London United Kingdom – 06 October 2017 – Cognosec AB (the “Company”) (Nasdaq First North: COGS), an international leader in Cybersecurity, GRC and PCI services today announces a private placement of new shares (“New Shares”) through a directed new share issue to a qualified investor (the “Private Placement”).

The issue of the 1,860,465 New Shares at a share price of €0.43 results in the Company having 260,513,965 issued shares from 258,653,500 previously, a dilution of 0.71% and an increase in Share Capital of 4,651 SEK to a Share Capital at today’s date of 651,284.33 SEK.

The name of the investor is Mr. S van Ettekoven who has initially invested €800,000 for the 1,860,465 New Shares in the Private Placement.

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The price of €0.43 per share for the Private Placement has been agreed in arms-length negotiation with the investor, based on a 10-day average of the market share price at a 9% discount.

In addition, the Company has afforded the investor the opportunity for a further investment of €800,000 in the Company, with a grant of an option to subscribe for 1,777,778 newly issued shares at €0.45 per share, to be exercised by 30 November 2017 (the “Option”).

The Company intends to use the proceeds from the Private Placement and any additional funds from the investor through the exercise of the Option to strengthen the working capital position of the Company, as well as to finance the continued operations and further development of its cybersecurity service offerings.

The reason for deviating from the shareholders’ preferential rights by conducting a directed new share issue in the Private Placement is as a result of a number of factors including:

  • the view of the Board of Directors in relation to the constitution of shareholders that a non-directed new share issue would run the risk of not being fully subscribed;
  • the lower costs of the process (including underwriting) of the directed new issue;
  • the timing advantage of a directed new issue taking into account the current market fluctuations of the Company’s share price; and
  • the desire of the Board of Directors to bring a new influential shareholder into the Company.

For the reasons above including, the risk of non-fulfilment of the subscription, the lower costs of the procedure and the timing of the Private Placement collectively indicate that it is in the shareholders’ interest as well as that of the Company as a whole that the issue is made with deviation from the shareholders’ preferential rights.

The Private Placement and the grant of the Option are subject to, inter alia, a resolution by the Board of Directors of Cognosec and is in line with the authorisation to issue new shares given to the Board of Directors at the AGM on the 28 June 2017.