THIS ANNOUNCEMENT, INCLUDING THE INFORMATION CONTAINED HEREIN, IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION. PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND SHALL NOT CONSTITUTE AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY NEW ORDINARY SHARES OF XEROS TECHNOLOGY GROUP PLC IN THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF THE MARKET ABUSE REGULATION EU NO. 596/2014, AS RETAINED AND APPLICABLE IN THE UK PURSUANT TO S3 OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

TERMS NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS GIVEN TO THEM IN THE COMPANY'S ANNOUNCEMENT RELEASED AT 07:00 A.M. 5 MARCH 2021.

Xeros Technology Group plc

("Xeros", the "Group" or the "Company")

Result of Oversubscribed Placing

and Proposed Open Offer

Xeros Technology Group plc (AIM: XSG), the developer and licensor of technologies which reduce the environmental impact and cost of clothing and fabrics, is pleased to announce that further to the Company's announcement released at approximately 07.00 a.m. this morning (the "Launch Announcement"), the Bookbuild has closed and the Company has conditionally raised gross proceeds of approximately £8.0 million, through the successful placing of 3,333,333 Placing Shares at the Issue Price of 240 pence per Ordinary Share.

The Placing Shares represent approximately 16.7 per cent. of the Company's Existing Ordinary Shares. The Issue Price represents a discount of approximately 1.23 per cent. to the closing price on the London Stock Exchange of 243 pence per Ordinary Share on 4 March 2021.

In addition to the Placing, the Company intends to provide all Qualifying Shareholders with the opportunity to subscribe for an aggregate of up to 416,586 Open Offer Shares at the Issue Price, to raise up to approximately £1.0 million (before expenses), on the basis of 1 Open Offer Share for every 48 Existing Ordinary Shares held on the Record Date. Qualifying Shareholders subscribing for their full entitlement under the Open Offer may also request additional Open Offer Shares through an excess application facility (the "Excess Application Facility").

The Placing and Open Offer are conditional upon, inter alia, the passing of the Resolutions at the General Meeting and upon the Placing Agreement becoming unconditional in all respects. The Placing is not conditional on the Open Offer proceeding or on any minimum take-up under the Open Offer.

General Meeting and Shareholder Approval

For the New Ordinary Shares to be admitted to trading on AIM, Shareholder approval is required:

a)            by way of ordinary resolution to give the Directors authority to allot the New Ordinary Shares; and

b)            by way of a special resolution to dis-apply statutory pre-emption rights in respect thereof.

The authorities referred to above are in addition to the Company's existing general shareholder authorities to allot Ordinary Shares for cash on a non-pre-emptive basis.

In order to obtain the necessary shareholder approval, a General Meeting is to be held at the offices of Squire Patton Boggs (UK) LLP at Premier Place, 2 & A Half Devonshire Square, London EC2M 4UJ at 10.00 a.m.  on 25 March 2021 at which the Resolutions will be proposed. A Circular containing a notice of General Meeting is expected to be sent to shareholders on 8 March 2021. The shareholder Circular and notice of General Meeting will be made available on the Company's website at www.xerostech.com.

Pursuant to the Stay at Home Order introduced by the UK Government on 6 January 2021 to manage the Covid-19 virus (coronavirus), public gatherings of more than two people and non-essential travel are currently prohibited. The Company will therefore convene the General Meeting with the minimum quorum of two shareholders necessary to conduct the meeting, and it is expected that the Company's Chairman, Klaas de Boer, and Mark Nichols (Chief Executive) will form the necessary quorum.  All other Shareholders must not seek to attend the General Meeting in person.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 Notes

Background to and reasons for the Fundraising

Following on from the successful independent evaluation of the efficacy of the XFiltra design in July 2020, the Company continues to develop the commercial opportunity for this proprietary microfibre filtration technology.  The Company is working with a leading product design consultancy to produce, in Q2 2021, a standardised product design which can be integrated into all domestic washing machines with a view to then running consumer field trials during 2021 with a number of OEMs with whom the Company is already in discussion. With successful field trials completed by the end of 2021, the Directors would anticipate being in a position to secure first commercial licensing revenues in a domestic application in 2023.

Commercialisation of the XFiltra represents an additional strategic development for Xeros, incremental to the Company's XDrum and XOrb related activities.  Given this, the Board intends to use approximately £2.5m of the Net Proceeds to action the commercialisation process, as envisaged above.  Funds will be deployed in employing additional technical capability to work with OEM partners, to further increase the patent portfolio around XFiltra and to extend its work on filtration standards with regulatory bodies in Europe to India, China and the United States, as well as significantly increasing the Company's marketing activity.

As previously reported, the continuing disruption of the COVID-19 pandemic has impacted the physical activities required for the Company's licensees to enter their markets with Xeros' technology in India and China. Progress has, however, been significant with XDrum machine designs now ready for full production with licensees planning to enter their markets over the next nine months. Ramsons, the Company's garment finishing partner, has already entered the garment finishing market in South Asia in late 2020. Market validation for the Company's technologies has also advanced significantly with an independent third party evaluation in India confirming the benefits case of the technology. With evidence of successful market entries, the Company plans to increase revenues further by entering into licenses with leading incumbents in additional geographies.

Whilst the Company's technology transfer activities have continued on a remote-working basis, the effect of COVID-19 has been to delay receipt of license income, as explained above, so whilst the Company has reduced the monthly rate of cash burn to its target of approximately £400,000 per month, in line with previously stated expectations, the Directors believe that further funding is needed to ensure that the Company is sufficiently capitalised to absorb the impact of these delays and any further COVID-19 related impacts.  Approximately £1.5m of the Net Proceeds will be deployed in this regard. The balance of the Net Proceeds will also serve to meet the expectations of the Company's current and prospective licensees, all of whom are large enterprises, to ensure the Company meets its medium-term contractual commitments.

Details of The Fundraising

The Company is undertaking the Fundraise to raise up to £9.0 million (before fees and expenses) from new and existing investors, through the Placing to raise £8.0 million plus the Open Offer to raise up to an additional £1.0 million.

The Issue Price represents a discount of approximately 1.23 per cent. from the Closing Price. It is anticipated the New Ordinary Shares will represent approximately 15.8 per cent. of the Enlarged Share Capital following Admission (assuming full take up under the Open Offer).

The New Ordinary Shares will be free of all liens, charges and encumbrances and will, when issued and fully paid, be identical to and rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all future distributions, declared, paid or made in respect of the Ordinary Shares following the date of Admission.

The Placing Agreement

In connection with the Placing, the Company has entered into the Placing Agreement pursuant to which finnCap has agreed, in accordance with its terms, to use reasonable endeavours to procure placees ("Placees") for the Placing Shares at the Issue Price. The Placing is not underwritten.

In accordance with the terms of the Placing Agreement, the Placing is conditional upon, amongst other things, the passing of the Resolutions, the conditions in the Placing Agreement being satisfied or (if applicable) waived and the Placing Agreement not having been terminated in accordance with its terms prior to Admission occurring on or before 26 March 2021 (or such later date as finnCap may agree).

The Placing Agreement contains certain warranties given by the Company in favour of finnCap concerning, amongst other things, the accuracy of information given in this Announcement and the Circular made by the Company in respect of the Placing as well as other matters relating to the Group and its business.

The Placing Agreement is terminable by finnCap in certain circumstances up until the time of Admission, including, inter alia, should there be a breach of a warranty contained in the Placing Agreement or a force majeure event takes place or a material adverse change occurs to the business of the Company or the Group. The Company has also agreed to indemnify finnCap against all losses, costs, charges and expenses which finnCap may suffer or incur as a result of, occasioned by or attributable to the carrying out of its duties under the Placing Agreement.

The Placing is not conditional on the Open Offer proceeding or on any minimum take-up under the Open Offer.

Admission of the New Ordinary Shares

Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. Subject, inter alia, to the passing of the Resolutions at the General Meeting it is expected that Admission will become effective in respect of, and that dealings on AIM will commence in, all of the New Ordinary Shares, on or around 26 March 2021.

It is expected that CREST ("CREST") accounts of the investors in the New Ordinary Shares who hold their Ordinary Shares in CREST will be credited with their New Ordinary Shares on 26 March 2021. In the case of investors in the New Ordinary Shares holding their Ordinary Shares in certificated form, it is expected that certificates will be dispatched by 9 April 2021. Pending dispatch of the share certificates or the crediting of CREST accounts, the Registrar ("Registrar") will certify any instruments of transfer against the register.

Open Offer

In order to provide all Qualifying Shareholders with an opportunity to participate, the Company is intending to conduct an Open Offer to provide those shareholders the opportunity to subscribe at the Issue Price for an aggregate of 416,586 Open Offer Shares. This will allow Qualifying Shareholders to participate on a pre-emptive basis whilst providing the Company with the flexibility to raise additional equity capital to further improve its financial position.

Qualifying Shareholders will also be offered the opportunity to apply for additional Open Offer Shares in excess of their pro rata entitlements to the extent that other Qualifying Shareholders do not take up their entitlements in full. In the event applications exceed the maximum number of Open Offer Shares available, the Company will decide on the basis for allocation, however if this scenario occurs, preference is likely to be given to Qualifying Shareholders with smaller shareholdings (who historically may have had less opportunity to participate in placings conducted by the Company). The Open Offer Shares will not be placed subject to clawback nor will they be underwritten. Consequently, there may be fewer than 416,586 Open Offer Shares issued pursuant to the Open Offer.

The Open Offer is conditional upon, inter alia, the approval of Shareholders of the Resolutions at the General Meeting and upon the Placing Agreement becoming unconditional in all respects.

Application will be made to the London Stock Exchange for admission of the Open Offer Shares to trading on AIM. Admission of the Open Offer Shares is expected to take place, and dealings on AIM are expected to commence, at 8.00 a.m. on 26 March 2021.

Open Offer Entitlement

On, and subject to the terms and conditions of the Open Offer, the Company invites Qualifying Shareholders to apply for their Open Offer Entitlement of Open Offer Shares at the Issue Price. Each Qualifying Shareholder's Open Offer Entitlement has been calculated on the following basis:

1 Open Offer Share for every 48 Existing Ordinary Shares held at the Record Date

Open Offer Entitlements will be rounded down to the nearest whole number of Ordinary Shares.

Excess Application Facility

Qualifying Shareholders are also invited to apply for additional Open Offer Shares (up to the total number of Open Offer Shares available to Qualifying Shareholders under the Open Offer) pursuant to an Excess Application Facility. Any Open Offer Shares not issued to a Qualifying Shareholder pursuant to their Open Offer Entitlement will be apportioned between those Qualifying Shareholders who have applied under the Excess Application Facility at the sole discretion of the Board, provided that no Qualifying Shareholder shall be required to subscribe for more Open Offer Shares than he or she has specified on the Application Form or through CREST.

The Open Offer Shares will, when issued and fully paid, rank pari passu in all respects with the Ordinary Shares in issue at that time, including the right to receive all dividends and other distributions declared, made or paid after the date of Second Admission.

Qualifying Shareholders should note that the Open Offer is not a ''rights issue''. Invitations to apply under the Open Offer are not transferable unless to satisfy bona fide market claims. Qualifying non-CREST Shareholders should be aware that the Application Form is not a negotiable document and cannot be traded. Qualifying Shareholders should also be aware that in the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for will not be sold in the market nor will they be placed for the benefit of Qualifying Shareholders who do not apply for Open Offer Shares under the Open Offer.

Settlement and dealings

Application will be made to the London Stock Exchange for admission of the Open Offer Shares. It is expected that Admission will become effective and that dealings will commence at 8.00 a.m. on 26 March 2021.

Overseas Shareholders

The Open Offer Shares have not been and are not intended to be registered or qualified for sale in any jurisdiction other than the United Kingdom. Accordingly, unless otherwise determined by the Company and effected by the Company in a lawful manner, the Application Form will not be sent to Shareholders with registered addresses in any jurisdiction other than the United Kingdom since to do so would require compliance with the relevant securities laws of that jurisdiction. The Company reserves the right to treat as invalid any application or purported application for Open Offer Shares which appears to the Company or its agents or professional advisers to have been executed, effected or despatched in a manner which may involve a breach of the laws or regulations of any jurisdiction or if the Company or its agents or professional advisers believe that the same may violate applicable legal or regulatory requirements or if it provides an address for delivery of share certificates for Open Offer Shares, or in the case of a credit of Open Offer Shares in CREST, to a CREST member whose registered address would not be in the UK.

Notwithstanding the foregoing and any other provision of the Circular or the Application Form, the Company reserves the right to permit any Qualifying Shareholder to apply for Open Offer Shares if the Company, in its sole and absolute discretion, is satisfied that the transaction in question is exempt from, or not subject to, the legislation or regulations giving rise to the restrictions in question.

This Announcement and the Circular together with the accompanying Application Form, in the case of Qualifying non-CREST Shareholders, contains the terms and conditions of the Open Offer.

If a Qualifying Shareholder does not wish to apply for Open Offer Shares he should not complete or return the Application Form or send a USE message through CREST.

 Qualifying non-CREST Shareholders

If you are a Qualifying non-CREST Shareholder you will receive an Application Form which gives details of your Open Offer Entitlement (as shown by the number of the Open Offer Shares allocated to you). If you wish to apply for Open Offer Shares under the Open Offer you should complete the Application Form in accordance with the procedure for application set out in the Circular and on the Application Form itself. The completed Application Form, accompanied by full payment, should be returned by post to Neville Registrars Limited, Neville House, Steelpark Road, Halesowen B62 8HD, so as to arrive as soon as possible and in any event no later than 11.00 a.m. on 23 March 2021.

Qualifying CREST Shareholders

Application will be made for the Open Offer Shares of Qualifying CREST Shareholders to be admitted to CREST. It is expected that the Open Offer Shares will be admitted to CREST on 26 March 2021. Applications through the CREST system may only be made by the Qualifying CREST Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim. If you are a Qualifying CREST Shareholder, no Application Form will be sent to you but you will receive credits to your appropriate stock account in CREST in respect of your Open Offer Entitlements. You should refer to the procedure for application set out in the Circular. The relevant CREST instruction must have settled by no later than 11.00 a.m. on 23 March 2021.

Action to be taken

Open Offer

Qualifying non-CREST Shareholders wishing to apply for Open Offer Shares must complete the Application Form in accordance with the instructions set out in the Circular (Terms and Conditions of the Open Offer) and on the Application Form and return it with the appropriate payment to Neville Registrars Limited, at Neville House, Steelpark Road, Halesowen B62 8HD, so as to arrive no later than 11.00 a.m. on 23 March 2021.

If you do not wish to apply for any Open Offer Shares under the Open Offer, you should not complete or return the Application Form. If you are a Qualifying CREST Shareholder, no Application Form will be sent to you. Qualifying CREST Shareholders will have Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to their stock accounts in CREST. You should refer to the procedure for application set out in the Circular (Terms and Conditions of the Open Offer). The relevant CREST instructions must have settled in accordance with the instructions in the Circular by no later than 11.00 a.m. on 23 March 2021.

Qualifying CREST Shareholders who are CREST sponsored members should refer to their CREST sponsors regarding the action to be taken in connection with this Announcement, the Circular and the Open Offer.

Related Party Transactions

Entrepreneurs Fund L.P.,  a Related Party (as defined by the AIM Rules), will be participating in the Placing as follows:

The participation of Entrepreneurs Fund in the Placing constitutes a related party transaction under the AIM Rules, by virtue of Entrepreneurs Fund (and its affiliates) being classified as significant shareholders in the Company.

The Directors (excluding Klaas de Boer) consider, having consulted with finnCap (as the Company's nominated adviser), that the terms of the participation in the Placing by Entrepreneurs Fund are fair and reasonable insofar as the Company's Shareholders are concerned.

Posting of Circular

The Company will post a Circular to Shareholders on 8 March 2021, containing a Notice of General Meeting, proxy form and full details of the Open Offer including the Open Offer application form. The Circular will also be available on the Company's website at www.xerostech.com.

Recommendation

The Directors consider the Resolutions being proposed at the General Meeting to be in the best interests of the Company and the Shareholders as a whole. Consequently, the Directors are recommending in the Circular that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting, as they intend to do in respect of the 462,482 Existing Ordinary Shares held, directly or indirectly, by them representing approximately 2.3 per cent. of the total voting rights of the Company.

Enquiries:

Notes for editors:

Forward-Looking Statements

This announcement contains forward-looking statements. These statements relate to the Group's future prospects, developments and business strategies. Forward-looking statements are identified by their use of terms and phrases such as "potential", "estimate", "expect", "may", "will" or the negative of such terms and phrases, variations or comparable expressions, including references to assumptions. The forward-looking statements in this announcement are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. These forward-looking statements speak only as at the date of this announcement. No statement in this announcement is intended to constitute a profit forecast or profit estimate for any period. Neither the Directors nor the Company undertake any obligation to update forward-looking statements other than as required by the AIM Rules or by the rules of any other securities regulatory authority, whether as a result of new information, future events or otherwise.

Market Abuse Regulation

Market soundings, as defined in MAR, were taken in respect of the Placing, with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.