GoTech Group plc Adjournment of GM and update re NEX admission

 
TIDMGOT 
 
11 June 2018 
 
                               GoTech Group plc 
 
                          ("GoTech" or the "Company") 
 
                        Adjournment of General Meeting, 
 
  Proposed NEX admission - Investment Strategy Clarification and Risk Factors 
 
GoTech announces that its general meeting ("General Meeting"), convened to be 
held at 11 a.m. today has been adjourned. As part of the Company's application 
for its ordinary shares of 0.1 pence each ("Ordinary Shares") to be admitted to 
trading on the NEX Exchange Growth Market ("NEX") as an investment vehicle, the 
Company has made minor amendments to its proposed investment strategy, further 
details of which are set out below. 
 
The adjourned General Meeting will now be held on 15 June 2018 at 11.00 a.m. at 
the offices of Peterhouse Capital Limited, New Liverpool House, 15 Eldon 
Street, London EC2M 7LD. A copy of this announcement will be posted to 
shareholders tomorrow and will be made available on the Company's website 
https://www.gotechgroup-plc.com/. Votes that have been cast will remain valid, 
but shareholders may change their votes if they so wish or alternatively may 
cast their votes if they have not yet done so. Shareholders should refer to the 
voting instructions enclosed in the circular which was dated 24 May 2018 and 
posted to shareholders on 25 May 2018, a copy of which is available on the 
Company's website at: https://www.gotechgroup-plc.com/. 
 
The Company's proposed admission to trading on NEX is conditional, inter alia, 
on all resolutions being approved at the General Meeting to take place on 15 
June 2018 ("General Meeting") and the cancellation of admission of its Ordinary 
Shares to trading on AIM ("Cancellation") occurring. 
 
As detailed in the Company's circular and announcement of 24 May 2018, trading 
in the Company's Ordinary Shares on AIM will be suspended with effect from 
7.30am on 21 June 2018 pursuant to AIM Rule 15. Subject to the relevant 
resolution being passed at the General Meeting, it is expected that 
Cancellation will take effect at 7.00 a.m. on 25 June 2018.  It is anticipated 
that dealings in the Company's Ordinary Shares on NEX will commence at 8.00 
a.m. on 25 June 2018. 
 
Investment Strategy Process Clarified 
 
In conjunction with the Company's application for its Ordinary Shares to be 
admitted to trading on NEX, the Company would like to clarify its Investment 
Strategy further, pursuant to the legal obligations with respect to investing 
in cannabis quoted and listed companies. 
 
The Company at this stage with will not focus on mainland Europe until the 
regulatory status of the medicinal cannabis industry becomes more developed. In 
due course and with increased Company resources, the Company may review the 
status of mainland Europe and consult Shareholders as appropriate. 
 
The Company will be responsible for commissioning appropriate legal due 
diligence on prospective investments. 
 
External advisers and investment professionals will be engaged as necessary to 
assist with the sourcing and due diligence of prospective opportunities. The 
Directors will also consider appointing additional directors with relevant 
experience if the need arises. 
 
As part of each investment analysis, Malcolm Burne (to be appointed as a 
director of the Company in conjunction with the proposed admission to NEX), 
with the assistance of the Board, will liaise with and where necessary, 
instruct National or Foreign Counsel to produce a legal opinion relating to the 
terms and lawfulness of the Company's proposed investment. The Board will 
review the Counsel's opinion to identify whether the investment is in line with 
a legal opinion to be given by UK Counsel in relation to the same matter.  The 
Board will heed the advice provided by Foreign and UK Counsel, and where the 
advice given reflects any negatives, regulatory risks, or otherwise advised, 
will decline the proposed investment. In particular, the Board will seek to 
ensure that there is as little risk as possible of breaching the Proceeds of 
Crime Act 2002 ("POCA 2002"), The Misuse of Drugs Act 1971 ("MDA 1971"), The 
Misuse of Drugs (Designation) Order 2001 ("MDDO 2001") and The Misuse of Drugs 
Regulations 2001 (S.I. 2001/3998) ("MDR 2001"). The Board will also seek to 
avoid any risk of breaching Money Laundering Legislation and will seek to 
ensure that any prospective future dividends will not contravene any laws, 
having particular regard to whether there may be any breach of POCA 2002. 
 
Once the Board, led by Malcolm Burne, has completed due diligence on a 
prospective investment, it will opine on its findings in a comprehensive 
report. The Independent Non-Executive Director (as required by the NEX Rules) 
will in turn provide their comments and recommendations to the Board as to 
whether the Company should pursue the prospective investment. 
 
The Company will endeavour to follow good corporate governance, in that it will 
continually monitor changes in activities of its investee companies, and 
especially those investee company shares that will be held long term. The Board 
will, in particular, assess the credibility of the investee company directors. 
There is a vast array of recently quoted and listed companies that fall within 
the Company's investment strategy targets. The Company will monitor and engage 
with investee companies. This will allow the Company to improve its 
understanding of investee companies and their governance structures. To this 
end, meeting with management of investee companies will take place regularly to 
review management process and best practices in, amongst other things, 
regulatory questions pertaining to the Investment Strategy. At a minimum, the 
Company would expect companies to comply with the accepted corporate governance 
standard in their domestic country. 
 
In compliance with Rule 51 of the NEX Exchange Rules, if the Company (as an 
Investment Vehicle) has not substantially implemented its investing policy 
after the period of one year following Admission, it will seek Shareholder 
approval in respect of the subsequent year for the further pursuit of its 
investment strategy. 
 
Pursuant to Rule 52 of the NEX Exchange Rules, the Company (as an Investment 
Vehicle), is required to substantially implement its investment strategy within 
a period of two years following Admission. In the event that the Company has 
not undertaken a transaction constituting a Reverse Takeover under Rule 57 of 
the NEX Exchange Rules, or if it has otherwise failed to substantially 
implement its investment strategy within such two-year period, NEX Exchange 
will suspend trading of the Company's Issued Share Capital in accordance with 
Rule 78 of the NEX Exchange Rules. If suspension occurs, the Directors will 
consider returning the Company's cash to Shareholders after deducting all 
related expenses. However, in the case of the Company, NEX considers the two 
years' period to have commenced on 20 December 2017, the date on which the 
Company became an AIM Rule 15 cash shell. 
 
RISK FACTORS 
 
1. Risks relating to the investment in target companies whose main activities 
include Cannabis production and research and development thereof 
 
The Company and its shareholders may be at risk of committing offences under 
POCA 2002 
 
Even with the Company taking all precautions to ensure that it and the target 
companies in which it invests comply fully with all applicable regulations and 
legislation in relation to cannabis (both in the UK and in the relevant foreign 
jurisdiction applicable to a target company), there are no guarantees that the 
activities of the Company and a target company will always be deemed lawful if 
there are any changes in the applicable law. 
 
The Company will take all precautions possible to ensure that it does not at 
any time contravene POCA 2002. Contravention of POCA 2002 carries potential 
criminal liability. 
 
The Company's reputation may be damaged 
 
Damage to the Company's reputation can be the result of the actual or perceived 
occurrence of any number of events, and could include negative publicity, 
whether true or not. This may arise as a consequence of investing in companies 
that are involved in the production and the research and development of 
medicinal cannabis, cannabis being a Class B drug within the UK. 
 
The increased usage of social media and other web-based tools used to generate, 
publish and discuss user-generated content and to connect with other users has 
made it increasingly easier for individuals and groups to communicate and share 
opinions and views in regards to the Company and its activities, along with 
those activities of certain target companies in which the Company invests. 
 
Reputation loss may result in decreased investor confidence, increased 
challenges in developing and maintaining community relations, banking 
relationships etc. and thereby having a material adverse impact on the 
financial performance, financial conditions, cash flows and growth prospects of 
the Company. 
 
The Company, or the Medicinal Cannabis industry more generally, may receive 
unfavourable publicity or become subject to negative consumer perception 
 
The Company believes that the medicinal cannabis industry is highly dependent 
upon consumer perception regarding the medical benefits, safety, efficacy and 
quality of the cannabis distributed for medical purposes to such consumers. 
Consumer perception of a target company's products can be significantly 
influenced by scientific research or findings, regulatory investigations, 
litigation, political statements, media attention and other publicity (whether 
or not accurate or with merit) regarding the consumption of cannabis products 
for medical purposes, including unexpected safety or efficacy concerns arising 
with respect to the products of a target company or its competitors. 
 
There can be no assurance that future scientific research, findings, regulatory 
proceedings, litigation, media attention or other research findings or 

publicity will be favourable to the medicinal cannabis market or any particular 
product, or consistent with earlier publicity. Future research reports, 
findings, regulatory proceedings, litigation, media attention or other 
publicity that are perceived as less favourable than, or that question, earlier 
research reports, findings or publicity could have a material adverse effect on 
the demand for a target company's products and the business, results of 
operations and financial condition of a target company and therefore materially 
adversely affect the Company's return on investment. 
 
Furthermore, adverse publicity reports or other media attention regarding the 
safety, efficacy and quality of cannabis for medical purposes in general, or a 
target company's products specifically, or associating the consumption of 
cannabis with illness or other negative effects or events, could have such a 
material adverse effect. Such adverse publicity reports or other media 
attention could arise even if the adverse effects associated with such products 
resulted from consumers' failure to consume such products legally, 
appropriately or as directed. 
 
Cannabis plant may not be approved for medicinal use in all (or any) 
jurisdictions 
 
Medical regulatory authorities in many jurisdictions require carefully 
conducted studies (clinical trials) in hundreds to thousands of human subjects 
to determine the benefits and risks of a possible medication. In many 
jurisdictions, researchers have not conducted sufficient large-scale clinical 
trials that show that the benefits of the cannabis plant (as opposed to its 
cannabinoid ingredients) outweigh its risks in patients it's meant to treat. 
 
2. Risks relating to regulatory matters 
 
Laws, regulations and guidelines may change in ways that the Company has not 
predicted 
 
The laws, regulations and guidelines applicable to the medicinal cannabis 
industry may change in ways currently unforeseen by the Company. 
 
The Company's operations and investments into quoted or approved and properly 
licensed companies lawfully producing and/or conducting research into cannabis 
are subject to laws, regulations and guidelines. If there are any changes to 
such laws, regulations or guidelines, which are matters beyond the Company's 
control, the Company may incur significant costs in complying with or is unable 
to comply with such changes. This may have a material adverse effect on the 
Company's business, financial condition and results of operations. 
 
Regulatory Compliance Risks and maintaining a bank account 
 
Failure to comply with regulations may result in additional costs for 
corrective measures, penalties or in restrictions of operations. In addition, 
changes in regulations, more vigorous enforcement thereof or other 
unanticipated events could require extensive changes to operations, increased 
compliance costs or give rise to material liabilities, which could have a 
material adverse effect on the business, results of operations and financial 
condition, and, therefore, on the Company's prospective returns. 
 
As a result of perceived reputational risk and regulatory risks, the Company, 
in the medicinal cannabis sector, may in the future have difficulty in 
maintaining its current bank accounts, establishing further bank accounts, or 
other business relationships. 
 
Environmental Regulations and Risks 
 
The operations of some target companies will be subject to environmental 
regulation in the various jurisdictions in which they operate. These 
regulations mandate, among other things, the maintenance of air and water 
quality standards and land reclamation. They also set forth limitations on the 
generation, transportation, storage and disposal of solid and hazardous waste. 
Environmental legislation is evolving in a manner which will require stricter 
standards and enforcement, increased fines and penalties for non-compliance, 
more stringent environmental assessments of proposed projects and a heightened 
degree of responsibility for companies and their officers, directors and 
employees. There is no assurance that future changes in environmental 
regulation, if any, will not adversely affect the business, financial condition 
and operating results of a target company, and therefore have a material 
adverse effect on the Company's return on investment. 
 
Changes to safety, health and environmental regulations could have a material 
effect on future operations of target companies 
 
Safety, health and environmental legislation will affect nearly all aspects of 
a target company's operations including product development, working 
conditions, waste disposal and emission controls. Compliance with safety, 
health and environmental legislation can require significant expenditures and 
failure to comply with such safety, health and environmental legislation may 
result in the imposition of fines and penalties, the temporary or permanent 
suspension of operations, clean-up costs resulting from contaminated 
properties, damages and the loss of important permits. Exposure to these 
liabilities arises not only from a target company's existing operations but 
from operations that have been closed or sold to third parties. A target 
company could also be held liable for worker exposure to hazardous substances 
and for accidents causing injury or death. There can be no assurances that a 
target company will at all times be in compliance with all safety, health and 
environmental regulations or that steps to achieve compliance would not 
materially adversely affect a target company's business, and therefore have a 
material adverse effect on the Company's return on investment. 
 
Safety, health and environmental laws and regulations are evolving in all 
jurisdictions. The Company is not able to determine the specific impact that 
future changes in safety, health and environmental laws and regulations may 
have on a target company's operations and activities, and its resulting 
financial position; however, the Company anticipates that capital expenditures 
and operating expenses will increase in the future as a result of new and 
increasingly stringent safety, health and environmental regulation. Further 
changes in safety, health and environmental laws, new information on existing 
safety, health and environmental conditions or other events, including legal 
proceedings based upon such conditions on an inability to obtain necessary 
permits, may require increased financial reserves or compliance expenditures or 
otherwise have a material adverse effect on a target company, and therefore 
have a material adverse effect on the Company's return on investment. 
 
Terms defined in the Circular to Shareholders dated 24 May 2018, have the same 
meaning in this announcement. 
 
For further information, please visit www.gotechgroup-plc.com or contact: 
 
Rupert Horner            GoTech Group plc         Tel: [phone] 
 
Virginia Bull            Allenby Capital Limited  Tel: [phone] 
James Reeve              (AIM Nominated Adviser 
Liz Kirchner             and Joint Broker) 
 
Duncan Vasey             Peterhouse Capital       Tel: [phone] 
Lucy Williams            Limited (AIM Joint 
                         Broker) 
 
Guy Miller               Peterhouse Capital       Tel: [phone] 
                         Limited (Corporate 
                         Adviser for NEX 
                         Admission) 
 
 
 
END 
 

(END) Dow Jones Newswires

June 11, 2018 06:55 ET (10:55 GMT)