Proposed cancellation of admission to trading

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018), AS AMENDED. ON PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN AND ANY PERSONS WHO RECEIVED INSIDE INFORMATION IN A MARKET SOUNDING ARE NO LONGER IN POSSESSION OF SUCH INSIDE INFORMATION.

22 November 2024

OTAQ plc

("OTAQ" or the "Company")

Proposed cancellation of admission to trading on the AQSE Growth Market

Amendment to Convertible Loan Note Instrument

Notice of general meeting

OTAQ (AQSE: OTAQ), the innovative technology company targeting the aquaculture and offshore markets, today announces:

• subject to Shareholder approval, the proposed cancellation of the admission of its ordinary shares of 1 penny each ("Ordinary Shares") from trading on the Access Segment of the AQSE Growth Market  (the "AQSE Growth Market  and the "Cancellation"), the re-registration of the Company as a private limited company (the "Re-registration") following the Cancellation and the adoption of new articles of association (the "New Articles of Association") to be effective on the Re-registration (together the "Proposals"); and
• the posting of a circular to Shareholders (the "Circular") which contains further information on the Cancellation and the Re-registration and notice of a general meeting to be held at The Barracks, White Cross, Lancaster, LA1 4XF on 10 December 2024 at 10.00 a.m. (the "General Meeting") at which shareholder approval will be sought for the Proposals.

Proposed Cancellation and Re-registration

The Board has extensively reviewed and evaluated the benefits and drawbacks for the Company and its Shareholders in retaining the admission to trading of the Ordinary Shares on the AQSE Growth Market. The Board has taken into consideration numerous factors, both positive and negative, and considered the interests of all Shareholders in reaching its decision. These factors include the limited liquidity in the Ordinary Shares and share price volatility, access to appropriate finance, less corporate and strategic flexibility and the costs and regulatory burden of maintaining a public listing being disproportionate to the benefits of the Company's continued admission to trading on the AQSE Growth Market. Following this review, the Board has concluded that the continued admission to trading of the Ordinary Shares on the AQSE Growth Market is not appropriate and, accordingly, the Cancellation and Re-registration are in the best interests of the Company and Shareholders as a whole. A detailed explanation of these reasons is set out in Appendix I to this announcement.

Following the Cancellation and Re-registration, the Company will continue to evaluate the optimal corporate structure to ensure its long-term success, which could include listing on an alternative exchange at a future date, should this provide appropriate access to capital and liquidity to support the Company's strategy.

To be passed, the resolution to approve the Cancellation requires, pursuant to Rule 5.3 of the AQSE Rules, the approval of not less than 75 per cent. of the votes cast by Shareholders at the General Meeting. The resolution to approve the Re-registration and the adoption of New Articles of Association also requires the approval of not less than 75 per cent. of the votes cast by Shareholders at the General Meeting.

Amendment to Convertible Loan Note Instrument

On 26 June 2024, the Company constituted a Convertible Loan Note Instrument for the issue of a maximum principal amount of up to £2.7 million and on 12 July 2024 issued £1.79 million of 10 per cent. secured Convertible Loan Notes. Pursuant to the issuance of the Convertible Loan Notes, the Company agreed to certain customary rights and protections for Noteholders, including granting a charge over the Company’s existing Sealfence acoustic deterrent system product inventory, namely its Sealfence 3 and Sealfence 4 control units, related projectors and related battery boxes.

Under the terms of the Convertible Loan Note Instrument, the proposed Cancellation would constitute an event of default and accordingly the Noteholders would be entitled to require the immediate repayment of all amounts of principal and/or interest owing in respect of the Convertible Loan Notes held by them. However, Noteholders holding more than 75 per cent. of the Convertible Loan Notes have agreed to waive this event of default on the basis that the Company will undertake to sell the existing Sealfence acoustic deterrent system product inventory to repay the Convertible Loan Notes.

In addition to the above waiver, Noteholders holding more than 75 per cent. of the Convertible Loan Notes have agreed to vary the terms of the Convertible Loan Note Instrument so that:

• the Company is entitled to capitalise interest accruing due; and

• up to 75 per cent. (formerly 50 per cent.) of the proceeds of sale of the Sealfence acoustic deterrent system product inventory will be applied to redeem the outstanding Convertible Loan Notes and settle any accrued interest.

General Meeting

The General Meeting will be held at The Barracks, White Cross, Lancaster, LA1 4XF on 10 December 2024 at 10.00 a.m.

Resolution 1 to be proposed at the General Meeting is a special resolution to approve the Cancellation.

Conditional on the passing of Resolution 1, Resolution 2 to be proposed at the General Meeting is a special resolution to re-register the Company as a private limited company and to approve the adoption by the Company of the New Articles of Association.

Resolution 1 to approve the Cancellation is not conditional on Resolution 2 to approve the Re-registration, but Resolution 2 is conditional on Resolution 1. If Resolution 1 is passed, but Resolution 2 is not, the Company still intends to proceed with the Cancellation.

As at today's date, the Company has received irrevocable undertakings to vote in favour of the Resolutions from each of the Directors and their connected parties along with certain Shareholders who in aggregate hold 58,846,081 Ordinary Shares representing approximately 45.8 per cent. of the Company's issued share capital.

A copy of this announcement and the Circular will be made available on the Company's website later today at www.otaq.com/investors/.

Capitalised terms used but not defined in this announcement shall have the same meaning given to such term in the Circular.

Enquiries:

APPENDIX I

Extracts from the Circular

Background to and reasons for the Cancellation and Re-registration

The Board has extensively reviewed and evaluated the benefits and drawbacks for the Company and its Shareholders in retaining the admission to trading of the Ordinary Shares on the AQSE Growth Market. The Board has taken into consideration numerous factors, both positive and negative, and considered the interests of all Shareholders in reaching its decision. Following this review, the Board has concluded that the continued admission to trading of the Ordinary Shares on the AQSE Growth Market is not appropriate and, accordingly, the Cancellation and Re-registration are in the best interests of the Company and its Shareholders as a whole for the reasons set out below.

• Costs and regulatory burden: The considerable cost and management time and the legal and regulatory burden associated with maintaining the Company's admission to trading on the AQSE Growth Market is, in the Board's opinion, disproportionate to the benefits of the Company's continued admission to trading on the AQSE Growth Market, particularly given the limited and inconsistent liquidity in the Ordinary Shares as described below. Given the lower costs associated with private limited company status, the Cancellation and Re-registration will reduce the Company's recurring administrative and adviser costs which the Board believes can be better spent supporting and investing in the Group's business.

• Limited liquidity in the Ordinary Shares: There continues to be limited and inconsistent liquidity in the Ordinary Shares, as a result of which small trades in the Ordinary Shares can have a significant impact on price and, therefore, on the market valuation of the Company. The Board believes that this, in turn, has a materially adverse impact on the Company's ability to seek appropriate financing or realise an appropriate value for any material future transactions. Moreover, the limited liquidity in the Ordinary Shares makes it challenging for Shareholders of any size to acquire additional Ordinary Shares or dispose of any Ordinary Shares in the market at an attractive price.

• Access to appropriate finance: The Company’s aquaculture activities remain in development. The Company has sought further funding to support the commercialisation of these activities. The Company did receive support from investors with the issue of the Convertible Loan Note earlier this year, but necessary further funding utilising the Company’s quoted Ordinary Shares is unlikely. In the circumstances the costs of continued admission to trading on the AQSE Growth Market cannot be justified.

• Corporate and strategic flexibility: The Board believes that a private limited company can take and implement strategic decisions more quickly than a company which is publicly traded as a result of the more flexible regulatory regime that is applicable to a private limited company. It has also been disadvantageous to publicly announce news of significance, as this has given the Company’s competitors insights they would not otherwise have if the Company was a private limited company. This will be advantageous in the Company's business development discussions which may ultimately benefit the Company and Shareholders as a whole.

Therefore, as a result of this review, the Board has unanimously concluded that the proposed Cancellation and Re-registration are in the best interests of the Group and Shareholders as a whole.

Strategic corporate re-organisation

The Board agree that to ensure the Company’s long-term success it will pause, with immediate effect, the development of Aquaculture and Technology products and focus all available resources on the profitable and growing Offshore division.

With offices in Aberdeen and Cumbria, the Offshore division, which includes offshore products and connector solutions, produces a range of marine technology products and solutions for offshore industries, supplying customers around the world including subsea oil and gas, remotely operated vehicle operations, commercial diving and oceanographic research, with significant growth opportunities in the offshore renewables sector. Specialising in subsea leak and cement detection, laser measurement systems, underwater imagery and telemetry solutions, as well as subsea survey solutions, major customers include Expro and Amphenol for its underwater connector solutions and Oceaneering, Fugro and Subsea 7 for its OceanSense rental business, with the rental business remaining significantly cash generative.

Following the proposed Cancellation, Re-registration, and strategic corporate re-organisation, the Board forecasts annualised cost savings of £1.2 million in addition to the £0.5 million of cost savings undertaken to restructure the Group over recent months to enable it to focus on its core, profitable operations and prospects. The additional cost savings are expected to derive from costs associated with maintaining the Company’s quote and reduced Board costs, approximately £0.3 million each, further overhead reductions of approximately £0.2 million, and other identified cost savings of approximately £0.4 million.

Despite these cost savings, the Board believes the Offshore division has the appropriate corporate and management structure as well as expertise to execute on both the immediate and medium term prospects available to it.

Current trading and outlook

For the year ending 31 December 2024, the Board expects the Group to achieve revenue of not less than £3.0 million (2023: £4.4 million) and an Adjusted EBITDA loss of £1.0 million (2023: loss of £0.3 million). However, at a divisional level, the Board expects that the Offshore division will achieve revenue of £2.5 million and Adjusted EBITDA of £0.7 million.

Following the proposed Cancellation, Re-registration, and strategic corporate re-organisation, the Board forecasts that for the year ending 31 December 2025 the Offshore division is expected to achieve revenue of £3.0 million and Adjusted EBITDA of £0.9 million.

Process for, and principal effects of, the Cancellation

The Directors are aware that certain Shareholders may be unable or unwilling to hold Ordinary Shares in the event that the Cancellation is approved and becomes effective. Such Shareholders should consider selling their interests in the market prior to the Cancellation becoming effective.

Under the AQSE Rules, the Company is required to give at least 20 clear Business Days' notice of the Cancellation. Additionally, the Cancellation will not take effect until at least five clear Business Days have passed following the passing of the Cancellation Resolution. If the Cancellation Resolution is passed at the General Meeting, it is proposed that the last day of trading in the Ordinary Shares on the AQSE Growth Market will be 20 December 2024 and that the Cancellation will take effect at 7.00 a.m. on 23 December 2024.

Under the AQSE Rules, it is a requirement that the Cancellation must be approved by Shareholders holding not less than 75 per cent. of votes cast by Shareholders at the General Meeting. Accordingly, the Notice of General Meeting set out in the Circular contains a special resolution to approve the Cancellation.

The principal effects of the Cancellation will include the following:

• it is possible that, following the publication of this announcement, the liquidity and marketability of the Ordinary Shares may be significantly reduced and their value adversely affected (however, as set out above, the Directors believe that the existing liquidity in the Ordinary Shares is, in any event, limited);

• the Ordinary Shares may be more difficult to sell compared to shares of companies traded on the AQSE Growth Market (or any other recognised market or trading exchange);

• in the absence of a formal market and quoted price, it may be difficult for Shareholders to determine the market value of their investment in the Company at any given time;

• the regulatory and financial reporting regime applicable to companies whose shares are admitted to trading on the AQSE Growth Market will no longer apply;

• Shareholders will no longer be afforded the protections given by the AQSE Rules, such as the requirement to be notified of price sensitive information or certain events and the requirement that the Company seek Shareholder approval for certain corporate actions, where applicable, including substantial transactions, reverse takeovers, related party transactions and fundamental changes in the Company's business, including certain acquisitions and disposals;

• the levels of disclosure and corporate governance within the Company may not be as stringent as for a company quoted on the AQSE Growth Market;

• the Company will no longer be subject to UK MAR regulating inside information and other matters;

• the Company will no longer be required to publicly disclose any change in major shareholdings in the Company under the Disclosure Guidance and Transparency Rules;

• the Takeover Code is expected to cease to apply to the Company shortly following the Cancellation and the Re-registration given anticipated Board changes;

• Dowgate Capital will cease to be AQSE Corporate Adviser to the Company but will be appointed Corporate Adviser;

• whilst the Company's CREST facility will remain in place immediately after the Cancellation, the Company's CREST facility may be cancelled in the future and, although the Ordinary Shares will remain transferable, they may cease to be transferable through CREST (in which case, Shareholders who hold Ordinary Shares in CREST will receive share certificates);

• stamp duty will be due on transfers of shares and agreements to transfer shares unless a relevant exemption or relief applies to a particular transfer; and

• the Cancellation and Re-registration may have personal taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent tax adviser.

The above considerations are not exhaustive, and Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation on them.

For the avoidance of doubt, the Company will remain registered with the Registrar of Companies in England and Wales in accordance with, and subject to, the Companies Act, notwithstanding the Cancellation and Re-registration.

Provision of information, services and facilities following the Cancellation

The Company currently intends to continue to provide certain information, services and facilities to Shareholders following the Cancellation, including:

• to continue to communicate information about the Company (including annual accounts) to its Shareholders, as required by the Companies Act; and

• to continue, for at least 12 months following the Cancellation, to maintain its website, www.otaq.com and to post updates on the website from time to time, although Shareholders should be aware that there will be no obligation on the Company to include all of the information required under the Disclosure Guidance and Transparency Rules, AQSE Rule 4.14 or to update the website as currently required by the AQSE Rules.

Transactions in the Ordinary Shares prior to and post the proposed Cancellation

Prior to the Cancellation

Shareholders should note that they are able to continue trading in the Ordinary Shares on the AQSE Growth Market prior to Cancellation.

Following the Cancellation

Shareholders should be aware that following the proposed Cancellation, the ability to transact in the Ordinary Shares will be greatly inhibited.

If Shareholders wish to buy or sell Ordinary Shares on the AQSE Growth Market they must do so prior to the Cancellation becoming effective. As noted above, in the event that Shareholders approve the Cancellation, it is anticipated that the last day of dealings in the Ordinary Shares on the AQSE Growth Market will be 20 December 2024 and that the effective date of the Cancellation will be 23 December 2024.

Process for the Re-registration

As set out above, following the Cancellation, the Directors believe that the requirements and associated costs of the Company maintaining its public company status will be difficult to justify and that the Company will benefit from the more flexible requirements and lower costs associated with private limited company status. It is therefore proposed to re-register the Company as a private limited company. In connection with the Re-registration, it is proposed that the New Articles of Association be adopted to reflect the change in the Company's status to a private limited company. The principal effects of the Re-registration and the adoption of the New Articles of Association on the rights and obligations of Shareholders and the Company are summarised in Part II of the Circular.

Under the Companies Act, the Re-registration and the adoption of the New Articles of Association must be approved by Shareholders holding not less than 75 per cent. of votes cast by Shareholders at the General Meeting. Accordingly, the Notice of General Meeting set out in the Circular contains a special resolution to approve the Re-registration and adopt the New Articles of Association.

If the Cancellation Resolution and the Re-registration Resolution are approved at the General Meeting, an application will be made to the Registrar of Companies for the Company to be re-registered as a private limited company. Re-registration will take effect when the Registrar of Companies issues a certificate of incorporation on Re-registration. The Registrar of Companies will issue the certificate of incorporation on Re-registration when it is satisfied that no valid application can be made to cancel the Re-registration Resolution or that any such application to cancel the Re-registration Resolution has been determined and confirmed by the Court.

If the Resolutions are passed at the General Meeting and no application to cancel the Re-registration Resolution is made, it is anticipated that the Re-registration will become effective on or before 31 January 2025.

Takeover Code

The Takeover Code currently applies to all offers for companies which have their registered offices in the United Kingdom, the Channel Islands or the Isle of Man if any of their equity share capital or other transferable securities carrying voting rights are admitted to trading on a UK regulated market or a UK multilateral trading facility or on any stock exchange in the Channel Islands or the Isle of Man.

Currently the Takeover Code also applies to all offers for companies (both public and private) which have their registered offices in the United Kingdom, the Channel Islands or the Isle of Man and which are considered by the Takeover Panel to have their place of central management and control in the United Kingdom, the Channel Islands or the Isle of Man, but in relation to private companies only if one of a number of conditions is met - for example, if the company's ordinary shares were admitted to trading on a UK regulated market or a UK multilateral trading facility or on any stock exchange in the Channel Islands or the Isle of Man at any time in the preceding ten years.

If the Cancellation and Re-registration are approved by Shareholders at the General Meeting, the Company will be re-registered as a private company and its securities will no longer be admitted to trading on a regulated market or a multilateral trading facility in the United Kingdom and the Takeover Code will continue to apply to the Company for a period of at least ten years from the date of the Cancellation if the Company.

Currently, following the expiry of the ten-year period from the date of the Cancellation (subject to Re-registration occurring), the Takeover Code will cease to apply to the Company and Shareholders will no longer be afforded the protections provided by the Takeover Code. This includes the requirement for a mandatory cash offer to be made if either:

• a person acquires an interest in ordinary shares which, when taken together with the ordinary shares in which persons acting in concert with it are interested, increases the percentage of ordinary shares carrying voting rights in which it is interested to 30 per cent. or more; or

• a person, together with persons acting in concert with it, is interested in ordinary shares which in the aggregate carry not less than 30 per cent. of the voting rights of a company but does not hold ordinary shares carrying more than 50 per cent. of such voting rights and such person, or any person acting in concert with it, acquires an interest in any other ordinary shares which increases the percentage of ordinary shares carrying voting rights in which it is interested.

However, the Takeover Panel has proposed amendments to the Takeover Code so that, with effect from 3 February 2025, the ten-year period during which the Takeover Code would continue to apply will be reduced to two years. Consequently, the Takeover Code would cease to apply to the Company from 3 February 2027.

Brief details of the Takeover Panel, and of the protections afforded by the Takeover Code are set out in Part III of the Circular.

Before giving your consent to the Cancellation and the Re-registration, you may want to take independent professional advice from an appropriate independent financial adviser.

APPENDIX II

Expected timetable of principal events

Announcement of the Cancellation and Re-registration 22 November 2024

Publication and posting of the Circular 22 November 2024

Latest time for receipt of proxy appointments in respect of 10.00 a.m. on 6 December 2024

the General Meeting

General Meeting 10.00 a.m. on 6 December 2024

Last day of dealings in Ordinary Shares on the 20 December 2024

AQSE Growth Market

Cancellation of admission of the Ordinary Shares to trading 7.00 a.m. on 23 December 2024

on the AQSE Growth Market

Expected Re-registration as a private company on or before 31 January 2025