Proposed Placing / Subscription & Notice of GM

MOPOWERED GROUP PLC

("MoPowered" or the "Company")

Proposed Placing and Subscription

and

Notice of General Meeting

MoPowered Group Plc (MPOW), the mobile commerce specialist, is pleased to announce that it has conditionally raised approximately £3.50 million) (before expenses) through the issue of 70,000,000 New Ordinary Shares by way of a Placing and Subscription at an Issue Price of 5 pence per New Ordinary Share. N+1 Singer is acting as sole broker to the Company in connection with the Placing.

It is proposed that the net proceeds of the Placing and the Subscription will be used to strengthen the Company's balance sheet and accelerate growth through investment in sales and marketing activities, product development and the acquisition of app creation software assets.

The Issue Price of 5 pence per New Ordinary Share represents a 75.31 per cent. discount to the closing middle market price of 20.25 pence per Ordinary Share on 19 September 2014, being the last business day prior to the announcement of the Placing and the Subscription.

The Placing and the Subscription are conditional, inter alia, on Admission becoming effective, the Placing Agreement between the Company and N+1 Singer becoming unconditional and not being terminated (in accordance with its terms), the passing by the Shareholders of Resolution 1 and 2 (as detailed below in paragraph 8) at the General Meeting, including a special resolution which will give the Directors the required authority to disapply statutory pre-emption rights in respect of the allotment of the New Ordinary Shares and clearance from HMRC that the Company's business qualifies for EIS relief and is a qualifying business for VCT relief. Subject to all relevant conditions being satisfied (or, if applicable, waived), it is expected that the New Ordinary Shares will be admitted to trading on AIM on or around 13 October 2014.

A General Meeting of the Company will be held at 10.00 a.m. on 8 October 2014 at the offices of Wragge Lawrence Graham & Co LLP, 4 More London Riverside, London SE1 2AU.

Copies of the circular, which will be posted to shareholders later today, will shortly be available on the Company's website (www.mopowered.co.uk).

1. Background on the Company

MoPowered Group has developed and offers a 'Software-as-a-Service' platform which works with online retailers and e-commerce businesses to enable fully transactional mobile commerce that can be deployed rapidly, cost-effectively and with little operational overhead.

The MoPowered Platform enables the Group's clients to benefit from the attractive growth opportunities arising from the increasing levels of mobile device-initiated internet traffic hitting their websites. The MoPowered Platform sits alongside a client's e-commerce offering and provides a browsing, checkout and payment experience for consumers which is tailored primarily for smartphone users (and, to a lesser extent, tablet users) with the objective of significantly increasing mobile conversion rates and associated revenues and in addition, also provides commerce apps (both remote and in-store). The Group's clients currently include a number of well-known retailers such as Next, Waterstones, Western Union, Jewson, Superdry and DFS with the Group having won over 50 new clients in 2014 to date, with recent focus being on the mid-tier retailer market.

It is estimated that there are approximately 10,000 mid-tier retailers in the UK, with over an estimated 100,000 mid-tier retailers globally which represent an estimated £1 billion revenue opportunity for the Group. Although the Group has seen slower overall levels of adoption of mobile commerce systems than had been anticipated, there is still a significant market opportunity to be exploited. This opportunity is further supported by improving network speeds (i.e. 4G), increased uptake in mobile devices, and consumer confidence in mobile shopping all of which are leading to an increase in the adoption of mobile commerce volumes.

The Group continues the expansion of its channel programmes, with referral partners remaining an important part of its lead generation. Through its channel programme, the Group is building a reseller model to build scale in the UK and abroad which has demonstrated promising initial results from one reseller arrangement and has led to 11 new opportunities in the first month of partnership. The Directors believe that reseller arrangements will have a major impact in assisting with new client acquisitions in the second half of 2015.

The Group's competitive advantage lies in its underlying technology and in the first half of the year the Group further improved its systems so that clients can offer higher quality mobile shopping experiences for their end-customers. The Group has experienced harder than anticipated successful commercialisation of smaller online retailers than mid-tier retailers and the Group's strategy has subsequently been evolved to maximise this optimum target client size, with sales resources reallocated and a reduction of cost base as a result. The Group has also launched new products, MoPowered Professional and MoPowered 3DS to better monetise the Group's intellectual property and technology.

2. Background to and reasons for the Placing and the Subscription

In December 2013, the Company was admitted to trading on AIM and raised net funds of £2.9 million at this time. This allowed the Group to develop in areas to reinforce its first mover advantage predominantly through investment in sales people, marketing activities and further development of the MoPowered Platform. The Group has seen a return on this investment, having won approximately 50 clients in 2014, launched new products to better commercialise the Group's intellectual property and advanced its development of the MoPowered Platform, with version 3 currently expected to be released in the fourth quarter of 2014. The Directors anticipate that version 3 of the MoPowered Platform will create a stronger product proposition which will create new acquisition opportunities.

However, due to the slower overall levels of adoption of mobile commerce systems, the Group has seen a lower than expected increase in sales. Additionally, the Group has experienced a longer than anticipated payback period in relation to smaller clients and a more modest than expected increase in recurring revenues. As a result of these factors, revenue and profitability was lower than expected for the first half of 2014. Consequently, the Company has reviewed its financial projections and has revised its model to reflect more conservative assumptions going forward, with the intention of providing greater visibility on profitability. The Company has also strengthened its financial controls with tighter financial account management against budget, project based forecasting and an expansion of its operational risk management activities. Since June 2014, approximately £1.2 million of annualised costs have been removed from the business to improve the Company's cash flow position going forward, this includes rationalisation in the senior management team, reduction of headcount in product development and operations and modest redundancy costs, with the Company considering additional cost cutting initiatives. The Directors believe that this reduced cost base along with the new client acquisition strategies referred to above shall assist in ensuring that the fixed costs of the business are addressed, with a view to future profitability.

Furthermore, the Board is committed to strengthening the finance function of the Company and a recruitment process is already underway for a new Chief Financial Officer, with a view to having an appointment in place during the fourth quarter of 2014.

The Company has also identified an opportunity to purchase the Cortana platform, a technology asset developed by Rounded Labs Limited which allows for the rapid construction of mobile commerce applications. Currently, MoPowered Group licences this technology and has been able to reduce the time and cost of building mobile commerce apps by 40 per cent., leading to substantially improved margins. The Director's believe that the acquisition of Cortana will reduce costs, giving MoPowered a further competitive advantage in the market and will also allow the Group to stay in control of its technology base. The Company has not yet entered into a binding agreement to acquire this asset but believe that the total consideration is likely to be £200,000, with £13,000 being off-set against licence payments already made, £45,000 payable in cash and £142,000 to be satisfied by the issue of new Ordinary Shares, issued over an 18 month period. A further announcement regarding the proposed acquisition will be made at the time the parties enter into a binding agreement.

The Company believes that the Placing and the Subscription is required in order to fund the future growth of the business more rapidly and strengthen its balance sheet as an increasing number of mid-tier retailers adopt the MoPowered Platform.

In deciding to structure the equity fund-raise as a Placing and Subscription and the price at which the Placing and Subscription would be taken the Directors considered a number of factors including the current financial and trading position of the Group, the opportunity to widen the Shareholder base of the Company and a desire to achieve certainty within the shortest permissible timeframe. The Directors also took into consideration that the majority of the Company's significant Shareholders were given the opportunity to participate in the Placing and Subscription.

3. Use of Proceeds

The Company is proposing to raise approximately £3.5 million (before expenses) by means of the Placing and the Subscription in order to invest approximately £1.25 million in sales and marketing activities and approximately £1 million in product development. Approximately £0.045 million will be used to satisfy the cash consideration for the purchase of the app-creation software asset, Cortana, and the remainder will be used for ongoing working capital purposes and repayment of the Loan further details of which are set out in paragraph 6 below.

Pending these uses, the Directors intend to hold the net proceeds of the Placing and the Subscription in cash deposits.

4. Current Trading and Outlook

Shareholders' attention is drawn to the Results Announcement which was released by the Company on 19 September 2014.

The market outlook for mobile commerce systems remains encouraging as consumers continue to embrace mobile shopping. MoPowered Group remains one of the larger and better-known suppliers in this area and has an opportunity to become an international market leader over forthcoming years. The Board is focused on executing its plan to realise this opportunity which it believes will generate substantial returns for Shareholders.

The business continues to learn more about its rapidly evolving trading environment and the new strategy represents a reaction to the challenges that were faced in the second quarter of the year which resulted in an adjustment of the board's expectations in early July. As discussed in paragraph 3 above, actions have been undertaken to reduce the cost base of MoPowered Group by approximately £100,000 per month so cash break-even point is brought forward, based on more modest forecasts.

Based on the revised forecasts, the Directors anticipate that MoPowered Group will start to generate monthly positive cash-flow by the end of 2015, which will underpin subsequent profitable growth over future years.

Current trading indicates that MoPowered Group is on track to achieve this milestone based on performance so far against key operating metrics in the third quarter of 2014.

The pipeline of new client acquisitions also appears promising with the potential to close eight deals per month in the remaining part of the third and further quarter of this year.

5. Details of the Placing and the Subscription

The Company is proposing to raise £3.50 million (before expenses) through the placing by N+1 Singer, as broker, of 67,940,000 Placing Shares at the Issue Price and through direct subscriptions to the Company of 2,060,000 Subscription Shares at the Issue Price. The Issue Price represents a discount of 75.31 per cent. to the closing middle market price of an Ordinary Share on 19 September 2014.

The Placing, which is not being underwritten, has been undertaken pursuant to the Placing Agreement. Under the terms of the Placing Agreement N+1 Singer, as broker, has agreed to use its reasonable endeavours to procure institutional and other investors to subscribe for the Placing Shares.

The Placing Agreement is conditional on, amongst other things:

· the passing of Resolutions 1 and 2 (as set out in paragraph 8 below) (without amendment) at the General Meeting;

· the Company having received clearance having from HMRC that the Company's business qualifies for EIS relief and is a qualifying business for VCT relief; and

· Admission becoming effective by not later than 8.00 a.m. on 13 October 2014 (or such later time and/or date as the Company and N+1 Singer may agree (being not later than 8.00 a.m. on 31 October 2014)).

The Placing Agreement contains certain warranties given by the Company in favour of N+1 Singer in relation to, inter alia , certain matters relating to the Group and its business. In addition, the Company has agreed to indemnify N+1 Singer in respect of certain liabilities it may incur in respect of the Placing. N+1 Singer has the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, in the event of a material breach of the warranties.

In addition, the Company has entered into subscription letters with certain existing Shareholders to issue 2,060,000 Subscription Shares pursuant to the Subscription. The Subscription is conditional on:

· the passing of Resolutions 1 and 2 (as set out in paragraph 8 below) (without amendment) at the General Meeting;

· the Company having received clearance having from HMRC that the Company's business qualifies for EIS relief and is a qualifying business for VCT relief; and

· Admission becoming effective by not later than 8.00 a.m. on 13 October 2014 (or such later time and/or date as the Company and N+1 Singer may agree (being not later than 8.00 a.m. on 31 October 2014)).

Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. Subject to, amongst other things, Resolutions 1 and 2 being duly passed by the requisite majority at the General Meeting, it is expected that Admission will become effective and dealings in the New Ordinary Shares on AIM will commence on 13 October 2014.

The total number of New Ordinary Shares to be issued pursuant to the Placing and the Subscription will represent approximately 81.48 per cent. of the Enlarged Issued Share Capital immediately following Admission.

If Admission does not take place on or before 8.00 a.m. on 13 October 2014 (or such later time and/or date as the Company and N+1 Singer may agree (being not later than 8.00 a.m. on 31 October 2014)), the Placing and the Subscription will not proceed.

The New Ordinary Shares will rank pari passu in all respects with the existing issued Ordinary Shares, including the right to receive all dividends and other distributions declared, paid or made after Admission.

6. Related Party Transaction

Twocan Limited a company owned by a trust of which Nigel Keen, who retired as a director of the Company in December 2013, and Dominic Keen, the chief executive officer of the Company are both beneficiaries has conditionally agreed to subscribe for 10,000,000 Placing Shares at the Issue Price pursuant to the Placing. Twocan Limited's participation in the Placing shall constitute a related party transaction for the purposes of Rule 13 of the AIM Rules for Companies. Accordingly, the Independent Directors consider, having consulted with the Company's nominated adviser, N+1 Singer, that the terms of Twocan Limited's participation in the Placing to be fair and reasonable insofar as Shareholders are concerned. In providing advice to the Independent Directors, N+1 Singer has taken into account the commercial assessment of the Directors.

Imperialise Limited Pension Fund of which Dominic Keen and Nigel Keen are both members (and in the case of Nigel Keen, a trustee and a beneficiary) has conditionally agreed to subscribe for 2,000,000 Placing Shares at the Issue Price pursuant to the Placing. Imperialise Limited Pension Fund's participation in the Placing shall constitute a related party transaction for the purposes of Rule 13 of the AIM Rules for Companies. Accordingly, the Independent Directors consider, having consulted with the Company's nominated adviser, N+1 Singer, that the terms of Twocan Limited's participation in the Placing to be fair and reasonable insofar as Shareholders are concerned. In providing advice to the Independent Directors, N+1 Singer has taken into account the commercial assessment of the Directors. At the time of the Company's admission to AIM (the "AIM IPO"), Imperialise Limited Pension Fund and Dominic Keen both entered into separate lock-in agreements with N+1 Singer whereby they agreed that save in certain circumstances they would not transfer or dispose of their interests in the Company until the first anniversary following the AIM IPO and for a further year thereafter would be subject to an orderly market arrangement. It has now been agreed that, conditional upon Admission, such agreements will terminate and new agreements will take effect whereby Imperialise Limited Pension Fund and Dominic Keen have separately agreed with N+1 that they will not transfer or dispose of their interests in the Company (including, in the case of Imperialise Limited Pension Fund its Placing Shares) until the first anniversary following Admission and thereafter will be subject for a further year to an orderly market arrangement.

The Company entered into a short-term loan agreement with Imperialise on 19 September 2014 whereby Imperialise has agreed to lend to the Company £250,000 for working capital purposes. The Loan is unsecured and interest shall be cumulated and charged at a rate of one per cent. per calendar month. The Loan (including all cumulated interest) shall be repaid on 22 October 2014 (being seven Business Days following Admission) or such later date as the parties may agree. Dominic Keen is a shareholder of Imperialise and Nigel Keen is a shareholder and director and consequently, the Loan constitutes a related party transaction for the purposes of Rule 13 of the AIM Rules for Companies. Accordingly, the Independent Directors consider, having consulted with the Company's nominated adviser, N+1 Singer, that the terms of the Loan are fair and reasonable insofar as Shareholders are concerned. In providing advice to the Independent Directors, N+1 Singer has taken into account the commercial assessment of the Independent Directors. The Loan will be repaid out of the proceeds of the Placing and the Subscription.

7. EIS/VCT Schemes

The Placing and the Subscription are conditional upon clearance having been received from HMRC that the Company's business qualifies for EIS relief and is a qualifying business for VCT relief. Although qualifying investors should obtain tax relief on their investments under EIS relief or VCT relief, neither the Company nor the Directors can provide any warranty or guarantee in this regard. Investors must seek independent advice on which they are able to rely.

Neither the Company nor the Directors give any warranties or undertakings that EIS relief or VCT relief, if granted, will not be withdrawn. Investors must take their own advice and rely on it. If the Company carries on activities beyond those disclosed to HMRC, then Shareholders may cease to qualify for the tax benefits.

8. General Meeting

The Company currently does not have sufficient authorities in place under section 551 and section 570 of the Act to allot the New Ordinary Shares and to disapply pre-emption rights in respect of such allotment. Accordingly, the Directors are seeking authority to allot Ordinary Shares on a non pre-emptive basis to implement the Placing and the Subscription. In addition, the Directors are seeking general authorities under section 551 and section 570 of the Act to allot Ordinary Shares separate to the Placing and the Subscription in line with certain institutional investor guidelines. A summary of the resolutions is set out below.

Notice of the General Meeting is set out in the circular. The General Meeting will be held at the offices of Wragge Lawrence Graham & Co LLP, 4 More London Riverside SE1 2AU on 10 October 2014 at 10.00 a.m.

Shareholders have the right to attend, speak and vote at the General Meeting (or, if they are not attending the meeting, to appoint someone else as their proxy to vote on their behalf) if they are on the Register at the Voting Record Time (namely 6.00 p.m. on 8 October 2014). Changes to entries in the Register after the Voting Record Time will be disregarded in determining the rights of any person to attend and/or vote at the General Meeting. If the General Meeting is adjourned, only those Shareholders on the Register 48 hours before the time of the adjourned General Meeting (excluding any part of a day that is not a Business Day) will be entitled to attend, speak and vote or to appoint a proxy.

The number of Ordinary Shares a Shareholder holds as at the Voting Record Time will determine how many votes a Shareholder or his proxy will have in the event of a poll.

Explanation of the Resolutions to be proposed at the General Meeting

The notice convening the General Meeting sets out the Resolutions to be proposed at the General Meeting.

An explanation of these Resolutions is set out below:

Authority to allot New Ordinary Shares (Resolution 1)

Resolution 1 would give the Directors the authority to allot Ordinary Shares for the purpose of the Placing and the Subscription up to an aggregate nominal value of £350,000. This represents approximately 439.90 per cent. of the ordinary share capital of the Company in issue at 18 September 2014 (being the latest practicable date prior to the publication of the circular). This authority, if granted, would expire on 31 October 2014.

Disapplication of pre-emption rights for the issue of the New Ordinary Shares (Resolution 2)

Under the Companies Act 2006, when Ordinary Shares are allotted for cash, they must generally first be offered to existing shareholders pro rata to their holdings. This special resolution which is conditional upon the passing of Resolution 1 gives the Directors authority, for the period ending on 31 October 2014, to allot Ordinary Shares for cash on a non pre-emptive basis for the purpose of the Placing up to an aggregate nominal amount of £350,000.

General Authority to allot shares (Resolution 3)

Resolution 3 would give the Directors the authority to allot Ordinary Shares and grant rights to subscribe for or convert any security into Ordinary Shares up to an aggregate nominal value of £143,044. This represents approximately 33.33 per cent. of the Enlarged Issued Share Capital.

In line with guidance issued by the Association of British Insurers ("ABI"), Resolution 3 would give the Directors the authority to allot Ordinary Shares and grant rights to subscribe for or convert any security into Ordinary Shares up to a further aggregate nominal value of £286,376 in connection with a rights issue. This amount represents approximately 66.67 per cent. of the Enlarged Issued Share Capital. Resolution 3 is conditional on the passing of Resolutions 1 and 2. The Directors' authority will expire on the conclusion of the annual general meeting of the Company to be held in 2015. If the Directors do exercise the authority to allot Ordinary Shares in excess of one-third of the ordinary share capital, they intend to follow emerging best practice as regards use of the authority (including the Directors standing for re-election in certain cases), as recommended by the ABI. As at the date of this document the Company does not hold any Ordinary Shares in treasury.

Disapplication of pre-emption rights for other allotments (Resolution 4)

This special resolution, which is conditional on the passing of Resolution 3, gives the Directors authority, for the period ending when the authority granted in Resolution 3 expires, to: (a) allot Ordinary Shares for cash in connection with a rights issue or other pre-emptive offer; and (b) otherwise allot shares of the Company for cash up to an aggregate nominal value of £42,956 (representing in accordance with certain institutional investor guidelines, approximately 10 per cent. of the Enlarged Issued Share Capital), in each case as if the pre-emption rights in the Companies Act 2006 did not apply.

9. Irrevocable Undertakings

The Company has received irrevocable undertakings to vote in favour of the Resolutions to be proposed at the General Meeting from certain Shareholders holding, in aggregate, 40.68 per cent. of the existing issued share capital.

10. Importance of Vote

As mentioned above, the Directors anticipate that the MoPowered Group will start to generate monthly positive cash flow by the end of 2015. However, until such time the Group is therefore reliant upon debt and/or equity funding to maintain its current operations. Accordingly, if Resolutions 1 and 2 are not passed by Shareholders the Placing and Subscription will not proceed. In these circumstances unless financing is available from other sources the Directors believe that the Group would not be able to trade as a going concern which would likely result in the insolvency of all or part of the Group and such an outcome would, in the Board's opinion, result in Shareholders receiving little or no value for their current shareholdings.

11. Enlarged Issued Share Capital

If the Placing and the Subscription are approved by Shareholders, then immediately following Admission the Company's issued share capital will be 85,912,803 Ordinary Shares.

12. Action to be taken

Shareholders will find enclosed with the circular a Form of Proxy for use at the General Meeting. Whether or not you intend to attend the General Meeting you are strongly encouraged to complete, sign and return the Form or Proxy in accordance with the instructions printed on it to Capita as soon as possible, and in any event so as to arrive no later than 10.00 a.m. on 8 October 2014 (or, in the case of an adjournment of the General Meeting, not later than 48 hours before the time fixed for the holding of the adjourned meeting (excluding any part of a day that is not a Business Day)).

If you hold your Ordinary Shares in CREST you may appoint a proxy using the CREST electronic proxy appointment service by following the instructions in notes 5 to 8 to the Notice of General Meeting. The completion and return of a Form of Proxy or the electronic appointment of a proxy will not preclude Shareholders from attending the General Meeting and voting in person should they so wish.

13. Recommendation

Your Board believes the Placing and the Subscription to be in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors unanimously recommend you to vote in favour of the Resolutions to be proposed at the General Meeting. The Directors all of whom hold Ordinary Shares (either directly or indirectly) have irrevocably undertaken to vote or procure the legal holders vote in favour of the Resolutions, amounting, in aggregate, to 632,500 Ordinary Shares, representing 4 per cent. of the existing issued share capital of the Company.

Expected Timetable of Principle Events

Notes: 

1. Each of the times and dates above are indicative only and are subject to change. If any of the above times and/or dates change, the revised times and/or dates will be notified by the Company to Shareholders by announcement through a regulatory information service.

2. All of the above times refer to London time unless otherwise stated.

3. The admission and commencement of dealings in the Placing Shares and Subscription Shares on AIM are conditional on, inter alia, the passing of the Resolutions at the General Meeting.

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