Artificial Solutions announces a rights issue of up to approximately 120 MSEK with subscription commitments and declarations of intent of 75 MSEK, including an over-allotment option of up to 30 MSEK

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

Summary

• The board of directors of Artificial Solutions International AB (SSME:ASAI) (“Artificial Solutions” or the “Company”) has, subject to approval from the extraordinary general meeting, decided to carry out a rights issue of maximum 18,532,998 new shares with preferential right for the Company’s existing shareholders (the “Rights Issue”).
• The subscription price is set to SEK 6.50 per share, which, assuming full subscription, corresponds to proceeds of approximately SEK 120 million before deduction of transaction costs.
• The board of directors has also decided to propose to the extraordinary general meeting on 8 January 2020 to authorize the board of directors to decide upon a directed new share issue of maximum 4,615,500 new shares, corresponding to approximately SEK 30 million, with deviation from the existing shareholders’ preferential rights (the “Over-Allotment Option”) in order to meet a stronger demand in the Rights Issue and to broaden the shareholder base with strategic investors. The subscription price in the Over-Allotment Option is SEK 6.50 per share. The Over-Allotment Option is conditioned by the Rights Issue being oversubscribed.
• The proceeds from the Rights Issue will, assuming it is fully subscribed, provide the Company with sufficient financial resources to fulfil its existing business plan and finance the Company until it is cash flow positive.
• For existing shareholders that do not participate in the Rights Issue and under the assumption that the Rights Issue is fully subscribed and the Over-Allotment Option is exercised in full, the dilution corresponds to approximately 48.4 percent of the number of shares and votes in the Company.
• Artificial Solutions’ main shareholder, Scope Growth II L.P. and Scope Growth III L.P. (together “Scope”) has committed to subscribe for approximately SEK 38.7 million in the Rights Issue. In addition, some of the board of directors and several of the Company’s larger shareholders, among others AFA Försäkring, SEB-Stiftelsen, C-WorldWide Asset Management have declared intentions to subscribe for their pro rata share. Together with Scope’s subscription commitment, the Rights Issue is covered by subscription commitments or declarations of intent to subscribe of approximately SEK 75 million, corresponding to approximately 62.3 percent of the Rights Issue.
• The board of directors will publish a notice to an extraordinary general meeting expected to take place on 8 January 2020, in part to approve the Rights Issue and the authorization of the Over-Allotment Option.
• As part of the Rights Issue, Artificial Solutions has entered into agreements with Scope, with respect to bridge loan financing of SEK 23 million, which is intended to be set-off in the Rights issue, and also been granted extension of short-term loans

Background and reasons in brief

Artificial Solutions is the leading specialist in enterprise-strength conversational AI, a type of artificial intelligence that enables people to communicate with applications, websites and internet-connected devices in a human-like manner through voice, text, touch or gesture interaction.

The Company’s advanced AI platform, Teneo, makes it possible for larger global corporations to collaborate with developers and together create sophisticated and highly intelligent conversational AI applications that runs over 35 languages, on multiple platforms and communication channels. The ability to analyze and benefit from the huge amount of conversation data is completely integrated into Teneo, which allows for unmatched insight into the customers’ behaviors.

Operationally, Artificial Solutions has had a positive development since the IPO in March 2019. For the period July – September 2019, the Company reported an increase of the order intake of 65 percent as well as a 33 percent increase of revenue, while improving the gross margin from 52 percent to 62 percent during the same period. Even though the Company has exhibited strong growth and improved the margin, total costs are still higher than the revenue and an equity increase is therefore necessary for the Company to reach positive cash flow and to finance the development of the business internally.

In order to provide the Company with the necessary financial resources to follow through with the existing business plan and meet the increasing demand from the Company’s customers, the board of directors has resolved on the Rights Issue, subject to approval by the extraordinary general meeting. Under the assumption that the Rights Issue is fully subscribed, the Company will receive approximately SEK 120 million before transaction costs, which are expected to amount to approximately SEK 7 million. Of the total Rights Issue, about SEK 75 million is covered by subscription commitments and declarations of intent from existing shareholders, corresponding to approximately 62.3 percent of the Rights Issue. If the Over-Allotment Option is exercised in full, the Company will receive additional financing of approximately SEK 30 million before transaction costs, which are expected to amount to approximately SEK 1.5 million.

By means of the proceeds from the Rights Issue, the Company will receive necessary financing to fulfil the Company’s existing strategic plan. The proceeds will furthermore, provided that the Rights Issue is fully subscribed, be enough to facilitate the Company’s continued growth until the Company becomes cashflow positive, which is expected to occur by the end of 2020. Any additional proceeds from the Over-Allotment Option will be invested in further development of the sales and marketing organization in order to support an accelerated growth in revenues from the Teneo platform.

Bridge loans and extension of short-term loans

As part of the Rights Issue, Artificial Solutions has entered into agreements with Scope, with respect to bridge loan financing totaling SEK 23 million. The bridge loans run with an interest rate of 10 percent per year and are intended to be set-off in the Rights Issue. Moreover, the Company has been granted an extension of two short-term loans by Leman Management Nominees Limited. The outstanding amount of the loans totals EUR 8.2 million and are to be repaid on 31 March 2021. Artificial Solutions has also been granted an extension of a loan by Masselaz AB. The outstanding amount of the loan totals EUR 1.1, million and is to be repaid on 31 March 2021.

The Rights Issue

Artificial Solutions’ board of directors has today, subject to approval by the extraordinary general meeting on 8 January 2020, decided to carry out a rights issue of maximum 18,532,998 new shares with preferential rights for the Company’s existing shareholders, corresponding to a maximum of approximately SEK 120 million.

For each share held at the record date on 22 January 2020, the shareholder receives one (1) subscription right. Four (4) subscription rights entitle the shareholder to subscribe for three (3) new issued shares at a subscription price of SEK 6.50 per share. The Rights Issue will increase the Company’s share capital by a maximum of approximately SEK 33,359,396.97 to SEK 77,838,594.73. The number of shares increases by a maximum of approximately 18,532,998 new shares to 43,243,663 shares. In the event that the partial registration with the Swedish Companies Registration Office of the 34,438 new shares issued through a resolution on 12 April 2019 is completed in such a time that the right to participate in the rights issue arises, the resolution shall be considered to increase the company's share capital by a maximum of SEK 46,488.60 through a new issue of a maximum of 25,827 shares.

For the existing shareholders that refrain from participating in the Right Issue and under the assumption that the Rights Issue is fully subscribed, the dilution amounts to approximately 42.9 percent of the number of shares and votes in the Company.

The Over-Allotment Option

In order for the Company to meet potential demand in the case of oversubscription of the Rights Issue, and thereby raise additional proceeds to the Company, the board of directors has decided to propose to the extraordinary general meeting on 8 January 2020 to authorize the board of directors to, with deviation from existing shareholders’ preferential rights, carry out a so called over-allotment option of maximum 4,615,500 new shares, which will be issued at a subscription price of SEK 6.50 per share. The reason for the decision on the Over-Allotment Option and the deviation from shareholders’ preferential rights is to, in the case of oversubscription of the Rights Issue, satisfy higher demand than anticipated as well as broaden the shareholder base with strategic investors. The Over-Allotment Option is conditioned of the Rights Issue being oversubscribed. The subscription price for shares subscribed for in the Over-Allotment Option is the same as in the Rights Issue. If the Over-Allotment Option is fully subscribed, the Company will receive additional proceeds of SEK 30 million, before deduction for transaction costs. At full utilization of the Over-Allotment Option, the Company’s share capital increases by a maximum of approximately SEK 8,307,900.14 to SEK 86,146,494.87. The number of shares increases by a maximum of approximately 4,615,500 new shares to 47,859,163 shares.

Allocation of shares in the Over-Allotment Option will be determined based on demand and with the intention to achieve a strong shareholder base, with strategic investors and large shareholders with a long-term ownership interest in the Company, as well as to attain an adequate distribution of the Company shares among different shareholders. The allocation is decided by the board of directors in consultation with Pareto Securities AB.

Existing shareholders that refrain from participating in the Right Issue and under the assumption that the Over-Allotment Option is exercised in full, the dilution amounts to approximately 48.4 percent of the number of shares and votes in the Company.

Subscription commitments and declarations of intent

Artificial Solutions’ main shareholder, Scope, which currently owns approximately 43.84 percent of the outstanding shares, has made a subscription commitment to subscribe for shares to a value of approximately SEK 38.7 million in the Rights Issue as well as provided their support for the Rights Issue and the Over-Allotment Option at the extraordinary general meeting. Scope has furthermore committed to, without compensation, transfer the subscription rights they are entitled to, but do not intend to use, to a new shareholder who intend to use these subscription rights to subscribe for shares in the Rights Issue. Pareto Securities AB will, administratively, facilitate the transfer of subscription rights from Scope to the new shareholder. For the avoidance of doubt, this declaration of intent is included in the total subscription commitments and declarations of intent that covers the Rights Issue.

In addition to Scope’s subscription commitments, some of the board of directors and several of the Company’s larger existing investors, among others AFA Försäkring, SEB-Stiftelsen, C-WorldWide Asset Management have declared intentions to subscribe for their pro rata share. Together with Scope’s subscription commitment, the Rights Issue is covered by subscription commitments or declarations of intent of approximately SEK 75 million, corresponding to 62.3 percent of the Rights Issue.

Extraordinary general meeting on 8 January 2020

The Rights Issue and the Over-Allotment Option is proposed to be approved at the extraordinary general meeting, which is expected to take place on 8 January 2020.

For the full notice to attend the extraordinary general meeting, please refer to separate press release.

Exemption from mandatory bid obligation

Scope holds a total of approximately 43.84 percent of the shares and votes in Artificial Solutions. Scope has applied for and been granted an exemption from the mandatory bid obligation by the Swedish Securities Council (Sw. Aktiemarknadsnämnden), which otherwise could emerge in relation to Scope’s subscription of shares in the Rights Issue.

The exemption is conditional upon the shareholders of the Company being informed of the size of Scope’s ownership of the shares and votes in the Company, and that the Rights Issue is resolved upon by at least two thirds of both the votes cast and the shares represented at the extraordinary general meeting, where the shares held and represented by Scope shall be disregarded from the counting of votes. If Scope subsequently acquires additional shares and thereby increases its voting rights, a mandatory bid obligation will emerge.

Scope’s ownership of the shares and votes in the Company may, if Scope subscribes for its pro rata share of the Rights Issue, amount to a maximum of 54.75 percent. The Swedish Securities Council's statement (AMN 2019:49) is available in its entirety on the Swedish Securities Council's website (www.aktiemarknadsnamnden.se).

Preliminary timetable

8 January 2020                                            Extraordinary general meeting

20 January 2020                                          Expected announcement of the prospectus

20 January 2020                                          Last trading date with entitlement to participate in the Rights Issue

21 January 2020                                          First date without entitlement to participate in the Rights Issue

22 January 2020                                          Record date. Shareholders that are registered in Euroclear Sweden AB’s shareholder registry as of this date will receive subscription rights that allow the shareholder to participate in the Rights Issue

24 January – 7 February 2020                                    Trading of subscription rights

24 January – 11 February 2020                                 Subscription period

On or about 14 February 2020                                  The outcome of the Rights Issue is announced

On or about 27 February 2020                                  The Rights Issue is completed and registered

Advisors

Pareto Securities AB is financial advisor to Artificial Solutions, Cirio Advokatbyrå is legal counsel to Artificial Solutions in connection with the Rights Issue.

For more information, please contact:

Lawrence Flynn, CEO, Artificial Solutions International AB

+46 8 663 54 50

lawrence.flynn@artificial-solutions.com

Erik Penser Bank is Artificial Solutions’ Certified Advisor at Nasdaq First North Growth Market. Tel: +46 8 463 80 00

certifiedadviser@penser.se.

The information in this press release is such that Artificial Solutions International AB shall announce publicly according to the EU Regulation No 596/2014 on market abuse (MAR). The information was submitted for publication, through the agency of the contact person set out above, 12 December 2019 at 08:45 CET.

About Artificial Solutions International AB

Artificial Solutions (SSME:ASAI) is the leading specialist in enterprise-strength conversational AI, a type of artificial intelligence that enables people to communicate with applications, websites and internet-connected devices in a human-like manner through voice, text, touch or gesture interaction.

The Company’s advanced AI platform, Teneo, makes it possible for larger global corporations to collaborate with developers and together create sophisticated and highly intelligent conversational AI applications that runs over 35 languages, on multiple platforms and communication channels. The ability to analyze and benefit from the huge amount of conversation data is completely integrated into Teneo, which allows for unmatched insight into the customers’ behaviors.

Artificial Solutions’ technology for conversational AI makes it easy to implement a wide spectrum of applications with natural language, such as virtual assistants, chatbots, voice-based conversational interfaces for smart devices, and more. The technology is already used by millions of people today in hundreds of implementations within both the public and private sector globally. For more information, please visit www.artificial-solutions.com.

IMPORTANT INFORMATION

This press release does not constitute an offer, or a solicitation of any offer, to buy or subscribe for any securities in Artificial Solutions. A prospectus regarding the Rights Issue described in this press release will be prepared and submitted to the Swedish Financial Supervisory Authority (Sw. Finansinspektionen). Following the Swedish Financial Supervisory Authority’s approval and registration of the prospectus, the prospectus will be published and kept available at Artificial Solutions’ website.

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. Artificial Solutions has 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 of America, Canada, Japan, Australia, Hong Kong, New Zealand, 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.

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.

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 Artificial Solutions 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 Artificial Solutions may decline and investors could lose all or part of their investment; the shares in Artificial Solutions offer no guaranteed income and no capital protection; and an investment in the shares in Artificial Solutions 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 and the Over-Allotment.

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 Artificial Solutions.

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

For more information:

Lawrence Flynn, CEO, Artificial Solutions

Tel: +44 (0)1635 523267

Email: lawrence.flynn@artificial-solutions.com

Artificial Solutions® is the leading specialist in enterprise-strength conversational AI, a form of Artificial Intelligence that allows people to communicate with applications, websites and devices in everyday, humanlike natural language via voice, text, touch or gesture input.

Designed for the global enterprise, Artificial Solutions' advanced conversational AI platform, Teneo®, allows business users and developers to collaborate on creating sophisticated, highly intelligent applications that run across 35 languages, multiple platforms and channels in record time. The ability to analyze and make use of the enormous quantities of conversational data is fully integrated within Teneo, delivering unprecedented levels of insight that reveal what customers are truly thinking.

Artificial Solutions' conversational AI technology makes it easy to implement a wide range of natural language applications such as virtual assistants, chatbots, speech-based conversational UIs for smart devices and more. It is already used daily by millions of people across hundreds of private and public sector deployments worldwide. For more information, please visit www.artificial-solutions.com.

Tags: