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2020-08-17

AQUA BIO TECHNOLOGY ASA – CONTEMPLATED PRIVATE PLACEMENTS OF NOK 12.6 MILLION – OPERATIONAL UPDATE

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR HONG KONG OR ANY OTHER JURISDICTION IN WHICH THE RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER TO BUY, SELL OR SUBSCRIBE FOR ANY SECURITIES DESCRIBED HEREIN.

Aqua Bio Technology ("ABT" or the "Company") is pleased to announce that it has received binding pre-commitments to subscribe for 2,100,000 new shares (the "New Shares") for gross proceeds of NOK 10.5 million in a conditional private placement of NOK 10.5 million (the "Private Placement"). The board of directors of the Company (the "Board") will also carry out subsequent offering towards eligible shareholders.

In addition to the Private Placement, the Company has also received binding pre-commitments to subscribe for 426,000 new shares for gross proceeds of NOK 2.13 million (the "New Shares II") from new key employees and Board members (the "Private Placement II").

Espen Kvale, CEO of ABT, comments: "We are very pleased to have binding pre-commitments for subscription of all the New Shares from our Board, management and key shareholders, that will secure the development of our own brands and private label brands arising from our recent agreement with DCP Dermoscience".

Operational update

ABT is strengthening its business development and sales organization with two new key employees, to have the resources to fully commercialize on the opportunities arising from the strategic DCP Dermoscience agreement entered into in June 2020, as further described in the operational update below.

The DCP agreement gives ABT an opportunity to meet new customer demands with regards to development of own brands to increase own margins but also better control development of products to meet the local customer base in its respective regions. The DCP agreement had, at signing, two cosmetic lines included in it; 1) a Nordic Beauty Product Concept and 2) a Spa/Clinic Concept as described in Appendix 1 and Appendix 2. ABT has started discussions regarding the development of private label cosmetic lines on these two opportunities. ABT is also considering an agreement that will allow ABT to further develop the Moana Skincare line and expand ABT's exclusive regions.

ABT's US partner, Restorsea, secured global rights for ABT’s proprietary technology in 2012 until 2032 pending continued payment of renewal fees of USD 5,000,000 in 2022 (USD 2,500,000) and in 2027 (USD 2,500,000). The past 18 months ABT has been informed of and has seen a positive trend in its US partner’s commercialization of ABT’s proprietary technology involving launches outside the US and development of licensing agreements with partners within the cosmetic sector which increases the likelihood that ABT will receive additional renewal fees, income from sales of ingredients and royalty from Restorsea and its licensees.

"Aqua Bio Technology's focus on commercialization and development of natural ingredients and natural skin care products has been, and will continue to be, a key element of ABT's strategy going forward. Companies that have sustainable business models will generally reduce risks and increase the possibilities of good long-term returns. Aqua Bio Technology's owners and management are convinced that companies that, over time, are able to maintain focus on factors as sustainability, environment and ESG will have an advantage. We are also very happy to strengthen our organization with two important hires, and we are convinced that they will become key assets positively affecting our sales and distributions efforts, both domestically and internationally", notes CEO Espen Kvale.

The Private Placement

Through the Private Placement, the Company is offering New Shares for gross proceeds of approximately NOK 10.5 million, representing approximately 13.7% of the outstanding capital of the Company on a fully diluted basis. The offer price in the Private Placement is a fixed price of NOK 5 per New Share, corresponding appr. to the volume weighted average price of the Company's since 2 June 2020.

The Private Placement is directed towards the Company's 30 largest shareholders, representing approximately 80% of the current outstanding shares of the Company. The Company has already received binding pre-commitments from key shareholders for all New Shares offered in the Private Placement.

The application period for the Private Placement opens today at 18:00 CEST and closes on 18 August 2020 at 08:00 CEST. The Company may, however, at any time resolve to close or extend the application period at its sole discretion and on short notice.

Allocation of New Shares will be determined by the Board, in its sole discretion, shortly after the close of the application period. The Board will focus on criteria such as (but not limited to) current ownership in the Company, timeliness of the application, relative order size, sector knowledge, perceived investor quality and investment horizon.

The net proceeds from the Private Placement will be used for strengthening of the Company's business development and sales organization, development of new products and brands and for general purposes and working capital.

The issuance of the New Shares in the Private Placement is subject to approval of the pertaining share capital increase by an extraordinary general meeting of the Company (the "EGM"), to be held on or about 11 September 2020. A notice for the EGM will be distributed in due course. The Company has received voting undertakings in favour of the share capital increase pertaining to the Private Placement from shareholders holding in excess of 66.67% of the currently outstanding shares and votes in the Company.

The New Shares will be delivered to the investors in the Private Placement as immediately tradable shares as soon as practically possible after the registration of the share capital increase pertaining to the Private Placement, expected on or about 17 September 2020.

The Private Placement constitutes a deviation from the preferential right of the shareholders to subscribe for the New Shares. The Board, together with the Company's management, has considered various transaction alternatives to secure new financing. Based on an overall assessment, taking into account inter alia the need for funding, execution risk and possible alternatives, the Board has on the basis of careful considerations decided that the Private Placement is the alternative that best protects the Company's and the shareholders' joint interests. Thus, the deviation of the preferential rights inherent in a share capital increase through issuance of New Shares is considered necessary.

The Private Placement II

Through the Private Placement II, the Company is offering 426,000 New Shares II to certain new key employees and Board members. The New Shares II are offered at the same price as the New Shares, being NOK 5 per New Share II.

The net proceeds from the Private Placement II will be used for the same purposes as the net proceeds from the Private Placement.

The issuance of the New Shares II will be resolved by the Board pursuant to an authorization to increase the share capital, such resolution to be passed prior to the EGM.

The New Shares II will be delivered as immediately tradable shares as soon as practically possible after the registration of the share capital increase pertaining to the Private Placement, expected on or about 17 September 2020.

The Private Placement II constitutes a deviation from the preferential right of the shareholders to subscribe for the New Shares II. The Board considers this deviation to be justifiable as the New Shares II are subscribed by members of the Company's Board and management as long-term incentives for their work on behalf of the Company.

The Subsequent Offering

In order to reduce the dilution resulting from the issuance of the New Shares, the Board will launch a subsequent offering (the "Subsequent Offering") of new shares (the "Offer Shares") at a subscription price of NOK 5 per Offer Share (i.e. the same subscription price as for the New Shares).

The Subsequent Offering will be directed towards the Company's shareholders as of 17 August 2020, as registered in the VPS on 19 August 2020 (the "Record Date"), less (i) shareholders who offered to subscribe for New Shares in the Private Placement, and (ii) shareholders who are resident in a jurisdiction where such offering would be unlawful or would require any filing, registration or similar action.

The Subsequent Offering will be carried out pursuant to an authorization to increase the share capital held by the Board and with a two-week subscription period expected to expire on or about the date of the EGM.

* * *

For further information, please contact Espen Kvale, CEO, telephone +47 9162 8092.

Aqua Bio Technology (ABT) is developing and commercializing sustainable biotechnology for use in skin care products. ABT's cosmetics ingredients are highly effective and they provide the cosmetics industry with natural alternatives to traditional ingredients. ABT is also marketing and distributing natural skin care products developed by partners towards consumers and professional users.  ABT's focus on commercialization and development of natural ingredients and natural skin care products has been, and will continue to be, an important part of the company's strategy going forward. Aqua Bio Technology is listed on the Axess market of the Oslo Stock Exchange.

This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

IMPORTANT INFORMATION
This announcement is not an offer to sell or a solicitation of offers to purchase or subscribe for shares. Copies of this announcement may not be sent to jurisdictions, or distributed in or sent from jurisdictions, in which this is barred or prohibited by law. The information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy, in any jurisdiction in which such offer or solicitation would be unlawful absent registration, or an exemption from registration or qualification under the securities laws of any jurisdiction.

This document is not for publication or distribution in, directly or indirectly, Australia, Canada, Japan, Hong Kong or the United States or any other jurisdiction in which such release, publication or distribution would be unlawful, and it does not constitute an offer or invitation to subscribe for or purchase any securities in such countries or in any other jurisdiction. In particular, the document and the information contained herein should not be distributed or otherwise transmitted into the United States or to publications with a general circulation in the United States of America.

This announcement is not an offer for sale of securities in the United States. Securities may not be offered or sold in the United States absent registration with the United States Securities and Exchange Commission or an exemption from registration under the U.S. Securities Act of 1933, as amended (the "Secur...

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