OS3 Digital is pleased to issue an Investor Update following on from the Trading Update issued on 21 December 2018, and following the OS3 Digital board meeting held on the 30 January 2019.  The agenda for this board meeting included discussion to approve the terms of the proposed general fundraise to be launched in 2019, as well as a number of proposed investments and acquisitions.

In the 21 December 2018 Trading Update, OS3 Digital confirmed the intention to conduct a general fundraise in early 2019.  It was also announced that the pre-marketing for this fundraise had resulted in several million pounds worth of ring-fenced funding commitments being offered to OS3 Digital at a £25 per share level for North American expansion, subject to contract and OS3 Digital board approval.

In the North American market, certain areas of commercial activity related to the Care Approved business model were identified as being attractive and suitable for market/digital disruption.  These areas are particularly lucrative in Canada and Nevada, USA, as well as in a number of other US states.  Care Approved’s North American expansion is not key to delivering OS3 Digital’s initial 2022 target valuation of £100+ per share, although it is central to our planned second phase of very significant growth.  As previously announced, the initial valuation target is effectively underpinned by the Bikers Care Approved Joint Venture and the initial phases of the development of the Care Approved business model.

It was stated that as part of the planned general fundraise to accelerate growth towards the 2022 initial valuation target, existing investors would be able to purchase additional shares at a discounted price of £15 per share, should they wish.  It was also stated that new investors looking to invest £2m+ would also be able to benefit from the discounted £15 per share level.  Both of these opportunities were conditional on the total number of shares issued, and would therefore be offered on a first come, first served basis.

As previously announced, OS3 Digital received indications of pre-commitment on up to £3m worth of shares at the £25 per share level during the pre-launch period of the general fundraise.  Investments and acquisitions were identified for approval by the OS3 Digital board representing a further circa £10m worth of shares at the £25 share level, with these shares being issued as consideration, should these opportunities be pursued.  The majority of these transactions relate to the acquisition of the supply chain to be utilised by the Care Approved business model, with most being conducted using OS3 Digital’s acquisition and investment methodology.  This methodology is used to de-risk the investment for OS3 Digital’s shareholders, whilst aligning all parties’ interests.

Subject to final contracts, the OS3 Digital board has today accepted a number of cash commitments, and approved in principal a number of the transactions mentioned above, as well as some additional transactions related to acquisitions, investments and cash commitments.

In total, OS3 Digital will now issue up to £25m worth of shares at the £25+ per share level for this combination of general fundraising, acquisitions, and investments which, subject to final contracts, have been completed in 2018/19 or are due to complete in 2019.  Some of these transactions remain subject to regulatory approval.

Demand for OS3 Digital’s shares at the £25 per share level during pre-marketing of the general fundraise has exceeded the expectations of the OS3 Digital board.  OS3 Digital is also experiencing rapid growth within a number of operational initiatives, including the accelerated onboarding of new customers for the Care Approved business model.  Consequently, the OS3 Digital board believe it is no longer in the best interests of shareholders for a general provision for issuing shares to existing and new large investors (investing £2m+) at a discounted £15 per share level. Excluding warrants and options, all shares will therefore now be targeted to be issued at a £25+ per share level in the short term.

Until all of the activities above have been concluded, the general update meetings planned for existing investors in March 2019 have been rescheduled. Meetings will still be held at the company’s head office location, Quob Park, and shortly thereafter in Toronto, Canada, where all planned phases of growth for OS3 Digital will be explained to investors, including outlining the strategy and anticipated timescales beyond the initial valuation target for reaching £625+ per share.

The OS3 Digital board confirmed the possibility of exceeding the 10m shares in issue by 2022 target in the 2017 Annual Report, provided that funds could be raised in line with, or better than a £25+ per share level in the short term, or at least £33 per share level as further progress is made, and as 2022 approaches.  This 2022 target will now be exceeded due to the opportunities the OS3 Digital board has approved at £25+ per share.  This in no way lowers the £100+ share price target for an Initial Public Offering, though it does increase the target market cap at such time to beyond £1bn.