The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. The information is disclosed in accordance with the Company's obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

11 December 2023

DG Innovate plc

("DG Innovate", "DGI", the "Company" or the "Group")

Board Restructuring and Appointment of Directors

£2.4 million Convertible Note Fundraise

Director Dealings and Issue/Lapsing of Options

DG Innovate (LSE: DGI), the advanced research and development company pioneering sustainable and environmentally considerate improvements to electric mobility and energy storage, is pleased to announce, inter alia, a board restructuring, including the appointment of three new executive directors with significant experience in the electric vehicle sector, all of whom have held senior roles with Tesla, as detailed below, and a £2.4 million fundraising via the issue of convertible notes.

The new executive management team envisage a dual strategy: to complete the development and commercialisation of the Company's existing technology and to build a larger business through significant complimentary acquisitions within the wider electric mobility and energy storage spaces.

Highlights

·    Board restructuring including the appointment of a new executive management team comprising Peter Bardenfleth-Hansen as Chief Executive Officer and Christian Eidem and Jochen Rudat as Executive Directors.  All three have significant experience in the electric vehicle and mobility sector, including senior roles with Tesla.

·    Convertible note fundraise of £2.4 million to progress the new executive management team's plans including the development and commercialisation of the Company's existing technology.

·    Christian Eidem has acquired a 29.3% stake in the Company through the purchase of shares from existing shareholders in the Company.

·    Options under a new Executive Share Option Scheme have been issued to the incoming directors and the Company's Chief Technology Officer, Martin Boughtwood, with certain existing options lapsing.

·    Peter Tierney, the Company's previous Chief Executive Officer has moved to a Non-Executive Director role and Dr Pat Symonds has resigned from his position as a Non-Executive Director.

Commenting, Nick Tulloch, Chairman of DG Innovate, said: "We are delighted to welcome Christian Eidem, Peter Bardenfleth-Hansen and Jochen Rudat to DG Innovate, together with Christian taking a significant stake in the Company.  The new executive management team, with their world-class track record in the electric vehicle and mobility sector, recognise the significant commercial potential in DG Innovate's technology and the wider opportunity to use DG Innovate as a platform to build a larger company focused on the sector.  The funds raised will help progress these plans and I look forward to an extremely bright future for DG Innovate.

"I would also like to express my gratitude to Peter Tierney for his contribution as CEO and I am delighted that he will continue his involvement in the Company.  My thanks go also to Pat Symonds for his wise counsel to the Company and I wish him well in his future endeavours.  Finally, on behalf of the Board, I would like to express our gratitude to the Deregallera Trust and the other shareholders who have, for the benefit of the Company and wider shareholder base, sacrificed a significant proportion of their holdings to enable the funding and new management team to be put in place."

Commenting, Peter Bardenfleth-Hansen, incoming CEO of DG Innovate, said: "The technology the DGI team has developed is exceptional.  Jochen, Christian and I have spent a collective 90 years in this industry, and in the last few years have looked at hundreds of different technologies to invest in and commit to across the globe - DGI's technology was the standout.  We look forward to working with the DGI team, and alongside investment from leading investors we have the opportunity to leverage DGI's technology and build a scaled business focused on green technology."

Board Restructuring

The Company is pleased to announce the appointment of Peter Bardenfleth-Hansen as the Company's new Chief Executive Officer, together with Christian Eidem and Jochen Rudat as Executive Directors.  Mr Bardenfleth-Hansen and Mr Eidem will devote the majority of their working time to the Company.

Peter Bardenfleth-Hansen is a seasoned executive in the electric vehicle and mobility industry. Peter spent almost 10 years at Tesla (Nasdaq: TSLA), during which he held increasingly senior sales roles within the organisation.  His role in drawing attention to Tesla at Copenhagen's December 2009 Conference on Climate Change, led to him being Tesla's first hire in Scandinavia, where he successfully led the launch of the Roadster.  He progressed through the ranks at Tesla and ultimately became Nordic Director in 2013, overseeing a team of 160 people, with geographic responsibility for Scandinavia as well as the Nordic and Baltic regions.  In December 2016, Peter became the Director of EMEA business development at Tesla where he oversaw all business expansion throughout Europe, the Middle East and Africa.  In 2015, he was given a 6-month special assignment to Japan where he was tasked with restructuring management.  Peter is now advising on mobility and invests in numerous private mobility companies, including Fenris Motorcycles and Viggo.  He has also been a member of the board of directors of Volta Trucks and Zaptec since October 2020 and has also been the chairman of Viggo since May 2019.

Christian Eidem graduated from the Wharton School of Business, University of Pennsylvania, with a degree in Economics. He is an investor and entrepreneur who started his career as a venture capitalist in Oslo, Norway.  He has created and managed companies in sports and healthcare, including International Sports Management.  He also co-founded Orion Systems and Mylna Gruppen, one of Scandinavia's leading fitness equipment companies.  Christian holds numerous directorship and board member positions around the world, including as Director of Life Natural, advisor to Tesla Motors and advisor to Orion Systems.  In the past he served as Chairman and co-founder of International Sports Management. He has worked as an advisor to Elon Musk and Tesla.

Jochen Rudat has almost 25 years of experience in the mobility industry.  Following his management role at BMW Switzerland, he joined Tesla in 2009, where he was one of Tesla's first hires in Europe and was tasked with building Tesla's business in Europe from the ground up.  During his tenure, Jochen was responsible for the launch of Tesla products in several markets, including Switzerland, Austria, Italy and France. In his last role at Tesla as Director Central Europe, he had responsibility for the entire Central European region, including the key German market.  During his time at Tesla, Jochen also reported directly to Tesla founder, Elon Musk, and was recognised for his significant achievements by being awarded the Key Contributor Award, which only a few high performers received in certain times.  Jochen was also given a special assignment for several months to improve retail operations in China.  In addition to Tesla, Jochen was Chief Sales Officer at the electric luxury brand Automobili Pininfarina, and has worked in different roles for Porsche, Citroen, Kia Motors and BMW. Currently, Jochen consults to several mobility start-ups and is on the advisory board of Silent Yachts, which manufacture solar powered e-boats, Micro Mobility Systems AG, which manufacture light electric vehicles, American Manganese, which is involved in the recycling of lithium ion batteries, Bonnet Ltd., an EV charging start-up, and Carify, a fast-growing Swiss car subscription service.  Jochen is the Head of Sales of Piech Automotive and is also an executive advisor at Vulcan Energie Ressourcen GmbH.

Peter Tierney, the Company's previous Chief Executive Officer, has moved to a Non-Executive Director role and Dr Pat Symonds has resigned from his position as a Non-Executive Director to focus on his other activities, including his position as Formula One's Chief Technical Officer. 

The Board of the Company will now comprise: Nicholas Tulloch (Non-Executive Chairman), Peter Bardenfleth-Hansen (Chief Executive Officer), Christian Eidem (Executive Director), Jochen Rudat (Executive Director), Jack Allardyce (Chief Financial Officer), Martin Boughtwood (Chief Technical Officer), Peter Tierney (Non-Executive Director) and Trevor Gabriel (Non-Executive Director).

Convertible Note Fundraise

The Company has raised gross proceeds of £2.4 million through the issue of unsecured convertible notes ("CLNs") convertible into the Company's ordinary shares of 0.01 pence ("Ordinary Shares") at a price of 0.035 pence per share.  The CLNs have been placed by Patronus Partners with new and existing investors in the Company.

The CLNs have no coupon and are convertible (i) after one year, subject to the availability of a valid exemption from the requirement to prepare a prospectus in respect of the Ordinary Shares arising from the conversion; or (ii) following admission of the Company's ordinary share capital to the AIM Market of the London Stock Exchange.

The proceeds raised through the issue of the CLNs will be used for general corporate purposes, including to progress the testing and commercialisation of the Company's Pareta® prototype high-performance electric vehicle drive, together with other projects, including the Scale up Readiness Validation of Parallel Motor for Automotive Applications' ("SUPAR") project with the UK Government's Advanced Propulsion Centre as detailed in the Company's interim results, announced on 28 September 2023.

Director Dealings

In the interest of acquiring a substantial position in the Company's shares in an expedient manner, Christian Eidem made a proposal to acquire a proportion of the holding of DG Innovate's largest shareholder, the Deregallera Trust (the "Trust").  The Trust was established by the family of Martin Boughtwood, a director, with the beneficiary being his wife and the trustees being his adult children.  The appointment of the new executive team and funding arrangements were contingent on an agreement being reached between the Mr Eidem and the Trust.  Mr Eidem reached agreement with the Trust to facilitate the overall transaction and shield other shareholders from potentially significant dilution.  Christian Eidem has therefore acquired 2,560,637,110 Ordinary Shares from the Trust, equating to 25% of the Company's existing issued share capital.

Mr Eidem has also reached agreement with certain other shareholders, including two existing directors of the Company, to acquire an additional 440,000,000 Ordinary Shares at the same price as the transaction with the Trust.  Following these purchases, Mr Eidem's has a holding in the Company of 3,000,637,110 Ordinary Shares, equating to approximately 29.3% of the Company's issued share capital.

Further information on these transactions is contained in the disclosure tables below.

Following these transactions the Directors' holdings of Ordinary Shares are as follows:

*Held by the Deregallera Trust, whose beneficiary is Martin's wife, Denise Boughtwood

** Held by Disruptech Limited, owned by Trevor Gabriel

Issue of Options

The Company has granted the following options over Ordinary Shares ("Granted Options") under the terms of its executive share option scheme:

* Martin Boughtwood's second tranche of options will be repriced to 0.03 pence per share subject to the Company entering into contracts within two years worth not less than £2 million for the sale/licencing of its technologies.

The Granted Options vest on a daily basis during the first year, are exercisable immediately upon vesting and have no performance conditions attached other than continued employment by the Company (or other Group company).

Further details are contained in the disclosure tables below.

Lapsing of Existing Options

On 12 October 2022 Peter Tierney was granted 690,790,814 options over Ordinary Shares with an exercise price of 0.1 pence per share.  Mr Tierney has agreed that 425,987,669 of these options will lapse and he therefore now holds options over 264,803,145 Ordinary Shares with an exercise price of 0.1 pence per share, representing approximately 2.6% of the Company's current issued share capital.

On 12 April 2022 Martin Boughtwood was granted 156,105,002 options over Ordinary Shares with an exercise price of 0.1 pence per share.  Mr Boughtwood has agreed that all of these options will lapse.

Certain other former directors have also agreed that certain options held by them, which in aggregate comprise 599,999,999 options over Ordinary Shares with an exercise price of 0.1 pence per share, will also lapse.

Following the lapsing of these options and the grant of options detailed above, the Company has a total of 8,245,101,307 options outstanding representing approximately 80.5% of the Company's issued share capital.

Director Salary/Fee Waivers

The existing and continuing directors, detailed below, have for some time deferred the receipt of certain salaries and fees contractually owed to them in order to preserve the Company's cash resources.  These directors have agreed to waive the amounts owed as set out below:

Issue of Warrants

The Company has agreed to issue 205,714,286 warrants to Patronus Partners for services provided in connection with the CLN fundraise.  The 205,714,286 warrants give Patronus Partners the right to acquire such number of new Ordinary Shares at an exercise price of 0.035 pence and expire on 11 December 2024 ("Broker Warrants").  If the Broker Warrants were ultimately to be exercised in full, it would result in the issue of 205,714,286 new Ordinary Shares raising a further £72,000 for the development of the Company's business.

For further information please contact:

About DG Innovate 

DG Innovate is an advanced research and development company pioneering sustainable and environmentally considerate improvements to electric mobility and storage, using abundant materials and the best engineering and scientific practices. DG Innovate is currently developing its products alongside a number of major manufacturers across the transportation and energy sectors, research institutions and the UK Government, and has filed 18 patents worldwide. DG Innovate's current research and development activities are broadly split into two areas, focusing on novel electric motor technologies and energy storage solutions. Its two main products are: 

- Enhanced Drive Technology (EDT) - High efficiency, cost-effective electric motors + power electronics; and 

- Enhanced Battery Technology (EBT) - Sodium-ion batteries offering a sustainable energy storage solution at similar/greater energy density to incumbent technologies at a lower cost, increased safety with lower environmental footprint.  

Further information may be found at: https://www.dgiplc.com 

The information set out below is provided in accordance with the requirements of Regulation 19(3) of the EU Market Abuse Regulation No 596/2014: