Capital increase - Softbinator and Equatorial acquisitions

Capital increase - Softbinator and Equatorial acquisitions

BITTNET SYSTEMS S.A. (hereinafter referred to as "the Company") informs the investors about the Decision of the Board of Directors of the Issuer to increase the share capital with the amount of RON 6,650,000 on account of the receivable held over the company by the associates/shareholders of the two companies Equatorial Gaming and Softbinator Technologies:

1.       issuing 10,684,445 ordinary, dematerialized shares, of equal value, with a nominal value of 0.1 RON each, and a total value of RON 1,068,444.5

2.       registration of the amount of RON 5,581,555.50 as issue premiums

Based on the mandate conferred by the EGMS Decisions no. 4 and no. 5 from 26 November 2020, the Board of Directors signed two contracts for sale-purchase of shares, and established the settlement weight between cash and BNET shares for each of the 2 transactions.

The total amount of the Issuer's investments is RON 11,073,500, and the Board of Directors decided to pay the amount of RON 4,423,500 in cash and RON 6,650,000 in BNET shares. Following these operations, Bittnet Systems holds a share of 98.99% in Equatorial Gaming and 25% in Softbinator. The shareholders of the 2 companies will have allocated shares to the Issuer as follows:

·         Daniel Berteanu – co-founder Equatorial Gaming - 2,717,647 BNET shares

·         Diana Rosetka – co-founder Equatorial Gaming - 736,722 BNET shares

·         Daniel Ilinca – founder Softbinator - 5,784,061 BNET shares

·         Andrei Pitis – Softbinator shareholder - 1,446,015 BNET shares

Following the issuance of the 10,684,445 BNET shares, the share capital increased by RON 1,068,444.50 , and the equity increases by the amount of RON 5,581,555.50 - issue premiums (the difference between the value of the receivable and the value by which the share capital is increased).

The value of 6.65 million RON, of the receivable held by the sellers over the Company, was certified by the extrajudicial accounting expertise report dated 17.12.2020 - attached to this current report.

The number of newly issued shares was determined in accordance with the provisions of art. 210 (2) of Law 31/1990 and art. 87-88 of Law 24/2017 on issuers of financial instruments and market operations and art. 174 of the FSA Regulation no. 5/2018. Thus, the number of shares was established by dividing the receivable at the price of 0.6224 ron/ share - the average price of BNET shares between 13.12.2019 - 16.12.2020.

The capital increase is made by raising the right of preference and based on the Decision of the Board of Directors no. 10 of 17.12.2020 (attached to this current report) and in accordance with the attributions delegated by EGMS by Decisions no. 3 of 25.04.2018 and no. 1 of 17.12.2018, so that the newly issued shares can be allocated to the holders of the debt.

The settlement of the 2 transactions through a mix of BNET and cash shares was approved in the EGMS of 26.11.2020, and the reason behind this model was to align the interests of the shareholders of the 2 companies acquired with Bittnet shareholders.

Thus, the shares released as a result of the share capital increase by converting the certain, liquid and due receivable will be registered by the Central Depository in the global accounts of the 4 beneficiaries - proportional to the value of the receivable they hold over the Company.

By acquiring 25% of Softbinator, the Issuer aims to open a new area of ​​IT services - software development - together with a partner that has had among the largest expansions in this field in Romania.

In case of Equatorial Gaming, after 2 years from the initial investment, we confirmed a very good alignment both operational and management for the business line 'Education', both the standard processes of Bittnet training having to gain from the Equatorial Gaming experience, and Equatorial Gaming through access to operational technology, but also to a larger customer base.

In the next period, the Company will follow the legal procedures for registering the capital increase from the operation described above at the Trade Register Office, the Financial Supervisory Authority, the Central Depository and Bucharest Stock Exchange.

President of the Board

Mihai Alexandru Constantin Logofatu