Rex Bionics : Proposed Fundraising and Notice of General Meeting

Rex Bionics Plc

('Rex Bionics' or the 'Company')

Proposed Fundraising and Notice of General Meeting

· £2.3 million (gross) fundraising to sustain commercial momentum during strategic re-positioning and review of further funding opportunities

· Strategic re-positioning, emphasising the unique benefits of REX for patients with the most severe spinal cord injury and rehabilitation-resistant stroke

· RAPPER II clinical trial enrolment reaches 50 patients, with positive results maintained

· New agreement signed with Dubai-based Amana Healthcare to provide Robot Assisted Physiotherapy with REX in the United Arab Emirates

29 June 2016: Rex Bionics plc (AIM: RXB), the pioneer of the REX Robot technology that enhances the mobility of wheelchair users, today announces a proposed Subscription of 7,683,333 New Ordinary Shares by certain new and existing investors at a price of 30 pence per Subscription Share to raise £2.3 million (before expenses), conditional upon Shareholder approval. Subscribers will also receive Warrants to subscribe for New Ordinary Shares at the Subscription Price on or before 30 June 2017 on the basis of one Warrant for each Subscription Share, giving the potential for the Company to receive additional funds of up to £2.3 million (gross) if the Warrants are exercised in full.

The Board has recently completed a strategic review on commercialisation progress and capital availability. The Board concluded that, while it took longer than expected to achieve first commercial revenues, the market opportunity remains significant, that the RAPPER II data shows that the REX product is safe and effective, and that there are many wheelchair users for whom REX is the only viable option for the achievement of an improvement in health and fitness for work and for recreation. The Board has therefore concluded that the Company should adopt a strategic positioning that more explicitly promotes REX's unique potential for patients with the most severe neurological injuries (typically people with quadriplegia and people who have experienced a stroke that has proved resistant to rehabilitation).

The Board also concluded that the capital required by the Company appears unlikely to be readily available from new public market portfolio investors at this time and therefore that would be appropriate to evaluate alternative opportunities with a view to maximising value for the Company's shareholders and to build on the Company's successes to date. Accordingly, the Company has begun to evaluate potential future strategic options, including seeking alternative sources of funding, strategic partnerships or other transactions. The investment by a regional distribution partner of the Company in the Subscription is an example of this new approach.

The Subscription provides the resources to explore the options available, to build on Rex's successes to date and to help realise the potential of the technology.

The Subscription is conditional, inter alia, on the approval by Shareholders at a general meeting to be held at 11.00 a.m. on 19 July 2015 at the offices of Simmons & Simmons, CityPoint, 1 Ropemaker Street, London EC2Y 9SS (the 'General Meeting') and on the Admission of the Subscription Shares to trading on AIM.

The Circular to Shareholders, including a notice convening the General Meeting, will be dispatched today and will also be available on the Company's website atwww.rexbionics.com/.

The Company also announces that momentum in the RAPPER II clinical trial has been maintained. 50 patients have now been recruited and a second interim analysis is scheduled for presentation at the 2016 meeting of the Military Health System Research Symposium (15 - 18 August) in Orlando FL and at the American College of Rehabilitation Medicine's 93rd Annual Conference (30 October - 4 November 2016) in Chicago, Illinois, USA. The first interim analysis has been well-received at a number of conferences and a preliminary view of the second interim analysis is that the positive results of the first have been sustained.

The Company is also pleased to announce the signing of an agreement with the Dubai-based neuro-rehabilitation clinic Amana Healthcare to provide Robot Assisted Physiotherapy with REX in the United Arab Emirates. Commenting on the new agreement, Mr. Mark E. McGourty, Chief Executive Officer of Amana Healthcare, said 'We are delighted that patients in the United Arab Emirates now have access to a world class in-patient rehabilitation service using REX technology and no longer need to travel abroad to obtain the care they need. Intensive in-patient rehabilitation improves recovery rates, restores independence and gets patients back to work or home with fewer complications than either acute or outpatient treatment.'

Commenting on the announcement Crispin Simon, Chief Executive, said, 'We greatly appreciate the support of the investors who have participated in this funding round. We continue to believe in the value of REX for the treatment of people living with severe neurological damage and we are taking the evidence from RAPPER II to the people who can make it happen.

'We are also very pleased to announce our new collaboration with Amana Healthcare, which increases REX's international coverage and represents a base from which to expand the Company's activities in the Gulf'.

For further information please contact:

Rex Bionics Plc

Crispin Simon, Chief Executive Officer

+44 (0) 781 086 6386

Peter Worrall, Chief Financial Officer

+44 (0)1428 645416

Stifel Nicolaus Europe Limited (NOMAD and Broker)

Jonathan Senior/ Stewart Wallace / Ben Maddison

+44 (0) 20 7710 7600

Consilium Strategic Communications

Mary-Jane Elliott / Chris Welsh

rexbionics@consilium-comms.com

+44 (0) 203 709 5700

Additional Information on the Fundraising

1. Introduction

Rex Bionics has today announced the following:

· strategic re-positioning emphasising the unique benefits of REX for patients with the most severe spinal cord injury and rehabilitation-resistant stroke;

· approximately £2.3 million conditional fundraising before expenses to sustain commercial momentum during strategic re-positioning; and

· RAPPER II clinical trial reaches 50 patients with positive results maintained.

2. Strategic update and outlook

The Board has recently completed a strategic review on commercialisation progress and capital availability. The Board concluded that, while it took longer than expected to achieve first commercial revenues, the market opportunity remains significant, that the RAPPER II data shows that the REX product is safe and effective and that there are many wheelchair users for whom REX is the only viable option for the achievement of an improvement in health and fitness for work and for recreation. The Board has therefore concluded that the Company should adopt a strategic positioning that more explicitly promotes REX's unique potential for patients with the most severe neurological injuries (typically people with quadriplegia and people who have experienced a stroke that has proved resistant to rehabilitation).

The Board also concluded that the capital required by the Company appears unlikely to be readily available from new public market portfolio investors at this time and therefore it is appropriate to evaluate alternative opportunities with a view to maximising value for the shareholders and to build on the successes to date. Accordingly, the Company has begun to evaluate potential future strategic options, including seeking alternative sources of funding, strategic partnerships or other transactions. The investment by a regional distribution partner of the Company in the Subscription is an example of this new approach.

The Subscription provides the resources to explore the options available, to build on Rex's successes to date and to help realise the potential of the technology.

3. Reasons for the Subscription and use of proceeds

Rex Bionics has today announced a proposed Subscription of 7,683,333 Subscription Shares at a price of 30 pence per Subscription Share to raise approximately £2.3 million (before expenses). The issue of the Subscription Shares will be conditional on the passing of Resolutions 1 and 2 at the General Meeting.

The Subscription Shares will represent 30.1 per cent. of the Enlarged Share Capital. The Company will also issue Warrants to the Subscribers on the basis of one Warrant for every Subscription Share. If each of the Subscribers exercises all of the Warrants issued to it by the Company and the US Distributor exercises its US Distributor Warrants, before any Further Fundraising, the Subscription Shares and the Ordinary Shares issued pursuant to the exercise of the Warrants and the US Distributor Warrants will represent 47.6 per cent. of the Enlarged Share Capital (including Warrants and US Distributor Warrants).

Approval of the necessary Resolutions for the issue and allotment of the Subscription Shares and for the issue of Warrants and the US Distributor Warrants will be sought at the General Meeting convened for 11.00 a.m. on 19 July 2016, the notice of which is set out in this document.

The Company's unaudited available cash reserves at 31 May 2016 were £1.14 million, reduced from the last reported cash position of £3.70 million as at 30 September 2015. The Directors believe that the amount raised by the Subscription, taken together with current cash reserves, will, enable the Company to make progress towards the achievement of the strategy highlighted in Paragraph 2above.

4. Progress since the Company's previous fundraising

Since the last trading update on 16 March 2016, the Company has continued to implement its three strategic priorities (commercialisation, data and operations):

Commercialisation

As announced in the trading update, a total of three REX units were shipped in the six month period to 30 September 2015 and a further four units were shipped in the six-month period to 31 March 2016. The full year sales mix comprised three units sold in Asia, two in the US and one each in the UK and Australia. A further one unit has been shipped since 31 March 2016.

Strategic commercialisation achievements include the appointment of EnableMe (formerly Ri Medical, a specialised distributor of neuro-rehabilitation products) as the Company's exclusive distributor for the US market. EnableMe brings extensive knowledge of the US neuro-rehabilitation market and a sales team with broad geographic coverage throughout the US.

2016 also saw the first successful personal injury claim in the UK to include the award of costs for the claimant to purchase and maintain a REX and its replacements. This development underlines the Directors' belief that personal injury claims represent a significant potential source of revenues for the Company.

The Company also signed an agreement with the US Army to collaborate on a program of design modifications to the REX robotic mobility aid that will allow its use in the early ambulation of patients with lower limb loss. If successful, this would mark the first use of REX in an acute care setting as opposed to a rehabilitation therapy setting.

In addition, several other initiatives within our commercialisation strategy have attracted publicity, highlighting the considerable public interest in this new class of technology:

· The Australian Institute of Neuro-rehabilitation clinic in Newcastle, New South Wales, Australia has acquired a REX, largely funded by a local charity. We envisage that charitable donations and not-for-profit organisations could become an important contributor to the adoption of REX.

· The Company has signed an agreement with the Dubai neuro-rehabilitation clinic, Amana Healthcare, to provide Robot-Assisted Physiotherapy with REX in the United Arab Emirates, representing a base from which to expand our activities in the Gulf. A loan REX has been shipped, representing the first revenues of the Company's new financial year and training has been successfully completed.

· On 21 May 2016, the Company loaned a REX to a father from Derby, UK, to enable him to walk his daughter up the aisle at her wedding, illustrating the psycho-social benefits of REX and resulting in media coverage across the globe.

Based on customer requests for quotations following demonstrations, primarily in the US, the Directors believe that sales momentum is now beginning to build and that, if obtained, the achievement of regulatory approvals for REX in China and for home use in the US will, if the Company completes the Subscription and subsequently raises further funding, provide impetus to the Company's sales and marketing efforts by allowing it to target much larger potential customer populations. The Board has focused on market development in the US and China and the Company has a number of quotes outstanding in the US that the Board anticipates converting to sales in the first half of the Company's fiscal year, ending 30 September 2016.

Data

Momentum has been maintained in the RAPPER II clinical trial, with 50 patients now recruited and a second interim analysis now scheduled for presentation at the 2016 meeting of the Military Health System Research Symposium (15 - 18 August 2016) in Orlando, Florida, US and at the American College of Rehabilitation Medicine's 93rd Annual Conference (30 October - 4 November 2016) in Chicago, Illinois, US.

The first interim analysis has been well received at a number of conferences, including the European Congress of Neurorehabilitation, Vienna, Austria (December 2015) and the World Congress of Neurorehabilitation, Philadelphia, Pennsylvania, US (May 2016). Invitations to present at these important conferences are a valuable endorsement of the quality of the trial and the REX technology. A preliminary view of the second interim analysis is that the positive results of the first have been sustained.

Operations

The Company has continued to implement product and process improvements in the Auckland, New Zealand manufacturing facility which is now certified to ISO 13485:2003 and ISO 9001:2008 standards, confirming the compliance of the Company's quality management systems with international regulatory requirements for medical devices.

The Auckland development team has also delivered two important product enhancements. The first is a software upgrade that provides physiotherapists with a set of repeatable exercises that they can offer to their patients by putting the REX into RAPPER mode. This upgrade is in a phased global roll-out and the early customer feedback indicates that it will materially assist sales efforts. The second product enhancement is a reporting package that allows physiotherapists and patients to monitor their REX exercise performance in each session and over time.

These developments give the Company and its Directors, if the current funding round is completed and subsequently further funds are raised, continued confidence in the commercial viability of REX and the prospects for its long-term success.

5. Further details about the Subscription

Rex Bionicshas raised, in aggregate, approximately £2.3 million (before expenses) by way of the Subscription from the Subscribers for 7,683,333 Subscription Shares at the Issue Price. The Subscription is conditional upon Shareholder approval of Resolutions 1 and 2 at the General Meeting. Subscription Shares will represent approximately 30.1 per cent. of the Enlarged Share Capital. The Issue Price represents a discount to the closing mid-market price of 7.7 per cent. per Ordinary Share as at 28 June 2016, the latest practicable date before the announcement of the Subscription.

The Resolutions therefore seek, among other matters, authority to allot non pre-emptively the maximum number of Subscription Shares to be issued.

The Subscription is not underwritten and Stifel is not acting for the Company, or any other person, in relation to the Subscription.

Conditions, Admission and Registration

The Subscription is conditional, among other matters, on:

· The passing (without amendment) of Resolutions 1 and 2 at the General Meeting and them becoming unconditional;

· The conditions of each of the Subscription Agreements being satisfied or (if applicable) waived (other than any condition relating to Admission) and each of the Subscription Agreements not having been terminated in accordance with their terms before Admission; and

· Admission becoming effective by no later than 8.00 a.m. on 20 July 2016 (or such later time and/or date as the Company and the Subscribers may agree)

It is expected that the Subscription Shares will be registered in the names of each of the Subscribers and issued either: (a) in certificated form, with the relevant share certificate expected to be despatched by first class post, at the applicant's risk no later than 25 July 2016; or (b) in CREST where an applicant who is a 'system member' (as defined in the CREST Regulations) in relation to CREST has so elected in which case delivery (to the designated CREST account) of the Subscription Shares is expected to take place on 20 July 2016, unless the Company exercises its right to issue such Subscription Shares in certificated form.

No temporary documents of title will be issued. Pending the despatch of definitive share certificates, instruments of transfer will be certified against the register of members of the Company.

The Subscription Shares will, when issued and fully paid, rank pari passuin all respects with the Existing Ordinary Shares, including the right to receive, in full, all dividends and other distributions thereafter declared, made or paid after the date of issue together with all rights attaching to them and free from all liens, charges and encumbrances of any kind.

Application will be made to the London Stock Exchange for the Subscription Shares to be admitted to trading on AIM. On the assumption that, among other matters, the Resolutions are passed and the Subscription Agreements become unconditional, it is expected that Admission will become effective and that dealings in the Subscription Shares will commence on 20July 2016.

6. Further details about the Warrants

Conditional on the passing of the Resolutions, Warrants will be issued to the Subscribers on the basis of one Warrant for every Subscription Share. The terms and conditions applying to the Warrants will be contained in the instrument to be entered into by the Company by way of deed poll at the board meeting following the General Meeting. The Warrants will be exercisable at any time between 1 August 2016 and 30 June 2017 (the 'Exercise Period') and will thereafter lapse. The exercise price will be the Issue Price or if there is a Further Fundraising by the Company during the Exercise Period, the exercise price of the Warrants will be reset to a price equal to the issue price of any Further Fundraising, subject to any adjustments if applicable (including a minimum exercise price per Ordinary Share of 15p).

If during the period of the Warrants, there is (i) any consolidation or sub-division of Ordinary Shares; (ii) any allotment or issue of Ordinary Shares (or instruments or rights convertible into Ordinary Shares) by way of capitalisation of profits or reserves (including share premium account and any capital redemption reserves); (iii) any payment of capital distribution, (iv) any reduction in capital or the number of Ordinary Shares, or (v) any rights issue, open offer or other pre-emptive offer or invitation to subscribe for new Ordinary Shares or for securities which can be converted into or exchanged for Ordinary Shares or conferring the rights to subscribe for Ordinary Shares to holders of Ordinary Shares (which, in any such case, is at a price per share which is less than 90 per cent. of the closing price per Ordinary Share on the trading day immediately before the announcement of such issue, offer or invitation), then the number and/or nominal value of Ordinary Shares which are the subject of the Warrant will be adjusted so as to maintain the same relative subscription rights.

The Warrants will be transferable but no application is being made for the Warrants to be admitted to trading on AIM.

A copy of the final form of the warrant instrument to be entered into by the Company may be inspected at the registered office of the Company during normal business hours of any day (Saturday, Sunday and public holidays excepted) until the date of the General Meeting.

7. US Distribution Agreement

Pursuant to the US Distribution Agreement, the Company appointed the US Distributor as its exclusive distributor for the promotion and sale of the REX products, as permitted, in the US. As a part of the US Distribution Agreement, the Company agreed that the US Distributor would become entitled to US Distributor Warrants carrying the right to subscribe for up to 212,500 Ordinary Shares on the completion of its first unit sale to one of a certain list of specified customers in the US and up to an aggregate of 850,000 Ordinary Shares in total on the completion of 100 unit sales to customers in the US, with intermediary thresholds in between. The subscription price for each tranche of the US Distributor Warrants will equal 75% of the average middle market price at which the Ordinary Shares have been traded for the ten trading days immediately before the date the relevant threshold sale has been completed to the satisfaction of the Company. The US Distributor Warrants will vest on issue and will expire if not exercised within seven years from September 2018.

Shareholders will be asked to approve Resolutions 3 and 4 at the General Meeting which will authorise the Directors to grant the US Distributor Warrants to the US Distributor on the terms of the US Distribution Agreement.

8. Further Fundraising

Resolutions 5 and 6 are being proposed at the General Meeting as the Company is seeking approval for (i) authority to issue and (ii) the disapplication of pre-emption rights over Ordinary Shares with an aggregate nominal amount of £1,250,000. If obtained, these authorities will allow the Company greater flexibility and access to a wider pool of potential investors in seeking a Further Fundraising, particularly in the US, where the Board believes investors are typically reluctant to make an investment decision where completion of such investment is delayed for a period of time by the need to obtain shareholder approval.

9. General Meeting

A General Meeting of the Company is being convened for 11.00 a.m. on 19 July 2016 at which the Resolutions as summarised below will be submitted to Shareholders for approval, of which Resolutions 1, 3 and 5 will be proposed as ordinary resolutions and Resolutions 2, 4 and 6will be proposed as special resolutions.

Resolution 1: THAT the Board is generally and unconditionally authorised in accordance with section 551 of the Act to exercise all powers of the Company to allot shares in the Company and grant rights to subscribe for or convert any security into shares in the Companyprovided such authority is limited to:

(a) Ordinary Shares with an aggregate nominal amount of £768,333.30 pursuant to the Subscription;

(b) Warrants with an aggregate nominal amount of £768,333.30; and

(c) otherwise than pursuant to paragraphs (a) and(b)above, or pursuant to Resolution 3 (if passed), up to a maximum aggregate nominal amount of £765,500,

such authority to expire on 30 September 2017.

Resolution 2: THAT, subject to and conditional on the passing of Resolution 1, the Board areempowered, pursuant to section 570 of the Act, to allot equity securities (within the meaning of section 560(1) of the Act) for cash pursuant to the authority conferred by Resolution 1as if section 561(1) of the Act did not apply to any such allotment, provided that such power is limited to:

(a) Ordinary Shares with an aggregate nominal amount of £768,333.30 pursuant to the Subscription;

(b) Warrants with an aggregate nominal amount of £768,333.30;and

(c) otherwise than pursuant to paragraphs (a) and (b) above,or pursuant to Resolution 4 (if passed)up to a maximum aggregate nominal amount of £765,500,

and expires on 30 September 2017.

Resolution 3: THAT the Board is generally and unconditionally authorised in accordance with section 551 of the Act to exercise all powers of the Company to allot shares in the Company and grant rights to subscribe for or convert any security into shares in the Company up to a maximum aggregate nominal amount of £85,000 in relation to theissue of the US DistributorWarrants, such authority to expire on 30 June 2021.

Resolution 4: THAT subject to and conditional on the passing of Resolution 3, the Board isempowered, pursuant to section 570 of the Act, to allot equity securities (within the meaning of section 560(1) of the Act) for cash pursuant to the authority conferred by Resolution 3as if section 561(1) of the Act did not apply to any such allotment provided that this power is limited to an aggregate nominal amountof £85,000 in relationto the issueof the US Distributor Warrants and expires on 30 June 2021.

Resolution 5: THAT the Board is generally and unconditionally authorised in accordance with section 551 of the Act to exercise all powers of the Company to allot shares in the Company and grant rights to subscribe for or convert any security into shares in the Companyprovided such authority is limited to Ordinary Shares with an aggregate nominal amount of £1,250,000 pursuant to a Further Fundraisingand such authority to expire on 30 September 2017.

Resolution 6: THAT, subject to and conditional on the passing of Resolution 5, the Board areempowered, pursuant to section 570 of the Act, to allot equity securities (within the meaning of section 560(1) of the Act) for cash pursuant to the authority conferred by Resolution 5as if section 561(1) of the Act did not apply to any such allotment, provided that such power is limited to Ordinary Shares with an aggregate nominal amount of £1,250,000 pursuant to a Further Fundraising and expires on 30 September 2017.

10. Importance of the vote

Shareholders' attention is being drawn to the fact the Subscription is conditional and dependent on Resolutions 1 and 2 being passed by Shareholders at the General Meeting. Shareholders are asked to vote in favour of Resolutions 1 and 2 in order for the Subscription to proceed.

If the Subscription does proceed, the Board's view is that the Company's available cash reserves will extend into the second quarter of 2017.The Board anticipates obtainingadditional funding from Shareholders, including from the exercise of the Warrants, although no legally binding commitments have been received, and will additionally seek investment from other parties.

Shareholders should also be aware that if they do approve the Subscription but additional financing does not become available to the Company by the end of January 2017, the Company may be forced to cease trading, in which case Shareholders could lose their entire equity investment.

If Shareholders do not approve the Subscriptionat the General Meeting, the Board considers that the Company would become unable to pay its debts as they fall due and will be forced to cease operating with immediate effect, in which case, Shareholders would lose their entire equity investment.

11. Related Party Transactions

The participation of One Funds Management Limited, as trustee for the Asia Pacific Healthcare Fund II ('Asia Pacific'), Hunter Hall Investment Management Limited ('Hunter Hall') and Paul Matthews in the Subscription, who are substantial shareholders (the 'Substantial Shareholders') of the Company, will constitute related party transactions under the AIM Rules. The number and percentage of Existing Ordinary Shares currently held, and the percentage of the Enlarged Share Capital and the percentage of Existing Ordinary Shares (as at Admission and before the exercise of any Warrants) which will be held by each of the Substantial Shareholders if the Subscription is approved and proceeds, are shown in the table below.

The Directors consider, having consulted the Company's nominated adviser, Stifel, that the terms on which Asia Pacific, Hunter Hall and Paul Matthews are subscribing for Subscription Shares and are being issued Warrants are fair and reasonable insofar as the Company's Shareholders are concerned.

12. Recommendations and irrevocable undertakings

The Board considers that the Subscription and the issue of Warrants, US Distributor Warrants and the shareholder authorities sought pursuant to Resolutions 5 and 6 are in the best interests of the Company and its Shareholders as a whole and that the terms are fair and reasonable. Accordingly, the Board is unanimously recommending that Shareholders vote in favour of the Resolutions as they have irrevocably undertaken to do in respect of their own legal and beneficial shareholdings amounting in aggregate to 1,014,584 Existing Ordinary Shares, representing 5.7 per cent. of the Existing Ordinary Shares currently in issue.

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