordance with the applicable rules in each jurisdiction. This press release does not constitute an offer or an invitation to acquire or subscribe for any securities in Intellego in any jurisdiction, neither from Intellego nor from anyone else.

This press release is not a prospectus within the meaning of Regulation (EU) 2017/1129 (the "Prospectus Regulation") and has not been approved by any regulatory authority in any jurisdiction. No prospectus will be prepared by the Company and published on the Company's website in connection with the Directed Issue.

This press release does not constitute an offer or invitation 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 U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration or an 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 such securities in the United States. The information contained in this press release may not be announced, published, copied, reproduced or distributed, directly or indirectly, in whole or in part, in or into the United States, Australia, Hong Kong, Japan, Canada, New Zealand, Switzerland, Singapore, South Africa, South Korea, Russia, Belarus or any other jurisdiction where such announcement, publication or distribution of this information would be contrary to applicable law or where such action is subject to legal restrictions or would require additional registration or other measures than those required by Swedish law. Actions in contravention of this guidance may constitute a breach of applicable securities laws.

In the United Kingdom, this document and other materials relating to the securities referred to herein are only being distributed and directed to, and any investment or investment activity to which this document relates is available only to, and will be engaged in only with, "qualified investors" (as defined in section 86(7) of the Financial Services and Markets Act 2000) who are (i) persons who have professional experience in matters relating to investments and 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" as referred to in Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). An investment or investment activity to which this communication relates is available in the United Kingdom only to relevant persons and will be engaged in only with relevant persons. Persons who are not relevant persons should not take any action based on this announcement and should not act or rely on it.

FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements that reflect the Company's intentions, beliefs or expectations regarding the Company's future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which the Company operates. Forward-looking statements are statements that do not relate to historical facts and can be identified by the fact that they contain expressions such as "believes", "expects", "anticipates", "intends", "estimates", "will", "may", "assumes", "should", "could" and, in each case, negatives thereof, or similar expressions. The forward-looking statements in this press release are based on various assumptions, many of which are based on additional assumptions. Although the Company believes that the assumptions reflected in these forward-looking statements are reasonable, there can be no assurance that they will materialise or that they are accurate. Because these assumptions are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcomes may differ materially from those in the forward-looking statements for a variety of reasons. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied by the forward-looking statements in this press release. The Company does not guarantee that the assumptions underlying the forward-looking statements in this press release are correct and any reader of this press release should not place undue reliance on the forward-looking statements in this press release. The information, opinions and forward-looking statements expressed or implied herein speak only as of the date of this press release and are subject to change. Neither the Company nor anyone else undertakes to review, update, confirm or publicly announce any revision to any forward-looking statement to reflect events that occur or circumstances that arise in relation to the content of this press release, unless required by law or First North's Rulebook for Issuers.