Velox3 : 43. Proposed acquisition and change of name

2b1b1601-bb29-4a21-9b2b-452e5e93848b.pdf 9 June 2016 Velox3 plc

("Velox3" or the "Group")

Proposed Acquisition of Sheltyco Enterprises Group Ltd., Change of Name to Veltyco Group plc and Notice of General Meeting

Velox3 plc (AIM: VLOX) is pleased to announce the conditional acquisition of the entire issued share capital of Sheltyco Enterprises Group Limited for a consideration of £10.9 million to be satisfied by the issue of 43,753,775 new consolidated Ordinary Shares. Sheltyco is a holding company for several subsidiary companies focused on the marketing and promotion of third party online gaming, lottery and binary option operators, such as Betsafe (online casino and sports betting), Lottopalace (lottery) and Option888 (binary options).

Key points

• Sheltyco (founded in 2011) is specialised in marketing and promotion activities in three fast growing markets:

  • Online gaming (Betsafe - online casino and sports betting)

  • Lottery (Lottopalace)

  • Binary options (Option888)

• Profitable and cash generative since 2013

• Following Admission, the Enlarged Group will also review potential acquisition opportunities which fit into the company's profile.

• The net proceeds of the transaction will be used to support the working capital needs of the Enlarged Group and to continue Sheltyco's marketing activities in gaming, lottery and binary options

• The Directors intend to declare dividend payments as soon as it becomes commercially prudent to do so

The Company also announces that it has conditionally raised c.£538,000 before expenses by way of a Subscription of 2,152,172 Subscription Shares at a price per Subscription Share of 25 pence. The approximate net proceeds of the Subscription of £251,000 will be applied as working capital for the Enlarged Group.

The Subscription is anticipated to complete in two stages with 1,273,181 Subscription Shares being issued on Admission, raising approximately £318,295 (gross), and a further 878,991 Subscription Shares issued in early July raising approximately £219,747 (gross).

As a term of the Subscription, each Subscriber shall also receive 1 Warrant for every 5 Subscription Shares subscribed, exercisable at 31 pence per Warrant at any time during the period from the date of issue until the 5th anniversary of issue. It is not intended that the Warrants will be listed on any stock market.

In addition, the Company intends to convert outstanding loans of c.€818,000 into 2,717,932 Ordinary Shares and 503,586 Warrants.

Share Consolidation

The Company currently has 193,031,360 Existing Ordinary Shares in issue; the last recorded price per

Existing Ordinary Share was 0.20 pence on 4 December 2015, the last day that the Existing Ordinary Shares were trading on AIM before suspension. The Existing Directors believe that consolidating the Existing Ordinary Shares will lead to the Enlarged Group having a more readily understood share price and number of Ordinary Shares in issue.

Accordingly, the Existing Directors have decided to implement a consolidation of its share capital so that each Shareholder of every 25 or more Existing Ordinary Shares will be entitled to receive one new Ordinary Share. Shareholders with a holding in excess of 25 Existing Ordinary Shares, but which

is not exactly divisible by 25, will have their holdings of Ordinary Shares rounded down to the nearest whole number of Ordinary Shares following the Share Consolidation.

Conversion of outstanding fees

In settlement of certain fees and remuneration due to the Existing Directors in the aggregate sum of

€106,400, it is envisaged that the Board will propose to issue on Admission to David Mathewson 173,538 new Ordinary Shares and to Mark Rosman 153,846 new Ordinary Shares at the Issue Price.

Assuming that these share issues are carried out, David Mathewson's interest in the Enlarged Share Capital on Admission will comprise 249,769 Ordinary Shares representing 0.44 per cent. of the Enlarged Share Capital and warrants over 240,000 Ordinary Shares and Mark Rosman's interest will comprise 486,927 Ordinary Shares representing 0.86 per cent. of the Enlarged Share Capital.

Change of Name

To reflect the changing nature of the business the Directors propose a change of name to Veltyco Group Plc.

Notice of General Meeting

The Acquisition is classified as a reverse takeover under the AIM Rules requiring the approval of Shareholders. The Acquisition is also conditional on the approval by the Shareholders of a waiver of Rule 9 of the Takeover Code. As a result, the Company is today also publishing a readmission document (Readmission Document) which is available from the Company's website at www.velox3.com.

Conditional upon the completion of the Acquisition, application will be made for the Enlarged Issued Share Capital to be admitted to trading on AIM.

An Extraordinary General Meeting of the Company will be held at the offices of Estera Trust (Isle of Man) Limited, 33-37 Athol Street, Douglas, Isle of Man IM1 1LB on 27 June 2016 at 10.30a.m. for the purpose of considering and, if thought fit, passing the resolutions.

A copy of the Readmission Document, notice of Extraordinary General Meeting and Proxy Form will be posted to Shareholders later today

Trading in the Company's Existing Ordinary Shares on AIM is currently suspended; it is anticipated that following completion of the Acquisition the suspension will be lifted and trading in the Enlarged Share Capital will commence at 8.00 a.m. on or around 29 June 2016.

Stockdale Securities is acting as Nominated Advisor and Broker to the Company.

Capitalised terms used in this announcement but not defined have the meanings given to them in the Readmission Document.

For further information please contact: Velox3

David Mathewson, Executive Chairman + 44 (0)1624 647 979

Stockdale Securities [phone] Antonio Bossi

David Coaten

Newgate Communications [phone] Adam Lloyd

Robyn McConnachie Helena Bogle

Below are extract from the Readmission Document published today

Dear Shareholder

PROPOSED ACQUISITION OF SHELTYCO ENTERPRISES GROUP LIMITED PROPOSED CHANGE OF NAME TO VELTYCO GROUP PLC 25 TO 1 SHARE CONSOLIDATION SUBSCRIPTION OF 2,152,172 ORDINARY SHARES AT 25 PENCE PER SHARE APPROVAL OF A WAIVER OF RULE 9 OF THE CITY CODE ADMISSION OF THE ENLARGED ISSUED SHARE CAPITAL TO TRADING ON AIM AND NOTICE OF EXTRAORDINARY GENERAL MEETING

1. INTRODUCTION

   The Company today announced two conditional transactions. The first is the proposed issue of 2,152,172 new Ordinary Shares at a subscription price of 25 pence per Ordinary Share to various investors to raise approximately £538,000 before expenses for working capital purposes. The second is the Company's proposed acquisition of Sheltyco Enterprises Limited ("Sheltyco") in consideration for the issue of 43,753,775 new Ordinary Shares that, at a notional price of 25 pence per share, values Sheltyco at £10.9 million.

   Sheltyco is a holding company for several subsidiary companies interested in the marketing and promotion of online gaming, lottery and binary option operators, such as Betsafe (online casino and sports betting), Lottopalace (lottery) and Option888 (binary options). Sheltyco was incorporated in The British Virgin Islands in November 2011. Detailed information on Sheltyco and its business is set out in paragraph 3 of this Part I of this document.

   In addition to the Subscription Shares, each Subscriber will be issued one Warrant for every 5 Subscription Share subscribed, exercisable at 31 pence per Ordinary Share at any time during the period from the date of issue until the 5th anniversary of issue. The Subscription is anticipated to complete in two stages with 1,273,181 Subscription Shares issued on Admission and a further 878,991 Subscription Shares to be issued in early July.

   The approximate net proceeds of the Subscription of £251,00 will be applied as working capital for the Enlarged Group. Details of Sheltyco's future strategic aims are detailed in paragraph 2 of Part I of this document.

   Details of the Acquisition Agreement are set out in paragraph 5 of this Part I and in paragraph 12 of Part VIII of this document. Details of the Subscription are set out in paragraph 1 of this Part I.

   The Acquisition is classified as a reverse takeover under the AIM Rules requiring the approval of Shareholders. It is therefore conditional upon, inter alia, the passing of the Resolutions. The Acquisition is also conditional on the approval by the Shareholders of a waiver of Rule 9 of the Takeover Code. Conditional upon the completion of the Acquisition, application will be made for the Enlarged Share Capital to be admitted to trading on AIM.

   The purpose of this document is to set out the reasons for the Acquisition and the Subscription, and to explain why the Existing Directors consider that the Proposals are in the best interests of the Company and the Shareholders and to seek Shareholder approval for the Proposals.

   You should read the whole of this document and your attention in particular is drawn to the Risk Factors set out in Part IV of this document.

2. BACKGROUND TO AND REASONS FOR THE ACQUISITION

   Velox3 was admitted to AIM in July 2013 under the name of 24/7 Gaming Group Holdings plc as a service provider to the mobile gaming industry for smart phones and tablets. The Company

   developed HTML 5 based games, however, the board of directors realised during 2014 that returns from its investment in the mobile gaming sector were not satisfactory. At that juncture, the board of directors decided to explore alternative acquisition opportunities and entered in discussions to acquire a binary options business. Whilst it was considering this acquisition opportunity, the Board initiated a restructuring of the Group and, in December 2014, decided to cease operations and further funding to its gaming and publishing operations.

   After careful consideration, the board of directors decided not to progress with the acquisition opportunity in the binary options space and sought approval from shareholders to re-classify Velox3 as an investing company with an investing policy focused on the acquisition of direct and indirect interests in the online trading services industry. Shareholders approved this investing policy in February 2015.

   Recently, the Board has been introduced to the Sheltyco acquisition opportunity. The Board has reviewed the Acquisition and believes that, considering its stage of development, historical financial performance and profitability, the presence of certain common shareholders between the two groups and the sector in which Sheltyco operates, it would constitute a good fit with Velox3's current focus and expertise.

   Sheltyco operates in growing markets and have industry experts who run the operational side of the business. By achieving Admission, the Enlarged Group can benefit from the increased visibility afforded by the stock market. Being quoted on AIM is expected to enable the Enlarged Group to carry out acquisitions through equity deals, retain key employees by providing long term (equity) incentive plans and have easier access to funding, if required.

   In addition, Sheltyco has been generating profits and positive net cash flows almost since the start of its operations, and therefore the Independent Director will be recommending that Shareholders vote in favour of the Whitewash Resolution and the Existing Directors will be recommending that Shareholders vote in favour of the other resolutions which are required to implement the Acquisition.

3. INFORMATION ON THE SHELTYCO GROUP

Sheltyco

Sheltyco is a holding company primarily focused on generating marketing leads and entering into marketing contracts for the activities of its partners in sports betting, casinos, poker games, lottery and binary options, such as Betsafe (online casino and sports betting), Lottopalace (lottery) and Option888 (binary options). Sheltyco focuses on all of these three complementary activities under one umbrella, leveraging its historical cash generative activities of marketing online casinos and sports betting.

Audited historical financial information relating to Sheltyco for the three years ended 31 December 2013, 2014 and 2015 is set out in Part V of this document.

History of the Group

Sheltyco was incorporated in The British Virgin Islands in November 2011 under the name of Pollard Marketing Ltd and initially focussed on marketing activities in gaming and sports betting. Sheltyco started its marketing operations in 2012 and changed its name to Sheltyco Enterprises Group Limited in July 2013. The Sheltyco Group has been profitable since 2013 and has been using its expertise to start marketing lottery and binary option operations in 2015.

Sheltyco Enterprises Ltd (Betsafe)

The Sheltyco Group entered into a partner agreement with Betsson Services Ltd in March 2012 to exclusively market the Betsafe brand and all related products (including, but not limited to, sports betting, casino and poker games) in the German speaking territories (Germany, Austria, Switzerland). Betsson Services Ltd is part of the Betsson AB group, the Swedish quoted investor and manager of companies in the online gaming industry. At 31 May 2016, Betsson AB had a market capitalisation of c. SEK 14,900 million (€1.6 billion). Sheltyco receives a share on all revenues generated from the Betsafe operations in Germany, Austria and Switzerland regardless of how the player is originated in recognition of its marketing activities. The revenue share is a percentage of net revenues which is calculated as bets less winnings after deducting licencing fees, third party