THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this Document, you should consult your stockbroker, bank manager, solicitor, accountant or other independent professional adviser who specialises in advising on the acquisition of shares and other securities and is duly authorised under the Financial Services and Markets Act 2000 (as amended) (“FSMA”), if you are resident in the UK, or if you are not resident in the UK, from another authorized independent adviser. Application has been made for the entire issued and to be issued ordinary share capital of the Company to be admitted to trading on AIM, a market operated by the Stock Exchange. It is expected that Admission will become effective, and dealings in the Ordinary Shares will commence on 29 December 2020. The Ordinary Shares are not dealt on any other recognised investment exchange and no application has been or is being made for the Ordinary Shares to be admitted to any such exchange. AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to larger or more established companies. AIM securities are not admitted to the Official List of the UK Listing Authority. A prospective investor should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with an independent financial adviser. Each AIM company is required, pursuant to the AIM Rules published by the London Stock Exchange, to have a nominated adviser. The nominated adviser is required to make a declaration to the London Stock Exchange on Admission in the form set out in Schedule Two to the AIM Rules for Nominated Advisers. Neither the UK Listing Authority nor the London Stock Exchange has itself examined or approved the contents of this Document. Prospective investors should read the whole text of this Document and should be aware that an investment in the Company is speculative and involves a high degree of risk and prospective investors should carefully consider the section entitled “Risk Factors” set out in Part III of this Document. All statements regarding the Company’s current and the Enlarged Group’s proposed business, financial position and prospects should be viewed in light of these risk factors. This Document, which is drawn up as an AIM admission document in accordance with the AIM Rules, has been issued in connection with the application for admission to trading on AIM of the entire issued and to be issued ordinary share capital of the Company. This Document does not constitute an offer to the public requiring an approved prospectus under section 85 of FSMA and, accordingly, this Document does not constitute a prospectus for the purposes of FSMA and the Prospectus Rules and has not been pre-approved by the FCA pursuant to section 85 of FSMA. Copies of this Document will be available free of charge to the public during normal business hours on any day (Saturdays, Sundays and public holidays excepted) at the offices of Arden Partners plc at 125 Old Broad Street, London, EC2N 1AR and the registered office of the Company, from the date of this Document until one month from the date of Admission in accordance with the AIM Rules. A copy of this Document will also be available from the Company’s website at www.melodyvr.group. The Directors, whose names appear on page 8 of this Document, and the Company accept responsibility, both individually and collectively, for the information contained in this Document and for compliance with the AIM Rules for Companies. To the best of the knowledge and belief of the Company and the Directors (having taken all reasonable care to ensure that such is the case), the information contained in this Document is in accordance with the facts and does not omit anything likely to affect the import of such information.

MelodyVR Group PLC (a company incorporated in England and Wales under the Companies Act 2006 with company number 05628362) Conditional Acquisition of Rhapsody International, Inc.

Subscription of 201,349,772 Subscription Shares at 3.75 pence per Ordinary Share, Re-admission of the Enlarged Share Capital to trading on AIM and Notice of General Meeting

Nominated Adviser and Broker

The Subscription is conditional, inter alia, on Admission taking place by 8.00 a.m. on 29 December 2020 (or such later date as the Company and Arden may agree, being not later than 30 December 2020). The New Ordinary Shares and the Existing Ordinary Shares will, upon Admission, rank pari passu in all respects and will rank in full for all dividends and other distributions declared paid or made in respect of the Ordinary Shares after Admission. It is emphasised that no application is being made for the Enlarged Ordinary Share Capital to be admitted to the Official List or to any other recognised investment exchange. Arden, which is authorised and regulated in the United Kingdom by the FCA, is acting as nominated adviser and broker to the Company in connection with the Subscription, Acquisition and Admission. Its responsibilities as the Company’s nominated adviser under the AIM Rules for Nominated Advisers are owed solely to the London Stock Exchange and are not owed to the Company or to any Director or to any other person in respect of his decision to acquire shares in the Company in reliance on any part of this Document. Arden will not be offering advice and will not otherwise be responsible to anyone other than the Company for providing the protections afforded to clients of Arden or for providing advice in relation to the contents of this Document or any other matter or any transaction or arrangement referred to in this Document. Without limiting the statutory rights of any person to whom this Document is issued, no representation or warranty, express or implied, is made by Arden as to the contents of this Document. Apart from the responsibilities and liabilities, if any, which may be imposed on Arden by FSMA or the regulatory regime established thereunder, no liability whatsoever is accepted by Arden for the accuracy of any information or opinions contained in this Document, for which the Directors are solely responsible, or for the omission of any information from this Document for which it is not responsible. Notice convening a General Meeting of the Company to be held virtually on 24 December 2020 at 10.00 a.m. is set out at the end of this document. A Form of Proxy accompanies this document. To be valid, the Form of Proxy accompanying this document must be completed and returned so as to be received at the offices of the Company’s registrars, Neville Registrars Limited at Neville House, Steelpark Road, Halesowen, West Midlands B62 8HD not later than 10.00 a.m. on 22 December 2020. In accordance with the AIM Rules for Nominated Advisers, Arden has confirmed to the London Stock Exchange that it has satisfied itself that the Directors have received advice and guidance as to the nature of their responsibilities and obligations to ensure compliance by the Company with the AIM Rules and that, in its opinion and to the best of its knowledge and belief, all relevant requirements of the AIM Rules have been complied with. This Document does not constitute an offer to sell or an invitation to subscribe for, or solicitation of an offer to subscribe for or buy, shares to any person in any jurisdiction to whom it is unlawful to make such offer, invitation or solicitation. In particular, this Document must not be taken, transmitted, distributed or sent, directly or indirectly, in, or into, the , Canada, Australia, Japan or the Republic of South Africa or transmitted, distributed or sent to, or by, any national, resident or citizen of such countries. Accordingly, the Subscription Shares may not, subject to certain exceptions, be offered or sold, directly or indirectly, in, or into, or from, the United States, Canada, Australia, Japan or the Republic of South Africa or in any other country, territory or possession where to do so may contravene local securities laws or regulations. The Subscription Shares have not been, and will not be, registered under the US Securities Act of 1933, as amended, or under the securities legislation of any state or other jurisdiction of the United States, any province or territory of Canada, Australia, Japan or the Republic of South Africa and may not be offered or sold, directly or indirectly, within the United States, Canada, Australia, Japan or the Republic of South Africa or to or for the account or benefit of any national, citizen or resident of the United States, Canada, Australia, Japan or the Republic of South Africa or to any US person (within the definition of Regulation S made under the US Securities Act 1933, as amended). The distribution of this Document outside the UK may be restricted by law. No action has been taken by the Company or Arden that would permit a public offer of shares in any jurisdiction outside the UK where action for that purpose is required. Persons outside the UK who come into possession of this Document should inform themselves about the distribution of this Document in their particular jurisdiction. Failure to comply with those restrictions may constitute a violation of the securities laws of such jurisdiction.

2 IMPORTANT INFORMATION

In deciding whether or not to invest in Ordinary Shares, prospective investors should rely only on the information contained in this Document. No person has been authorised to give any information or make any representations other than as contained in this Document and, if given or made, such information or representations must not be relied on as having been authorised by the Company, the Directors, or Arden. Neither the delivery of this Document nor any subscription or purchase made under this Document shall, under any circumstances, create any implication that there has been no change in the affairs of the Company or of the Group since the date of this Document or that the information contained herein is correct as at any time after its date. Arden has not authorised the contents of this Document and, without limiting the statutory rights of any person to whom this Document is issued, no representation or warranty, express or implied, is made by Arden as to the contents of this Document and no responsibility or liability whatsoever is accepted by Arden for the accuracy of any information or opinions contained in this Document or for the omission of any material information from this Document, for which the Company and the Directors are solely responsible. Investment in the Company carries risk. There can be no assurance that the Company’s strategy will be achieved and investment results may vary substantially over time. Investment in the Company is not intended to be a complete investment programme for any investor. The price of Ordinary Shares and any income from Ordinary Shares can go down as well as up and investors may not realise the value of their initial investment. Prospective investors should carefully consider whether an investment in Ordinary Shares is suitable for them in light of their circumstances and financial resources and should be able and willing to withstand the loss of their entire investment (see “Part III: Risk Factors” of this Document). Potential investors contemplating an investment in Ordinary Shares should recognise that their market value can fluctuate and may not always reflect their underlying value. Returns achieved are reliant upon the performance of the Company. No assurance is given, express or implied, that investors will receive back the amount of their investment in Ordinary Shares. If you are in any doubt about the contents of this Document you should consult your stockbroker or your financial or other professional adviser. Investment in the Company is suitable only for financially sophisticated individuals and institutional investors who have taken appropriate professional advice, who understand and are capable of assuming the risks of an investment in the Company and who have sufficient resources to bear any losses which may result therefrom. Potential investors should not treat the contents of this Document or any subsequent communications from the Company as advice relating to legal, taxation, investment or any other matters. Potential investors should inform themselves as to: (a) the legal requirements within their own countries for the purchase, holding, transfer, or other disposal of Ordinary Shares; (b) any foreign exchange restrictions applicable to the purchase, holding, transfer or other disposal of Ordinary Shares that they might encounter; and (c) the income and other tax consequences that may apply in their own countries as a result of the purchase, holding, transfer or other disposal of Ordinary Shares. Potential investors must rely upon their own representatives, including their own legal advisers and accountants, as to legal, tax, investment or any other related matters concerning the Company and an investment therein. Statements made in this Document are based on the laws and practices currently in force in England and Wales and are subject to changes therein. This Document should be read in its entirety before making any investment in the Company.

Forward looking statements Certain statements contained in this Document are forward looking statements and are based on current expectations, estimates and projections about the potential returns of MelodyVR and industry and markets in which MelodyVR operates, the Directors’ beliefs and assumptions made by the Directors. Words such as “expects”, “anticipates”, “may”, “should”, “would”, “could”, “will”, “intends”, “plans”, “believes”, “targets”, “seeks”, “estimates”, “aims”, “projects”, “pipeline” and variations of such words and similar expressions are intended to identify such forward looking statements and expectations. These statements are not guarantees of future performance or the

3 ability to identify and consummate investments and involve certain risks, uncertainties, outcomes of negotiations and due diligence and assumptions that are difficult to predict, qualify or quantify. Therefore, actual outcomes and results may differ materially from what is expressed in such forward looking statements or expectations. Among the factors that could cause actual results to differ materially are: the general economic climate, competition, interest rate levels, loss of key personnel, the result of legal and commercial due diligence, the availability of financing on acceptable terms and changes in the legal or regulatory environment. Such forward looking statements are based on numerous assumptions regarding MelodyVR’s present and future business strategies and the environment in which the Enlarged Group will operate in the future. These forward looking statements speak only as of the date of this Document. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained herein to reflect any change in the Company’s expectations with regard thereto, any new information or any change in events, conditions or circumstances on which any such statements are based, unless required to do so by law or any appropriate regulatory authority.

Presentation of financial information The financial information contained in this Document, including that financial information presented in a number of tables in this Document, has been rounded to the nearest whole number or the nearest decimal place. Therefore, the actual arithmetic total of the numbers in a column or row in a certain table may not conform exactly to the total figure given for that column or row. In addition, certain percentages presented in the tables in this Document reflect calculations based upon the underlying information prior to rounding, and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers.

No Incorporation of Website The contents of the Company’s website (or any other website) do not form part of this Document.

Governing law Unless otherwise stated, statements made in this Document are based on the law and practice currently in force in England and Wales and are subject to changes therein.

Information for Distributors Solely for the purposes of the product governance requirements contained within the MiFID II Product Governance Requirements (the “Requirements”), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (as defined in the Requirements) may otherwise have with respect thereto, the Subscription Shares have been subject to a product approval process, which has determined that such securities are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution to professional clients and eligible counterparties through all distribution channels as are permitted by MiFID II, or the “Target Market Assessment” (as defined in the Requirements). Notwithstanding the Target Market Assessment, Distributors should note that: the price of Subscription Shares may decline and investors could lose all or part of their investment; the Subscription Shares offer no guaranteed income and no capital protection; and an investment in Ordinary Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Subscription. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Arden will only procure investors who meet the criteria of professional clients and eligible counterparties. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Subscription Shares.

4 Each distributor is responsible for undertaking its own Target Market Assessment in respect of the Subscription Shares and determining appropriate distribution channels.

5 CONTENTS

Page

KEY STATISTICS 7

EXPECTED TIMETABLE OF PRINCIPAL EVENTS 7

DIRECTORS, SECRETARY AND ADVISERS 8

DEFINITIONS 9

PART I INFORMATION ON THE COMPANY AND THE ACQUISITION 13

PART II PRESENTATION OF FINANCIAL AND OTHER INFORMATION 42

PART III RISK FACTORS 45

PART IV HISTORICAL FINANCIAL INFORMATION ON THE GROUP 53

PART V HISTORIC FINANCIAL INFORMATION ON THE ACQUISITION 54

PART VI ADDITIONAL INFORMATION 84

PART VII NOTICE OF GENERAL MEETING 110

6 KEY STATISTICS

Existing share capital at the date of this Document Number of Existing Ordinary Shares 2,061,845,991

Subscription and Acquisition Issue Price 3.75 pence Number of Subscription Shares 201,349,772 Gross proceeds of the Subscription (receivable by the Company) $10.1 million Estimated net proceeds of the Subscription available to Company $8.4 million Costs of the Subscription and Admission $1.7 million Number of Consideration Shares At least 200,000,000

Upon Admission Number of Ordinary Shares in issue upon Admission before additional 2,463,195,763 Consideration Shares Percentage of Enlarged Ordinary Share Capital represented by the New 16.3% Ordinary Shares Estimated market capitalisation of the Company at Admission at the £92.4 million Issue Price TIDM MVR ISIN number GB00BD2YHN21 LEI 213800B2AKGQC3D2R751

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

2020 Publication and posting of this Admission Document and the Form 8 December of Proxy to Shareholders Latest time and date for receipt of completed Forms of Proxy and 10.00 a.m. on 22 December receipt of electronic proxy appointments via the CREST system Time and date of the General Meeting 10.00 a.m. on 24 December Announcement of the result of the General Meeting 24 December Completion of the Acquisition 29 December Admission and commencement of dealings in the Enlarged 29 December Ordinary Share Capital on AIM CREST accounts credited in respect of the Subscription Shares 29 December (where applicable) Dispatch of definitive share certificates in respect of the Within 5 Busines Days of Subscription Shares (where applicable) by Admission ————— Notes: 1. References to time in this Document are to London (GMT) time unless otherwise stated 2. If any of the above times or dates should change, the revised times and/or dates will be notified by an announcement on an RIS

7 DIRECTORS, SECRETARY AND ADVISERS

Directors: Simon Cole (Chairman) Anthony Matchett (Chief Executive Officer) Steven Hancock (Chief Relationship Officer) Grant Dollens (Non-Executive Director) Andrew Botha (Non-Executive Director)

Registered Office: 55 Poland Street London England W1F 7NN Company Secretary: Sohail Bhatti Nominated Adviser and UK Arden Partners Plc Broker: 125 Old Broad Street London EC2N 1AR US Broker: Beech Hill Beech Hill Securities, Inc. 880 Third Avenue, 16th Floor New York, NY 10022 Reporting Accountants: RMT Accountants & Business Advisors Ltd Gosforth Park Ave Newcastle upon Tyne NE12 8EG Solicitors to the Company: Reed Smith LLP Broadgate Tower 20 Primrose Street London EC2A 2RS Solicitors to Arden: BDB Pitmans LLP One Bartholomew Close London EC1A 7BL Company Registrars: Neville Registrars Limited Neville House Steelpark Road Halesowen West Midlands B62 8HD

8 DEFINITIONS

The following definitions apply throughout this Document, unless the context requires otherwise or unless defined in Part III of this Document, for the purposes of that part only: “£” or “Sterling” British pounds sterling “Act” the Companies Act 2006 (as amended) “Acquisition” the acquisition of Rhapsody, which constitutes a reverse takeover pursuant to Rule 14 of the AIM Rules “Acquisition Resolution” the resolution numbered 1 in the Notice to be proposed at the General Meeting to approve the Acquisition and the issue of the Consideration Shares “Admission Document” or this document dated 8 December 2020 “Document” “Admission” the admission of the Enlarged Ordinary Share Capital to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules “Admission Agreement” the admission agreement dated 8 December 2020 between, inter alia, the Company, the Directors, Beech Hill and Arden, relating to the Admission “AIM” the market of that name operated by the London Stock Exchange “AIM Rules for Nominated the rules setting out the eligibility, ongoing obligations and certain Advisers” disciplinary matters in relation to nominated advisers, as published by the London Stock Exchange from time to time “AIM Rules” the AIM Rules for Companies published by the London Stock Exchange from time to time (including, without limitation, any guidance notes or statements of practice) which govern the rules and responsibilities of companies whose shares are admitted to trading on AIM “Arden” Arden Partners plc, a public limited company incorporated in England and Wales with registered number 04427253 “Articles” the articles of association of the Company, as at the date of Admission, a summary of which is set out in paragraph 10 of Part V of this Document “Associated Company” has the meaning given in paragraph 94 of Schedule 2 of the Income Tax (Earnings and Pensions) Act 2003 “Audit Committee” the audit committee of the Board, as constituted from time to time “Authority Resolutions” the resolutions numbered 2, 3, 4 and 5 in the Notice to be proposed at the General Meeting to grant the Directors authority to issue new Ordinary Shares otherwise than on a pre-emptive basis “Beech Hill” Beech Hill Securities, Inc. “Board” the board of Directors of the Company from time to time, or a duly constituted committee thereof “Business Day” any day (other than a Saturday or Sunday or any public holidays in England and Wales) on which banks generally are open for the transaction of normal banking business in the City of London “certificated” or “in certificated recorded on the relevant register of the share or security form” concerned as being held in certificated form in physical paper (that is not in CREST) “Company” MelodyVR Group PLC, a public limited company incorporated in England & Wales with registered number 05628362

9 “Company Consent” the written consent of the Company’s Board or Remuneration Committee “Completion” means the completion of the Acquisition “Consideration Shares” at least 200,000,000 Ordinary Shares to be issued to the shareholders of Rhapsody in connection with the Acquisition “Corporate Governance Code” the QCA Corporate Governance Code for Small and Mid-Size Quoted Companies 2013 published by the QCA “CREST Regulations” the Uncertificated Securities Regulations 2001 (SI 2001/3755), including (i) any enactment or subordinate legislation which amends those regulations; and (ii) any applicable rules made under those regulations or such enactment or subordinate legislation for the time being in force “CREST” the computer based system and procedures which enable title to securities to be evidenced and transferred without a written instrument, administered by Euroclear UK & Ireland in accordance with the CREST Regulations “Directors” the Directors of the Company as at the date of this Document, whose names are set out on page 8 of this Document “EMI Options” Enterprise Management Incentive options granted to employees pursuant to the Income Tax (Earnings and Pensions) Act 2003 “Enlarged Group” the Group, including from Completion, Rhapsody “Enlarged Ordinary Share Capital” the Ordinary Shares in issue immediately following the Subscription and Admission, comprising the Existing Ordinary Shares and the New Ordinary Shares “Euroclear UK & Ireland” Euroclear UK & Ireland Limited, a company incorporated under the laws of England and Wales with registered number 2878738 and the operator of CREST “Existing Ordinary Shares” or the 2,061,845,991 Ordinary Shares in issue as at the date of this “Existing Issued Share Capital” Document “FCA” the Financial Conduct Authority of the United Kingdom “Form of Proxy” the form of proxy accompanying the Document for use by Shareholders at the General Meeting. “FSMA” the Financial Services and Markets Act 2000 (as amended) “GM” or “General Meeting” the general meeting of the Company, convened for 10.00 a.m. on 24 December 2020, and any adjournment thereof, notice of which is set out at the end of this document “Group” or “MelodyVR” the Company and its subsidiary undertakings “HMRC” HM Revenue and Customs “Issue Price” 3.75 pence per Subscription Share “Loan Facility” the loan facility to be signed between the date of publication of this document and Admission in relation to a US$15 million loan from Davis Partnership, LP to Rhapsody, further details of which are set out in paragraph 15 of Part V “Locked-in Persons” Anthony Matchett, Steven Hancock, Simon Cole, Grant Dollens and Russell Backhouse “London Stock Exchange” London Stock Exchange plc

10 “Merger Agreement” means the merger agreement in respect of the Acquisition entered into between the Company and Rhapsody and dated 24 August 2020 “MiFID II” Markets in Financial Instruments Directive 2004/39/EC “” the trading name of Rhapsody “New Ordinary Shares” at least 401,349,772 new Ordinary Shares to be issued and allotted pursuant to the Subscription and the Consideration Shares “Notice” the notice of GM set out at the end of this document “Official List” the official list maintained by the UK Listing Authority “Ordinary Shares” ordinary shares of 1 penny each in the capital of the Company “Panel” the Panel on Takeovers and Mergers “Prospectus Rules” the Prospectus Rules made by the FCA pursuant to Part V of FSMA “QCA” the Quoted Companies Alliance “Recognised Stock Exchange” any market of a recognised investment exchange as defined by section 1005 of the Income Tax Act 2007 “Registrars” the Company’s registrars, being Neville Registrars “Regulation S” Regulation S promulgated under the Securities Act “Remuneration Committee” the remuneration committee of the Board, as constituted from time to time “Resolutions” together the Acquisition Resolution and the Authority Resolutions “Rhapsody” Rhapsody International, Inc., a Delaware corporation trading as Napster “RIS” Regulatory Information Service “Securities Act” the US Securities Act of 1933, as amended “Share Incentive Plans” the Company’s share incentive plans as described in paragraph 11 of Part VI “Share Options” options to subscribe for Ordinary Shares to be granted under the Share Option Scheme “Share Option Scheme” the share option scheme of the Company further details of which are set out in paragraph 11.7 of Part VI of this document “Shareholder(s)” holder(s) of Ordinary Shares “Subscription” the subscription by subscribers for Subscription Shares “Subscription Shares” the 201,349,772 new Ordinary Shares to be purchased or subscribed for pursuant to the Subscription “Takeover Code” the City Code on Takeovers and Mergers published by the Takeover Panel “UK Listing Authority” the FCA, acting in its capacity as the competent authority for the purposes of FSMA “UK” or “United Kingdom” the United Kingdom of Great Britain and Northern Ireland “uncertificated” or “uncertificated shares or other securities recorded or the relevant register as form” being held in uncertified form in CREST and title to which, by virtues of the CREST Regulations, may be transferred by means of CREST

11 “US” or “United States” the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia and all other areas subject to its jurisdiction “VAT” value added tax “VR” virtual reality “Warrants” the warrants in registered form to subscribe for Ordinary Shares of £0.01 each in the Company to be issued to Davis Partnership, LP in connection with the Loan Facility

12 PART I

INFORMATION ON THE COMPANY AND THE ACQUISITION

1. INTRODUCTION On 25 August 2020, the Company announced it had entered into an agreement and plan of merger with Rhapsody, trading as Napster, in connection with the Acquisition. Napster is a pioneer in digital and a leading provider of music streaming technologies and services for businesses. The Acquisition was classified as a reverse takeover pursuant to AIM Rule 14 and as such the Company’s shares were suspended on the morning of 25 August 2020 pending publication of an Admission Document. On the same day, MelodyVR raised gross proceeds of $15.3 million (£11.6 million) through the successful placing of 214,314,540 Ordinary Shares and direct subscription for 120,709,708 Ordinary Shares both at a price of 3.5 pence per new Ordinary Share. Under the terms of the Merger Agreement, the Company advanced the sum of $12.0 million by way of an upfront deposit that was placed into escrow and, upon satisfaction or waiver of the conditions to closing, including readmission, the Company will also deposit a further $3.0 million into an escrow account in satisfaction of the full cash consideration payable under the Merger Agreement. The Company utilised the $14.8 million (£11.2 million) net proceeds of the placing and subscription to fund the upfront deposits in connection with the Acquisition. Under the terms of the Merger Agreement, a wholly-owned subsidiary of the Company will be merged with and into Napster (with Napster being the surviving entity). On Completion, the Company will pay consideration totaling approximately $26.3 million to the vendors of Napster to be satisfied in aggregate by $15.0 million in cash, and the issuance of a minimum of 200 million MelodyVR shares. The number of Consideration Shares may increase as result of any decline in the Company’s share price below 4.3 pence between signing of the Merger Agreement and Completion, pursuant to the terms of the Merger Agreement. As such, the final number of Consideration Shares to be issued will not be confirmed until Completion. Upon completion of the Acquisition, Napster will be a wholly-owned subsidiary of the Company. It is the intention of the Directors to combine both the MelodyVR and Napster businesses to realise significant cost synergies, and to create a truly differentiated music platform with significant growth potential. The Company intends to finance its strategy for the Enlarged Group through the net proceeds of the Subscription and a new loan facility from Davis Partnership, LP, a substantial shareholder. Further details of the new loan facility are set out in paragraph 6 of this Part I.

2. INFORMATION ON THE COMPANY 2.1. Background to MelodyVR MelodyVR was incorporated on 22 April 2015 by Anthony Matchett and Steven Hancock (the “Founders”). MelodyVR was formed to capitalise on the Founders’ expectations of a wave of virtual reality (“VR”) hardware scheduled for release during 2015 and 2016. Recognising that a significant investment had been made in VR hardware, but that there was only a limited amount of forthcoming VR content, the Founders began building an end-to-end virtual reality content production and distribution business. On 16 May 2016, MelodyVR was acquired by Armstrong Ventures plc, an AIM listed company, by way of a reverse takeover. Following completion of the reverse takeover, Armstrong Ventures plc changed its name to EVR Holdings plc and has pursued a stated strategy to continue to invest in the capture and creation of immersive VR and 2D 360 degrees content distributed via its own MelodyVR music platform. On 22 May 2020, EVR Holdings plc changed its name to MelodyVR Group PLC to reflect the name of its key operating platform.

13 2.2. Description of the MelodyVR business MelodyVR is an immersive music platform providing direct to consumer access to recorded and live virtual reality music events. The Company has developed technologies, products and services that enable users to consume immersive VR music experiences. The Company’s primary monetisation channels consist of applications available on smartphones (iOS and Android) and VR devices (Oculus). The MelodyVR app is available free of charge, with users purchasing access to content on an “a la carte basis”. The Company has developed, using commercially available parts (such as image sensors), bespoke 360-degree cameras that record audio-visual material for the purposes of capturing live music performances. This includes the live performances themselves, as well as additional backstage and interview content, intended to deepen the engagement between both artist and fan. These cameras can be installed into existing performance venues and festival stages, as well as at purpose built venues. MelodyVR currently holds a number of contracts with music brands and event partners granting MelodyVR exclusive rights to create and exploit 360 degree/virtual reality content typically for periods of five years or more. These include partnerships with Live Nation and O2 which are described in paragraph 2.7 of this Part I. In addition, MelodyVR holds licencing agreements with the three major music labels in the world, , Warner Music Group and Music Entertainment. The directors believe that they are the only company to be licensed by these key partners to capture and distribute VR music content globally and that this provides the Company with a significant competitive advantage. MelodyVR has developed a post-production workflow that enables recorded material captured by the Company’s cameras to be processed into MelodyVR 360 degree panoramic content. This material can be exploited via various distribution channels and monetisation models, including primarily through the MelodyVR App. The Directors believe that MelodyVR gains a significant competitive advantage from its licensing and distribution agreements in conjunction with its capture and processing technology. The Company offers an end-to-end, integrated production and distribution offering, recording live performances, repackaging them within a VR format or 2D 360 degree format, and then distributing such performances to the end consumer. The Directors believe that the combination of its licensing agreements, capture technology and production capabilities provide a significant barrier to entry for any potential competitive threat. Following the launch of the MelodyVR app on Oculus VR devices on 1 May 2018, the Company launched its iOS and Android mobile applications in July 2019. The smartphone and tablet applications expanded the Company’s offering to benefit from an increased reach encompassing millions of compatible smartphones, alongside the smaller, existing VR device market. Since launch, MelodyVR has continued to build awareness and engagement and now boasts approximately 325,000+ users. The MelodyVR application is available in 14 countries worldwide and it monetises its content principally via the sale of in-app purchases through Apple’s and Google’s Playstore. In addition, the Company monetises its content as a subscription service via its partnership with O2 Telefonica in the UK.

2.3. Content Creation MelodyVR has developed 360 degree cameras that it uses to capture music events in up to 12K video quality. These cameras can be placed in strategic positions throughout a venue which enables the VR viewer to view the performance from multiple positions, whether in the audience or on stage with the artist/performer. The Directors believe these usually inaccessible locations and experiences to be a core driver of user adoption of the MelodyVR service. Once an event has been recorded and produced, MelodyVR obtains final approval from the rights’ holders to enable it to release and distribute its content. Further details of these rights, permissions and waivers are set out in paragraph 2.5 of this Part I. MelodyVR has also developed the technology to not only record content, but also to broadcast it in realtime. The first event of this kind was a live performance featuring Liam Payne, formerly of X-Factor and One Direction, which was broadcast in virtual reality exclusively via the MelodyVR platform. Taking place on 19 December 2018, the event was the first live-streamed event on the

14 MelodyVR platform and utilised MelodyVR’s technology, to deliver a simultaneous, real-time VR broadcast of the performance. Since formation, the Company has made available more than 1,750 tracks on the MelodyVR platform with approximately 100 performances having been streamed live.

2.4. Content The experiences captured by MelodyVR are interactive, in that viewers have the freedom to move between different camera locations and viewpoints and to experience the performance from a number of vantage points during the playback of recorded content as if they were actually present at the event in person. The Directors have confirmed that the Company is in the final stages of developing a binaural format compatible with head tracking which lends to a more immersive experience. The MelodyVR App’s current content proposition consists of three distinct offerings:

1. Recorded music: From its current catalogue, comprising over 1,750 music tracks, MelodyVR licenses and curates a library of content that consumers are able to browse and purchase via the MelodyVR App. Content is available in the form of VR experiences, which contain either a performance of an individual song or a segment of a live event or concert.

2. Live streams: The Company launched live streamed VR experiences in 2018. Live experiences offer consumers the ability to watch a concert, with all of the aforementioned functionality of recorded experiences as the event happens in real time.

3. Interactive experiences: The Company has developed a number of highly interactive music experiences. These experiences react to a user’s inputs and movements in real time, and take the form of a short video game/CGI music video. The Directors believe that these experiences, provide an even greater degree of interaction and consumer engagement than recorded content. As VR technology develops, in addition to augmented reality (“AR”) technology such as ‘smart glasses’, the Directors expect interactive experiences to become a more prominent and appealing part of the consumer offering.

2.5 Rights, permissions and waivers MelodyVR operates a business which, among other things: (i) records and produces audiovisual material and footage capturing the activities and performances from live music events (including, where applicable, additional back-stage and interview content); (ii) edits and creates footage intended for or capable of being used to create 360 degree panoramic images or to create content intended for use on virtual reality devices (“Footage”); and (iii) exploits the Footage by means of various distribution channels and monetisation models. In order to facilitate this, there are a number of rights, permissions and clearances which may need to be considered. These include: i. Performing artists: performers (includes singers, backing singers, musicians and dancers) are entitled to certain rights in their live performances. Performers’ rights can be divided into two distinct categories: property rights, which are assignable, and non-property rights, which are non-assignable but may be waived. 1. Performers’ property rights: these rights include: (i) the right to make a copy of a recording of a performance; (ii) the right to issue copies of such recording to the public; and (iii) the right to make available a recording of a performance to the public over the . It is necessary to obtain a licence or assignment over these performers’ rights to exploit the Footage. 2. Performers’ non-property rights: a performer’s consent is required for the recording and exploitation of their performances. It is necessary to obtain consent from a performer to produce the Footage. 3. Equitable remuneration: performers also have a right to equitable remuneration (payment) when: (i) a sound recording embodying the performer’s performance is broadcast or otherwise communicated to the public (other than by on-demand

15 exploitation); and (ii) where the performer’s rental right in a film or sound recording is transferred to its producer. It is necessary to ensure that performers are paid for their performances and for such payments to be categorised as fulfilling the requirement for performers to be paid “equitable remuneration”. 4. Moral rights: performers are also entitled to exercise moral rights in relation to their performance (the right to be identified as the performer of a performance, and the right to object to derogatory treatment of a performance). It is prudent to obtain relevant waivers from performers in respect of their moral rights. 5. Image rights: although English law generally does not recognise an “image right”, it is considered good practice to obtain from performing artists consent to use those artists’ name, likeness, image and biography in connection with exploitation of the Footage. 6. Generally, performers’ rights are controlled by the performers themselves, meaning that the requisite consents and rights must be obtained from the performers directly by means of a standard form of release. However, if a performing artist is subject to an exclusive recording agreement with a record label then the performers’ property rights will need to be obtained from the label instead. ii. Venues: it is necessary to obtain: (i) access rights for permission to use the venue for recording; and (ii) licences to use any logos, names and other branding displayed in and around the venue which may be captured by the Footage. iii. Members of the public: it is considered good practice to obtain consents from members of the public who attend events which are to be recorded. Often this is done by means of the venue’s ticket terms and conditions, or through prevalent signage at the venue explaining that recording will occur in the area. iv. Musical compositions: to the extent that performances of musical compositions are embodied in the Footage, it is necessary to obtain a: 1. reproduction licence: to cover both the initial fixation of the performance of the compositions in the Footage, and the subsequent reproduction of such Footage; 2. communication to the public licence: to cover the transmission, performance and other exploitation of the compositions (as embodied in the Footage); and 3. waiver of moral rights: similarly to performers’ moral rights, composers are entitled to exercise so-called “moral rights” (the right to be identified as the author, the right to object to derogatory treatment, and the right not to suffer false attribution). It is therefore prudent to obtain a waiver of such rights (or to procure that the rightsholder obtains such waiver from the composer) or to ensure that the exploitation of the Footage is undertaken in a manner which does not infringe such moral rights. Musical compositions are likely to be controlled by either: (i) the original composer (to the extent the composer is not affiliated with a music publisher or a collection society); (ii) a music publisher representing the original composer; or (iii) a collection society representing the original composer or their music publisher. It is therefore necessary to establish which entity controls these rights and to obtain the necessary licences. It should be noted that some musical compositions have more than one composer and can therefore be controlled by multiple entities. v. Sound recordings: to the extent that sound recordings are embodied in the Footage (which is less likely since the performances are being given live, but may still be relevant in the case of DJs), it is necessary to obtain a:

* reproduction licence: to cover both the initial fixation of the performance of the sound recordings in the Footage, and the subsequent reproduction of such Footage; and

* communication to the public licence: to cover the transmission, performance and other exploitation of the sound recordings (as embodied in the Footage). Sound recordings are likely to be controlled by either: (i) the initial producer of the sound recording; or (ii) a record label to which the artist is signed. It is therefore necessary to establish which entity controls these rights and to obtain the necessary licences.

16 vi. Lighting design and choreography: to the extent that the Footage includes recordings of a light sequence, choreographed movement, sound design, set design or creative direction in which copyright subsists, then it may also be necessary to obtain a licence and permissions from the relevant copyright owners (i.e. lighting designers, choreographers, sound designers, set designers, and directors). However, in our experience, such peripheral clearances are rarely obtained, unless more high-profile venues and artists are involved. vii. Footage: under English copyright law, the automatic first owner of the copyright in a film is the producer and principal director (or their employer (where applicable)). Unless there is an employment relationship between the producer, director and the ultimate operating business, it is necessary to obtain an express, written assignment from whoever produces the recordings to transfer ownership of copyright. Furthermore, it is good practice to obtain an acknowledgement from certain parties (such as the performing artists and the venues) that ownership in the recordings does not transfer to them. It should also be noted that, with respect to major labels in particular, it is common for such rightsholders to insist that recordings made of their artists are assigned to and owned by the applicable label – it is then usual practice for the record label to license back such recording on an exclusive basis for a particular period (say three years), after which time the licence becomes non-exclusive and the label is free to use the recording for its own purposes. MelodyVR has entered into a number of agreements with artists, venues and promoters regarding the necessary rights, permissions and artist waivers to exploit recorded and live content. The Directors believe that MelodyVR is the only business to be licensed by all major rights holders for the capture, curation and distribution of VR music content and, in the absence of a similarly licensed party are insulated from a competitive threat.

Agreements with Artists MelodyVR has entered into various agreements with featured performing artists. The artist agreements comprise, among other things, the artists’ consent for certain performances being filmed by MelodyVR for the purposes of producing 360 degree VR footage, and exclusive ownership by MelodyVR of all footage, subject to any separate agreement between MelodyVR and the artists’ record label (if any). The Directors have confirmed that not all of the footage currently captured features artists who are not party to an exclusive recording contract with a record label.

Negotiations with Music Rights Holders MelodyVR is regularly in active negotiations with various major and independent music labels and publishers, with a view to extending on-going relationships to create and exploit content featuring established artists and music content. The extension of these agreements beyond VR content will enable MelodyVR to further enrich its platform and in doing so, broaden the depth and breadth of its content offering.

Partnership Agreements MelodyVR has agreements with a number of companies specialising in event promotion and venues, including Live Nation (Music) UK Limited, American Broadcasting Companies Inc, Ibiza Rocks Group Limited and Broadwick Live Limited. These agreements provide for a period of exclusivity to capture and create VR or 360 degree content of events organised or hosted by the partner, ownership by MelodyVR of all VR content filmed by MelodyVR and consent to include venue branding in such content. MelodyVR’s VR music experiences provide an additional revenue stream to event promoters and venues as MelodyVR enables such promoters and venues to make their events available beyond the physical capacity of the venue, to a significantly higher number of users at any given time via the MelodyVR app.

2.6. The MelodyVR App The Company has developed an app, called MelodyVR. It can be downloaded free of charge and is available in stores accessible by most smartphones including those running recent releases of iOS, iPadOS and Android. In addition to smartphones, the app can be accessed by Oculus VR devices.

17 Customers can browse through performances, all of which have been exclusively captured by MelodyVR, and purchase content via in-app purchases at prices ranging from £0.99 per track to £12.99 for a full live performance, comparable to pricing currently utilised by Apple iTunes for digital music downloads. In October 2019, MelodyVR launched its subscription service in conjunction with the UK mobile network operator O2 to complement existing sales of its content via Apple’s App store and Google’s Playstore. The success of the app has been recognised by both Apple and Google with the app being featured as Apple’s App of the Day in November 2019 and one of Googles “Hidden Gems”–Best of 2019. The app currently has approximately 325,000 users. The majority of the Company’s users are based in either Europe or the US (48 per cent. of users are in the UK and 44 per cent. are in the US). Of the app’s mobile user base 55 per cent. have streamed at least once in the past 12 months. All rights relating to the development of the MelodyVR app and the associated development rights are owned by MelodyVR.

2.7. MelodyVR Partnerships Exclusive partnership with O2 On 17 October 2019, MelodyVR announced its exclusive UK partnership with Telefonica UK Limited (“O2”), one of the UK’s largest mobile operators with more than 25 million customers. The partnership saw MelodyVR unveiled as the exclusive music partner of O2's 5G UK launch with O2 providing customers with 5G mobile plans a 12-month subscription to the MelodyVR platform. This partnership saw O2 users provided with 12 months of unrestricted access to the MelodyVR platform and all MelodyVR content, redeemable via the MelodyVR app on smartphones or VR devices, when they upgrade to an O2 5G plan. In addition, O2's premium 5G tariff included an Oculus Go device to enjoy with the MelodyVR service. O2 remunerates MelodyVR for each of their customers that utilise the promotion and guaranteed a minimum number of subscribers during the course of the first 12 months. In addition, O2 have also committed significant resource and support to ensure the long-term success of this key partnership including prime placement and promotion across six flagship O2 stores nationwide, all of which will enable MelodyVR to increase its engagement with new audiences. The Directors believe that the access to new subscribers and supply by O2 of VR devices will increase uptake of VR services and engagement with MelodyVR leading to long-term customer growth.

18 After twelve months of the partnership, both parties are now assessing how the arrangements can be developed beyond the current ongoing partnership structure. Advancements in the telecoms industry with 5G networks and the recent launch of the 5G enabled iPhone 12 are key areas of focus for both parties.

Live Nation Partnership On 20 June 2019, MelodyVR announced it had entered into a partnership with , a division of Live Nation, for ‘Wireless Connect’, a virtual music festival that was to be made available via the MelodyVR platform. Following the announcement that due to the impact of Coronavirus in the UK 2020 in Finsbury Park would no longer take place, MelodyVR and Festival Republic expanded their partnership, to bring the festival digitally to fans at home between 3-5 July 2020. This unique partnership was a first-of-its kind digital festival presented by both Festival Republic and MelodyVR. Performances were available in 2D 360 and virtual reality and could be accessed via the MelodyVR app on a number of devices including Oculus VR devices. The event was broadcast from MelodyVR’s, specially designed content studios, located in both Los Angeles and in London, at the legendary Alexandra Palace, to audiences across 34 countries, a ground-breaking VR first, which generated over 250,000 individual views reaching more than 1,000,000 fans via Facebook live and 13,000,000 impressions over the Company’s digital media channels. Over the festival weekend, the MelodyVR app featured as one of the top 20 apps on the iOS App store as well as trending as the number 1 app on marking a new phase in amplified awareness of MelodyVR’s music service. The partnership with Live Nation has continued beyond Wireless Festival 2020 to include world famous venues, providing enhanced content distribution opportunities for the MelodyVR platform. Performances are promoted and sold via the global Live Nation network alongside direct MelodyVR marketing. The Directors expect that the partnership between Live Nation and MelodyVR will deliver increased ticket sales and develop an artists’ fanbase while providing additional catalysts for MelodyVR adoption. Recent Live Nation promoted events include a live streamed performance by artist Tom Grennan on 2 October 2020 from the O2 Academy Brixton. The performance had an average watch time exceeding 59 minutes on the MelodyVR app with over 22,000 jump spot changes illustrating the high level of fan engagement throughout the show. On 13 November 2020, Frank Carter and the Rattlesnakes performed at the O2 Academy Brixton, with a series of further artist performances scheduled during the weeks leading up to Christmas 2020, all of which will be live streamed on the Company’s platform. Unlimited virtual tickets for all of these events are available for sale via the MelodyVR app, and via LiveNation and Ticketmaster providing fans opportunities to experience truly live music, which would otherwise not be possible due to current COVID-19 restrictions. MelodyVR’s partnership with Live Nation and Ticketmaster is provided under a revenue share model providing MelodyVR with a revenue percentage of each virtual ticket sale, such percentage dependent upon the artist.

Good Morning America On 27 August 2019, Melody announced a partnership with Good Morning America (“GMA”) for the first ever live simultaneous TV and VR broadcast featuring Marshmello and Kane Brown from Central Park in New York which reached viewing audiences in all 50 US states and stimulated tens of thousands of installs of the Company’s mobile app in the days leading up to the event. Live coverage of the Good Morning America Nashville concerts during November 2019 reinforced the partnership with GMA and provided an opportunity to extend the reach of MelodyVR’s content to new genres and stimulated further awareness of VR and the MelodyVR platform. Given the impact of the COVID-19 pandemic, GMA’s Summer 2020 season was suspended with expectations for a return during 2021. Despite the impact of COVID-19, MelodyVR continues to refine its internet connectivity within the facilities at GMA in preparation for future content opportunities.

19 2.8. Competition The Directors are aware of a number of content creation VR companies that may potentially compete with MelodyVR in production and distribution of VR content, although a number of these companies have now been acquired by larger entities. These include companies that host VR content as well as 360 degree camera hardware suppliers. Potential competitors include Jaunt, a Disney backed VR start up involved in the design of camera hardware and 360 Degree content creation (whose assets were acquired by Verizon in September 2019); NextVR, a live VR broadcasting company acquired by Apple in May 2020 and Immersive Media, which reports to have introduced the first 360 degree full digital camera in 2004 and supplied the cameras and drivers for Google Street View. The Directors are not currently aware that any of these companies have publicly announced an intention to launch a music focused platform comparable to MelodyVR’s that gives consumers access to a library of VR music content alongside live VR concerts. As an independent content provider, the Company’s app is accessible across a number of platforms and is complementary to VR device hardware. While the Company is involved in the distribution of music and musical performances to consumers, the Directors do not consider the major consumer music streaming services, including and Apple Music, to be direct competitors due to the differentiated nature of the Company’s VR content and proposed offering.

3. INFORMATION ON THE ACQUISITION 3.1. Background and history to Napster Napster was founded by Shawn Fanning and Sean Parker. Initially, Napster was developed as an independent peer-to-peer file sharing service. The service operated between June 1999 and July 2001. Its technology allowed people to easily share MP3 files with other participants. On 11 July 2001, Napster shut down its entire network in order to comply with a legal injunction over copyright infringement. On 24 September 2001, the legal case against Napster over copyright infringement was partially settled. Napster agreed to pay music creators and copyright owners a $26 million settlement for past, unauthorized uses of music, and an advance against future licensing royalties of $10 million. In order to pay those fees Napster attempted to convert its free service into a subscription system, and thus traffic to Napster was reduced. A prototype solution was tested in 2002: the Napster 3.0 Alpha, using the “.nap” secure file format from PlayMedia Systems and audio fingerprinting technology licensed from Relatable. On 17 May 2002, Napster announced that its assets would be acquired by German media firm Bertelsmann for $85 million with the goal of transforming Napster into an online music subscription service. The two companies had been collaborating since the middle of 2000 when Bertelsmann became the first major label to drop its copyright lawsuit against Napster. Pursuant to the terms of the acquisition agreement, on 3 June 2002 Napster filed for Chapter 11 protection under United States bankruptcy laws. On 3 September 2002, an American bankruptcy judge blocked the sale to Bertelsmann and forced Napster to liquidate its assets. Napster’s brand and logos were acquired at bankruptcy auction by Roxio which used them to re- brand the Pressplay music service as Napster 2.0. Roxio subsequently changed its name to Napster. In September 2008, Napster was purchased by US electronics retailer Best Buy for US $121 million. On 1 December 2011, pursuant to a deal with Best Buy, a minority interest in Napster was acquired by Rhapsody, with Best Buy receiving a minority stake in Rhapsody. After launching in 2001, Rhapsody was acquired by digital media company Real Networks in 2003. In 2007, Rhapsody became a joint venture between Real Networks and MTV Networks taking over from MTV’s smaller online service offering “Urge”. On 14 July 2016, Rhapsody phased out the Rhapsody brand in favor of Napster and has since branded its service internationally as Napster. Napster is headquartered in , with offices in the U.S., Europe, Asia, and Latin America. The business is operated by its 105 members of staff with emphasis on its technical and development capability, including a 45 person Seattle based technical and product team and a 25 person mobile application development team in Croatia.

3.2. Description of the Napster business Napster is a pioneer in digital music and a leading provider of music streaming technologies and services for businesses. The Napster business is formed of three core divisions: Direct to

20 Consumer, Carrier Partner and Platform Partner with the latter two divisions providing ‘business to business’ music streaming and technology services. Direct to Consumer, Carrier Partner and Platform Partner revenues and subscribers for the Napster business are as set out in the table below.

Six months Six months Year ended Year ended Year ended ended ended 31 December 31 December 31 December 30 June 30 June 2017 2018 2019 2019 2020 Revenue $’000 $’000 $’000 $’000 $’000

Direct to Consumer 78,010.8 68,744.7 58,030.3 30,391.6 25,736.3 Carrier Partners 91,651.4 71,343.7 50,527.3 27,456.5 19,346.2 (via 3rd party resellers) Platform Partners 1,124.2 2,460.5 3,841.4 1,376.3 4,039.4 (“white label” services) ————— Financial information presented under US GAAP.

31 December 31 December 31 December Subscribers as at the 2017 2018 2019 30 June 2019 30 June 2020 end of the period ’000 ’000 ’000 ’000 ’000

Direct to Consumer 607 511 436 469 404 Carrier Partners 1,761 1,095 747 911 639 Platform Partners (excl PaaS) 336 612 618 632 67 ————— PaaS services reflect services charged on a per stream basis as opposed to on a per subscriber basis – in addition to the subscribers as set out above, an approximate further 2.1m users have engaged with the Napster service during the course of 2020 via PaaS. Revenues and subscriber numbers for the 12 months ended 31 December 2017 and 31 December 2018 are reflected for the full calendar years as opposed to the 12 month accounting periods ended 30 September as set out in the Historical Financial Information. H1 2019 Revenue has been extracted from management information.

Direct to Consumer The Napster consumer streaming service currently operates in four continents and 34 countries with a premium subscription service providing consumers unlimited ad-free access to music on any device – online or offline. Napster generates a gross margin performance after rights holder royalties of between 33 per cent. and 34 per cent. on its Direct to Consumer revenues.

Business to business 'Powered by Napster’ is a complete music and audio platform service that enables third parties to launch branded music and audio services with Napster providing the entire platform and content required. The platform service offers companies a suite of technologies and solutions, including music and media streaming and download infrastructure, applications, rights management, customer billing, royalty administration and business intelligence. Key customers include BMW (BMW Music), SFR France (telecom), Sonos (Sonos Radio), Entertainment Japan (Mora Qualitas), Telefonica (Vivo Musica), Univision (Uforia) all of which offer consumer music streaming services based on Napster’s technology and content. Gross margin performance across its Business to Business customers averages approximately 18%.

3.3. Napster Direct to Consumer (“D2C”) Napster’s D2C music subscription service provides subscribers with unlimited access to an extensive library of over 80 million tracks of digital music for a flat monthly fee of £9.99/$9.99 per month. The Napster service currently has approximately 408,000 active subscribers with annualised churn reducing from 16% in 2019 to an annualised 13% during the first half of 2020. Via its streaming app, for a monthly fee of £9.99 per month, subscribers can listen to and download an unrestricted amount of music from the Napster platform without advertising. In addition, based on listening preference, the service provides recommendations for a variety of curated playlists and new artists.

21 The Napster service has mobile applications for iPhone, Android, iPad, iPod touch, Kindle, and Windows Phone. Additionally subscribers can listen to music on any Mac or PC via www.napster.com, and stream music to compatible home audio systems. Historically, one of Napster’s core unique selling points has been to focus on its core features providing access to an “easy to use”, and reliable music service. Understanding the user preferences and a focus on driving specific behaviours patterns to positively impact engagement and retention. Key user engagement metrics are as set out below:

* Users who added tracks to favourites are circa 3 times more likely to renew their subscriptions;

* Users who added tracks to a playlist are circa 2.5 times more likely to renew their subscriptions;

* Users who download content are circa 3 times more likely to renew their subscriptions;

* Users who viewed album and artist details are circa 2.5 times more likely to renew their subscriptions. Napster markets are serviced via a combination of artist features, in product and social content, working directly with record labels and partners via its website, digital, instore and one-off promotions. Over the course of 2018 and 2019 marketing spend as a percentage of revenue has represented 0.25 per cent. and 0.87 per cent. respectively, as a result of very limited allocation of marketing resource. Napster has sought to leverage music recommendations from existing users using personalised communications comprising e-mails, social media campaigns and mobile push messaging extending to its listener network. The Director’s believe that by increasing marketing, as well as by launching an updated version of the Napster platform, user churn can be mitigated and in turn, will deliver growth during 2022.

3.4. Napster Business to Business Platform Partnership Integrations Napster’s Partnership Platform Integrations was commenced in late 2016 and offers companies a full suite of platform as a service (“PaaS”) technologies and solutions that includes media streaming and download infrastructure, applications, personalization, recommendations, rights management, customer billing and royalty calculation capabilities. Napster has historically provided its PaaS service either with (“PaaS Plus”) or without music content (“PaaS technology”). Where Napster supports a partner with its streaming service without music content, contracts are typically lower value but higher margin on a per subscriber basis. Napster’s current key PaaS partners are BMW, Sonos and Huawei. iHeart, a US radio station, was a key PaaS technology partner contributing revenue of $8 million in the historical period from January 2018 to May in 2020. iHeart exited its contract with Napster in the first half of 2020 paying Napster $2 million to exit its contract. PaaS Plus is a service that offers Napster’s technology with its music content (i.e. existing licenses subject to royalty payments). The revenue consists of a set-up fee, monthly fixed fee plus per stream/per user charge to cover royalties. Napster’s PaaS partners include:

* offering a premium subscription service to BMW Music. Napster’s partnership with BMW commenced in 2018. Under the contract, BMW pays Napster for a 3-month free trial period offered to owners of its premium car models and then any subscriptions fees collected from users afterwards.

* Sonos Radio, a North American internet radio service which is exclusively available on Sonos. Featuring approximately 60,000 terrestrial radio stations from around the world and includes a selection of 35 Sonos owned and operated genre stations. The 35 owned and operated genre stations are powered by Napster, with music curated by Sonos and available to markets in the US, Canada, Ireland, Australia, France, Germany, Italy, Holland, Sweden and New Zealand. Napster’s partnership with Sonos Radio commenced in the first half of 2020.

* Sony Mora Qualitas whereby a premium hi-resolution subscription service is offered for circa $18 per month. Napster’s partnership with Sony in the AsiaPacific region commenced in 2019.

22 * Univision (Uforia Radio), a free, visually immersive radio, podcast and music app providing access to 58 top radio stations for Hispanic listeners, 60+ curated playlists by mood, plus more than 15 digital only stations curated specifically for Latin American listeners. Uforia is available in the US market.

* Huawei premium tier music service serving 16 countries in the EU at €9.95 per month together with 8 countries across the LATAM region. Napster’s partnership with Huawei commenced in the first half of 2020.

* RecoChoku, a Japanese entertainment conglomerate founded in 1988 providing access to live events, via ticketing, merchandise, video games, K-pop and J-pop artists together with other portal type information. Napster’s partnership with RecoChoku in the AsiaPacific region commenced in 2019.

* Soundmachine, a fully licenced cloud based background music service for businesses. Napster’s partnership with Soundmachine in North America commenced in 2018.

Carrier Partnerships Carrier Partnerships are partnerships, in which Napster collaborates with major telecom carriers, including SFR in France, Telefonica in Europe and Vivo in Brazil to market its music streaming service. As a tool for customer retention, carriers provide their customers with options to sign up to Napster as a bolt-on service generally at the same price as D2C services, in some cases with promotion discounts or bundled with mobile plans. The Directors believe the carrier partners have reduced the level of investment spent on promoting the Napster service on their mobile plans. Napster has refocused its business model and investment towards platform partners. The Directors anticipate that the launch of a combined offering will appeal to existing and new partners in this space, including from a 5G marketing standpoint and will re-invigorate promotional initiatives. Napster’s key distribution partners are as set out below;

* Telefonica – who operate “Vivo Musica” in Brazil a Napster “white label service”. Furthermore, Movistar, Terra and Speedy which all operate as either sub brands or subsidiaries of Telefonica operate similar “white label” services throughout Latin America.

* SFR, T-Mobile, Medion Aldi and TEFDE, all of which offer premium D2C subscription services and bolt on offerings. Napster has forged relationships with a number of hardware partners who have integrated Napster’s service into their hardware devices. These hardware partners include Samsung and LG who have integrated Napster’s services into their television products, Amazon’s Alexa service in Mexico, Brazil and the US, Sonos, Denon Heos and Yamaha’s music cast home audio. Integration with hardware partners provides Napster with an additional channel to capture new D2C subscribers.

3.5. Competitors Napsters primary D2C competitors are represented by the major streaming players Spotify, Apple Music, YouTube Music, Deezer, Tidal, and Amazon Music. These music streaming services are considered to be well funded and have been investing heavily in subscriber acquisition ahead of immediate profitability. Napsters primary PaaS competitors are represented by , Tuned Global, MediaNet, RedTouch Media and Feed.FM.

4. STRATEGY OF THE ENLARGED GROUP The New Platform The Directors believe that the combination of the Company’s and Napster’s service offerings will provide the basis for a compelling and differentiated music service which will appeal to the true music fan, consolidating all of an artist’s repertoire including recorded music, short form video content (such as music ), long form video content (such as documentaries), digitally ticketed live streams, educational videos and immersive AR/VR content, into one premium subscription product.

23 In order to leverage the benefits of the combined platforms, the Company intends to launch a new application in Autumn 2021 which will combine MelodyVR’s immersive content with Napster’s recorded music content and will be provided by way of an update to the existing Napster application. From a technology standpoint, Napster and MelodyVR’s back-end systems will be combined, with a new front-end application being developed to replace the existing Napster app. Post the launch of the new Napster application, MelodyVR will sunset the existing MelodyVR application following a period of user consolidation and migration to the new combined service on the new Napster app. The app will be made available across multiple devices, including smartphones, tablets, smart TV’s, consoles and VR devices, as well as providing audio only offerings for in-car and connected home devices such as Sonos and Amazon Echo. The app is expected to initially launch in Napster’s existing markets which span 33 countries, extending to new territories shortly thereafter. Prior to launch, the Company intends to undertake user testing with a wide demographic of potential users to ensure that the combined MelodyVR/Napster offering will deliver a proposition that is truly attractive to both fans and artists. The enlarged business will focus primarily on its D2C proposition and the integration of the businesses into a new combined consumer app. In addition, given the enhanced flexibility of the combined technologies and back-end systems from both MelodyVR and Napster, the Napster business will continue to support both existing and new PaaS partners, such as Sonos and Huawei. The Directors expect to continue to support Napster’s existing B2B partnerships and to further develop new partnerships across new and existing territories. Partnership growth, post completion is expected to focus on telecommunications companies and telephone network providers (such as Telefonica, SFR and T-Mobile) as the Directors believe the combination of both MelodyVR’s and Napster’s combined service will provide an ideal platform from which to showcase new 5G network technology with both new and existing partners. In addition to the new music service offering, the Board believes the combination of the two businesses will provide an opportunity to secure significant operating efficiencies. The Directors intend to integrate a number of core functions into the Napster business in Seattle. By eliminating the cost associated with multiple duplicated functions, and consolidating core functions and expertise, the unified operation is expected to secure operating efficiencies from greater scale, established operating practices and material cost synergies. In addition, the Enlarged Group is expected to benefit from these core functions being located in close proximity to many key music industry partners.

Marketing The Company intends to drive growth via a combination of different initiatives:

Direct Marketing to Consumers The Company will utilise a number of marketing techniques, across various channels such as digital, print, broadcast and out-of-home advertising. It is intended that these marketing initiatives will seek to generate further awareness, and ‘re-familiarize’ consumers with the Napster brand. In addition, Napster’s updated offering will be prominently displayed, with features and functionality marketed accordingly. These campaigns are expected to run from May 2021, in preparation of launching the updated product later in the year. The combined marketing and growth teams will work with industry leading agencies for both advertising and branding, to support the launch and maximise the enlarged business’ potential.

B2B Partner Marketing Napster has developed partnerships with a number of prominent B2B partners each with significant audiences. The Directors believe that due to the compelling proposition that the new platform will provide to consumers, partnerships in the telecommunications space will become a key driver for platform growth from 2021 onwards. As demonstrated by MelodyVR’s partnership with Telefonica in 2019, the Directors believe that many network providers and device manufacturers are looking for use cases and marketing tools to support both 5G networks and new 5G enabled devices including smart phones. Furthermore, the Directors believe that the high-resolution and immersive nature of MelodyVR’s content serves as a

24 significant asset when demonstrating the increased speed and bandwidth of 5G networks. It is anticipated that there will be significant interest from both new and existing partners, with a view to making the updated Napster platform available to their consumers.

Artist Marketing As MelodyVR has demonstrated, its unique content formats and live events have proved both attractive and engaging for artists themselves. Many of the artists with whom MelodyVR has worked with have created promotional assets that have been shared with their respective followers across the social media platforms. Given the unique nature of MelodyVR’s content, and the significant differentiators expected from the updated Napster platform when contrasted with the current competitive landscape, the Directors believe that significant reach will be generated by working directly with artists and their associated record labels, to evangelize the new Napster offering to their existing fan bases on platforms such as social media. In addition, the Company intends to host a number of promotional live performance streams delivered directly into fans homes around the world from purpose built studios to further increase engagement and subscriber conversions at the time of launch. Given the immersive and exclusive nature of “Virtual Events”, it is expected that the promotional events with leading artists, will generate traction and engagement for the Company’s new platform.

Rightsholders Music rights are a core component and asset to both businesses. MelodyVR and Napster both hold global umbrella agreements with all three major record labels, as well as a number of smaller record labels and music publishers. The licenses held will enable the Enlarged Group to create, distribute and monetise recorded content from the majority of the world’s most prominent musicians and artists. Currently, the Napster service boasts a library of over 80 million tracks, with MelodyVR offering what the Directors believe to be the world’s largest library of exclusive immersive content, spanning hundreds of artists and thousands of hours of recorded content. The Directors believe that the combination of these two libraries of content, in combination with MelodyVR’s partnerships with festival and event promoters, such as Live Nation, provides a distinct and competitive advantage within the music marketplace. In addition, as per the terms of the Company’s licensing agreements and in accordance with the change in control provisions contained therein, all major rightsholders have now approved the transaction as contemplated. Whilst new licencing agreements are not required to launch the new combined mobile app, it is expected that over the course of the next 12 months, Napster and MelodyVR will work with the rightsholders to both update and create new licensing agreements in support of an extended consumer offering.

Content Creation MelodyVR has defined itself as a leading immersive content creator within the music industry, based on an integrated end-to-end approach spanning live event production expertise, hardware such as camera equipment and a unique post-production workflow including compression and delivery mechanisms to enable the fast and efficient transmission of high-resolution content over average speed internet connections. The Enlarged Group will continue to leverage MelodyVR’s content production expertise to create further exclusive content including; live audio recordings, Immersive 360 Degree content and both short and long form 2D content, such as music videos and documentaries. Following a similar business model to other successful subscription-based content platforms, the Company believes that its original exclusive content will provide a unique and compelling driver for subscriber growth and will be a key area of focus both pre-and-post launch of the updated platform in 2021. Given MelodyVR’s experience with producing, hosting and delivering real-world live events and performance-based content, the Company intends to expand its original content offering, enabling the creation of further high-quality artist led content whilst delivering cost-efficiencies for the Enlarged Group.

Monetisation The Enlarged Group will continue to generate revenue by providing users with a premium, recurring, monthly subscription service. This is expected to be priced at a comparable level to existing

25 subscription services offered by Napster and other competitors, subject to further research and market testing and local market variations. For the monthly fee, subscribers will receive access to Napster’s recorded music library of 80 million tracks, together with new live audio recordings, long and short form video content and MelodyVR’s library of immersive VR experiences. In addition, the Enlarged Group will continue to produce live-streamed digital events, monetised directly via the platform, as well as sold via 3rd party providers such as Live Nation and Ticketmaster. Live streamed events are anticipated to serve as both a driver for subscriber growth and provide a significant source of additional revenue, incremental to the monthly subscription fee. In addition, the app will include the sale of retail merchandise alongside digital event tickets, such as clothing products, vinyl records and other show/artist related paraphernalia which provide significant new monetisation and engagement opportunities. Given the current global roll out of next generation 5G networks and the ability of the Company’s offering to showcase the benefits of 5G connectivity and bandwidth, it is anticipated that B2B partnerships combining both Carrier and PaaS will account for approximately half of revenues of the Enlarged Group post the launch of the new mobile app. The Enlarged Group will retain executives from both the MelodyVR and Napster commercial teams, who will continue to leverage existing partnerships and grow the existing Napster B2B business. Napster will continue to stimulate third party opportunities for PaaS customers. Revenues derived from “white label” platform services are expected to continue to scale and benefit from the availability of new and extended functionality, such as enhanced video and audio delivery services, live content, VR and AR infrastructure post integration. The combination of both MelodyVR and Napster’s backend systems, including royalty reporting and financial services will deliver an updated proposition to existing customers and appeal to new clients wishing to utilize and extended suite of “white label” services for their brands as well as facilitating accelerated scaling of the D2C business. The Directors intend to consolidate the Enlarged Group’s operations in Seattle, USA, where practical, where it will benefit from being in close proximity to many of its key music industry partners. It is anticipated that the Enlarged Group will benefit from material cost synergies from combining core operations of both companies, such as human resources, royalty reporting, technical development, finance and other central functions. During the first year following completion the Acquisition the Enlarged Group will focus on integrating the two businesses and the development of the new App, to be launched in Autumn 2021. The Directors anticipate that additional financing will be required to fund the launch of the App and associated marketing planned for 2022 as described in this paragraph. It is anticipated that such additional financing requirements are likely to be met from an issue of Ordinary Shares.

5. KEY TERMS OF THE ACQUISITION Under the terms of the Merger Agreement, a wholly-owned subsidiary of the Company will be merged with and into Napster (with Napster being the surviving entity). Upon completion of the transaction, Napster will be a wholly-owned 2nd-tier subsidiary of the Company. The Company has already advanced the sum of $12m by way of cash deposits which have been placed into escrow. At any time prior to completion, Napster may request funds to be released from the deposit in order to pay certain identified rights holder obligations. Any such requests must be approved by the Company. In the event that the Acquisition fails to complete due to Napster being unable to meet the closing conditions of the Acquisition, the deposit will be refunded to the Company and Napster must repay any advances to the Company within six months of completion. In the event that the Company fails to fulfil certain closing obligations under the Merger Agreement, the deposit may be forfeited. At completion of the Acquisition, the deposit will be released to certain of Napster’s debt-holders and shareholders, and a further $3m will be deposited by the Company into an escrow account. This amount will be used to secure certain indemnity obligations of Napster’s shareholders and unless used pursuant to those indemnity obligations, will be released to the former Napster shareholders 18 months after closing. As further consideration for the Acquisition, the Company will issue at least 200 million Consideration Shares to Napster’s debt-holders and shareholders at Completion. The number of Consideration Shares may increase as result of any decline in the Company’s share price below

26 4.30 pence between signing of the Merger Agreement and Completion, pursuant to the terms of the Merger Agreement. As such, the final number of Consideration Shares to be issued will not be confirmed until Completion. As part of the Acquisition, it has been agreed that approximately $30 million of shareholder loans that would otherwise be repayable by the Enlarged Group will be written off in full upon Completion of the Acquisition. Therefore this liability will be extinguished and no further amounts will be due following completion.

6. KEY TERMS OF THE DAVIS CAPITAL LOAN FACILITY On 8 December 2020, the Company entered into a binding commitment letter setting out the terms in respect of a $25 million delayed draw term loan facility (the “Loan Facility”) from Davis Partnership, LP to Rhapsody. The Loan Facility will be closed between the date of publication of this document and Admission. The repayment date of the loan will be 20 months from the date of closing the Loan Facility and Rhapsody may drawdown in minimum tranches of $5 million at an interest rate of 10 per cent per annum calculated daily from the date of drawdown until the date of repayment (inclusive). At its option, Rhapsody can make interest payments by either (a) allowing the interest to accrue or (b) the Company issuing Ordinary Shares to the lender, instead of making cash interest payments. Rhapsody will also be subject to a 2 per cent draw fee in connection with each draw upon the Loan Facility. The Loan Facility will be secured by a first priority lien on all of the assets of Rhapsody and its domestic and certain foreign subsidiaries, including on receivables of Rhapsody and certain subsidiaries, subject to certain exceptions. The Loan Facility will include customary affirmative and negative covenants for transactions of this nature and a covenant that requires Rhapsody to maintain a minimum of US$2 million of liquidity. In consideration for the Loan Facility, Davis Partnership, LP will receive warrants granting the ability to invest $20 million in the Company within a period of 10 years, at the Issue Price. It is a condition of the Loan Facility that the Company will use commercially reasonable efforts to install Lansing Davis as a director of the Company as soon as practicable. Ahead of signing the Loan Facility, the Company intends to enter into a secured bridge facility agreement and debenture with Davis Partnership, LP (the “Bridge Facility”). The Bridge Facility will be for the principal amount of US$5 million and will bear interest at a rate 15 per cent per annum, which interest is due and payable on the maturity date of 31 March 2021. The Company will repay and terminate the Bridge Facility with proceeds from a subsequent equity offering or by drawing on the Loan Facility prior to the maturity date. While any amounts are outstanding under the Bridge Facility, the Loan Facility will be decreased by such corresponding amount.

7. KEY STRENGTHS OF THE ENLARGED GROUP The Company, which operates the MelodyVR platform, believes that the addition of Napster’s music library, comprising in excess of 80 million music tracks, to its own platform of VR music performances and live streamed events will provide a compelling and differentiated offering to music fans around the world. As previously stated, the Company’s strategy is to scale the business through a consumer subscription model, implementing a monthly fee similar to other subscription- based companies operating in the entertainment sector. Napster is an established music streaming business with corporate and consumer subscribers across Europe, North America, Latin America and the Asia Pacific region. The investment case for the Acquisition can be summarised by:

* Differentiation – The creation of a differentiated music offering combining traditional music streaming and immersive content which is unique compared to other music services, including those of existing major streaming providers such as Apple Music and Spotify.

* Annuity income – Napster is a business with high quality revenue, comprising primarily annuity-based subscription earnings.

* Convergence – Compelling offering with opportunity for operational synergies which will eliminate the duplication of functions and combined OPEX reduction across the Enlarged Group via the centralisation of the enlarged resource in the US.

* Expansion – Opportunity for acceleration of scale and the extension of both awareness and engagement of the combined offering.

27 8. MARKET Driven by the expansion of mobile internet access and growing connection speeds (5G), the increasing number of mobile and streaming devices continues to lead a steady growth in demand for all types of digital media. The global music market generated revenues of circa $56 billion in 2019 and is expected to grow to $65 billion by 2023 as record labels seek to expand the market to recoup the $5.6 billion in annual spend associated with breaking new music artists. Of the total global revenue, live music market accounted for circa $27 billion in 2018 and is projected to increase to $31 billion by 2023 with approximately 47 per cent. of music listeners indicating the importance for the industry of offering live stream performances or virtual concerts. (Source US Music 360 – MRC & Niesen Music). The global digital music market size was approximately $16.3 billion in 2019 and accounted for 9.2 per cent. of the digital media market. By 2025, the market is expected to reach a global revenue of $22.8 billion and is growing at a CAGR of 5.7 per cent. Revenue from music streaming is projected to reach $16.4 billion in 2020 and $21.3 billion by 2025. Streaming users’ revenue at the end of 2020 is expected to reach $0.6 billion representing an 8 per cent. user penetration which is expected to increase to 12 per cent. by 2025 with the majority of revenue being generated in the U.S. (Statista – Digital Media Report 2020 – Digital Music). The U.S., Europe, and China cover 71.5 per cent. of the global digital music market with a cumulated revenue of $11.7 billion. China is likely to remain the smallest market of the three regions. Its total revenue is expected to grow from $1.4 billion in 2019 to $2.2 billion by 2025 as the average revenue per user of $5.06 is considerably lower compared to the figures of the U.S. ($63.15) and Europe ($29.93). Two major trends are expected: a growth in music streaming and a decline in music downloads. The trend towards music streaming is likely to continue through 2025, with a CAGR for the U.S. and Europe of 6.0 per cent., and 5.8 per cent., respectively. However, China’s music streaming market is likely to have the highest average annual growth of 8.3 per cent. up to 2025. Ad-based and freemium services as well as subscription-based services contribute to the rising popularity of music streaming services. Music streaming services secure access to more customer groups by offering different pricing models such as student or family license. From a VR perspective, Facebook continues to ramp up the production of its Oculus VR headsets by up to 50 per cent. from that achieved last year and remains the market leader in VR hardware with a 35 per cent. share. Oculus, acquired by Facebook six years ago for $2 billion, is a VR company which had historically developed headsets that were tethered to high-end PCs. Oculus’s first commercial headset, the Rift, mainly attracted hardcore gamers and developers when it launched in 2016, with mainstream users getting their first taste of VR through cheaper card-board- like accessories for smartphones. These devices offered more freedom than PC-based VR headsets, but were limited by a phone’s processing power. To address these limitations, Facebook launched the stand-alone Oculus Go, which wasn’t tethered to a PC or phone, in 2018. The Go was not as powerful as the Rift, but attracted more users and topped two million shipments in 2019. The Go’s success paved the way for the Quest, a more expensive and powerful stand-alone headset that added six degrees of freedom (6DOF) for more complex VR actions, which launched in May 2019. In May 2020, Facebook announced it had sold over $100 million in VR content for the Quest over the previous 12 months and implied each Quest owner bought over $140 in content for their $400- $500 headsets, and that Facebook’s plans for building a sprawling VR world for video games, media, and social interactions were gradually taking shape. Like other app stores, Facebook retains a 30 per cent. cut of its Oculus content sales. As VR reaches mainstream adoption, the 360 video viewing audience continues to grow. IDC forecasts that 76.7 million VR headsets will ship annually by 2024. The price of VR headsets has reduced significantly since early models were released and new headsets are making it easier for consumers to afford and discover VR as first-time users. VR/AR is the fastest growing of the entertainment and media segment with users driving demand for better, more immersive and engaging entertainment. The VR/AR market generated annual

28 revenues of $2.9 billion in 2019 and is expected to grow by circa 22 per cent. to $6.1 billion by 2023.

9. SUMMARY FINANCIAL INFORMATION Parts IV and V of this Document contains audited historical financial information of the Company and for Napster for three years ending with 31 December 2019 and six months ended 30 June 2020. The following financial information has been derived from the financial information contained in Parts IV and V of this Document and should be read in conjunction with the full text of this Document. Investors should not rely solely on the summarised information.

Six months Six months Year ended Year ended Year ended to to 30.12.2017 30.12.2018 31.12.2019 30.6.19 30.6.20 MelodyVR £’000 £’000 £’000 £’000 £’000

Revenue — 1,180 195 128 190 EBITDA (6,050) (10,544) (14,238) (6,335) (9,482) Loss Before Tax (6,231) (11,146) (16,153) (7,139) (10,741) ————— Financial information presented under IFRS.

Six months Six months Year ended Year ended Year ended to to 30.9.2017 30.9.2018 31.12.2019 30.6.19 30.6.20 Napster $’000 $’000 $’000 $’000 $’000

Revenue 181,930 150,278 112,589 n/a1 49,529 EBITDA (13,181) 16,468 2,394 n/a1 327 (Loss)/profit Before Tax (16,908) 8,841 (16,693) n/a1 97 ————— Financial information presented under US GAAP. 1 Not available. Further detail is contained within Part V.

10. CURRENT TRADING AND PROSPECTS FOR THE ENLARGED GROUP 10.1. MelodyVR During the course of the last three months MelodyVR has continued to focus on enriching its platform via the capture and distribution of new content. In July of this year, it announced that it had entered into an exclusive partnership with Live Nation UK for a series of pioneering new live concerts connecting artists and fans in 360 Degree virtual reality with fans able to purchase tickets from Ticketmaster and in-app via the MelodyVR platform. These live performances will be performed at the O2 Academy Brixton using the Company’s virtual reality technology and will provide fans with the choice of watching each performance from multiple vantage points within the venue including on stage with the artists themselves. Performances are available in both 2D 360° and virtual reality. Each show is entirely bespoke and created in collaboration with artist teams, to deliver an exclusive, unique and premium series of events with high quality production values. MelodyVR view this programme as a unique opportunity for artists to perform live for their fans and will create new opportunities for revenue generation and complement their continuing program of live performance releases, with tickets for this exclusive series sold via the series exclusive ticketing agent – Ticketmaster. These new partnerships follow the success of Wireless Festival’s virtual incarnation, Wireless Connect, which was also broadcast during July 2020. The three-day 360° event featured new and exclusive performances from London and Los Angeles, with performances from 70 UK and US hip hop, rap, R&B and grime artists. Delivered by Festival Republic and MelodyVR, this event attracted over 250,000 fans from 34 countries across the world and more than one million interactions over the weekend.

29 10.2. Napster Over the course of the last three months Napster has secured a two year extension with a key carrier partner SFR in France. New partnerships with Recochoku and NTT DoCoMo in Japan underpinned strong PaaS performance with revenues up 41 per cent. quarter on quarter (QE September 2020) and 88 per cent. year on year. During the last quarter Napster was also able to conclude an amendment to an agreement with a marquee PaaS partner that will lead to the launch of a new music service in Q4 and secure a new partnership arrangement which will provide for new high resolution streaming services. B2B revenues from both T-Mobile and Aldi showed increases of 19 per cent. and 5 per cent. respectively year on year, the effect of which underpinned a gross margin improvement of 570 bps quarter on quarter and 560 bps year on year. The initiatives to cross promote artist Tom Grennan, a MelodyVR live streamed event from O2 Academy Brixton drove a 20 per cent. increase in artist streams.

10.3. Prospects for the Enlarged Group It is anticipated that the combination of MelodyVR’s immersive VR and 2D 360 content and Napster’s streaming services will provide for a compelling and differentiated music service post launch of the new mobile application. The new service is intended to target the following audiences via a marketing campaign in conjunction with the development of the Enlarged Group’s new app with a depth and breadth of content designed to appeal to the true music fan with a focus on ensuring breadth, depth, value and retention. Tech Believers – Who are open to new technology and will try new services as long as they present themselves persuasively. They spend a lot of time on their smart devices and consume music content regularly. They’ve tried new technologies and may a VR headset at home or are thinking of getting one. Committed music fans – Actively seek more and deeper ways to bring music into their lives. They care about a wide range of artists, the stories behind the music and music as a craft. They are interested in their music scenes as a whole, beyond the latest big track or new release; Willing to Pay – They may not have a huge disposable income, but don’t immediately reject paywalls and subscriptions. They know nothing is really ‘free’ and that great digital content has value. Their expectations of paid experiences are high, but they are willing to pay for “valuable” products; Existing Users – A loyal and highly active user base. They value a service that is simple, personal and reliable. Adding to playlists, curating their collection and listening offline are their favourite features. Getting more in addition to recorded audio streaming, will enhance the Napster proposition and engage the existing user base. The Directors believe that a differentiated offering which extends beyond both MelodyVR’s and Napsters existing offerings to include recorded music, short form video content (such as music videos), long form video content (such as documentaries), digitally ticketed live streams, educational videos and immersive AR/VR content, will provide for an exciting new premium subscription based offering within the music market. Given the existing fragmentation between rightsholders in the music industry, and live-event promoters such as Live Nation, the Directors believe that MelodyVR is uniquely positioned to launch a previously unseen combined offering, due to its existing partnerships and relationships across the industry. The Directors also believe that the updated platform will resonate with artists looking to increase engagement with their fans in a more succinct way, by offering access to their entire body of work, be it recorded audio, video or live performance in one place. The Directors believe that initially launching in the 34 territories where Napster has an existing presence, with the marketing resources and strategy outlined earlier in this Document, will drive engagement and awareness. The Directors believe that via its own marketing initiatives and those of its extensive partner network combined with the existing subscription base across both D2C and B2C channels will provide a solid foundation for growth.

30 The new app will be made available across multiple devices, including smartphones, tablets, smart TV’s, consoles and VR devices, as well as providing audio only offerings for in-car and connected home devices such as Sonos and Amazon Echo. New App Lauch Markets

New App Lauch Platforms

11. DETAILS OF THE SUBSCRIPTION The Company is proposing to issue 201,349,772 Subscription Shares at a price of 3.75 pence per share to subscribers. The 201,349,772 Subscription Shares subscribed for by Subscribers will represent approximately 8.2 per cent of the Enlarged Ordinary Share Capital. The Subscription Shares will have the effect of

31 diluting the Existing Ordinary Shares by approximately 9.8 per cent. and on Admission, the Company will have an implied market capitalisation of approximately £92.4 million at the Issue Price. The Company, the Directors, Beech Hill and Arden have entered into the Admission Agreement relating to Admission. The Admission Agreement is conditional, amongst other things, upon Admission having become effective by not later than 8:00 am on 29 December 2020 or such later time and date as the Company and Arden may agree (being not later than 8:00 am on 30 December 2020). Further details of the Admission Agreement are set out in paragraph 15 of Part VI of this document. Application has been made to the London Stock Exchange for all issued Ordinary Shares to be admitted to trading on AIM. The Subscription Shares are expected to be issued and admission to AIM of the Ordinary Shares is expected to become effective on 29 December 2020. The issue of the Subscription Shares is subject to Shareholder approval of the Authority Resolutions at the General Meeting. The Subscription Shares will be issued fully paid, and following allotment, will rank in full for all dividends or other distributions hereafter declared, made or paid on the Ordinary Shares of the Company and will rank pari passu in all other respects with all other Ordinary Shares in issue on Admission. The rights attaching to such Ordinary Shares are set out in paragraph 10 of Part VI of this Document.

12. RELATED PARTY TRANSACTIONS The loan by Davis Partnership, LP constitutes a related party transaction for the purposes of the AIM Rules by virtue of Davis Capital Partners, LLC being a substantial shareholder of the Company. The Commitment Letter and subsequent Loan Facility, has been entered into in order to ensure sufficient working capital immediately following the Acquisition and support the strategy for the Enlarged Group. The Directors are entering into the Loan Facility having considered the availability to the Company of alternate sources of finance including equity and debt financing. The Directors therefore consider, having consulted with the Company’s nominated adviser, Arden, that the terms upon which Davis Partnership, LP is providing the Loan Facility to the Company are fair and reasonable insofar as the Company’s shareholders are concerned. The Bridge Facility by Davis Partnership, LP constitutes a related party transaction for the purposes of the AIM Rules by virtue of Davis Capital Partners, LLC being a substantial shareholder of the Company. The Bridge Facility, has been entered into in order to ensure sufficient capital is available to the Company until it is able to draw down on the Loan Facility. The Directors are entering into the Bridge Facility having considered the Company’s immediate working capital requirements and no alternate sources of finance being immediately available. The Directors therefore consider, having consulted with the Company’s nominated adviser, Arden, that the terms upon which Davis Partnership, LP is providing the Bridge Facility in the Company are fair and reasonable insofar as the Company’s shareholders are concerned. Investors attention is drawn to the risk factors contained in Part III of this document. In particular, attention is drawn to the potential for significant dilution in the event of exercise of the associated warrants and to the risk to the continuing operations of the Company in the event that the Company is unable to refinance the loan upon the expiry of its term. Anthony Matchett, Steven Hancock and Grant Dollens, (being current Directors of the Company) are related parties for the purposes of the AIM Rules and have agreed to subscribe for Ordinary Shares pursuant to the Subscription. Simon Cole and Andrew Botha, being the Directors not participating in the Subscription, are considered to be independent directors of the Company for the purposes of AIM Rule 13 in connection with the Subscription. They consider, having consulted with the Company's nominated adviser, Arden, that the terms of the Subscription by Anthony Matchett, Steven Hancock and Grant Dollens are fair and reasonable insofar as the Shareholders are concerned.

32 13. REASONS FOR ACQUISITION, ADMISSION, THE SUBSCRIPTION AND USE OF PROCEEDS The Directors believe that the Acquisition and Admission will position the Company for its next stage of development by further raising its profile, incentivising employees and providing it with a platform for future organic growth and acquisitions. The Company will receive approximately $8.4 million of net proceeds from the Subscription (after deducting related expenses incurred by MelodyVR of approximately $1.7 million). In addition, the Company will have access to $25 million of funding from the Loan Facility which the Directors expect to draw down in the next 12 months. The Directors expect to require additional funding to complete on the Company’s strategy beyond the launch of the new App. The Company intends to use the net proceeds from the Subscription and Loan Facility: Integration costs

* Cloud migration ($5.8 million);

* Integration expenses ($2.2 million);

* Licensing and publishers ($6.0 million); (5 12 months) Operations

* Marketing and ($10.3 million); awareness generation

* Content Capture ($2.7 million);

* CAPEX ($3.5 million); and

* Working Capital ($2.8 million).

14. DIRECTORS, SENIOR MANAGEMENT AND ADVISORY BOARD The Board on Admission will comprise Anthony Matchett, Steven Hancock, Simon Cole, Grant Dollens and Andrew Botha. Lansing Davis, principal of Davis Capital Partners LLC, is expected to join the Board following Admission subject to completion of customary nominated advisor checks. Brief biographical details of the Directors, senior management and members of the advisory board are set out below:

14.1. Directors The current composition of the Board of the Company is as follows:

Simon Cole (Independent Chairman, aged 62) Following spells at the BBC and at Piccadilly Radio, where he helped establish PPM Radiowaves, an independent production company, in 1989 Simon founded The Unique Broadcasting Company (“Unique”). Unique became a market leader in both the production of network radio programmes for commercial radio throughout the UK and BBC Radio. In 2000, Unique floated on the London Stock Exchange as part of UBC Media Group PLC (“UBC”) (now called 7Digital Group PLC), with Simon as Chief Executive. UBC were leaders in content production and software development for the global radio and online communities. Simon has overseen the acquisition of several production companies in both London and Manchester and driven UBC’s move into new online platforms. He was formerly a non-executive director of AIM quoted Audioboom Holdings PLC.

Anthony Matchett (Chief Executive Officer, aged 32) Anthony is the Executive Chair and Chief Executive Officer of MelodyVR. He has extensive music industry experience and began his career as an audio engineer before moving on from the music industry to the world of post-production for advertising. In 2011, Anthony was tasked with founding Wave Recording Studios’ (“Wave”) first interactive division, focused on servicing the audio requirements of game developers and publishers. During his time at Wave, he secured clients such as Studios, Sony Computer Entertainment, King.com and Ubisoft, and spearheaded numerous projects on their behalf. In 2015, Anthony’s background and passion for music and technology inspired him to create MelodyVR, together with Steven Hancock.

33 Steven Hancock (Chief Relationship Officer, aged 37) Steven is the Chief Relationship Officer of MelodyVR. Prior to this, Steven gained over 15 years’ experience at senior management level, within events management where he worked with music artists around the globe and also numerous FTSE 100 companies, managing more than 150 staff on a daily basis. More recently, Steven was the Commercial Manager at Ibiza Rocks, one of the fastest growing youth lifestyle brands in Europe, where he oversaw sales and marketing. In 2015, Steven joined forces with Anthony Matchett to create MelodyVR.

Grant Dollens (Non-Executive Director, aged 42) Grant is currently Managing Member at Global Frontier Investments, LLC, a US-based investment manager, and Portfolio Manager for Global Frontier Partners, LP. Prior to founding Global Frontier Investments, Mr Dollens worked for Ayer Capital Management, BA Venture Partners and Deutsche Bank. Grant also holds a Masters in Business Administration with majors in analytical finance, management & strategy, and accounting and a BSE, biomedical engineering, from Duke University. Mr Dollens is also a Non-Executive Director of WANdisco plc, the AIM listed live data company for machine learning and AI.

Andrew Botha (Non-Executive Director, aged 53) Group CFO at Purplebricks plc, Andrew has wide and varied experience derived from a number of high-profile finance and commercial roles at high growth, digital companies such as; Zoopla (ZPG plc), Secret Escapes, notonthehighstreet.com, Betfair and lastminute.com. Andrew’s experience covers key areas such as: M&A, financing, business development, restructuring, financial reporting and risk management as well as operational P&L management. In his role as a Non- Executive Director at MelodyVR, Andrew chairs the audit committee.

14.2. Senior management In addition to the Board, details of key senior management personnel within the Enlarged Group are set out below:

Russell Backhouse (Head of Corporate Finance – MelodyVR, aged 53). Russell Backhouse was part of the advisory team which supported MelodyVR’s admission as a public company in 2015. He is an experienced finance director and corporate financier and has served on a number of company boards in the UK, continental Europe and North America, both listed and private, with a particular focus on the TMT sector. He was finance director at Transcomm Plc (AIM Listed) prior to its disposal to British Telecom, and sat on the Board of Swindon Town Football Company Limited.

Sohail Bhatti (Finance Director – MelodyVR, aged 61). Sohail Bhatti is a Fellow of The Association of Chartered Certified Accountants (FCCA), and has served as finance and non-executive director of a number of private and quoted companies for more than 20 years. In 1998, he joined Transcomm plc, an AIM quoted telecommunications group as finance director for one of its subsidiary undertakings and served for 6 years until its acquisition by British Telecom in 2004.

Matt Eccles (Senior Vice President and General Council – Napster, aged 43). Matt Eccles has over 20 years of music and content licensing experience having worked extensively with major record labels and publishers in the US, UK and other key markets. He was admitted to practice law in State, USA in 2011 and in England and Wales in 2000, having graduated with a BSc (Hons) from St.Andrew’s University, Scotland in 1996.

Scott Javor (Senior Vice President and Chief Financial Officer – Napster, aged 47). Scott Javor has extensive experience advising companies on financial planning and operations, corporate development and strategic growth. Prior to joining Napster, he held the position of managing director at FTI Consulting and FTI Capital Advisors. Throughout his 10 years with FTI, he advised companies on performance improvement, business plans, M&A and restructuring transactions. Previously, he served as the Vice President of GE Capital’s Media, Communications &

34 Entertainment business. He holds a bachelor’s degree in economics from Yale University and an MBA in finance from The Wharton School, University of Pennsylvania.

Bill Patrizio (President and CEO – Napster, aged 58). Bill Patrizio joined Napster in 2018, from Opaka Partners, a firm that supports private equity owners and management teams to design and execute strategies for growth and reinvention, where he was founder and managing director. Prior to that, he was CEO of Red Bee Media, a digital media software and broadcast services company based in the UK with operations in Europe, Asia and Australia. Red Bee Media, owned by Macquarie Capital, was purchased by Ericsson Communications in 2014. Patrizio has also held leadership positions at Technicolor as President of Broadcast Network Services, The Walt Disney Company and Universal Studios.

15. CORPORATE GOVERNANCE The Directors acknowledge the importance of the principles set out in the Corporate Governance Code. The MelodyVR Directors have adopted the Corporate Governance Code which has become a widely recognised benchmark for corporate governance of small and mid-sized companies, particularly AIM companies. Immediately following Admission, the Board will comprise five Directors, two of whom shall be executive Directors and three of whom shall be non-executive Directors, reflecting a blend of different experience and backgrounds. Two of the non-executive directors are considered by the Board to be independent. Lansing Davis is expected to join the Board as a non-executive director following admission, due to his connection with Davis Capital, LLP he will not be considered independent. Following Admission, the Board will meet at least six times a year to review, formulate and approve the Company’s strategy, budgets, corporate actions and oversee the Company’s progress towards its goals. It has established an audit committee and a remuneration committee with formally delegated duties and responsibilities and with written terms of reference. From time to time, separate committees may be set up by the Board to consider specific issues when the need arises.

Board Committees The Company will, upon Admission, have established Audit and Remuneration Committees comprised solely of non-executive Directors.

Audit Committee The Audit Committee is chaired by Andrew Botha and its other member is Simon Cole, both of whom are independent non-executive directors. The Audit Committee is expected to meet formally at least two times a year and otherwise as required. It will have the responsibility for ensuring that the financial performance of the Company is properly reported on and reviewed and its role includes monitoring the integrity of the financial statements of the Company (including annual and interim accounts and results announcements), reviewing internal control and risk management systems, reviewing any changes to accounting policies, reviewing and monitoring the extent of the non-audit services undertaken by external auditors and advising on the appointment of external auditors.

Remuneration Committee The Remuneration Committee is chaired by Simon Cole and its other member is Grant Dollens. Simon Cole is an independent non-executive director. The Remuneration Committee is expected to meet as required. It will have responsibility for determining, within the agreed terms of reference, the Company’s policy on the remuneration packages of the Company’s chairman, the executive Directors, senior managers and such other members of the executive management as it is designated to consider. The Remuneration Committee will also have responsibility for determining (within the terms of the Company’s policy and in consultation with the chairman of the Board and/or the chief executive officer) the total individual remuneration package for each executive director and other designated senior executives (including bonuses, incentive payments and share options or other share awards). The remuneration of non-executive directors will be a matter for the chairman

35 and executive directors of the Board. No director or manager will be allowed to partake in any discussions as to their own remuneration. In addition, the Remuneration Committee will have the responsibility for reviewing the structure, size and composition (including the skills, knowledge and experience) of the Board and giving full consideration to succession planning. It will also have responsibility for recommending new appointments to the Board.

Share dealing policy The Company has adopted, with effect from Admission, a share dealing policy regulating trading and confidentiality of inside information for the Directors and other persons discharging managerial responsibilities (and their persons closely associated) which contains provisions appropriate for a company whose shares are admitted to trading on AIM (particularly relating to dealing during closed periods which will be in line with the Market Abuse Regulation). The Company will take all reasonable steps to ensure compliance by the Directors and any relevant employees with the terms of that share dealing policy.

Compliance with the Corporate Governance Code The Company has published on its AIM Rule 26 website details of how it complies with the Corporate Governance Code and where it departs from the Corporate Governance Code and explanations of the reasons for doing so. This information is also set out below. The Company will review this information annually in accordance with the requirements of AIM Rule 26. The following summary sets out how the Company applies the key governance principles defined in the Corporate Governance Code. The Board of Directors of the Company are committed to developing and applying high standards of corporate governance appropriate to the Company’s size and stage of development. The Board of Directors has adopted the QCA Code, revised in April 2018 as devised by the Quoted Companies Alliance. The Quoted Companies Alliance is the independent membership organisation that champions the interests of small to mid-size quoted companies. The QCA Code takes key elements of good governance and applies them in a manner which is workable for the different needs of growing companies. A revised version of the QCA Code (the “Revised Code”) was published in April 2018, based on the ‘comply or explain’ principle. The Corporate Governance Code has ten principles of corporate governance that the Company has committed to apply within the foundations of the business. These principles are: 1. Establish a strategy and business model which promote long-term value for shareholders; 2. Seek to understand and meet shareholder needs and expectations; 3. Take into account wider stakeholder and social responsibilities and their implications for long term success; 4. Embed effective risk management, considering both opportunities and threats, throughout the organisation; 5. Maintain the board as a well-functioning balanced team led by the Chair; 6. Ensure that between them the Directors have the necessary up to date experience, skills and capabilities; 7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement; 8. Promote a corporate culture that is based on ethical values and behaviours; 9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board; and 10. Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders.

36 The Corporate Governance Code requires the Company to apply the ten principles and publish certain disclosures in its annual report and also on its website (www.MelodyVR.group). The Company’s disclosures are as follows:

Principle One – Establish a strategy and business model which promote long-term value for shareholders. The Board of Directors has clearly set out the vision for the Company for the medium to long term communicating this with stakeholders through regulatory announcements as well as interim and annual financial reports. The Board of Directors meet on a regular basis to discuss the strategic direction of the Company and progress in achieving against its aims. The Company provides detailed disclosure on the Company’s business model and strategy in the Annual Report and regulatory announcements. Strategic objectives and risks are disclosed here as well.

Principle Two – Seek to understand and meet shareholder needs and expectations. The Company has a Board of Directors with experience in understanding the needs and expectations of its shareholder base. It supplements this board by inviting experienced advisors to Board meetings and discussions as well as consulting professional advisers in the form of NOMAD and Broker, and Auditor who provide advice and recommendations in various areas of its communications with shareholders. The Company engages with shareholders in the following way:-The Company website has been designed as an information hub providing up to date information to shareholders. The website is reviewed on a regular basis to ensure the information is up to date, relevant and contains copies of all Company communications and public documents. The Company provides regular updates to the market via the Regulatory News Service. The Company’s Annual Report provides the required information with regard to historical performance, strategy and objectives of the Company. An Annual General Meeting is held to which all shareholders are invited and may engage with the Board of Directors. The Executive management team meet with shareholders regularly to discuss the Company’s performance and business model and strategy and feedback from these meetings is reported to the Board. Contact details for the Company are provided on the Company website along with public documents. The Company does not currently have a dedicated investor relations role nor corporate PR firm. The Board feels that this is appropriate given the size and stage of development of the Company.

Principle Three – Take into account wider stakeholder and social responsibilities and their implications for long-term success Resources and relationships on which the business relies are its customers, shareholders, employees, rights holders and suppliers. The Company’s long term success is reliant on a number of key partnerships that have been secured that encompass music rights, venues rights and technologies. The Board continues to deepen and expand these relationships to develop all opportunities available to the business. Employees are encouraged to raise any concerns they may have with relevant management and are also provided with independent contact should they not want to engage directly with their managers.

Principle Four – Embed effective risk management, considering both opportunities and threats, throughout the organisation The Company recognises that risk is inherent in all of its business activities and that these risks can have a financial, operational or reputational impact. The Company’s system of risk identification,

37 supported by established governance controls, ensures that it effectively responds to such risks, whilst acting ethically and with integrity for the benefit of all of our stakeholders. Once identified, risks are evaluated to establish root causes, financial and non-financial impacts, and likelihood of occurrence. The effectiveness and adequacy of mitigating controls are assessed. If additional controls are required, these will be identified and responsibilities for implementing them assigned. The Company’s management is responsible for monitoring the progress of actions to mitigate key risks. The risk management process is continuous; when material are captured in a risk register and key risks are reported to the Audit Committee and to the full Board.

Principle Five – Maintain the board as a well-functioning, balanced team led by the chair To ensure there is sufficient challenge to the executive directors, the Company has appointed Simon Cole Independent Chairman. The Board of Directors meet at least six times a year as a full board, it is responsible for setting the strategic direction and management of the of the Company while ensuring that there are established and adequate policies and procedures in place to safeguard Company assets and resources. It is the directors’ responsibility to oversee the financial position of the Company and monitor its business and affairs, on behalf of the shareholders, to whom they are accountable. The primary duty of the Board is to act in the best interests of the Company at all times. The Board also addresses issues relating to internal controls and risk management. The Board is comprised of five directors, three of whom are non-executives. The non-executive directors bring a wide range of skills and experience to the Company, as well as independent judgment on strategy, risk and performance. The independence of each non-executive director is assessed at least annually. The Board has appointed a number of subcommittees to assist in its activities. The terms of reference of the board committees are reviewed regularly and are available on the Company’s website. The Remuneration Committee consists of Simon Cole (Committee Chairman) and Grant Dollens. It is responsible for reviewing the performance of the senior executives and for determining their levels of remuneration as well as determining any options awards to employees and contractors. The Audit Committee consists of two non-executive Directors: Andrew Botha (Committee Chairman) and Simon Cole. The Audit Committee meets at least twice a year to consider the annual and interim financial statements as well as the audit plan. The Audit Committee is responsible for ensuring that appropriate financial reporting procedures are properly maintained and reported upon, reviewing accounting policies and for meeting the auditors and reviewing their reports relating to the financial statements and internal control systems. Grant Dollens, a non-executive director, has a significant holding in the Company and as such is not considered independent. Simon Cole and Andrew Botha are considered independent. Neither Simon Cole nor Andrew Botha hold any options or warrants over Ordinary Shares. The Board has committed to appointing the new CFO within six months of readmission. On appointment of a CFO to the Board, Steven Hancock will step down from the Board.

Principle Six – Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities The Board of MelodyVR has been assembled to allow each Director to contribute the necessary mix of experience, skills and personal qualities to deliver the strategy of the Company for the benefit of the Shareholders over the medium to long term. Full details of the Board Members and their relevant experience and skills can be found in this Document and on the Company’s website: MelodyVR.Group.com/board-and-committee Together the Board of Directors have the relevant music sector experience, the skills associated with running large public companies, technical skills and technical and financial qualifications to assist the Company in achieving its stated aims. The Directors keep their skillsets up to date through the range of roles they perform, external training (where necessary) and consideration of technical and industry updates.

38 Principle seven – Evaluate board performance based on clear and relevant objectives, seeking continuous improvement The Company internally assesses the effectiveness of the Board at every Board meeting, given its current stage of development as an entity this is considered adequate at the moment. Principle Eight – Promote a corporate culture that is based on ethical values and behaviours The executive team promote the corporate culture and ideals the Board consider provide the greatest competitive advantage, the desired ethical behaviours across all levels of the Company as well as the Corporate values. These are communicated by the executive team across the entire business through daily interaction and senior supervision which is considered adequate given the current scale of the organisation.

Principle Nine – Maintain governance structures and processes that are fit for purpose and support good decision-making by the board The current governance structures are considered adequate for the current stage of the Company and the Board has appointed a number of subcommittees to assist in its activities. The terms of reference of the Board committees are reviewed regularly and are available on the Company’s website melodyvr.group.com/board-and-committee.

Principle Ten – Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders The Company communicates with its shareholders through its Annual Report and Accounts, annual and interim announcements, the AGM and individual meetings with shareholders. Copies of all annual reports, notices and governance-related material are available on the company website: www.melodyvr.group.com The executive management team meets with the Company’s investors through briefings at least twice a year, coinciding with the Company’s annual and interim results and at other times during the year. The Company responds formally to all queries and requests for information from existing and prospective shareholders. These should be directed to [email protected]. In addition, the Chairman (Simon Cole) is available to shareholders to ensure that any potential concerns can be raised directly.

16. EMPLOYEES As at 7 December 2020, being the last practicable date prior to the publication of this document, the Company employed approximately 84 employees. The Company has put in place various incentive schemes to incentivise, and recognise the value of, its employees and senior management, the details of which are summarised briefly in the following paragraphs and in more detail in paragraph 11 of Part VI of this Document.

17. SHARE INCENTIVE PLANS The Company has granted options under the EVR Holdings PLC 2016 Enterprise Management Incentive Plan to employees to purchase ordinary shares of 1p each of the Company. The exercise prices of the options granted range between £0.0625 and £0.09 and have an expiry date of the 10th anniversary of the date of grant and are subject to vesting conditions. In addition, the Company has resolved to establish a Share Option Scheme of up to 30m ordinary £0.01 shares in the Company to be issued to employees and utilised in the event of further appointments. The exercise price of the options granted under the option pool will be 5.225p and will expire on the 10th anniversary of the date of grant and are subject to vesting conditions.

18. TAXATION Information regarding taxation is set out in paragraph 21 of Part VI of this Document. These details are intended only as a general guide to the current tax position in the UK.

39 If an investor is in any doubt as to his or her tax position or is subject to tax in a jurisdiction other than the UK, he or she should consult his or her own independent financial adviser immediately.

19. ADMISSION, SETTLEMENT AND DEALINGS Application has been made to the London Stock Exchange for the Enlarged Ordinary Share Capital to be admitted to trading on AIM. It is expected that Admission will become effective and dealings in the Ordinary Shares on AIM will commence at 8.00 a.m. on 29 December 2020. The Ordinary Shares will be in registered form and will be capable of being held in either certificated or uncertificated form (i.e. in CREST). Accordingly, following Admission, settlement of transactions in the Ordinary Shares may take place within the CREST system if a Shareholder so wishes. In respect of Shareholders who will receive Ordinary Shares in uncertificated form, Ordinary Shares will be credited to their CREST stock accounts on 29 December 2020. Shareholders who wish to receive and retain share certificates are able to do so and share certificates representing the Ordinary Shares to be issued pursuant to the Subscription are expected to be dispatched by post to such Shareholders within 5 Business Days of Admission. CREST is a paperless settlement enabling securities to be evidenced otherwise than by certificate and transferred otherwise than by written instrument in accordance with the CREST Regulations. The Articles permit the holding of Ordinary Shares in CREST. The Company will apply for the Enlarged Ordinary Share Capital to be admitted to CREST from the date of Admission. The ISIN number of the Ordinary Shares is GB00BD2YHN21. The TIDM is MVR.

20. INTERESTS IN ORDINARY SHARES Upon Admission, the Directors will in aggregate be interested in, directly and indirectly, 405,598,747 Ordinary Shares representing approximately 16.5 per cent. of the Enlarged Ordinary Share Capital. Further information is available in paragraph 11 of Part VI of this Document.

21. DIVIDEND POLICY The Board intends to adopt a progressive dividend policy for the Company once it has sufficient distributable reserves to do so and whilst understanding the need to retain sufficient earnings for the future growth of the business. The Board may revise the dividend policy from time to time.

22. TAKEOVER CODE The City Code on Takeovers and Mergers (the “City Code”) is issued and administered by The Panel on Takeovers and Mergers (the “Takeover Panel”). The Company is subject to the City Code and therefore its Shareholders are entitled to the protections afforded by the City Code. Under Rule 9 of the City Code when (i) a person acquires an interest in shares which (taken together with shares he and persons acting in concert with him are interested) carry 30 per cent. or more of the voting rights of a company subject to the City Code, or (ii) any person who, together with persons acting in concert with him, is interested in shares which in the aggregate carry not less than 30 per cent. of the voting rights of a company, but does not hold shares carrying more than 50 per cent. of the voting rights of the company subject to the City Code, and such person, or any persons acting in concert with him, acquires an interest in any other shares which increases the percentage of the shares carrying voting rights in which he is interested, then, in either case, that person, together with the person acting in concert with him, is normally required to extend offers in cash, at the highest price paid by him (or any persons acting in concert with him) for shares in the company within the preceding 12 months, to the holders of any class of equity share capital whether voting or non-voting and also to the holders of any other class of transferable securities carrying voting rights, unless the Company has obtained the approval of over 50 per cent. of its independent Shareholders in advance of such increase.

23. RISK FACTORS Your attention is drawn to the risk factors set out in Part III of this Document and to the section entitled “Forward Looking Statements” therein. In addition to all other information set out in this

40 Document, potential investors should carefully consider the risks described in those sections before making a decision to invest in the Company.

24. ADDITIONAL INFORMATION You should read the whole of this Document and not just rely on the information contained in this Part I. Your attention is drawn to the information set out in Parts II to VI (inclusive) of this Document which contains further information on the Company.

25. NOTICE OF GENERAL MEETING A notice convening the General Meeting is set out on pages 110 to 113 of this document, which is to be held virtually at 10.00 a.m. on 24 December 2020, for the purpose of considering, and if thought fit, passing the Resolutions which seek to do the following:

* approve the Acquisition and authorise the Directors to issue the Consideration Shares for the purposes of the Acquisition;

* authorise the Directors to issue the Consideration Shares and disapply pre-emption rights in respect of teh Consideration Shares;

* authorise the Directors to issue, grant rights to subscribe for, or convert any security into shares in the Company up to an aggregate nominal amount of £10,309,229.95, being approximately 50 per cent. of the Existing Issued Share Capital and to disapply pre-emption rights in respect of an aggregate nominal amount of £10,309,229.95, being approximately 50 per cent. of the Existing Issued Share Capital. The Acquisition Resolution will be proposed as an ordinary resolution (Resolution 1). The Authority Resolutions will be proposed as ordinary resolutions (Resolutions 2 and 3) and as special resolutions (Resolutions 4 and 5). An ordinary resolution, in order to be passed, requires the approval of a simple majority of those voting in person or on a proxy or on a poll, and a special resolution requires the approval of 75 per cent. of those voting in person or on a proxy or on a poll. It is a condition to completion of the Acquisition that the Acquisition Resolution is approved by Shareholders.

Action to be taken Enclosed with this document you will find the Form of Proxy for use by Shareholders in connection with the General Meeting. Shareholders are asked to complete, sign and return the Form of Proxy to the Registrar as soon as possible but in any event so as to arrive no later than 10.00 a.m. on 24 December 2020. Shareholders who hold their shares through CREST and who wish to appoint a proxy or proxies for the General Meeting or any adjournment(s) by using the CREST electronic proxy appointment service may do so by using the CREST proxy voting service in accordance with the procedures set out in the CREST manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider, should refer to that CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

Recommendation The Directors unanimously recommend that Shareholders vote in favour of the Resolution to be proposed at the General Meeting, as they intend to do so in respect of their own beneficial shareholdings amounting to, in aggregate, 378,979,468 Existing Ordinary Shares representing 18.4 per cent. of the Existing Issued Share Capital.

41 PART II

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Prospective investors should only rely on the information in this Admission Document. No person has been authorised to give any information or to make any representations other than those contained in this Admission Document in connection with the Acquisition and the Subscription and, if given or made, such information or representations must not be relied upon as having been authorised by or on behalf of the Company, the Directors or Arden. No representation or warranty, express or implied, is made by Arden as to the accuracy or completeness of such information and nothing contained in this Admission Document is, or shall be relied upon as, a promise or representation by Arden as to the past, present or future. The Company will update the information provided in this document by means of a supplement hereto if a significant new factor that may affect the evaluation by prospective investors in the Subscription occurs prior to Admission or if this Document contains any material mistake or inaccuracy. The contents of this Admission Document are not to be construed as legal, business or tax advice. Each prospective investor should consult its, his or her own lawyer, financial adviser or tax adviser for legal, financial or tax advice in relation to any subscription or purchase, or proposed subscription or purchase, of Ordinary Shares. In making an investment decision, each prospective investor must rely on its, his or her own examination, analysis and enquiry of the Company and the terms of the Subscription, including the merits and risks involved. This Admission Document is not intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by any of the Company, the Directors, Arden or any of their respective affiliates and representatives that any recipient of this Admission Document should purchase any of the Ordinary Shares. Prior to making any decision as to whether to purchase any of the Ordinary Shares, prospective investors should read the entirety of this Admission Document. Prospective investors should ensure that they read the whole of this Admission Document and not just rely on key information or information summarised within it. Investors who purchase Ordinary Shares in the Subscription will be deemed to have acknowledged that: (i) they have not relied on Arden or any of its affiliates or representatives in connection with any investigation of the accuracy of any information contained in this Admission Document for their investment decision; and (ii) they have relied only on the information contained in this Admission Document, and no person has been authorised to give any information or to make any representation concerning the Company or the Ordinary Shares (other than as contained in this Admission Document) and, if given or made, any such other information or representation should not be relied upon as having been authorised by or on behalf of the Company, the Directors, Arden or their respective affiliates or representatives. None of the Company, the Directors, Arden or any of their representatives is making any representation to any offeree or purchaser of the Ordinary Shares regarding the legality of an investment by such offeree, subscriber or purchaser. Arden does not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

Presentation of financial information and non-financial operating data The Historical Financial Information in Part IV of this Admission Document has been prepared in accordance with the requirements of the AIM Rules for Companies and in accordance with the basis of preparation stated in it. The basis of preparation and significant IFRS accounting policies are further explained in the notes to these accounts.

Historical Financial Information Except as otherwise stated, the financial information for MelodyVR in this document has been prepared and presented in accordance with IFRS and International Reporting Standards Interpretations Committee interpretations adopted by the European Union. IFRS as adopted by the European Union differs in certain respects from international financial reporting standards as adopted by the International Accounting Standards Board.

42 Except as otherwise stated, the financial information for Rhapsody in this document has been prepared and presented in accordance with US GAAP.

Operating information and non-IFRS financial information This document contains certain financial measures that are not defined or recognised under IFRS, including EBITDA. Information regarding these measures is sometimes used by investors to evaluate the efficiency of a company’s operations and its ability to employ its earnings toward repayment of debt, capital expenditures and working capital requirements. There are no generally accepted principles governing the calculation of these measures and the criteria upon which these measures are based can vary from company to company. These measures, by themselves, do not provide a sufficient basis to compare the Company’s performance with that of other companies, and should not be considered in isolation or as a substitute for operating profit or any other measure as an indicator of operating performance, or as an alternative to cash generated from operating activities as a measure of liquidity.

Currency presentation Unless otherwise indicated, all references in this document to:

* “sterling”, “pounds sterling”, “GBP”, “£” or “pence” are to the lawful currency of the United Kingdom;

* “$”, “US$” or “dollar” are to the lawful currency of the United States of America; and

* “Euros” or “€” or “EUR” are to the lawful currency of the European Monetary Union. The Company prepares its financial statements in pounds sterling.

Market, industry and economic data Unless the source is otherwise identified, the market, economic and industry data sourced and statistics in this Admission Document constitute Directors’ estimates, using underlying data from third parties. The Company obtained market and economic data and certain industry statistics from internal reports as well as from third party sources as described in the footnotes to such information. The Company confirms that all third party information set out in this Admission Document has been accurately reproduced and that, so far as the Company is aware and has been able to ascertain from information published by the third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. Where third party information has been used in this Admission Document, the source of such information has been identified. Such third party information has not been audited or independently verified. The third party information used herein includes: the US Music 360 — MRC & Niesen Music and Statista — Digital Media Report 2020 — Digital Music.

Information regarding forward-looking statements This Admission Document includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the Company’s control and all of which are based on the Directors’ current beliefs and expectations about future events. Forward-looking statements are sometimes identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “will”, “could”, “should”, “shall”, “risk”, “intends”, “estimates”, “aims”, “plans”, “predicts”, “continues”, “assumes”, “positioned”, “targets” or “anticipates” or the negative of those terms, other variations on those terms or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Admission Document and include statements regarding the intentions, beliefs and current expectations of the Directors or the Company concerning, among other things, the results of operations, financial condition, prospects, growth, strategies and dividend policy of the Company and the industries in which it operates. In particular, the statements under the following headings Part I Information on the Company and the Acquisition of this Admission Document regarding the Company’s strategy and other future events or prospects are forward-looking statements. These forward- looking statements and other statements contained in this Admission Document regarding matters that are not historical facts

43 involve predictions. No assurance can be given that such future results will be achieved: actual events or results may differ materially as a result of risks and uncertainties facing the Enlarged Group. Such risks and uncertainties could cause actual results to vary materially from the future results indicated, expressed or implied in such forward-looking statements. Please refer to Part II of this Admission Document for further confirmation in this regard. The forward-looking statements contained in this Admission Document are made only as of the date of this Admission Document. The Company, the Directors and Arden expressly disclaim any obligation or undertaking to update these forward-looking statements contained in this Admission Document to reflect any change in their expectations or any change in events, conditions, or circumstances on which such statements are based unless required to do so by applicable law, the Admission Document Rules, the AIM Rules. Investors should note that the contents of these paragraphs relating to forward-looking statements are not intended to qualify the statements made as to sufficiency of working capital in this Admission Document.

Information not contained in this Admission Document No person has been authorised to give any information or make any representation other than those contained in this Admission Document and, if given or made, such information or representation must not be relied upon as having been so authorised. Neither the delivery of this Admission Document nor any subscription, sale, or purchase made under it shall, under any circumstances, create any implication that there has been no change in the affairs of the Company or the Enlarged Group since the date of this Admission Document or that the information in this Admission Document is correct as of any time subsequent to the date of this Admission Document.

No incorporation of website information The contents of the Company’s website, any website mentioned in this Admission Document or any website directly or indirectly linked to these websites have not been verified and do not form part of this Admission Document, and investors should not rely on such information.

Rounding Certain data contained in this Admission Document, including financial information, have been subject to rounding adjustments. As a result of this rounding, the totals of data presented in this Admission Document may vary slightly from the actual arithmetic totals of such data. In certain statistical and operating tables contained in this Admission Document, the sum of numbers in a column or a row may not conform to the total figure given for that column or row. Percentages in tables and elsewhere in this Admission Document have been rounded and accordingly may not add up to 100 per cent.

Constitution All Shareholders are entitled to the benefit of, and are bound by, and are deemed to have notice of, the provisions of the Articles.

Interpretation Certain terms used in this Admission Document are defined in the Definitions section of this Admission Document.

44 PART III

RISK FACTORS

Before making any investment decision, prospective investors should carefully consider all the information contained in this Document including, in particular, the risk factors described below. Ordinary Shares may not be a suitable investment for all recipients of this Document. If you are in any doubt about the Ordinary Shares and their suitability for you as an investment, you should consult a person authorised under FSMA who specialises in advising on the acquisition of shares and other securities. In addition to the usual risks associated with an investment in a company, the Directors consider that the factors and risks described below are the most significant in relation to an investment in the Company and should be carefully considered, together with all the information contained in this Document, prior to making any investment decision in respect of the Ordinary Shares. The list below is not exhaustive, nor is it an explanation of all the risk factors involved in investing in the Company and nor are the risks set out in any order of priority. It should be noted that the risks described below are not the only risks faced by the Enlarged Group and there may be additional risks that the Directors currently consider not to be material or of which they are currently not aware. If any of the events described in the following risks actually occur, the Company’s business, financial condition, results or future operations could be materially affected. In such circumstances, the price of the Ordinary Shares could decline and investors could lose all or part of their investment.

RISKS RELATING TO THE ACQUISITION Conditionality of the Acquisition Completion of the Acquisition is subject to the satisfaction (or waiver, where applicable) of a number of conditions, including, among other things:

* the Admission;

* consents, waivers or approvals of certain third parties, including Rhapsody’s lenders;

* various representations and warranties of the parties continuing to true and correct as of completion;

* no material adverse event having occurred in relation to Rhapsody or its business;

* Rhapsody’s net working capital deficit not having increased by more than 20% since the effective date of the Merger Agreement;

* employment agreements having been agreed and executed with senior managers of Rhapsody; and

* the requisite majority of the Company’s shareholder having approved the Merger Agreement and the Acquisition;

* absence of any litigation or governmental action or order seeking to prohibit all or any material portion of the transactions contemplated by the Merger Agreement. Although certain of these conditions precedent may be waived by the applicable parties, there is no guarantee that any such waiver will be granted. There is no assurance that the conditions precedent will be satisfied (or waived, if applicable), and in the event of a failure of one or more conditions to be satisfied or waived, the Acquisition will not complete.

Litigation Plaintiffs alleged Rhapsody unlawfully reproduced and/or distributed copyrighted musical compositions via its interactive commercial music streaming services. As of 16 January 2019, the dispute has been settled for up to $10 million, dependent on the number of infringed qualified

45 works, plus $2,500 per class member, pursuant to that certain Joint Stipulation of Class Action Settlement and Release which is set to be reviewed for approval by the U.S. District Court for the Northern District of California (“Court”) in December 2020. The Court will also hear Plaintiffs’ motion for lawyers’ fees and costs in the amount of $6.1 million. The Court’s decision on this hearing will determine Rhapsody’s exposure regarding lawyers’ fees. If the Court does not approve the settlement agreement, the parties may have to expend additional resources in order to negotiate new settlement.

SISVEL patent infringement On 22 July 2020, the Court held a Markman hearing regarding three disputed terms. The Court construed each of the terms in favor of Plaintiff, and thus Rhapsody will need to reevaluate and adjust its litigation strategy. The parties have since engaged in discovery efforts and Plaintiff was to serve Final Infringement Contentions on 4 November 2020. However, on 2 November 2020, the parties entered into a joint motion to stay all deadlines. If Rhapsody is unsuccessful in defending the infringement claims, they may be liable for damages and may have to license or procure the patents from the Plaintiff.

Change of Control As a condition to closing, Rhapsody has obtained consent from the major record labels approving the change of control of Napster. There is therefore low risk associated with the change of control provisions identified during due diligence review. The remaining change of control provisions deal either with expired agreements or those of smaller clients and vendors.

Most Favored Nations Various rightsholder agreements contain most favored nations provisions and it has been confirmed that Napster does not maintain a tracking sheet logging the same. If there is an audit of such provisions, Napster will be in breach which may result in top-up payments to the auditing rights holder. Napster has previously had to make top-up payments in the amounts of €2.5 million and $2 million in 2015 following an audit by Sony Music. In addition, UMG audited Napster in 2013 and 2016 and uncovered underpayments totaling approximately $13 million, although this also included unreported usage. Napster may be subject to further audits and additional underpayments.

Deposit of Funds in Escrow; Release As required under the Merger Agreement, the Company has deposited USD $12,000,000 into an escrow account with a US bank. The funds are to be released as follows:

* to Rhapsody’s stockholders at completion (after payment of certain specified liabilities of Rhapsody using a portion of the escrowed funds);

* to Rhapsody if the Company fails to complete the Acquisition by a specified date if all conditions precedent have been satisfied (other than the Admission); and

* to the Company if the Acquisition does not complete due to a failure of conditions precedent to be satisfied (other than the Admission). Consequently, the Company is at risk of loss of the entire escrow deposit in the event the Admission is not completed as planned, or if the Company is otherwise not able to complete the Acquisition for reasons other than a failure of the conditions precedent specified in the Merger Agreement. Furthermore, pursuant to the Merger Agreement, Rhapsody may request disbursements of funds from the amount deposited in escrow to pay certain expenses of Rhapsody, including expenses associated with settlement of claims and litigation. In the event the Company fails to complete the Acquisition by a specified date despite all conditions precedent having been satisfied (other than the Admission), the amounts advanced to Rhapsody will be forfeit. If the Acquisition is not completed due to a failure of conditions precedent, the advances will be considered loans to Rhapsody that Rhapsody is obligated to repay in instalments over a number of months. However, there is no guarantee that Rhapsody will have the ability to repay such amounts within the time permitted under the Merger Agreement, or at all.

46 Limited recourse under the Merger Agreement By virtue of the Acquisition, the Company will be exposed to a variety of risks and potential liabilities associated with Rhapsody and its business, including without limitation:

* a deterioration in Rhapsody’s results of operation or material condition (and in particular, an increase it Rhapsody’s working capital deficit prior to or after completion);

* liabilities associated with ongoing litigation to which Rhapsody is a party, or new claims to which it may become subject, which may include claims from music rights holders for royalties or other sums claimed to be owed;

* liabilities to stockholders of Rhapsody who may challenge the fairness of the Acquisition or of the consideration paid by the Company in connection with the Acquisition;

* loss or reduction of business including loss of any of the key marketing partnerships Rhapsody relies on for a material portion of its revenue; and

* other liabilities associated with Rhapsody or its business that are not known to the Company. Under the terms of the Merger Agreement, the Company is receiving warranties in relation to certain matters from the Vendors. However, in most cases (barring fraud) the aggregate amount the Company may recover upon a breach of such warranties is limited to $3,000,000 or less, and any claims for recovery may not be lodged more than 18 month after completion. Therefore, the Company may have limited recourse for breaches of warranty and other breaches of the Merger Agreement.

Basis of preparation for Napster HFI The historical financial information presented in Part V of this Admission Document has not been prepared under IFRS and no opinion has been given by an independent reporting accountant in accordance with the Standards for Investment Reporting issued by the Financial Reporting Council in the United Kingdom. Accordingly, no independent assurance has been given that the historical financial information represents a true and fair view of the state of affairs of Napster at the reporting dates nor that any material differences may arise on reporting of Enlarged Group under IFRS and the accounting policies of MelodyVR. Differences between the accounting standards of US GAAP and IFRS could relate specifically to revenue recognition and leasehold properties.

RISKS RELATING TO THE ENLARGED GROUP AND ITS BUSINESS Future funding requirements The Enlarged Group will need to raise additional funding to fully execute its strategy as described in pararaph 4 of Part I (Strategy of the Enlarged Group) beyond that being funded by the current cash deposits of the Enlarged Group. In addition the Loan Facility may require refinancing on expiry of its term. There is no certainty that this will be possible at all or on acceptable terms. In addition, the terms of any such financing may be dilutive to, or otherwise adversely affect, Shareholders. In absence of any additional financing, the Enlarged Group will not be able to complete its strategy beyond the launch of its App in Autumn 2021.

Breach of covenants under the Loan Facility In the event the borrower breaches certain covenants contained in the Loan Facility, the lender may terminate the facility and accelerate repayment of any amounts outstanding under the facility. Certain covenant breaches are subject to customary cure periods pursuant to the agreement governing the terms of the Loan Facility. In the event the lender accelerated repayment of amounts outstanding under the Loan Facility, the borrower may be unable to meet its liquidity requirements and such acceleration may have a material adverse effect on the financial condition, business, or results of operations of the borrower and its subsidiaries.

Exercise of Warrants will result in dilution of existing shareholdings Davis Partnership, LP may choose to exercise their subscription rights over the Ordinary Shares which are the subject of the Warrants within the ten year subscription period. The exercise of such Warrants would result in a dilution of the existing shareholdings in the Enlarged Group.

47 Attraction and retention of key management and employees The successful operation of the Enlarged Group will depend partly upon the performance and expertise of its current and future management and employees. The loss of the services of certain of these members of the Enlarged Group’s key management or employees, particularly Anthony Matchett or the inability to identify, attract and retain a sufficient number of suitably skilled and qualified employees may have a material adverse effect on the Enlarged Group. Expansion of the Enlarged Group may require considerable management time which may in turn inhibit management’s ability to conduct the day to day business of the Enlarged Group.

Rate of market adoption and consumer penetration The Enlarged Group’s prospects, among other things, rest upon the rate of consumer penetration and adoption of its service and technologies, including, inter alia, its new App and VR headsets. Should the rate of adoption be slower, this could significantly inhibit the Enlarged Group’s revenue and prospects. In the event that market adoption and consumer penetration of these new technologies is at a lower rate than that anticipated by the Directors, the Enlarged Group may need additional capital to continue with its stated strategy.

Delay in launching the new MelodyVR App The Enlarged Group intends to launch the new MelodyVR App in Autumn 2021 which will combine music streaming with VR content; any delay, particularly if other competitors were to make an alternative App available ahead of MelodyVR’s, will have an adverse impact on the Enlarged Group’s prospects including the ability of the Enlarged Group to attract new subscribers including the ability of the Enlarged Group to attract new subscribers. Any delay in launching the new App could also increase cost of development of the new App and result in the Enlarged Group requiring additional capital to continue app development through to launch.

Viability of the new MelodyVR App It is important that MelodyVR successfully releases a functional version of its new MelodyVR App. Whilst MelodyVR and Napster have created Apps on a standalone basis, there remains execution risk that the new MelodyVR App and the content it delivers are not well received by users. Failure to launch the app, or failure to design the app in a manner which is easily usable by the intended users could adversely impact on the Enlarged Group’s ability to fulfil its potential.

Rate of consumer adoption of the new MelodyVR App Even with significant consumer adoption, there is no guarantee that such consumers will download the new MelodyVR App in the quantities or in the timeframe which the Enlarged Group targets and that consumers who download the App convert into active, revenue generating users.

Effectiveness of marketing expenditure in generating new subscribers The Enlarged Group intends to significantly increase expenditure in marketing in the build up to, and following, the launch of the new MelodyVR App. This expenditure is expected to be required to drive new subscriber growth and the result of marketing initiatives may not be immediately evident. A significant increase in marketing expenditure beyond that anticipated or a failure of marketing expenditure to deliver new subscribers may result in the Enlarged Group requiring additional capital. Should marketing not result in subscriber growth, the Enlarged Group may be required to increase marketing expenditure beyond that forecast in order to achieve expected growth in new subscribers.

Quality of Internet connection The Enlarged Group’s business relies on its customers’ ability to have access to a quality Internet connection. If the customers’ access to or use of a quality Internet connection was restricted, the quality of the Enlarged Group’s product offering would be reduced, which could have an adverse effect on the Enlarged Group’s business, operations and financial position.

48 Competition Given the nascent and dynamic state of the market in which MelodyVR operates, there may be new competitors which could include well resourced, international players in the entertainment and music industries which have greater market presence, name recognition, financial resources and economies of scale or lower cost bases than the Enlarged Group and may be able to withstand or respond more swiftly to changes in market conditions, any of which could give them a competitive advantage over MelodyVR. In addition, competitors may seek to copy or improve on the Enlarged Group’s business strategy, which could significantly harm MelodyVR’s competitive position.

Feasibility of live streaming The logistics of live streaming present additional technical challenges. Live streaming requires an uninterrupted high-speed internet connection through which to upload the content, the feasibility of which may be limited in the outdoor, more remote music festivals. Failure to address these technical issues may adversely impact the Enlarged Group’s prospects.

Seattle office integration The Enlarged Group intends to integrate the majority of its operations into the existing Seattle office of Napster. Any delay to the anticipated integration process may have an adverse impact on the Group’s operations, including technology offering, staff retention and financial performance. As a result, this may require additional investment and / or capital expenditure that the Enlarged Group had not envisaged.

Relationship with content owners The content that MelodyVR captures remains the property of the record companies and associated artists, which is then licensed back to MelodyVR under the rights agreements. As a result, it is imperative that MelodyVR maintains good relationships with the content owners to ensure that it continues to enjoy the commercial use of the content that they own.

Relationship with music record labels and license owners The music content that Napster streams remains the property of the record companies and associated artists, which is then licensed back to Napster under the rights agreements. As a result it is imperative that the Enlarged Group maintains good relationships with the record labels and content owners to ensure that it continues to enjoy the commercial use of the music that they own.

Reliance on app platforms The new Napster App will be offered exclusively on third party app platforms. Accordingly, MelodyVR Group PLC is beholden to changes in those platforms’ terms and conditions and the prominence of the App within those third party storefronts.

General risks relating to the Ordinary Shares Suitability of the Ordinary Shares Investment in the Ordinary Shares may not be suitable for all readers of this Document. Readers are accordingly advised to consult a person duly authorised under the FSMA who specialises in investments of this nature before making any investment decisions.

Volatility in the prices of Ordinary Shares The Issue Price may not be indicative of the market price for the Ordinary Shares following Admission. The subsequent market price of the Ordinary Shares may be subject to wide fluctuations in response to a number of events and factors that are unrelated to Enlarged Group’s operating performance such as variations in operating results, changes in financial estimates, recommendations by securities analysts, the share price performance of other companies that investors may deem comparable to the Company, market perceptions of the Company, new reports relating to trends in the Company’s markets, large purchases or sales of Ordinary Shares, liquidity (or absence of liquidity) in the Ordinary Shares, currency fluctuations, legislative or regulatory

49 changes, national and global economic conditions and various other factors and events. These fluctuations may adversely affect the trading price of the Ordinary Shares, regardless of the Company’s performance. The price at which the Ordinary Shares will be traded and the price at which investors may realise these investments will be influenced by a large number of factors, some not specific to the Company and its operations. Furthermore, there is no guarantee that the market price of an Ordinary Share will accurately reflect its underlying value.

No prior trading market for Ordinary Shares Prior to Admission, there was no public market for the Ordinary Shares. Admission to trading on AIM should not be taken as implying that a liquid market for the Ordinary Shares will either develop or be sustained following Admission. The Enlarged Group cannot predict the extent to which investor interest in the Ordinary Shares will lead to the development of a trading market. The liquidity of a securities market is often a function of the volume of the underlying Ordinary Shares that are publicly held by unrelated parties. If a liquid trading market for the Ordinary Shares does not develop, the price of Ordinary Shares may become more volatile and it may be more difficult to complete a buy or sell order for Ordinary Shares.

Future issues of Ordinary Shares may result in dilution of existing Shareholders The Company may decide to issue additional Ordinary Shares in the future in subsequent public offerings or private placements to fund expansion and development. If existing Shareholders do not subscribe for additional Ordinary Shares on a pro rata basis in accordance with their existing shareholdings, this will dilute their existing interests in the Enlarged Group. Furthermore, the issue of additional Ordinary Shares may be on more favourable terms than the Subscription Shares. The issue of additional Ordinary Shares by the Enlarged Group, or the possibility of such issue, may cause the market price of the Ordinary Shares to decline and may make it more difficult for Shareholders to sell Ordinary Shares at a desirable time or price. There is no guarantee that market conditions prevailing at the relevant time will allow for such a fundraising or that new investors will be prepared to subscribe for Ordinary Shares at a price which is equal to or in excess of the Issue Price.

Future performance of the Enlarged Group cannot be guaranteed There is no certainty and no representation or warranty is given by any person that the Enlarged Group will be able to achieve any returns referred to in this Document. The financial operations of the Enlarged Group may be adversely affected by general economic conditions or by the particular financial condition of other parties doing business with the Enlarged Group.

There is no guarantee that the Enlarged Group will maintain its quotation on AIM The Enlarged Group cannot assure investors that the Enlarged Group will always retain a quotation on AIM. If the Enlarged Group fails to do so, certain investors may decide to sell their Ordinary Shares, which could have an adverse impact on the share price. Additionally, if in the future the Enlarged Group decides to obtain a listing on another exchange, in addition to AIM or as an alternative, this may affect the liquidity of the Ordinary Shares traded on AIM.

Share price effect of sales of Ordinary Shares The market price of Ordinary Shares could decline significantly as a result of any sales of Ordinary Shares by certain Shareholders following the expiry of the relevant lock-in periods, details of which are set out in paragraph 15 of Part VI of this Document, or the expectation or belief that such sales of shares may occur.

Higher risk for shares traded on AIM than on the Official list Application has been made for the Ordinary Shares to be admitted to trading on AIM, a market designated primarily for emerging or smaller companies. The AIM Rules for Companies are less onerous than those of the Official List and an investment in shares that are traded on AIM is likely to carry a higher risk than an investment in shares listed on the Official List.

50 Conditionality of the Subscription The Subscription is conditional upon, among other things, Admission. In the event that any condition to which Admission is subject is not satisfied or, if capable of waiver, waived, Admission (and therefore the Subscription) will not occur.

Legislation and tax status This Document has been prepared on the basis of current legislation, regulation, rules and practices and the Directors’ interpretation thereof. Such interpretation may not be correct, and it is always possible that legislation, rules and practice may change. Any change in legislation or regulation and, in particular, in tax status or tax residence of the Enlarged Group or in tax legislation or practice may have an adverse effect on the returns available on an investment in the Enlarged Group. Furthermore, there is a risk that possible legislative and regulatory changes resulting from the Brexit negotiations could adversely affect the Enlarged Group.

The Enlarged Group could be adversely affected by the effects of health epidemics, including the current COVID-19 pandemic The current COVID-19 pandemic could materially affect the Enlarged Group’s operations, as well as the business or operations of third parties with whom it conducts business. The spread of COVID-19, which has caused a broad impact globally, may materially affect the Company economically. While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of the Ordinary Shares. The global pandemic of COVID-19 continues to rapidly evolve. The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on the Enlarged Group or the global economy as a whole. However, these effects could have a material impact on our business, and we will continue to monitor the COVID-19 situation closely.

Taxation The attention of potential investors is drawn to paragraph 21 of Part VI of this Document headed “Taxation”. The tax rules and their interpretation relating to an investment in the Enlarged Group may change during its life. Any change in the Enlarged Group’s tax status or in taxation legislation or its interpretation could affect the value of the investments held in the Enlarged Group or the Enlarged Group’s ability to provide returns to Shareholders or alter the post-tax returns to Shareholders. Representations in this Document concerning the taxation of the Enlarged Group and its investors are based upon current tax law and practice which is, in principle, subject to change. Current and potential investors are strongly recommended to consult an independent financial adviser authorised under FSMA who specialises in investments of this nature before making any investment decision in respect of Ordinary Shares.

Dividends The Enlarged Group’s ability to pay dividends (including any special dividends) in the future is affected by a number of factors, principally the generation of distributable profits within its Group and the receipt of sufficient dividends from its subsidiaries. Under English law, a company can only pay cash dividends to the extent that it has distributable reserves and cash available for this purpose. In addition, the Enlarged Group may not pay dividends if the Directors believe this would cause the Enlarged Group to be inadequately capitalised or if, for any other reason, the Directors conclude it would not be in the best interests of the Enlarged Group. Any change in the tax treatment of dividends or interest received by the Enlarged Group may reduce the amounts available for dividend distribution. Any of the foregoing could limit the payment of dividends to Shareholders or, if the Enlarged Group does pay dividends, the amount of such dividends. In addition, the Enlarged Group’s ability to pay dividends will depend on the level of distributions, if any, received from its operating subsidiaries. The Enlarged Group’s subsidiaries may, from time to

51 time, be subject to restrictions on their ability to make distributions including foreign exchange limitations, and regulatory, fiscal and other restrictions.

52 PART IV

HISTORICAL FINANCIAL INFORMATION ON THE GROUP

Pursuant to Rule 28 of AIM Rules for Companies, the Company’s audited financial information for the financial years ended 31 December 2019, 31 December 2018 and 31 December 2017 and its unaudited half year results for the six months ended 30 June 2019 and 30 June 2020 can be viewed on the Company’s website at www.melodyVR.group and are incorporated by reference in this document. The accounts for each of the three financial years ended 31 December 2019 and six months ended 30 June 2019 and 30 June 2020 were prepared under International Financial Reporting Standards, as adopted by the EU (“IFRS”). Shareholders or other recipients of this document may request a hard copy of the above information incorporated by reference from the Company by emailing [email protected]. A hard copy of the information incorporated by reference will not be sent to Shareholders or other recipients of this document unless requested.

53 PART V

HISTORIC FINANCIAL INFORMATION ON THE ACQUISITION

SECTION 1: DIRECTORS’ OPINION ON THE FINANCIAL INFORMATION ON RHAPSODY INTERNAL INC The Directors Arden Partners plc 125 Old Broad Street London EC2N 1AR

8 December 2020

Dear Sirs,

Rhapsody International Inc. T/A Napster We refer to the financial information set out in Part V of this admission document (the “Admission Document”) of MelodyVR Group PLC (“MelodyVR” or the “Company”). This historical financial information has been prepared by the Company and reviewed by the Directors of MelodyVR (the “Directors”) for inclusion in the Admission Document. This opinion has been prepared by the Directors in lieu of an independent accountants report on the historical financial information of Rhapsody International Inc. T/A Napster (“Napster”) as required by paragraph (a) of Schedule Two of the AIM Rules for Companies. This report has been prepared by the Directors for the purposes of paragraph (a) of Schedule Two of the AIM Rules for Companies and is given for the purpose of complying with that paragraph and for no other purpose.

Responsibility The Directors and the Company have taken responsibility for preparing the financial information on Napster and it is therefore the Directors and the Company’s responsibility to form an opinion on the financial information as to whether the financial information gives the facts and contains no omissions likely to affect its import for the purposes of the Admission Document, and to report this opinion to you.

Basis of opinion In preparing their opinion, the Directors have given consideration to the due diligence work undertaken by the Executive Directors and MelodyVR on Napster as part of the acquisition and readmission process. This includes, where possible, review of available underlying documents by independent accountants. The due diligence on Napster considered the 45 month period ended 30 June 2020. In addition, the directors have had regard to the audited financial reports of Napster for the two years ended 30 September 2018 (“Napster Audited Accounts”). While the Directors have had regard to the Napster Audited Accounts, these documents were not prepared for the purposes reporting for this Admission Document and may not be relied upon by you. For the year ended 30 December 2019 and the half year ended 30 June 2020, Napster’s results were consolidated into the group results of its parent company which were subject to independent review by the group auditors. The Directors have not had sufficient access to the audit files in order to prepare a complete reconciliation of the US GAAP accounts to IFRS. However, the Directors believe that there are limited differences between the US GAAP accounts presented in this Part V and any translation of this financial information under IFRS. As a US incorporated company Napster has historically prepared financial information under US GAAP and the historical financial information in this Part V has been prepared under US GAAP. MelodyVR currently prepares its financial information under IFRS and will continue to do immediately post readmission.

Three Months Ended 31 December 2018 The Napster Audited Accounts were prepared to a 30 September year end. Subsequently a controlling interest in Napster was acquired by Real Networks on 19 January 2019 and Napster’s accounting year end was changed to 31 December in line with the Real Networks accounting

54 period. Periods following the Napster Audited Accounts have been prepared based upon financial information consolidated as part of the Real Networks accounts and therefore no suitably prepared financial information is available for inclusion in this Admission Document. The Directors are of the opinion that the absence of financial information for the three months ended 31 December 2018 does not materially impact on the presentation of the financial history of Napster and are not aware of any material events within that period that are not otherwise reflected in the historical financial information.

Opinion of the Directors and the Company In the sole opinion of the Directors and the Company the consolidated historical financial information gives, for the purpose of this Admission Document, the facts and contains no omission likely to affect its import of the state of affairs of Napster as at 30 September 2017, 30 September 2018, 31 December 2019 and 30 June 2020 and of the losses, cash flows and statement of changes in shareholders’ equity for the 12 months periods and 6 month period then ended. For the purposes of paragraph (a) of Schedule Two of the AIM Rules for Companies the Directors have taken responsibility for the opinions provided in this Part V of the Admission Document and declare that they have taken all reasonable care to ensure that the information contained in this opinion is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import.

Yours faithfully

Anthony Matchett for and on behalf of MelodyVR Group plc

55 SECTION 2: FINANCIAL INFORMATION ON RHAPSODY INTERNATIONAL INC FINANCIAL INFORMATION COVERING THE TWO PERIODS ENDED 30 SEPTEMBER 2018 HISTORICAL FINANCIAL INFORMATION ON RHAPSODY INTERNATIONAL INC. T/A NAPSTER FOR THE YEARS ENDED 30 SEPTEMBER 2018 AND 30 SEPTEMBER 2017 CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)

Year Ended 30 September

2018 2017 $’000 $’000

Revenues 150,278 181,930 Cost of revenues 114,690 155,866

Gross profit 35,588 26,064 Operating expenses: Sales, marketing, and customer acquisition 1,910 12,393 Technology and product development 7,399 10,680 General and administrative 10,846 15,582 Restructuring — 2,202

Total operating expenses 20,155 40,857

Income (loss) from operations 15,433 (14,793) Other expense: Interest expense (3,443) (3,496) Other income (expense), net (2,629) 1,381 Loss on debt extinguishment (520) —

Total other expense (6,592) (2,115)

Income (loss) before income tax expense 8,841 (16,908) Income tax expense (1,474) (1,380)

Net income (loss) 7,367 (18,288) Other comprehensive gain (loss): Gain (loss) on translation adjustment 3,437 (1,428)

Other comprehensive gain (loss) 3,437 (1,428)

Comprehensive income (loss) 10,804 (19,716)

See accompanying notes.

56 CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 September

2018 2017 $’000 $’000

Assets Current assets: Cash and cash equivalents 10,430 10,373 Accounts receivable, net 19,905 25,929 Prepaid expenses and other current assets 8,559 4,274

Total current assets 38,894 40,576 Restricted cash 2,357 4,150 Equipment and software, net 580 1,146 Other non-current assets 315 429 Goodwill 14,538 14,546

Total assets 56,684 60,847

Liabilities and stockholders’ deficit Current liabilities: Accounts payable 869 1,229 Accrued royalties and fulfilment 70,769 76,447 Accrued expenses 7,376 10,959 Due to related parties 11,966 11,020 Deferred revenue 4,152 4,399 Notes payable 12,805 17,570

Total current liabilities 107,937 121,624 Other non-current liabilities 649 1,262

Total liabilities 108,586 122,886 Commitments and contingencies Stockholders’ deficit: Preferred stock, $0.01 par value: 47,500,000 shares authorized, issued and outstanding as of September 30, 2018 and 2017 475 475 Common stock, Class A, $0.01 par value: 101,500,000 shares authorized as of September 30, 2018 and 2017; 52,316,109 shares issued and outstanding as of September 30, 2018 and 2017 523 523 Common stock, Class B, $0.01 par value: 73,000,000 shares authorized as of September 30, 2018 and 2017; 13,757,582 shares issued and outstanding as of September 30, 2018 and 2017 138 138 Additional paid-in capital 93,189 93,856 Accumulated other comprehensive income 3,664 227 Accumulated deficit (149,891) (157,258)

Total stockholders’ deficit (51,902) (62,039)

Total liabilities and stockholders’ deficit 56,684 60,847

See accompanying notes.

57 Rhapsody International Inc.

Consolidated Statements of Changes in Stockholders’ Deficit (In Thousands, Except Share Data)

Common Stock Preferred Stock Class A Shares Class B Accumu- lated Other Additional Compre- Total Stock- Paid-in hensive Accumu- holders’ Amount Amount Amount Capital Income lated Deficit Deficit Shares $’000 Shares $’000 Shares $’000 $’000 $’000 $’000 $’000 Balances at September 30, 2016 47,500,000 475 52,316,109 523 13,757,582 138 88,959 1,655 (138,970) (47,220) Stock-based compensation ——————3,483 ——3,483 Issuance of warrants to related-party (see Note 6) ——————1,414 ——1,414 Loss on translation adjustment ———————(1,428) — (1,425) Net loss ————————(18,288) (18,288)

58 Balances at September 30, 2017 47,500,000 475 52,316,109 523 13,757,582 138 93,856 227 (157,258) (62,039)

Stock-based compensation ——————1,343 ——1,343 Reversal of stock-based compensation (see Note 13) ——————(2,010) ——(2,010) Gain on translation adjustment ———————3,437 — 3,437 Net income ————————7,367 7,367 Balances at September 30, 2018 47,500,000 475 52,316,109 523 13,757,582 138 93,189 3,664 (149,891) (51,902)

See accompanying notes. CONSOLIDATED STATEMENT OF CASHFLOWS (In Thousands)

Year Ended 30 September

2018 2017 $’000 $’000

Operating activities Net income (loss) 7,367 (18,288) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Stock-based compensation 1,343 3,483 Issuance of warrants to related parties — 1,414 Reversal of stock-based compensation (2,009) — Depreciation and amortization 1,035 1,612 Foreign currency remeasurement (gain) loss 2,747 (205) Other 90 (25) Change in fair value of warrant liability (137) (549) Loss on extinguishment of debt 520 — Non-cash interest expense 2,377 1,426

Changes in operating assets and liabilities: Accounts receivable 5,395 9,884 Prepaid expenses and other assets (4,811) 5,510 Accounts payable (314) (212) Accrued royalties and fulfilment (4,108) (7,822) Other accrued liabilities (3,950) (97) Deferred revenue (233) (930) Other assets (64) 105

Net cash provided by (used in) operating activities 5,248 (4,694) Investing activities Purchases of property and equipment (359) (221)

Net cash used in investing activities (359) (221) Financing activities Proceeds from loan from related parties (Note 6) — 10,000 Proceeds from issuance of notes payable 58,806 — Principal payments on loans (64,730) (2,556) Changes in restricted cash 1,794 —

Net cash (used in) provided by financing activities (4,130) 7,444 Foreign currency effect on cash and cash equivalents (702) 268 Change in cash and cash equivalents 57 2,797 Cash and cash equivalents at beginning of year 10,373 7,576

Cash and cash equivalents at end of year 10,430 10,373

Supplemental disclosures of cash flow information Cash paid for interest expense 642 2,378

See accompanying notes.

59 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business and Summary of Significant Accounting Policies Description of Business Rhapsody International Inc. (the Company) operates a music business offering a comprehensive set of digital music products and services designed to provide consumers with broad access to digital music. The Company’s primary service is a subscription music service offering on-demand streaming services and conditional downloads through unlimited access to a catalog of millions of music tracks. The Company operates its music service under the Napster brand name within the United States of America (U.S.), Europe, Central and South America, and Canada. Prior to July 2016, the Company’s service was branded as Rhapsody in the U.S. Basis of Presentation

Liquidity and Capital Resources The Company generated a net income of $7.4 million and a net loss of $18.3 million in 2018 and 2017, respectively. The Company had an accumulated deficit of $149.9 million and a working capital deficit of $69.0 million at September 30, 2018. The working capital deficit includes $70.8 million of accrued music royalties classified as a current liability, of which $11.6 million relates to tracks which the Company and its service provider have been unable to identify the applicable right-holders. The Company generated operating income and generated cash from operations in 2018. However, to meet future liquidity needs, the Company will need additional financing for operations and growth. Additional financing may not be available on a timely basis or on terms acceptable to the Company, which could harm the Company’s business and financial condition, results of operations, and cash flows. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business.

Basis of Presentation The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and reflect all adjustments that, in the opinion of the Company’s management, are necessary for a fair presentation of the consolidated financial position and results of operations for the years ended September 30, 2018 and 2017.

Consolidation The consolidated financial statements include the accounts of Rhapsody International Inc. and its wholly owned subsidiaries. The Company has eliminated all significant intercompany transactions in the consolidated financial statements.

Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Estimates are used for the allowance for sales returns and bad debt, unbilled receivables, accrued royalties and fulfillment, stock-based compensation, fair values of financial instruments, fair values of stock awards issued or share-based payments to non-employees, fair value of assets acquired, and income taxes. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, the Company’s consolidated financial statements will be affected.

Cash and Cash Equivalents Cash and cash equivalents include highly liquid securities with maturities, when acquired, of three months or less and are carried at cost, which approximates market value given their short-term nature.

60 Accounts Receivable Billed accounts receivable are recorded at the invoiced amount and do not bear interest. Unbilled accounts receivable arise when revenues, though appropriately recorded, have not yet been billed and include amounts to be billed in subsequent periods. The Company maintains an immaterial allowance for sales returns and bad debts. The allowance is based upon historical loss patterns, the number of days that billings are past due, and an evaluation of the potential risk of loss associated with delinquent accounts. The Company also considers any changes to the financial condition of its customers and any other external market factors that could impact the collectability of its receivables in the determination of its allowance for sales returns and bad debt. The Company writes off accounts when it has determined that an account will be uncollectible, usually after the account is over 90 days past due and after pursuing collection, or sooner in the event of customer bankruptcy or other circumstances that make further collection unlikely. For the years ended September 30, 2018 and 2017, charge-offs to bad debt expense as a percentage of revenue were 0.4%. Included in accounts receivable are various amounts owed to the Company for services performed or products delivered that remained unbilled to customers. As of September 30, 2018 and 2017, the amounts unbilled were $7.8 million and $11.5 million, respectively. These amounts have met recognition criteria, are based on best estimates, and have now been billed to customers after the fiscal year-end. The Company considers these amounts collectible and has determined that no allowance is necessary.

Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. The Company maintains cash and cash equivalents with financial institutions of high-credit quality. The Company performs ongoing credit evaluations of customers and resellers to assess the probability of accounts receivable collection based on a number of factors, including past transaction experience with the customer, evaluation of their credit history, and review of the invoicing terms of the contract. The Company generally does not require collateral. The Company maintains reserves for potential credit losses on customer accounts when deemed necessary. For the fiscal years ended September 30, 2018 and 2017, two customers comprised more than 10% of total revenue and more than 10% of accounts receivable as described below.

2018 2017

Percentage Percentage Percentage Percentage of Total of Accounts of Total of Accounts Revenue Receivable Revenue Receivable

Customer A 22% 46% 24% 32% Customer B 19% 36% 20% 50%

Concentration of Suppliers Risk The Company’s business is dependent on receiving content from three major content providers and numerous independent providers. While the Company does not foresee this, any interruption in the supply of content from any one of the three major providers could adversely impact the Company’s business.

Equipment and Software, Net Equipment and purchased software are recorded at amortized cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. The useful lives of equipment and purchased software range from two to four years. Depreciation and amortization expense was $915,000 and $1.8 million during the years ended September 30, 2018 and 2017, respectively. Maintenance and repairs are expensed as incurred.

61 Intangible Assets Intangible assets consist primarily of developed technology, trademarks, and trade names. Intangible assets are amortized on a straight-line basis over one to ten years, which approximates their estimated useful lives. Aggregate amortization expense of intangible assets was $120,000 and $194,000 for the years ended September 30, 2018 and 2017, respectively, and is classified in cost of revenues on the consolidated statements of operations and comprehensive income (loss).

Goodwill Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The Company accounts for goodwill in accordance with Accounting Standards Codification (ASC) 350, Intangibles – Goodwill and Other, which states that goodwill should either be amortized or evaluated for impairment at least annually or when an event occurs or circumstances change to suggest that the carrying amount may not be recoverable. The Company does not amortize goodwill. Goodwill is tested at the reporting-unit level (the Company has only one reporting unit) by comparing the reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit. Effective October 1, 2017, the Company adopted Accounting Standards Update (ASU) 2017-04, Simplifying the Test for Goodwill Impairment, which was issued by the Financial Accounting Standards Board (FASB). The guidance in the ASU simplifies certain aspects of the goodwill impairment test, including the elimination of the requirement to perform a qualitative assessment of the likelihood of a goodwill impairment for reporting units with a negative carrying value of net assets. The Company’s only reporting unit has a negative carrying value. As a result, the Company will no longer be required to perform the qualitative assessment.

Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of assets held and used is measured by a comparison of the carrying amount of the asset group to the estimated undiscounted future cash flows expected to be generated by the asset group. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset group exceeds its fair value.

Fair Value of Financial Instruments The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk.

Revenue The majority of the Company’s revenue is generated through subscription products. The Company recognizes revenue when (1) persuasive evidence exists of an arrangement with the customer reflecting the terms and conditions under which products or services will be provided, (2) delivery has occurred or services have been provided, (3) the fee is fixed or determinable, and (4) collection is reasonably assured. The Company’s revenue is generated through consumer transactions or through a reseller. Consumer subscription products are paid in advance, typically for monthly, quarterly, or annual periods. Transactions through a reseller are typically paid in arrears for monthly subscriptions. Subscription revenue is recognized ratably over the related subscription period. Deferred revenue consists of both prepaid but unrecognized subscription revenue, where cash is received in advance of the delivery or completion of the services or in instances when revenue recognition criteria have not been met. Deferred revenue is recognized when the services are provided and all revenue recognition criteria have been met.

62 Taxes Collected From Customers The Company collects various types of taxes from its customers, assessed by governmental authorities, which are imposed on and concurrent with revenue-producing transactions, and remits such amounts to the appropriate governmental authority. Such taxes are recorded on a net basis and are not presented on the accompanying consolidated statements of operations and comprehensive income (loss).

Cost of Revenues Cost of revenues consists of the content royalties, infrastructure costs related to content streaming, and maintaining the Company’s service, including the employee costs associated with supporting these functions. Due to the length of time it can take to settle accrued royalties with labels, music rights holders, and European Copyright Collection Societies; unmatched royalty accruals; final rate agreements; and royalty audit settlements, cost of revenues can fluctuate significantly from year to year based upon changes in estimate recorded in any given period. During the year ended September 30, 2018, the Company recorded a benefit pertaining to such matters of $2.9 million that reduced cost of revenues.

Sales, Marketing, and Customer Acquisition Expenses Sales, marketing, and customer acquisition expenses are primarily related to advertising expense, payroll, and other related expenses of employees in those functions. The Company records the cost of advertising and promoting its products as sales, marketing, and customer acquisition expenses as incurred. Advertising expense totaled $69,000 and $4.9 million for the years ended September 30, 2018 and 2017, respectively. The decrease in advertising expense was a result of the change in the Company’s business strategy after the restructuring, refer to Note 14 for further discussion.

Technology and Product Development The Company incurs product development expenses consisting of employee compensation, information technology, consulting, and costs associated with supporting consumer-connected- device manufacturers in implementing its service in their products. The Company incurs product development expenses primarily for improvements to its website and for developing and expanding the Napster music platform to numerous consumer electronic devices. The Company generally expenses product development costs as incurred.

General and Administrative General and administrative expenses primarily relate to payroll and related expenses for human resources, legal, accounting and executive functions, as well as professional service firms that provide assistance to the Company. Also in general and administrative, the Company included rent, utilities, employee stock-based compensation, and other facility costs.

Internal Use Software and Website Development Costs Costs incurred to develop software for internal use, including mobile device applications, are required to be capitalized and amortized over the estimated useful life of the asset if certain criteria are met. Costs related to design or maintenance of internal-use software are expensed as incurred. The Company evaluates the costs incurred during the application development stage of website development to determine whether the costs meet the criteria for capitalization. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. As of September 30, 2018 and 2017, the Company had not incurred material costs related to internal use software, other than design and maintenance, and as such, no costs were capitalized.

Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

63 On December 22, 2017, President Trump signed into law new legislation (the “Act”) that significantly revises the Internal Revenue Code of 1986, as amended. The newly enacted federal income tax law, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for interest expense to 30% of adjusted earnings, limitation of the deduction for newly generated net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, one time taxation of offshore earnings at reduced rates regardless of whether they are repatriated (the “Transition Tax”), future taxation of certain classes of offshore earnings regardless of whether they are repatriated, immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits. As a result of the Act’s reduction to the corporate tax rate from 35 percent to 21 percent, the Company’s Federal deferred tax assets decreased by $15.7 million, with the difference recorded as an income tax expense; however, the reduction to the corporate tax rate results in an income tax benefit of $15.7 million for the corresponding decrease in the Company’s valuation allowance. As a result of the two offsetting entries to income tax expense, the reduction to the corporate tax rate results in no change to income tax expense. In prior years, the Company had not recognized a deferred tax liability for the undistributed earnings of its foreign subsidiaries because the Company did not expect to remit those earnings in the foreseeable future. In the year ended September 30, 2016, the Company determined it could no longer assert that it was permanently invested in the earnings of its foreign subsidiaries, though no cash was repatriated to the United States from any of the foreign subsidiaries during the year. A deferred tax liability related to undistributed earnings of foreign subsidiaries was recorded for the years ended September 30, 2018 and 2017. A valuation allowance against deferred tax assets is established if, based on all available evidence, it is more likely than not that some or all of the deferred tax assets are not expected to be realized. The Company recognizes income tax expense related to uncertain tax positions as part of its income tax provision and recognizes interest and penalties related to uncertain tax positions in interest expense and other expenses, respectively. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Stock Compensation Plan In 2010 the Company established the 2010 Omnibus Incentive Plan (the 2010 Plan) pursuant to which the Company’s Board of Directors granted stock options, restricted stock unit awards to employees, directors of the Company, and non-employees to acquire shares of the Company’s Class B common stock. In February 2015, the Company’s Board of Directors suspended further grants in the 2010 Plan. At this time, the Company also adopted the 2015 Equity Incentive Plan (the 2015 Plan). Stock-based compensation expense for restricted stock units (RSUs) awards is estimated at the grant date based on the fair market value of the underlying stock, as determined by the Board of Directors. RSU awards cliff-vest after seven years from date of grant. In the event of an initial public stock offering, the awards contain certain accelerating vesting provisions. Stock options granted under the 2010 Plan to employees that are vested do not become exercisable unless and until the optioned shares are covered by an effective registration statement under the Securities Act of 1933, as amended, and under the applicable securities laws of any state, or a change in ownership and control of the Company. Stock options granted under the 2015 Plan generally will vest and become exercisable 25% after one year with an additional 12.5% after each additional six-month period. Stock-based compensation expense for stock options is estimated at the grant date based on the award’s fair value as calculated by the Black-Scholes option-pricing model. As the 2010 Plan has restrictions on exercisability of the stock options, stock-based compensation for stock options granted and outstanding under the 2010 Plan will not be recognized until one of the events described above becomes probable. The Black-Scholes model requires various highly judgmental assumptions, including the Company’s common stock value and volatility, and expected option term. The Company’s stock-based compensation costs are based upon the grant-date fair market value of restricted stock units (RSUs) as determined by the Board of Directors on the date of grant.

64 Stock-based awards issued to non-employees are accounted for based on the fair value of the equity instruments issued. As of September 30, 2018, there were 500,000 stock options and RSUs authorized for issuance and outstanding under the 2010 Plan. As of September 30, 2018, there were 33.2 million shares authorized for issuance under the 2015 Plan, of which 21.5 million stock options and RSUs were outstanding and 11.7 million remained available for future issuance under the 2015 Plan.

Leases The Company accounts for lease agreements by categorizing leases at their inception as either operating or capital leases depending on certain defined criteria. On certain lease agreements, the Company may receive rent holidays and other incentives. Lease expense is recognized on a straight-line basis without regard to deferred payment terms, such as rent holidays, that defer the commencement date of required payments. Additionally, incentives received are treated as a reduction of costs over the term of the agreement.

Foreign Currency Translation and Transaction Gains and Losses The functional currencies of the Company’s foreign subsidiaries, the Euro, British Pound, or Brazilian Real, are the local currency in the country in which the subsidiary is located. Assets and liabilities of the foreign locations are translated to U.S. dollars using the exchange rate at each balance sheet date. Income and expense accounts are translated using an average exchange rate during the period. Translation adjustments are included in accumulated other comprehensive income, a separate component of stockholders’ deficit, and in the foreign currency effect on cash and cash equivalents, on the consolidated statements of cash flows. Transaction gains and losses, including intercompany transactions denominated in a currency other than the functional currency of the entity involved, are included in other income (expense), net on our consolidated statements of operations and comprehensive income (loss). In connection with the remeasurement of intercompany balances, we recorded a loss of $2.7 million in 2018 and recorded a gain of $205,000 in 2017.

Recent Accounting Pronouncements In May 2014, the FASB issued new revenue recognition guidance. The guidance will require an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new guidance is effective for the Company for the fiscal year ending September 30, 2020 with early adoption permitted beginning January 1, 2018. The guidance permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that the guidance will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor determined the effect of the standard on its ongoing financial reporting. We are evaluating the impact of the acquisition of the Company by RealNetworks (see Note 16) on the timing of our adoption of this standard since RealNetworks adopted this standard on January 1, 2018. In February 2016, the FASB issued new guidance related to the accounting for leases by lessees. A major change in the new guidance is that lessees will be required to present the right-of-use assets and lease liabilities on the balance sheet. The new guidance will be effective for the Company for the fiscal year ending September 30, 2021. While we continue to assess all potential impacts of this new standard, we anticipate this standard will have a material impact on our financial position, primarily due to our office space operating leases, as we will be required to recognize right-of-use assets and lease liabilities on our consolidated balance sheets. However, we do not expect the adoption to have a significant impact on our results of operations or cash flows. We are evaluating the impact of the acquisition of the Company by RealNetworks (see Note 16) on the timing of our adoption of this standard since RealNetworks adopted this standard on January 1, 2019. In November 2015, the FASB issued new guidance (ASU No. 2015-17) related to the balance sheet classification of deferred taxes. A major change in the new guidance is that deferred tax liabilities and assets must be classified as noncurrent in a classified statement of financial position rather than separately stating deferred income tax liabilities and assets into current and noncurrent

65 amounts in a classified statement of financial position. The Company has early adopted ASU No. 2015-17 for the fiscal year ending September 30, 2018 and has applied this position retrospectively to all periods presented. See Note 7 for more detail

2. Fair Value Measurements The Company measures certain financial instruments at fair value on a recurring basis, including cash equivalents and warrants. The fair value of these financial instruments was determined based on three levels of inputs: Level 1 – Observable inputs, such as quoted prices in active markets for identical assets or liabilities Level 2 – Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active Level 3 – Unobservable inputs that reflect the reporting entity’s own assumptions Whenever possible, when determining fair value, the Company uses observable market data, and relies on unobservable inputs only when observable market data is not available. On a recurring basis, the Company measures at fair value certain financial assets and liabilities, which consist of certificates of deposit and warrants. The carrying amounts reflected on the consolidated balance sheets for receivables, accounts payable, and other accrued liabilities approximate fair value due to their short-term nature.

Items Measured at Fair Value on a Recurring Basis The Company has certificate of deposit assets and warrant liabilities that have been measured at fair value. The balances for our certificate of deposits and warrants are immaterial as of 30 September 2017 and 2018.

Items Measured at Fair Value on a Nonrecurring Basis Certain assets and liabilities of the Company are measured at estimated fair value on a nonrecurring basis. These assets and liabilities are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). There were no impairment adjustments for the years ended 30 September 2018 and 2017.

66 3. Intangible Assets Intangible assets, which are a component of other non-current assets in the accompanying balance sheets, consist of the following at September 30 (in thousands): 2018

Gross Accumulated Useful Amount Amortization Net Lives $’000 $’000 $’000

Developed technology 1–3 years 10,057 10,057 — Trade names and trademarks 2–10 years 1,990 1,810 180

Total 12,047 11,867 180

2017

Gross Accumulated Useful Amount Amortization Net Lives $’000 $’000 $’000

Developed technology 1–3 years 10,057 10,053 4 Trade names and trademarks 2–10 years 1,990 1,690 300

Total 12,047 11,743 304

As of 30 September 2018, estimated future amortization of other intangible assets is as follows (in thousands):

$’000

2019 120 2020 60 2021 and thereafter —

Total 180

4. Equipment and Software, Net Equipment and software, net consists of the following at 30 September (in thousands):

2018 2017 $’000 $’000

Computer equipment 8,983 8,871 Software 2,566 2,562 Office equipment 494 413 Leasehold improvements 782 867

Total equipment and software 12,825 12,713 Less accumulated depreciation (12,245) (11,567)

Equipment and software, net 580 1,146

67 5. Accrued Expenses Accrued expenses consist of the following at 30 September (in thousands):

2018 2017 $’000 $’000

Employee compensation, commissions and benefits 2,361 2,021 Sales and other taxes 4,161 2,121 Professional fees 352 2,285 Class B common stock warrant liability 239 375 Partner bounty 15 3,617 Other 248 540

Total 7,376 10,959

6. Related-Party Transactions RealNetworks has invoiced the Company at cost for certain costs incurred by RealNetworks on the Company’s behalf. The total amounts incurred by the Company for these costs for the years ended 30 September 2018 and 2017, were approximately $40,000 and $105,000, respectively. These costs are billed directly to the Company and are included in the consolidated financial statements within the relevant expense caption and as due to related parties. In November 2016, two shareholders each extended a $5.0 million loan to the Company for a total of $10 million (Shareholder Loans). The loans had original maturity dates of November 2017 but have not yet been repaid. In addition, there is a change in control repayment premium in an amount equal to three times the original principal amount, plus all accrued and unpaid interest thereon payable at the time of repayment, in addition to the principal and accrued interest and other amounts so repaid on any such date. The shareholder loans have an interest rate of 10% per annum and shall be paid by capitalizing such interest and adding it to (and thereby increasing) the outstanding principal amount of the loan. The principal and interest balance of the Shareholder Loans at September 30, 2018 was $12.0 million and is included in the consolidated financial statements as due to related parties. All interest shall be paid in full in cash on the maturity date. On January 10, 2017, the Company issued 2,750,000 Class B (non-voting) stock warrants, split equally, to its two largest shareholders, at an initial exercise price of $0.88 per share. These warrants are exercisable within the earlier of ten years from the date of issue or a specified change of control event. The warrants were for payment of management services and these services completed in March 2017. Therefore, the non-employee stock-based compensation of $1.4 million related to these warrants was fully recognized during the year ended September 30, 2017.

7. Income Taxes In 2018, the Company’s pre-tax book income was $4.6 million and $4.2 million for U.S. and foreign entities, respectively. The Company recognized income tax expense of $1.5 million and $1.4 million during the years ended September 30, 2018 and 2017, respectively. The income tax expense consists of state income tax expense, international income tax expense, and foreign withholding tax expense. The differences between this amount and the amounts computed by applying the IRC Section 15 blended U.S. federal income tax rate of 24% to pretax income from continuing operations are due principally to recording a valuation allowance against deferred tax assets and foreign subsidiary activity. Deferred income taxes reflect the tax effect of net operating loss and tax credit carryforwards and the net temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, offset by a valuation allowance. The Company adopted ASU No. 2015-17 retrospectively for all periods presented below. The adoption of ASU No. 2015-17 has had no material impact to the financial statements

68 Significant components of deferred tax assets and liabilities as of September 30 are as follows (in thousands): 2018 2017 $’000 $’000

Deferred tax assets: Net operating losses 22,878 37,510 Accrued royalties 3,679 5,421 Stock compensation and warrant 2,297 3,186 Transfer pricing 3,000 2,658 Depreciation and amortization 897 1,737 Deferred revenue 750 1,275 Accrued expenses 413 615 Other 1,054 1,741

Total 34,968 54,143 Less valuation allowance (34,482) (53,341)

Net deferred tax assets 486 802 Deferred tax liabilities (486) (802)

Net deferred tax liabilities (486) (802)

Net deferred tax assets — —

The Company has recognized a full valuation allowance for its net deferred tax assets due to the uncertainty of realizing the benefits of the net deferred tax assets. The valuation allowance decreased by $18.9 million during the year ended September 30, 2018 and increased by $6.5 million during the year ended September 30, 2017. The Company has a federal net operating loss carryforward of approximately $78 million that will begin to expire in 2030 and state net operating loss carryforwards of approximately $1.4 million (tax effected) that will begin to expire according to state-specific laws The Company and its subsidiaries are subject to U.S. federal income tax as well as the income tax of multiple state and foreign jurisdictions. Foreign jurisdictions where there are wholly owned subsidiaries of Rhapsody International Inc. which require income tax filings include Luxembourg, Germany, the United Kingdom, Brazil, Argentina, and France. The tax years that remain open to examination by the taxing authorities are tax years ending September 30, 2010, to the present (varies by jurisdiction). The net operating losses from prior years are subject to adjustment under examination unless utilized in a year in which the statute of limitation has expired. A reconciliation of the change in the amount of gross unrecognized tax benefits as of September 30 is as follows (in thousands): 2018 2017 $’000 $’000

Balance at beginning of year 499 496 Gross increases – prior period tax positions 1,705 — Gross increases – current period tax positions 655 3

Balance at end of year 2,859 499

As of September 30, 2018, the Company had $2.9 million of unrecognized tax benefits consisting of $549,000 of Federal research and development tax credit carryforward and $2.3 million of Brazil concession of use fee, which represents an uncollectable 6% fee of Napster Brazil’s net revenue for fiscal years 2016 through 2018. No reserves for uncertain tax positions were recorded for the year ended September 30, 2018. The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease within the next 12 months.

69 8. Debt On September 23, 2015, the Company entered into a Loan and Security Agreement (2015 LSA) with two separate banks (Lenders). The 2015 LSA outlined terms for two banks to lend the Company $10 million under a Term Loan. The 2015 Term Loan has an interest rate equal to 11% plus the amount by which one-month London Interbank Offered Rate exceeds 0.50%. The loan had an interest-only payment period until May 1, 2017. The Company shall also pay the Lenders $300,000 upon the earlier of (i) payment in full of the principal, (ii) an event of default, or (iii) upon maturity of the loan The Company also entered into a Loan and Security Agreement (Revolver LSA) with one of the two banks in the 2015 Term Loan. The amount available on the Revolver LSA is based upon accounts receivable and direct-to-consumer subscription deposits. The revolving line had an original maximum available balance of $12.5 million. The maturity date on this loan is September 23, 2018. The interest rate is the greater of 3.25% or the Prime Rate published in the Wall Street Journal. Interest is due monthly. At the inception of the 2015 Term Loan, the Company recorded debt issuance costs of $1.3 million in deferred costs and a debt discount of $605,000. Interest expense for the amortization of the debt discount is calculated on an effective interest rate basis over the life of the 2015 Term Loan. In connection with the 2015 Term Loan, the Company issued warrants to purchase Class B common stock. The warrants price is the lower of (a) $0.88 per share, or (b) the lowest effective price per share at which the Company issues and sells capital stock in the next non-public offering of its equity transaction, or series of related transactions for equity financing purposes in which cash is received by the Company and/or debt of the Company is canceled or converted in exchange for equity securities, in either case, with aggregate gross cash proceeds of at least $5 million. Since no next-round stock was issued on or before September 23, 2017, the warrants were priced at $0.88 and 1,136,364 shares were issued. The estimated fair value of the warrants at the inception of the 2015 Term Loan was calculated using the Black-Scholes option-pricing model with the following assumptions: Inception

Volatility 44.69% Expected life in years 10 Risk-free interest rate 2.16% Expected dividend yield —%

The 2015 Term Loan was originally set to mature on October 1, 2019, and the Revolver LSA on September 23, 2018. The loans are secured by the tangible and intangible assets of the Company. The loans also contain certain financial covenants. As of December 31, 2016, the Company was not in compliance with one of the financial covenants and remained non-compliant with this covenant through March 31, 2017. In addition, the Company incurred indebtedness in excess of the amount permitted to be incurred per the agreements (Permitted Indebtedness). Starting June 23, 2017, the Company entered into several forbearance agreements and amendments to the 2015 Term Loan and the Revolver LSA (Forbearance Agreements). As part of the Forbearance Agreements, the default related to the Permitted Indebtedness was waived once the Company met certain conditions. The Lenders also agreed in the Forbearance Agreements to forbear from taking any enforcement action with respect to the financial covenant default subject to the terms and conditions set forth in the various agreements. As part of the Forbearance Agreements, the Company paid a total of $125,000 in amendment fees, fees in lieu of additional warrants in total of $298,000, a pro-rated facility fee of $31,000, and payments of all Lender’s expenses incurred related to the Forbearance Agreements. In addition, the revolving line of credit on the Revolver LSA decreased to a maximum available balance of $7 million with a maturity date of December 15, 2017, and the Company was required to make a $1 million paydown of principal on the 2015 Term Loan prior to the debt refinance that was required to be closed no later than October 27, 2017. On October 27, 2017, the Company entered into a Non Recourse Purchase of Eligible Receivables Agreement (NRP Agreement) with an international bank (Purchaser) in which the Company will sell and assign on a continuing basis its eligible receivables to the Purchaser in return for 90% of the

70 receivables upfront up to a maximum amount of $15 million in advances. The initial funding occurred on October 31, 2017 and was approximately $9.6 million. The Company used this funding to pay off the 2015 Term Loan on November 1, 2017. The paydown to the Lenders included all outstanding principal and interest as of November 1, 2017 as well as a final payment of $300,000, a prepayment fee of $140,000 and the Company incurred other loss on debt extinguishment costs of $80,000. The Company also used this funding to pay down the Revolver LSA to $7 million per the Forbearance Agreements. On December 15, 2017, the Company entered into an Amended and Restated Loan and Security Agreement (Amended Revolver LSA). The amount available on the Amended Revolver LSA is based upon accounts receivable and direct-to-consumer subscription deposits. The amended revolving line has a maximum available balance of $7 million. The maturity date on this loan is no later than October 31, 2018 with earlier maturity possible based on conditions set forth in the Amended Revolver LSA. The Amended Revolver LSA requires the Company to maintain a balance of unrestricted cash at the bank of not less than $1.5 million plus 5% of the total amount outstanding under the NRP Agreement. The interest rate is 0.75% above the Prime Rate (defined as the greater of 4.25% or the Prime Rate published in the Wall Street Journal). Interest is due monthly. On October 24, 2018, the Company entered into the first amendment to the Amended Revolver LSA to extend the maturity date on this loan to January 31, 2019. On January 28, 2019, the Company entered into the second amendment to the Amended Revolver LSA to extend the maturity date on this loan to April 30, 2019.

9. Commitments and Contingencies Restricted Cash As of September 30, 2018, the Company had $2.4 million in restricted cash, a decrease of $1.8 million from September 30, 2017. $1.9 million is related to a financial covenant in the Amended Revolver LSA that requires the Company to maintain a balance of unrestricted cash at the bank of not less than $1.5 million at all times and 5% of all amounts outstanding under the NRP Agreement. An additional $493,000 is a cash collateral agreement in connection with the issuance of the letter of credit executed in October 2013 to satisfy requirements under an office lease. This cash collateral is part of other noncurrent assets on the consolidated balance sheets. As of September 30, 2017, the covenant in the Revolver LSA required the Company to maintain a balance of unrestricted cash at the bank of not less than $3.5 million and the cash collateral agreement required a $650,000 letter of credit.

Royalty Audits On April 11, 2018, a major content provider provided notice of intent to audit the Company in respect of royalties due during the period January 1, 2014 through March 31, 2018. The audit is on-going and no preliminary results have been delivered.

Litigation From time to time the Company is, and expects to continue to be, subject to legal proceedings and claims in the ordinary course of its business, including employment claims, contract-related claims, and claims of alleged infringement of third-party patents, trademarks, and other intellectual property rights. These claims, including those described above, even if not meritorious, could force the Company to spend significant financial and managerial resources in responding to these claims. The Company is not aware of any legal proceedings or claims, other than the one noted below, that the Company believes will have, individually or taken together, a material adverse effect on the Company’s business, prospects, financial condition, or results of operations. However, the Company may incur substantial expenses in defending against third-party claims and certain pending claims are moving closer to trial. In March 2016, the Company was notified of a putative consumer class action lawsuit relating to an alleged failure to pay so-called “mechanical royalties” on behalf of the Plaintiffs and “other similarly- situated holders of mechanical rights in copyrighted musical works.” On April 7, 2017, the Plaintiffs and Rhapsody agreed to settlement terms during a mediation session. The long form Settlement Agreement was executed effective on January 16, 2019. The damages payable under the Settlement Agreement will be calculated on a claims made basis, subject to an overall maximum of

71 $10 million. The Company has not recorded an accrual related to this settlement as of September 30, 2018 or 2017, as the Company does not believe the amount payable is reasonably estimable.

10. Lease Obligations During 2018 and 2017, the Company had no capital leases. The Company has several non-cancelable operating leases for office space that expire at various dates from 2019 to 2023. Total rent expense for the years ended September 30, 2018 and 2017, was $1.3 million and $1.1 million, respectively. Future minimum payments under non-cancelable operating leases as of September 30, 2018, are as follows (in thousands): Office Leases $’000

2019 1,136 2020 1,070 2021 432

Total minimum payments 2,638

11. Guarantees In the ordinary course of business, the Company enters into agreements with various content providers that guarantee a minimum amount of royalty payments in a given period. The Company believes it will exceed all guarantee minimum amounts of royalty payments in the future and, as such, no accrual was recorded as of September 30, 2018 or 2017. The Company is subject to standard indemnification and warranty provisions that are contained within many of the Company’s customer license and service agreements. Indemnification and warranty provisions contained within the Company’s customer license and service agreements are those management considers necessary and consistent with those prevalent in the Company’s industry. The duration of the Company’s product warranties generally does not exceed 90 days following delivery of the Company’s products. The Company has not incurred significant obligations under customer indemnification or warranty provisions historically and does not expect to incur significant obligations in the future. Accordingly, the Company does not maintain accruals for potential customer indemnification or warranty-related obligations.

12. Stockholders’ Deficit The Company is authorized to issue two classes of common stock and one class of preferred stock.

Class A Common Stock As of September 30, 2018, the Company is authorized to issue 101.5 million shares of Class A common stock with a par value of $0.01 per share. Holders of Class A common stock are entitled to one vote per share, to receive dividends and, upon liquidation or dissolution, are entitled to receive all assets available for distribution to stockholders in conjunction with holders of Class B common stock as a single class. The holders have no preemptive or other subscription rights and there are no redemption or sinking funds with respect to such shares.

Class B Common Stock As of September 30, 2018, the Company is authorized to issue 73.0 million shares of Class B common stock with a par value of $0.01 per share. Holders of Class B common stock are not entitled to any voting rights. Such holders are entitled to receive dividends and, upon liquidation or dissolution, are entitled to receive all assets available for distribution to stockholders in conjunction with holders of Class A common stock as a single class. The holders have no preemptive or other subscription rights and there are no redemption or sinking funds with respect to such shares. Class

72 A common stock and Class B common stock shall rank equally with the Preferred Stock with respect to dividend rights and asset distribution.

Preferred Stock As of September 30, 2018, the Company is authorized to issue 47.5 million shares of preferred stock with a par value of $0.01 per share. Holders of preferred stock are entitled to one vote per share. Each share may be converted by the holder into one share of Class A common stock at such holder’s option. In the event of a liquidation or dissolution, holders of preferred stock shall be entitled to receive out of the assets available to the stockholders for distribution, prior to and in preference to any distribution made on the common stock or any other stock ranking junior to the preferred stock, amounts as specified in the Company’s certificate of incorporation.

Liquidation Preference In the event of liquidation where stockholders of the Company are entitled to receive distributions less than $50 million in the aggregate, the holders of preferred stock are entitled to receive preference during the distribution, and the holders of common stock shall receive their pro rata share of the remaining proceeds. In the event the stockholders are entitled to receive distributions greater than $50 million in the aggregate, the holders of preferred stock no longer have preference and proceeds shall be distributed based on the contractual terms described in the Company’s Amended and Restated Certificate of Incorporation.

13. Stock-Based Compensation Stock-based compensation expense was $1.3 million and $3.5 million during the years ended September 30, 2018 and 2017, respectively. As of September 30, 2018, total unrecognized stock- based compensation on outstanding awards was $1.8 million The compensation expense is recognized over the vesting period of 4 years on a straight-line basis. Stock-based compensation expense is recorded net of estimated forfeitures. Forfeitures are estimated at the time of grant and this estimate is revised, as necessary, in subsequent periods. During the years ended September 30, 2018 and 2017, the Company granted 7,821,197 and 3,070,750 options, respectively with a grant date fair value of $0.43 and $0.80, respectively. During the year ended September 30, 2018, the Company granted 4,542,947 RSUs with a grant date fair value of $0.43 and no RSUs were granted during 2017. No additional disclosure of the stock option plan was made due to the immaterial stock-based compensation expense related to the options and RSUs granted during the years ended September 30, 2018 and 2017. In 2013, the Company entered into an Equity Subscription Agreement with a partner pursuant to which the Company agreed to issue shares of the Company’s Class B common stock upon the achievement of certain milestones related to the subscriber migration and other service offerings. Under the terms of the Equity Subscription Agreement, no additional shares were issued during the years ended September 30, 2018 and 2017. The partner’s rights to additional shares expired during 2018. Therefore, in 2018 the Company reversed the accrued stock-based compensation expenses of $2.0 million, which is included in sales, marketing, and customer acquisition expenses. In 2017, the Company recognized stock-based compensation related to these non-employee equity awards of $1.9 million.

14. Restructuring On May 18, 2017, the Company communicated the plan of management to restructure the organization to set it up for long-term health and self-sustaining from a cash flow perspective. The restructure affected approximately 40% of the Company’s workforce, including contractor relationships. The Company incurred approximately $2.2 million in restructuring expenses related to this plan, which were recorded as operating expenses during the years ended September 30, 2018 and 2017. No additional expenses are expected in subsequent years related to this plan.

15. Employee Benefit Plan Employees are eligible to participate in the Company’s defined contribution retirement plan (401(k) Plan) on the first day of the month following their date of hire. Employees may elect to

73 contribute, on a pretax basis, up to the lesser of 15% of eligible compensation or $18,000 per calendar year. The Company changed the plan during the year ended September 30, 2015, to provide a matching contribution. For the years ended September 30, 2018 and 2017, the Company recorded $105,000 and $222,000, respectively, of matching contribution expense.

16. Subsequent Events Subsequent events are events or transactions that occur after the balance sheet date but before the consolidated financial statements are available to be issued. The Company recognizes in the consolidated financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing the consolidated financial statements. The Company’s consolidated financial statements do not recognize subsequent events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after the balance sheet date and before consolidated financial statements are available to be issued. The notes to the financial statements provide disclosures of certain subsequent events that did not result in recognition in the consolidated financial statements. The Company has evaluated subsequent events through March 20, 2019, which is the date the accompanying consolidated financial statements were available to be issued. On January 18, 2019, our two largest investors, RealNetworks (Buyer) and Rhapsody Applebee, LLC (Seller) entered into a Purchase Agreement (Purchase Agreement) whereby the Buyer acquired all of the Seller’s equity and debt interests in the Company (Acquisition). The Purchase Agreement provides that the Buyer acquired the Seller’s $5,000,000 unsecured note receivable from the Company. Subsequent to this transaction, the Company is a controlled subsidiary of RealNetworks as it owns an aggregate of approximately 84% of the outstanding stock of the Company. The terms of the transaction include initial cash consideration of $1.0 million, $0.2 million of which was paid by the Buyer at closing and the remainder of which will be paid no later than April 25, 2019. During the five years following the acquisition, RealNetworks will pay the lesser of (a) an additional $14.0 million to seller, (paid ratably over such five-year period), or (b) if RealNetworks sells the interest to a third party for less than $15.0 million, the actual amount received by RealNetworks, minus the $1.0 million initial payment. Moreover, in the event that RealNetworks sells such equity interest for consideration in excess of $15.0 million, then RealNetworks will pay seller additional consideration, which shall in no event exceed an additional $25.0 million. In order for Seller to receive the full $40.0 million, the proceeds from the sale of Napster received by RealNetworks for the equity interest acquired would have to exceed $60.0 million. The accompanying financial statements do not reflect any adjustments to give effect to this change in control transaction

74 SECTION 2: FINANCIAL INFORMATION ON RHAPSODY INTERNATIONAL INC (CONTINUED)

UNAUDITED HISTORICAL FINANCIAL INFORMATION ON RHAPSODY INTERNATIONAL INC. T/A NAPSTER FOR THE PERIOD ENDED 30 JUNE 2020 AND THE YEAR ENDED 31 DECEMBER 2019

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)

Six months Year ended ended 31 December 30 June 2020 2019 $’000 $’000

Revenues 49,529 112,589 Cost of revenues (37,527) (86,293)

Gross profit 12,002 26,296 Operating expenses (12,007) (24,489)

Income / (loss) from operations (5) 1,807 Total other income / (expense) 102 (18,500)

Income (loss) before income tax expense 97 (16,693) Income tax expense (60) (398)

Net income (loss) 37 (17,091) Other comprehensive gain (loss) ——

Comprehensive income (loss) 37 (17,091)

75 STATEMENT OF FINANCIAL POSITION

31 December 30 June 2020 2019 $’000 $’000

Assets Current assets: Cash and cash equivalents 5,256 8,326 Accounts receivable, net 16,339 16,718 Prepaid expenses and other current assets 1,895 2,840

Total current assets 23,490 27,884

Restricted cash 494 494 Equipment and software, net 464 401 Other non-current assets 1,713 2,429 Goodwill 14,521 14,521

Total assets 40,682 45,729

Liabilities and stockholders’ deficit Current liabilities Accounts payable 858 884 Accrued royalties and fulfilment 52,060 54,153 Accrued expenses 5,135 5,964 Due to related parties — 349 Deferred revenue 4,221 4,501 Notes payable 4,500 7,315

Total current liabilities 66,778 73,166

Other non-current liabilities 38,145 36,967

Total liabilities 104,919 110,133

Commitments and contingencies Stockholders’ deficit: Preferred stock, $0.01 par value: 47,500,000 shares authorized, issued and outstanding 475 475 Common stock, Class A, $0.01 par value: 101,500,000 shares authorized, 52,316,109 shares issued & outstanding 523 523 Common stock, Class B, $0.01 par value: 73,000,000 shares authorized, 13,757,582 shares issued and outstanding 138 138 Additional paid-in capital 93,625 93,625 Accumulated other comprehensive income 3,839 (9,864) Accumulated deficit (162,837) (149,301)

Total stockholders’ deficit (64,237) (64,404)

Total liabilities and stockholders’ deficit 40,682 45,729

76 Consolidated Statements of Changes in Stockholders’ Deficit

Common Stock Additional Accumulated Other Total

Preferred Stock Class A Class B Paid-In Comprehensive Accumulated Stockholders’

Shares Amount Shares Amount Shares Amount Capital Income Deficit Deficit $’000 $’000 ’000 $’000 $’000 $’000 $’000

Balances at September 30, 2018 47,500,000 475 52,316,109 523 13,757,582 138 93,189 3,664 (149,891) (51,902) Stock-based compensation ——————436 ——436 Gain on translation adjustment ———————6,200 — 6,200 Net loss ————————590 590

Balances at December 30, 2019 47,500,000 475 52,316,109 523 13,757,582 138 93,625 9,864 (149,301) (64,404) Loss on translation adjustment ———————(6,025) — (6,025) Net income ————————(13,536) (13,536)

Balances at June 30, 2020 47,500,000 475 52,316,109 523 13,757,582 138 93,625 3,839 (162,837) (64,237) 77 STATEMENT OF CASH FLOWS

Six Months Year Ended Ended 31 December 30 June 2020 2019 $’000 $’000

Operating activities Net (loss) / income (65) 1,409

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Stock-based compensation (31) (116) Reversal of stock-based compensation (66) — Depreciation and amortization (587) (332) Foreign currency remeasurement (gain) loss (959) (767) Interest income (expense) 102 (18,500)

Changes in operating assets and liabilities: Accounts receivable 156 6,054 Prepaid expenses and other assets 1,070 457 Accounts payable (390) 460 Accrued royalties and fulfilment 787 12,301 Other accrued liabilities (986) (265) Deferred revenue (1,356) (2,050) Other assets 507 523

Net cash provided by / (used in) operating activities (1,818) (826)

Investing activities Purchases of property and equipment (156) —

Net cash used in investing activities (156) —

Financing activities Principal payments on loans (1,096) — Net cash (used in) provided by financing activities (1,096) — Change in cash and cash equivalents (3,070) (826) Cash and cash equivalents at beginning of year 8,326 9,152

Cash and cash equivalents at end of year 5,256 8,326

78 NOTES TO THE FINANCIAL INFORMATION

1. Description of Business and Summary of Significant Accounting Policies Description of Business Rhapsody International Inc. (the Company) operates a music business offering a comprehensive set of digital music products and services designed to provide consumers with broad access to digital music. The Company’s primary service is a subscription music service offering on-demand streaming services and conditional downloads through unlimited access to a catalog of millions of music tracks. The Company operates its music service under the Napster brand name within the United States of America (U.S.), Europe, Central and South America, and Canada. Prior to July 2016, the Company’s service was branded as Rhapsody in the U.S.

Presentation The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and reflect all adjustments that, in the opinion of the Company’s management, are necessary for a fair presentation of the consolidated financial position and results of operations.

Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Estimates are used for the allowance for sales returns and bad debt, unbilled receivables, accrued royalties and fulfillment, stock-based compensation, fair values of financial instruments, fair values of stock awards issued or share-based payments to non-employees, fair value of assets acquired, and income taxes. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, the Company’s consolidated financial statements will be affected.

Accounts Receivable Billed accounts receivable are recorded at the invoiced amount and do not bear interest. Unbilled accounts receivable arise when revenues, though appropriately recorded, have not yet been billed and include amounts to be billed in subsequent periods. The Company considers any changes to the financial condition of its customers and any other external market factors that could impact the collectability of its receivables in the determination of its allowance for sales returns and bad debt. The Company writes off accounts when it has determined that an account will be uncollectible, usually after the account is over 90 days past due and after pursuing collection, or sooner in the event of customer bankruptcy or other circumstances that make further collection unlikely.

Equipment and Software, Net Equipment and purchased software are recorded at amortized cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. The useful lives of equipment and purchased software range from two to four years.

Intangible Assets Intangible assets consist primarily of developed technology, trademarks, and trade names. Intangible assets are amortized on a straight-line basis over one to ten years, which approximates their estimated useful lives.

Goodwill Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The Company does not amortize goodwill.

79 Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of assets held and used is measured by a comparison of the carrying amount of the asset group to the estimated undiscounted future cash flows expected to be generated by the asset group. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset group exceeds its fair value.

Revenue The majority of the Company’s revenue is generated through subscription products. The Company recognizes revenue when (1) persuasive evidence exists of an arrangement with the customer reflecting the terms and conditions under which products or services will be provided, (2) delivery has occurred or services have been provided, (3) the fee is fixed or determinable, and (4) collection is reasonably assured. The Company’s revenue is generated through consumer transactions or through a reseller. Consumer subscription products are paid in advance, typically for monthly, quarterly, or annual periods. Transactions through a reseller are typically paid in arrears for monthly subscriptions. Subscription revenue is recognized ratably over the related subscription period. Deferred revenue consists of both prepaid but unrecognized subscription revenue, where cash is received in advance of the delivery or completion of the services or in instances when revenue recognition criteria have not been met. Deferred revenue is recognized when the services are provided and all revenue recognition criteria have been met.

Taxes Collected From Customers The Company collects various types of taxes from its customers, assessed by governmental authorities, which are imposed on and concurrent with revenue-producing transactions, and remits such amounts to the appropriate governmental authority. Such taxes are recorded on a net basis and are not presented on the accompanying consolidated statements of operations and comprehensive income (loss).

Cost of Revenues Cost of revenues consists of the content royalties, infrastructure costs related to content streaming, and maintaining the Company’s service, including the employee costs associated with supporting these functions. Due to the length of time it can take to settle accrued royalties with labels, music rights holders, and European Copyright Collection Societies; unmatched royalty accruals; final rate agreements; and royalty audit settlements, cost of revenues can fluctuate significantly from year to year based upon changes in estimate recorded in any given period.

Sales, Marketing, and Customer Acquisition Expenses Sales, marketing, and customer acquisition expenses are primarily related to advertising expense, payroll, and other related expenses of employees in those functions.

Technology and Product Development The Company incurs product development expenses consisting of employee compensation, information technology, consulting, and costs associated with supporting consumer-connected- device manufacturers in implementing its service in their products. The Company incurs product development expenses primarily for improvements to its website and for developing and expanding the Napster music platform to numerous consumer electronic devices. The Company generally expenses product development costs as incurred.

General and Administrative General and administrative expenses primarily relate to payroll and related expenses for human resources, legal, accounting and executive functions, as well as professional service firms that provide assistance to the Company. Also in general and administrative, the Company included rent, utilities, employee stock-based compensation, and other facility costs.

80 Internal Use Software and Website Development Costs Costs incurred to develop software for internal use, including mobile device applications, are required to be capitalized and amortized over the estimated useful life of the asset if certain criteria are met. Costs related to design or maintenance of internal-use software are expensed as incurred. The Company evaluates the costs incurred during the application development stage of website development to determine whether the costs meet the criteria for capitalization. Costs related to preliminary project activities and post-implementation activities are expensed as incurred.

Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. A valuation allowance against deferred tax assets is established if, based on all available evidence, it is more likely than not that some or all of the deferred tax assets are not expected to be realized. The Company recognizes income tax expense related to uncertain tax positions as part of its income tax provision and recognizes interest and penalties related to uncertain tax positions in interest expense and other expenses, respectively. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Leases The Company accounts for lease agreements by categorizing leases at their inception as either operating or capital leases depending on certain defined criteria. On certain lease agreements, the Company may receive rent holidays and other incentives. Lease expense is recognized on a straight-line basis without regard to deferred payment terms, such as rent holidays, that defer the commencement date of required payments. Additionally, incentives received are treated as a reduction of costs over the term of the agreement.

Foreign Currency Translation and Transaction Gains and Losses The functional currencies of the Company’s foreign subsidiaries, the Euro, British Pound, or Brazilian Real, are the local currency in the country in which the subsidiary is located. Assets and liabilities of the foreign locations are translated to U.S. dollars using the exchange rate at each balance sheet date. Income and expense accounts are translated using an average exchange rate during the period. Translation adjustments are included in accumulated other comprehensive income, a separate component of stockholders’ deficit, and in the foreign currency effect on cash and cash equivalents, on the consolidated statements of cash flows. Transaction gains and losses, including intercompany transactions denominated in a currency other than the functional currency of the entity involved, are included in other income (expense), net on our consolidated statements of operations and comprehensive income (loss).

2. Fair Value Measurements The Company measures certain financial instruments at fair value on a recurring basis, including cash equivalents and warrants. The fair value of these financial instruments was determined based on three levels of inputs: Level 1 – Observable inputs, such as quoted prices in active markets for identical assets or liabilities Level 2 – Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active Level 3 – Unobservable inputs that reflect the reporting entity’s own assumptions

81 Whenever possible, when determining fair value, the Company uses observable market data, and relies on unobservable inputs only when observable market data is not available. On a recurring basis, the Company measures at fair value certain financial assets and liabilities, which consist of certificates of deposit and warrants. The carrying amounts reflected on the consolidated balance sheets for receivables, accounts payable, and other accrued liabilities approximate fair value due to their short-term nature.

3. Intangible Assets Intangible assets, which are a component of other non-current assets in the accompanying balance sheets, consist of the following (in thousands):

30 June 2020

Useful Gross Accumulated Lives Amount Amortization Net $’000 $’000 $’000 $’000

Developed technology 1–3 years 10,057 10,057 — Trade names and trademarks 2–10 years 1,990 1,990 —

Total 12,047 12,047 —

31 December 2019

Useful Gross Accumulated Lives Amount Amortization Net $’000 $’000 $’000 $’000

Developed technology 1–3 years 10,057 10,057 — Trade names and trademarks 2–10 years 1,990 1,990 —

Total 12,047 12,047 —

4. Equipment and Software, Net Equipment and software, net consists of the following (in thousands):

31 December 30 June 2020 2019 $’000 $’000

Computer equipment 499 4,820 Software 21 935 Office equipment 24 677 Leasehold improvements 492 495

Total equipment and software 1,034 6,927 Less accumulated depreciation (572) (6,526)

Equipment and software, net 464 401

82 5. Stockholders’ Deficit The Company is authorized to issue two classes of common stock and one class of preferred stock.

Class A Common Stock Holders of Class A common stock are entitled to one vote per share, to receive dividends and, upon liquidation or dissolution, are entitled to receive all assets available for distribution to stockholders in conjunction with holders of Class B common stock as a single class. The holders have no preemptive or other subscription rights and there are no redemption or sinking funds with respect to such share.

Class B Common Stock Company is authorized to issue 73.0 million shares of Class B common stock with a par value of $0.01 per share. Holders of Class B common stock are not entitled to any voting rights. Such holders are entitled to receive dividends and, upon liquidation or dissolution, are entitled to receive all assets available for distribution to stockholders in conjunction with holders of Class A common stock as a single class. The holders have no preemptive or other subscription rights and there are no redemption or sinking funds with respect to such shares. Class A common stock and Class B common stock shall rank equally with the Preferred Stock with respect to dividend rights and asset distribution.

Preferred Stock Holders of preferred stock are entitled to one vote per share. Each share may be converted by the holder into one share of Class A common stock at such holder’s option. In the event of a liquidation or dissolution, holders of preferred stock shall be entitled to receive out of the assets available to the stockholders for distribution, prior to and in preference to any distribution made on the common stock or any other stock ranking junior to the preferred stock, amounts as specified in the Company’s certificate of incorporation.

Liquidation Preference In the event of liquidation where stockholders of the Company are entitled to receive distributions less than $50 million in the aggregate, the holders of preferred stock are entitled to receive preference during the distribution, and the holders of common stock shall receive their pro rata share of the remaining proceeds. In the event the stockholders are entitled to receive distributions greater than $50 million in the aggregate, the holders of preferred stock no longer have preference and proceeds shall be distributed based on the contractual terms described in the Company’s Amended and Restated Certificate of Incorporation.

83 PART VI

ADDITIONAL INFORMATION

1. RESPONSIBILITY The Directors, whose names appear on page 8 of this document, and the Company accept responsibility, both individually and collectively, for the information contained in this document. To the best of the knowledge and belief of the Directors and the Company (who have taken all reasonable care to ensure that such is the case) the information contained in this document for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of that information. All of the Directors accept individual and collective responsibility for compliance with the AIM Rules and accept sole responsibility for the recommendation set out on in the first paragraph of the “Recommendation” section set out in Part I.

2. THE DIRECTORS The Directors and their respective functions are as follows: Anthony Matchett (Chief Executive Officer), appointed 26 April 2016 Steven Hancock (Chief Operations Officer), appointed 26 April 2016 Simon Cole (Independent Chairman), appointed 26 April 2016 Andrew Botha (Independent Non-Executive Director), appointed 17 December 2018 Grant Dollens (Non-Executive Director), appointed 16 April 2020

3. THE COMPANY 3.1 The Company was incorporated and registered in England and Wales on 18 November 2005 under the Act as a private limited company with the name Elm Investments Limited and registered number 05628362. On 19 January 2006, the Company re-registered as a public limited company under the Act with the name Elm Investments plc. The Company has undergone the following name changes:

Previous name New name Date of change

Elm Investments Limited Elm Investments plc 19 January 2006 Elm Investments plc iPoint-media plc 18 September 2006 iPoint-media plc Armstrong Ventures plc 31 July 2012 Armstrong Ventures plc EVR Holdings plc 13 May 2016

3.2 The liability of the Company’s members is limited to the amount, if any, unpaid on the Ordinary Shares. 3.3 The Company is governed by, and its securities were created under, the Act and the regulations made thereunder. 3.4 The Company’s registered office is located at 55 Poland Street, London, England, W1F 7NN. The principal place of business is 55 Poland Street, London, England, W1F 7NN. The Company is domiciled in the UK. 3.5 The business address of the Directors is 55 Poland Street, London, England, W1F 7NN. 3.6 The Company has no administrative, management or supervisory bodies other than the Board, the Remuneration Committee and the Audit Committee. 3.7 The Company’s principal activity following Admission will be to act as the holding company of the Enlarged Group.

84 4. THE ENLARGED GROUP 4.1 As at the date of this document, the Company has the following subsidiaries.

Country of Ownership Name incorporation Registered office Activity interest

MelodyVR Limited England and Wales 55 Poland Street, Virtual reality content 100% London, creation England, W1F 7NN

Immersive England and Wales The Lighthouse, Research and 50.98% Construction Limited 370 Gray’s Inn Road, development London, England, WC1X 8BB MelodyVR Holdings England and Wales The Lighthouse, Dormant 100% Limited 370 Gray’s Inn Road, London, England, WC1X 8BB MelodyVR Inc. United States of 8954 St Ives Drive, Virtual reality content 100% America Los Angeles, CA, creation United States, 90069

4.2 On Admission, the Company will be the holding company of the following subsidiaries:

Country of Ownership Name incorporation Registered office Activity interest

Rhapsody United States of 701 5th Avenue a3100, Virtual reality content 100% International Inc. America Seattle, WA 98104, creation United States Napster Luxembourg Luxembourg 60, Route de Managing local 100% S.a.r.l Luxembourg relationships L-5408 Bous Luxemburg Rhapsody Germany 5 Stephanstrasse Managing local 100% International GmbH 60313 Frankfurt relationships Rhapsody France 8 Rue du Caire Managing local 100% International GmbH – 75002 Paris relationships French Branch France Napster K.K. Japan Aoyama Palacio Tower Managing local 100% 11th Floor, Kita Aoyama relationships 3-6-7 Minato-Ku, Tokyo Japan Rhapsody United States of 701 5th Avenue, Managing local 100% Washington LLC America a3100, Seattle, WA relationships 98104, United States Napster Do Brasil Brazil Rua Samuel Morse, 74, Managing local 100% Conj 181 relationships Brooklin - São Paulo - Brasil 04576-06

5. SHARE CAPITAL 5.1 The issued, fully paid, share capital of the Company as at 7 December 2020 (being the latest practicable date before publication of this document) was as follows:

Number Nominal Value

Existing Ordinary Shares of £0.01 each 2,061,845,991 £20,618,459.91 Deferred Shares of £0.0024 each 150,520,616 £361,249.48 Deferred Shares of £0.0095 each 26,000,000 £247,000.00

85 5.2 Immediately following Admission the issued, fully paid, share capital of the Company will be as follows:

Number Nominal Value

Enlarged Ordinary Shares of £0.01 each 2,463,195,765 £24,631,957.65 Deferred Shares of £0.0024 each 150,520,616 £361,249.48 Deferred Shares of £0.0095 each 26,000,000 £247,000.00

5.3 The Acquisition will result in the allotment and issue of at least 200,000,000 Consideration Shares. 5.4 As at 31 December 2019 the share capital comprised 1,433,660,237 Existing Ordinary Shares of £0.01, 150,520,616 deferred shares of £0.0024 and 26,000,000 deferred shares of £0.0095. 5.5 During the period covered by the historical financial information incorporated by reference in Part IV of this document the following changes in share capital have taken place: 5.5.1 On 16 January 2017, 1,206,034 Existing Ordinary Shares were issued following the exercise of warrants at £0.014 per share. 5.5.2 On 16 January 2017, 4,052,912 Existing Ordinary Shares were issued following the exercise of warrants at £0.0185 per share. 5.5.3 On 26 January 2017, 926,723 Existing Ordinary Shares were issued following the exercise of warrants at £0.014 per share. 5.5.4 On 26 January 2017, 1,603,273 Existing Ordinary Shares were issued following the exercise of warrants at £0.0185 per share. 5.5.5 On 2 February 2017, 3,367,083 Existing Ordinary Shares were issued following the exercise of warrants at £0.014 per share. 5.5.6 On 2 February 2017, 372,549 Existing Ordinary Shares were issued following the exercise of warrants at £0.0185 per share. 5.5.7 On 16 February 2017, 833,333 Existing Ordinary Shares were issued following the exercise of warrants at £0.014 per share. 5.5.8 On 16 February 2017, 91,667 Existing Ordinary Shares were issued following the exercise of warrants at £0.0185 per share. 5.5.9 On 17 March 2017, 515,186 Existing Ordinary Shares were issued following the exercise of warrants at £0.0185 per share. 5.5.10 On 13 April 2017, 195,812 Existing Ordinary Shares were issued following the exercise of warrants at £0.0185 per share. 5.5.11 On 7 June 2017, 62,500,000 Existing Ordinary Shares were issued at £0.08 per share in a placing. 5.5.12 On 5 July 2017, 1,174,872 Existing Ordinary Shares were issued following the exercise of warrants at £0.0185 per share. 5.5.13 On 5 July 2017, 8,483,622 Existing Ordinary Shares were issued following the exercise of warrants at £0.011 per share. 5.5.14 On 30 August 2017, 704,925 Existing Ordinary Shares were issued following the exercise of warrants at £0.0185 per share. 5.5.15 On 30 August 2017, 625,000 Existing Ordinary Shares were issued following the exercise of warrants at £0.014 per share. 5.5.16 On 25 October 2017, 125,000,000 Existing Ordinary Shares were issued at £0.08 per share in a placing 5.5.17 On 25 January 2018, 37,083 Existing Ordinary Shares were issued following the exercise of warrants at £0.014 per share.

86 5.5.18 On 1 May 2018, 125,000,000 Existing Ordinary Shares were issued at £0.16 per share in a placing. 5.5.19 On 4 May 2018, 400,931 Existing Ordinary Shares were issued following the exercise of warrants at £0.0185 per share. 5.5.20 On 4 May 2018, 6,511,209 Existing Ordinary Shares were issued following the exercise of warrants at £0.014 per share. 5.5.21 On 26 June 2018, 686,274 Existing Ordinary Shares were issued following the exercise of warrants at £0.0185 per share. 5.5.22 On 26 June 2018, 1,208,333 Existing Ordinary Shares were issued following the exercise of warrants at £0.014 per share. 5.5.23 On 31 July 2018, 980,392 Existing Ordinary Shares were issued following the exercise of warrants at £0.0185 per share. 5.5.24 On 31 July 2018, 7,004,165 Existing Ordinary Shares were issued following the exercise of warrants at £0.014 per share. 5.5.25 On 5 October 2018, 8,752,940 Existing Ordinary Shares were issued following the exercise of warrants at £0.0185 per share. 5.5.26 On 23 January 2019, 355,963 Existing Ordinary Shares were issued following the exercise of warrants at £0.0185 per share. 5.5.27 On 21 June 2019, 111,111,111 Existing Ordinary Shares were issued at £0.045 per share in a subscription. 5.5.28 On 22 July 2019, 1,961,428 Existing Ordinary Shares were issued following the exercise of warrants at £0.0185 per share. 5.5.29 On 12 August 2019, 1,126,383 Existing Ordinary Shares were issued following the exercise of warrants at £0.0185 per share. 5.5.30 On 16 October 2019, 5,433,811 Existing Ordinary Shares were issued following the exercise of warrants at £0.0185 per share. 5.5.31 On 16 October 2019, 478,908 Existing Ordinary Shares were issued in accordance with the Company’s Share Option Plan. 5.6 Since 31 December 2019, the following changes in share capital have taken place: 5.6.1 On 6 January 2020, 4,997,041 Existing Ordinary Shares were issued at £0.153 per share in a subscription. 5.6.2 On 23 March 2020, 275,410,966 Existing Ordinary Shares were issued at £0.0375 per share in a placing. 5.6.3 On 23 March 2020, 4,630,180 Existing Ordinary Shares were issued following the exercise of warrants at £0.011 per share. 5.6.4 On 23 March 2020, 4,615,090 Existing Ordinary Shares were issued following the exercise of warrants at £0.012 per share. 5.6.5 On 23 March 2020, 1,470,588 Existing Ordinary Shares were issued following the exercise of warrants at £0.0185 per share. 5.6.6 On 3 August 2020, 4,615,090 Existing Ordinary Shares were issued following the exercise of warrants at £0.012 per share. 5.6.7 On 3 August 2020, 25,000 Existing Ordinary Shares were issued following the exercise of warrants at £0.09 per share. 5.6.8 On 3 August 2020, 2,394,592 Existing Ordinary Shares were issued following the exercise of warrants at £0.011 per share. 5.6.9 On 25 August 2020, 335,024,248 Existing Ordinary Shares were issued at £0.035 per share in a placing and subscription.

87 5.7 Save as disclosed in paragraphs 5, 7 and 11 of this Part VI: 5.7.1 no share or loan capital of the Company has been issued or is proposed to be issued; 5.7.2 there are no Ordinary Shares or Deferred Shares in the Company not representing capital; 5.7.3 there are no shares in the Company held by or on behalf of the Company itself; 5.7.4 there are no outstanding convertible securities, exchangeable securities or securities with warrants issued by the Company; 5.7.5 there are no acquisition rights and/or obligations over authorised but unissued share capital of the Company and the Company has made no undertaking to increase its share capital; and 5.7.6 no share or loan capital of the Company is under option and the Company has not agreed conditionally or unconditionally to put any share or loan capital of the Company under option. 5.8 At the last annual general meeting of the Company held on 11 May 2020 resolutions were passed granting the Directors general and unconditional authority pursuant to the Articles to issue (or grant rights to subscribe for, or to convert any security into) up to an aggregate nominal amount of £8,598,935.31 and that the provisions of the Articles requiring such shares to be offered on a pre-emptive basis to all Shareholders be excluded. 5.9 At the General Meeting, resolutions of the Company are being proposed to do the following: (i) approve the Acquisition and authorise the Directors to issue the Consideration Shares for the purposes of the Acquisition; (ii) authorise the Directors to issue the Consideration Shares and disapply pre-emption rights in respect of the Consideration Shares; and (iii) authorise the Directors to issue, grant rights to subscribe for, or convert any security into shares in the Company up to an aggregate nominal amount of £10,309,229.95, being approximately 50 per cent. of the Existing Issued Share Capital and to disapply pre-emption rights in respect of an aggregate nominal amount of £10,309,229.95, being approximately 50 per cent. of the Existing Issued Share Capital.

6. SECURITIES BEING ADMITTED 6.1 The New Ordinary Shares will be ordinary shares of £0.01 each in the capital of the Company, issued in British Pounds Sterling. 6.2 The International Security Identification Number (ISIN) of the Existing Ordinary Shares is GB00BD2YHN21 and the Stock Exchange Daily Official List (SEDOL) number will be MVR. The ISIN for the New Ordinary Shares will be GB00BD2YHN21. 6.3 The New Ordinary Shares will be in registered form. They will be capable of being held in certificated form or in uncertificated form in CREST. The Company’s register of members will be kept by Euroclear UK & Ireland, the operator of the CREST system and the Company’s registrars, Neville Registrars, Neville House, Steerpark Road, Halesowen B62 8HD. 6.4 The dividend and voting rights attaching to the New Ordinary Shares are set out in paragraphs 10.4 to 10.6 of this Part VI. 6.5 Section 561 of the Act gives the Shareholders rights of pre-emption in respect of allotments of securities which are or are able to be paid up in cash (other than by way of allotments to employees pursuant to an employee share scheme as defined under section 1166 of the Act). Subject to limited exceptions and to the extent authorised pursuant to the Resolutions, unless Shareholders’ approval is obtained in a general meeting of the Company, the Company must normally offer Ordinary Shares to be issued for cash to existing shareholders pro-rata to their shareholdings.

88 6.6 The New Ordinary Shares will have no right to share in the profits of the Company other than through a dividend, distribution or return of capital (further details of which are set out in paragraph 10.5 of this Part VI). 6.7 Each New Ordinary Share will be entitled on a pari passu basis with all other issued New Ordinary Shares to share in any surplus on a liquidation of the Company. 6.8 The New Ordinary Shares will have no redemption or conversion rights.

7. OUTSTANDING WARRANTS 7.1 The Company currently has the following 182,383,832 outstanding warrants each to subscribe for 1 Ordinary Share:

No of Warrants outstanding Exercise Price (pence) Lapse Date

46,664,054 1.1p 30 June 2026 43,239,926 4.3p 22 December 2021 43,239,926 14.2p 17 July 2022 43,239,926 12.4p 20 March 2022 6,000,000 5.5p 29 October 2023

7.2 In connection with the Loan Facility, Davis Partnership, LP will receive warrants granting the ability to invest $20 million in the Company within a 10 year period at an exercise price of 3.75 pence. 7.3 The 4,615,090 warrants currently held by Andrew Botha will be forfeited between publication of this document and Admission to allow him to be classified as an independent non- executive director.

8. TAKEOVERS 8.1 The Takeover Code applies to the Company. Rule 9 of the Takeover Code (“Rule 9”) therefore applies to any person, or group of persons, acting in concert, who acquires, whether by a series of transactions over a period of time or not, an interest in shares which, taken together with shares in which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of the Company. It would also apply to any person who, together with persons acting in concert with him, is already interested in shares which in aggregate carry not less than 30 per cent. (but not more than 50 per cent.) of the voting rights of the Company if that person, or any person acting in concert with him, acquires an interest in any other shares which increases the percentage of shares carrying voting rights in which he is interested. Where Rule 9 applies, the person or concert party group is normally required by the Panel to make a general offer in cash to acquire from the other shareholders the remaining shares in the company at not less than the highest price paid by him or them within the preceding twelve months. Rule 9 is subject to a number of dispensations. 8.2 In the event a bidder for shares in the Company acquires at least nine-tenths in value of the issued share capital of the Company to which an offer relates the bidder may in accordance with the procedure set out in section 979 of the Act require the holders of any shares he has not acquired to sell them subject to the terms of the offer. Those Shareholders may in turn require the bidder to purchase their shares on the same terms. 8.3 No person has made a public takeover bid for the Company’s issued share capital in the financial period to 31 December 2019 or in the current financial year. 8.4 Investors should be aware that under the Takeover Code, if a person (or group of persons acting in concert) holds interests in shares carrying more than 50 per cent. of the Company’s voting rights, that person (or any person(s) acting in concert with him) will normally be entitled to increase their holding or voting rights without incurring any further obligations under Rule 9 to make a mandatory offer, although individual members of the concert party will not be able to increase their percentage interest in shares through or between a Rule 9 threshold, without Panel consent. Such persons should, however consult with the Panel in advance of making such further acquisitions.

89 9. CONTROL 9.1 To the best of the knowledge of the Company, there are no persons who at the date of this document directly or indirectly control the Company, where control means owning 30 per cent. or more of the voting rights attaching to the share capital of the Company. 9.2 The Company is not aware of any arrangements which may at a subsequent date result in a change in control of the Company.

10. ARTICLES OF ASSOCIATION The Articles contain, among other things, provisions to the following effect:

10.1 Objects There are no express objects or restrictions on objects in the Company’s articles, with the effect that the objects of the Company are unrestricted in accordance with section 31 of the Act.

10.2 Initial Deferred Shares The Initial Deferred Shares shall rank equally in all respects and shall constitute one class of shares. Notwithstanding anything else in this paragraph 10, the rights and restrictions applying to the Initial Deferred Shares are as follows: (a) no right to receive any dividend or other distribution; (b) on any return of capital whether on a winding up or reduction of capital or otherwise the holders of Initial Deferred Shares shall be entitled to receive the amount paid up or credited as paid up on their respective holding of Initial Deferred Shares but only after there has been paid on each Ordinary Share the amount paid up on each Ordinary Share plus a further sum of £1,000,000,000,000 per share but the holders of the Initial Deferred Shares shall not be entitled to participate further in any distribution of the assets or the capital of the Company; and (c) no right to attend or to vote or to speak either in person or by proxy at any general meeting of the Company. Any reduction in capital undertaken by the Company shall not constitute a modification, variation or abrogation of the rights attached to the Initial Deferred Shares and accordingly the Initial Deferred Shares may be cancelled at any time for no consideration by means of a reduction in capital affected in accordance with the Act. The Company may from time to time create, allot and issue further shares, whether ranking equally with or in priority to the Initial Deferred Shares. Any such creation, allotment or issue shall not be treated as a variation of or abrogation of the rights conferred by the Initial Deferred Shares.

10.3 Subsequent Deferred Shares The Subsequent Deferred Shares shall rank equally in all respects and shall constitute one class of shares. Notwithstanding anything else in this paragraph 9, the rights and restrictions applying to the Subsequent Deferred Shares are as follows: (a) no right to receive any dividend or other distribution; (b) on any return of capital, whether on a winding up or reduction of capital or otherwise the holders of Subsequent Deferred Shares shall be entitled to receive the amount paid up or credited as paid up on their respective holding of Subsequent Deferred Shares but only after there has been paid on each Ordinary Share the amount paid up on each Ordinary Share plus a further sum of £100,000,000 per share but the holders of the Subsequent Deferred Shares shall not be entitled to participate further in any distribution of the assets or the capital of the Company; (c) no right to receive notice of or to attend or to vote or to speak either in person or by proxy at any general meeting of the Company; and

90 (d) no right to transfer the Subsequent Deferred Shares without the consent of the Company. Each holder of Subsequent Deferred Shares shall be deemed to have conferred irrevocable authority on the Company at any time to appoint any person, for and on behalf of such holder, to: (e) receive notice of, attend and vote at any meeting of the class of Subsequent Deferred Shares and sign any written resolution of such class; (f) agree and execute any transfer of (and any agreement to re-purchase transfer or otherwise dispose of) some or all of the Subsequent Deferred Shares to such persons as the Company may determine (including, without limitation, the Company itself); (g) agree to sell or cancel all of the Subsequent Deferred Shares then in issue for not more than one penny for all such Subsequent Deferred Shares; and (h) receive any consideration payable upon a transfer or re-purchase made pursuant to sub-paragraphs (b) or (c) above, in each case without obtaining the sanction of the holders, of such Subsequent Deferred Shares. The Company may at its option re-purchase all of the Subsequent Deferred Shares then in issue, at a price not exceeding one penny (in aggregate) for all such Subsequent Deferred Shares purchased at any one time.

10.4 Voting Subject to disenfranchisement in the event of any non-compliance with any statutory notice requiring disclosure of the beneficial ownership of any shares as mentioned in (4) below, and subject to any special terms as to voting for the time being attached to any shares (as to which there will be none immediately following Admission), on a show of hands every member who, being an individual, is present in person or by proxy or being a corporation, is present by a duly authorised representative shall have one vote and on a poll each member present in person or by proxy or authorised representative shall have one vote for every share of which he is a holder. In the case of joint holders, the vote of the person whose name stands first in the register of members is accepted to the exclusion of any votes tendered by any other joint holders. A member is not entitled to vote if any calls or other monies due in respect of his shares remain unpaid and a member may be disenfranchised where he, or a person appearing to be interested in shares fails to comply with a notice from the Company under section 793 of the Act (“section 793 notice”) which may require him to indicate the capacity in which he holds the shares or any interest in them.

10.5 Dividends and distributions Dividends may be declared by ordinary resolution but must not in any event exceed the amount recommended by the Directors. Subject to the rights of persons (if any) entitled to shares with special dividend rights, all dividends will be paid according to the amounts paid up (otherwise than in advance of calls) on the nominal value of the shares on which the dividend is paid. The Directors may from time to time pay to the members such interim dividends as appear to them to be justified by the profits of the Company. If any member or any other person appearing to be interested in shares held by that member representing 0.25 per cent. or more of the class of shares concerned fails to supply to the Company any information required by any section 793 notice (see “voting” above), the Directors may by notice to that member direct that any dividend (or any part of it) or other amount payable on those shares (except on a winding up of the Company) will be retained by the Company. The Company will not be obliged to pay interest on that dividend and the member concerned will have no right to receive any additional shares in the Company in lieu of any dividends.

91 On a winding up of the Company, the Company’s assets available for distribution must be divided among the members in proportion to the nominal amounts of capital paid up or credited as paid up on the shares held by them, subject to the terms of issue of or rights attaching to any shares.

10.6 Unclaimed dividends Any dividends unclaimed may be used for the benefit of the Company until claimed. Any dividend which is still unclaimed twelve years after having become due for payment will, unless the Directors resolve otherwise, be forfeited and revert to the Company.

10.7 Untraced shareholders The Company may sell any shares in the Company of a member or person entitled to shares by transmission who is untraceable if, during the period of twelve years prior to the date of the publication in both a national newspaper and a newspaper circulating in the area where the member’s or person’s last known address is located of its intention to sell: (a) no cheque, warrant or money order addressed to the member or the person entitled by transmission has been cashed; (b) no cash dividend has been satisfied by a transfer of funds; (c) the Company has paid at least three cash dividends (whether interim or final) and no such dividend has been claimed; and (d) the shares have been in issue during the 12 year period and the Company has received no communication in respect of the shares from the holder or person entitled by transmission during either the 12 year period or period of 3 months following the publication of the later of the two advertisements.

10.8 Variation of class rights If at any time the capital of the Company is divided into different classes of shares, all or any of the rights attached to any class of share may (unless the rights attached to the shares provide otherwise) be varied or abrogated with the consent in writing of the holders of not less than three-quarters in nominal value of the issued shares of that class or with the sanction of a resolution passed at a separate general meeting of the holders of the shares of that class.

10.9 Alteration of share capital There are no conditions imposed by the Articles of Association regarding changes in the Company’s capital which are more stringent than required by the laws of England and Wales. Accordingly, subject to complying with the Act (including any requirement to pass a shareholder resolution or resolutions), the Company may alter its share capital in the manner allowed for under the Act, including by sub-dividing or consolidating and sub-dividing its share capital, redenominating or reducing its share capital and purchasing its own shares. The Articles contain provisions allowing the Board to deal with fractions arising on consolidation and division or a sub-division of shares as it thinks fit.

10.10 Transfer of shares A member may transfer all or any of his uncertificated shares and the Company shall register the transfer of any uncertificated shares in accordance with any applicable statutory provision. The Directors may refuse to register the transfer of an uncertificated share or any renounceable right of allotment of a share which is a participating security held in uncertificated form in accordance with the CREST Regulations to the extent that the Company is permitted to do so by the CREST Regulations, provided that where the uncertificated shares are admitted to AIM, such a refusal would not prevent dealings in the shares of that class taking place on an open and proper basis and, in the case of a transfer to joint holders, where the joint transferees exceed four in number. If the Directors refuse to register a transfer of an uncertificated share they shall, within two months of the date on which the operator instruction relating to such a transfer was received by the Company, send to the transferee notice of the refusal.

92 A member may transfer all or any of his certificated shares by an instrument in writing in any usual form, or in any other form which the Directors may approve. The instrument of transfer of a partly paid share shall be executed by or on behalf of the transferee. The Directors may refuse to register the transfer of a certificated share provided the exercises of such power does not disturb the market (but if the Company’s shares are admitted to trading on AIM, only in exceptional circumstances approved by the London Stock Exchange). The Directors may also refuse to register a transfer of a certificated share, whether or not fully paid, unless the instrument of transfer is lodged, duly stamped or adjudged or certified as not chargeable to stamp duty, at the transfer office, or such other place as the Directors may appoint and is accompanied by the certificate(s) for the share(s) to which it relates (except where the shares are registered in the name of a market nominee and no certificate has been issued for them) and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer. If the Directors refuse to register a transfer of a certificated share they shall, within two months after the date on which the instrument of transfer was lodged with the Company, send to the transferee notice of the refusal. The Directors may also refuse to register any transfer of certificated shares unless it is in respect of only one class of share and is in favour of not more than four transferees. The Directors may, in their absolute discretion, refuse to register the transfer of any share which is not fully paid up.

10.11 Calls on shares The Board may make calls on the members (and persons entitled to shares by transmission) in respect of any amounts unpaid on their shares (whether in respect of nominal amount or premium) provided that (except as otherwise fixed by the conditions of application or allotment) no call on any share may exceed one quarter of the nominal value of the share. Each member must (subject to being given at least fourteen clear days’ notice specifying when and where payment is to be made) pay to the Company as required by the notice the amount called on his shares. A call may be postponed or revoked in whole or in part as the Board decides. The joint holders of a share are jointly and severally liable to pay all calls in respect of it.

10.12 Forfeiture If a call remains unpaid after it has become due and payable, the Board may give to the person from whom it is due not less than seven clear days’ notice requiring payment of the amount unpaid together with any interest which may have accrued. The notice must state a place at which payment is to be made and that if the notice is not complied with, the shares on which the call was made will be liable to be forfeited. Any share forfeited will become the property of the Company.

10.13 Lien The Company has a first and paramount lien on each issued share which is a partly paid share for all amounts payable in respect of such share. The lien takes priority over any third party’s interest in the share and extends to all dividends or other moneys payable by the Company in respect the share. The Board may at any time declare any share exempt in whole or in part, from the provisions of the articles on liens.

10.14 Disclosure of interest in shares There are no provisions in the Articles by which persons acquiring, holding or disposing of a certain percentage of the Company’s shares are required to make disclosure of their ownership percentage. However, the provisions of Rule 5 of the Disclosure and Transparency Rules (“DTR 5”) apply so that (in summary), unless an exemption applies, a person is required to notify the Company of the percentage of its voting rights which it holds as a Shareholder (as defined in the DTRs) or through its direct or indirect holding of financial instruments falling within paragraph 5.1.3R of DTR 5 (or a combination of such holdings) which reaches, exceeds or falls below 3% and each 1% threshold after that.

93 10.15 Change in control There are no provisions in the articles which would have the effect of delaying, deferring or preventing a change of control of the Company.

10.16 Remuneration of Directors The Directors shall be entitled to such remuneration by way of fees for their services in the office of a director as the Company may by ordinary resolution determine. Such fee shall be divided between the Directors as they agree or, failing agreement, equally except that any Director holding office for less than a year shall rank in the division in proportion to the fraction of the calendar year during which he has held office. The Directors may also be paid all travelling, hotel and other expenses properly incurred by them in connection with their attendance at meetings of the Directors or of committees of the Directors or general meetings or separate meetings of the holders of any class of shares of the Company or in connection with the business of the Company. The Directors may provide benefits, whether by the payment of gratuities or pensions or by purchasing and maintaining insurance or otherwise, for the benefit of any persons who are or were at any time Directors or the holders of any executive or comparable office of employment with the Company or any other company or undertaking which is or has been (a) a subsidiary of the Company; (b) otherwise allied to or associated with the Company or a subsidiary of the Company; (c) a predecessor in business of the Company or of any such subsidiary; or (d) for any member of his family (including a spouse and a former spouse) or any person who is or was dependent on him, and may (as well before or after he ceases to hold such office or employment) establish, maintain, subscribe and contribute to any fund and pay premiums for the purchase or provision of any such benefit.

10.17 Appointment of Directors Directors may be appointed by an ordinary resolution of the Company in general meeting or by the Board.

10.18 Number of Directors and votes Unless and until otherwise determined by the Company by ordinary resolution, the number of Directors (other than alternate Directors) may not be less than two in number. The quorum necessary for the transaction of business of the Board may be fixed by the Board at two or more and otherwise is two. Questions arising at a meeting of Directors must be decided by a majority of votes.

10.19 Directors’ permitted interests Subject to the provisions of the Act a Director may be a party to or otherwise interested in any contract or arrangement or proposal with the Company. A Director may hold any other office or place of profit under the Company (except that of auditor) in conjunction with the office of director and may act by himself or through his firm in such professional capacity for the Company and in any such case on such terms as to remuneration and otherwise as the Directors may arrange. Any remuneration shall be in addition to any remuneration provided for by any other article.

10.20 Directors’ conflicts of interest A Director who to his knowledge is in any way (directly or indirectly) interested in a contract, arrangement or proposal with the Company shall declare the nature of his interest at the meeting of the Directors at which the question of entering into such contract, arrangement or proposal is first considered if he knows his interest then exists or in any other case at the first meeting of the directors after he knows that he is or has become so interested. A Director shall not vote or be counted in the quorum on any resolution of the directors concerning his own appointment (including the arrangement and varying of terms of appointment) as the holder of any office or place of profit with the Company or any other

94 company in which the Company is interested. Where arrangements are under consideration concerning the appointment (including the arrangement or varying of terms of appointment) of two or more Directors to offices or places of profit with the Company or another company in which the Company is interested a separate resolution may be put in relation to each Director and each of the directors concerned shall be entitled to vote and be counted in the quorum in respect of each resolution except that concerning his own appointment and except (in the case of an office or place of profit with another company) where the other company is a company in which the Director owns 1 per cent. or more of any class of the equity share capital of that company.

10.21 Voting and counting to quorum on interested matters A Director shall not vote or count in the quorum in relation to a resolution or meeting of the Directors in respect of any contract or arrangement or any other proposals whatsoever in which he has an interest. Notwithstanding the above, a Director shall be entitled to vote (and be counted in the quorum) on: (a) any transaction in which he is interested by virtue of his interest in shares or debentures or other securities of or otherwise in or through the Company; (b) the giving of any guarantee, security or indemnity to him in respect of (i) money lent or obligations undertaken by him or by any other person at the request of, or for the benefit of, the Company or any of its subsidiary undertakings; or (ii) the giving of any guarantee, security or indemnity to a third party in respect of a debt or obligation of the Company or any of its subsidiary undertakings for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of security; (c) any transaction relating to an offer of shares, debentures or other securities of or by the Company or any of its subsidiary undertakings in which offer the Director is or may be entitled to participate as a holder of securities or in the underwriting or sub- underwriting of which the Director is to participate; (d) any contract, transaction, arrangement or proposal to which the Company is or is to be a party relating to another company, including any subsidiary undertaking of the Company, in which he does not (directly or indirectly) hold an interest in shares (as that term is used in Part 22 of the Act) whether as an officer, shareholder, creditor or otherwise representing one per cent. or more of any class of the equity share capital, or the voting rights, in that company; (e) any contract, transaction, arrangement or proposal for the benefit of employees of the Company or any of its subsidiary undertakings (including in relation to a pension fund, retirement, death or disability benefits scheme or personal pension plan or employee’s share scheme) which has been approved by HM Revenue & Customs or is conditional upon that approval or does not award him any privilege or benefit not awarded to the employees to whom the arrangement relates; and (f) any contract, transaction, arrangement or proposal concerning insurance which the Company proposes to maintain or purchase for the benefit of Directors or for the benefit of persons including Directors. The provisions of the Articles relating to the permitted interests of the Directors and their ability to vote thereon may be suspended or relaxed and a transaction not duly authorised thereby may be ratified, in each case by ordinary resolution. Without prejudice to any of such provisions of the Articles the Directors have power, in accordance with the Act, to authorise any interest of a Director which conflicts, or may conflict, with the interests of the Company provided the interested Director(s) are not counted in the quorum at any Board Meeting at which such matter is approved.

10.22 Directors’ qualification shares There is no requirement for Directors to hold qualification shares.

95 10.23 Directors’ retirement by rotation At each annual general meeting: (i) any Director appointed by the Board since the last annual general meeting; (ii) any Director who held office at the preceding two annual general meetings and who did not retire by rotation at either of them; and (iii) any Director who agrees to do so, must retire by rotation. A Director who retires, if willing to act, may be reappointed.

10.24 Indemnity and insurance of Directors Subject to the provisions of the Act, every director or other officer of the Company may be indemnified out of the assets of the Company against any liability incurred by that Director in connection with: (i) any negligence, default, breach of duty or breach of trust in relation to the Company or its subsidiaries; (ii) the activities of the Company or a subsidiary of the Company in its capacity as a trustee of an occupational pension scheme; or (iii) any other liability incurred by the Director as an officer of the Company or any of its subsidiaries. The Directors of the Company may purchase and maintain insurance at the expense of the Company for the benefit of any Director or former director of the Company or any of its subsidiaries against any loss or liability which has been or may be incurred in connection with that Director’s duties or powers in relation to the Company, any subsidiary of the Company or any pension fund or employees’ share scheme of the Company or subsidiary of the Company.

10.25 Shareholder meetings The Board must convene and the Company must hold annual general meetings in accordance with the Act. The Board may convene other general meetings when it decides to do so and on request by the members under section 303 of the Act. An annual general meeting must be convened by at least 21 clear days’ notice. All other general meetings must be convened by at least 14 clear days’ notice. The notice must comply with legislation applicable to the Company, including the Act relating to the content of notice of meetings including by specifying the place, day and time of the meeting together with the general nature of the business to be transacted at the meeting, and a statement of the members’ right to appoint a proxy. The notice may also specify the time by which a person must be entered on the Register of Members in order for such a person to have the right to attend and vote at the meeting. A general meeting shall, notwithstanding that it has been called by shorter notice than that specified above, be deemed to have been duly called if it is so agreed in the case of an annual general meeting, by all the members entitled to attend and vote at the meeting; and in the case of any other meeting, by a majority in number of the members having a right to attend and vote at that meeting, being a majority together holding not less than 95 per cent. in nominal value of the shares giving that right.

10.26 Proceedings at shareholder meetings No business may be transacted at a general meeting other than the appointment of a chairman of the meeting, unless at least two people entitled to attend and vote are present. At a general meeting a resolution put to the vote of the meeting must be decided on a show of hands, unless before, or upon the declaration of the result of, the show of hands a poll is demanded by either: (a) the chairman of the meeting; (b) at least three members present in person or by proxy having the rights to vote at the meeting; (c) a member or members present in person or by proxy representing not less than 10 per cent. of the total voting rights of all the members present in person or by proxy and having the right to vote on the resolution; or (d) one or more members present in person or by proxy holding shares conferring a right to vote on the resolution on which an aggregate sum has been paid up equal to not less than 10 per cent. of the total sum paid up on all the shares conferring that right.

96 Unless a poll is demanded, a declaration by the chairman of the meeting that a resolution has been carried, or carried unanimously or by a particular majority, or lost, or not carried by a particular majority, and an entry to that effect in the book containing minutes of the proceedings of general meetings of the Company, is conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.

10.27 Powers of borrowing and mortgaging The Directors may exercise all the powers of the Company to borrow money, and to mortgage or charge the whole or any part of its undertaking, property and assets and uncalled capital, and to issue debentures and other securities.

10.28 Reserves The Board may set aside out of the profits of the Company and carry to reserve any amounts(s) as it decides. The amount standing to reserve may be applied, at the Board’s discretion, for any purpose to which the profits of the Company may properly be applied and, pending that application, may either be employed in the business of the Company or be invested in any investments as the Board decides.

11. INTERESTS OF THE DIRECTORS AND SIGNIFICANT SHAREHOLDINGS 11.1 As at the date of this document and as expected to be immediately following completion of the Acquisition and Admission, the interests of the Directors and persons connected to them (within the meaning of section 252 of the Act) in the share capital of the Company, the existence of which is known to or could with reasonable diligence be ascertained by the Directors, are as follows:

Number of Existing Ordinary % of the Number of Shares at the Existing New Ordinary % of Enlarged date of this Ordinary Shares on Ordinary Name document Share Capital Admission Share Capital

Mr A Matchett1 155,149,463 7.5 158,482,796 6.4 Mr S Hancock2 117,550,803 5.7 120,884,136 4.9 Mr S Cole 4,615,090 0.2 4,615,090 0.2 Mr G Dollens 101,664,112 4.9 121,616,725 4.9 Mr A Botha3 ———— ————— 1 Mr A Matchett has warrants over 11,537,726 Ordinary Shares at an exercise price of £0.011 per Ordinary Share. 2 Mr S Hancock has warrants over 11,537,726 Ordinary Shares at an exercise price of £0.011 per Ordinary Share. 3 Mr A Botha has warrants over 4,615,090 Ordinary Shares at an exercise price of £0.057 per Ordinary Share. He will forfeit these warrants between publication of this Document and Admission to allow him to be classified as an independent non-executive director.

97 11.2 Save as disclosed in sub-paragraph 11.1 above and this sub-paragraph 11.2 the Company is not aware of any interest in the Company’s ordinary share capital which amounts or would, immediately following Admission, amount to 3 per cent. or more of the Company’s issued ordinary share capital other than the following:

Number of Ordinary % of the Number of Shares at the Existing New Ordinary % of Enlarged date of this Ordinary Shares on Ordinary Name document Share Capital Admission Share Capital

Davis Capital Partners LLC 249,171,192 12.1 249,171,192 10.1 Tellworth Investments 120,912,929 5.9 120,912,929 4.9 J Gore Bahamas Limited 120,108,152 5.8 120,108,152 4.9 Ross Creek Capital Management 70,445,828 3.4 70,445,828 2.9 Invesco Oppenheimer Global Opportunities Funds 68,750,000 3.3 68,750,000 2.8 Real Networks Digital Music of California Inc. ——200,000,000 8.1

The voting rights of the Shareholders set out in paragraphs 11.1 and 11.2 do not differ from the voting rights held by other Shareholders. 11.3 There are no outstanding loans granted or guarantees provided by the Company to or for the benefit of any of the Directors. 11.4 Save as disclosed in this paragraph 11, no Director has any interest, whether direct or indirect, in any transaction which is or was unusual in its nature or conditions or significant to the business of the Company taken as a whole and which was effected by the Company during the current or immediately preceding financial year, or during any earlier financial year and which remains in any respect outstanding or unperformed. 11.5 Save as otherwise disclosed in this document, none of the Directors, nor any member of their respective families nor any person connected with the Directors (within the meaning of section 252 of the Act) has any holding, whether beneficial or otherwise, in the share capital of the Company. 11.6 None of the Directors, nor any member of their respective families is dealing in any related financial product (as defined in the AIM Rules) whose value in whole or in part is determined directly or indirectly by reference to the price of the Ordinary Shares, including a contract for differences or a fixed odds bet.

11.7 Share Option Scheme As part of its strategy for executive and key employee remuneration, the Company has established the Share Option Scheme under which Share Options may be granted to officers and employees of the Company or other members of the Enlarged Group. The Share Option Scheme also includes a sub-plan under which Share Options may be granted to non-executive directors or consultants of the Company or other members of the Enlarged Group. The Board is responsible for administering the rules of the Share Option Scheme and may recommend that Share Options are granted under the Share Option Scheme from time to time. Under the rules of the Share Option Scheme, the Company may grant EMI Options and or Unapproved Options. A Share Option takes the form of an individual agreement between the Company and the employee, officer or consultant and is entered into subject to the rules of the Share Option Scheme.

98 The number of shares that may be used by the Company for Share Options is limited so that the number of shares that may be subject to Share Options or options granted by any other employees’ share scheme adopted by the Company or another member of the Enlarged Group may not exceed 10 per cent of the Company’s issued ordinary share capital. Share Options may be granted under the Share Option Scheme at any time. Share Options are capable of being exercised to the extent vested. Share Options vest in accordance with the vesting schedule set out in the relevant Share Option grant or on the occurrence of certain events, including a change of control on a sale, takeover or scheme of reconstruction. The exercise of a Share Option must occur in compliance with the AIM Rules and any other relevant UK or overseas regulation or enactment. Exercise of a Share Option is conditional upon payment of the relevant exercise price (or an undertaking to pay that amount, if the Board so permits). In the case of an Unapproved Option granted to a consultant who provides services to the Company or a member of the Enlarged Group, the Board has discretion to permit an arrangement where payment of the exercise price is set off against amounts due from the Company or another member of the Enlarged Group to the relevant consultant in return for services supplied to the Company or relevant member of the Enlarged Group. Exercise of a Share Option is further conditional upon the option holder paying to his or her employer an amount equal to the amount of any income taxes and, to the extent permissible, national insurance and social security contributions for which the employer is obliged to account on the exercise of the Share Option. Share Options may be granted subject to performance conditions. It is intended that Share Options shall not be granted with an exercise price per Ordinary Share which is at a discount to the prevailing market value of an Ordinary Share at the time of grant. Each individual Share Option grant will specify the date after which the Share Option may be exercised subject to an earlier exercise event or lapse (in accordance with the rules of the New Share Option Scheme). A Share Option will generally lapse on cessation of the option holder’s employment, office or consultancy (as applicable) with the Group other than in certain circumstances where the option holder is a ‘Good Leaver’. An option holder who is an employee or officer of the Company or a member of the Enlarged Group will be a ‘Good Leaver’ where the cessation is due to exceptional circumstances, including disability, injury, ill-health, redundancy, retirement at the expected time, death, the disposal of the business unit or group company which engages the option-holder or where the Board so resolves at its discretion. An option holder who is consultant will be a “Good Leaver” unless the consultant has terminated his or her consultancy agreement or the Company or relevant member of the Enlarged Group has terminated the consultancy agreement for a cause which allows immediate termination under the consultancy agreement. In the case of death of the option holder, exercise must take place within one year of death, failing which the Share Option will lapse. Other events that will cause the lapsing of Share Options include the following:

* to the extent that any performance or other exercise condition becomes incapable of fulfilment (unless waived by the Board);

* the tenth anniversary of the date on which the relevant Share Option was granted; and

* in the event of a change of control triggering early vesting, the expiry of the period during which the Share Option is specified to be exercisable in accordance with the rules of the Share Option Scheme. Share Options are not pensionable. The additional principal terms of the Share Option Scheme are summarised below.

99 Eligibility EMI Options may be granted to any employee of the Group selected by the Board who works either at least 25 hours per week or commits 75 per cent of his working time to the business of the Company or the business of the Enlarged Group and who does not already beneficially own either directly or indirectly through his associates more than 30 per cent of the Ordinary Shares of the Company. Employees selected for the grant of an Unapproved Option do not have to satisfy these eligibility requirements. EMI Options may only be granted when the Company is a qualifying company for the purposes of paragraph 8, Schedule 5 of ITEPA.

Individual Limit on Participation An individual employee’s participation in EMI Options is limited so that the aggregate market value of the shares placed under the EMI Option together with any unexercised EMI Options granted under the Share Option Scheme or other share options granted the Company or a company within the Enlarged Group under Schedule 4 or Schedule 5 of ITEPA, valued at the date of the grant of the EMI Option, cannot exceed £250,000. For the purpose of such valuation, any restrictions that are applicable to the shares that are the subject of the relevant EMI Options are ignored. Further, the aggregate market value of any EMI Options and other options under Schedule 4 or Schedule 5 (again valued at the date of grant) which are granted to an individual employee in any three year period cannot exceed £250,000. These limits on individual participation do not apply for Unapproved Options.

Company Limit The maximum value of unexercised qualifying EMI Options (valued as at the date of grant) that may exist under the Share Option Scheme is restricted to £3 million.

Non transferability of Share Options Share Options are non-transferable, except on death to the personal representatives of the employee. A Share Option shall lapse immediately if it is purportedly transferred or assigned.

Voting, Dividend and Other Rights An option-holder has no voting or dividend rights in the Company before the exercise of a Share Option.

Variation of share capital For these purposes “variation” of share capital includes any capitalisation, rights issue, subdivision, consolidation or reduction or any other variation in the ordinary share capital of the Company occurring after the date of grant. Upon a variation of the ordinary share capital of the Company, the Directors may adjust either the number of Ordinary Shares an employee is entitled to acquire under the Share Option agreement or adjust the exercise price in a manner they consider fair and reasonable.

Change of Control In the event of a change of control, an EMI Option granted to an employee may be exchanged for qualifying options pursuant to paragraph 42 of Schedule 5 of the ITEPA. In that case, the relevant change of control would not result in accelerated vesting of such EMI Option.

12. DIRECTORS’ SERVICE AGREEMENTS/LETTERS OF APPOINTMENT Directors 12.1 On 26 April 2016, Anthony Matchett entered into a service agreement with the Company. The agreement provides for Mr Matchett to act as an executive director and Chief Executive Officer or the Company. His appointment will continue subject to twelve months’ notice of termination by either party. Mr Matchett is required to work at such times and for such periods as are necessary for the efficient discharge of his duties or as the needs of the Company dictate. A salary of £396,000 per annum is paid by the Company to Mr Matchett.

100 No compensation will be payable for loss of office and the appointment may be terminated immediately if, among other things, Mr Matchett is in material breach of the terms of the appointment. 12.2 On 26 April 2016, Steven Hancock entered into a service agreement with the Company. The agreement provides for Mr Hancock to act as an executive director and Chief Operating Officer or the Company. His appointment will continue subject to twelve months’ notice of termination by either party. Mr Hancock is required to work at such times and for such periods as are necessary for the efficient discharge of his duties or as the needs of the Company dictate. A salary of £316,000 per annum is paid by the Company to Mr Hancock. No compensation will be payable for loss of office and the appointment may be terminated immediately if, among other things, Mr Hancock is in material breach of the terms of the appointment. 12.3 On 26 April 2016, Simon Cole entered into a letter of appointment with the Company. The letter provides for Mr Cole to act as a non-executive director of the Company in consideration of a fee of £150,000 per annum. Mr Cole is also entitled to bonus payments which he chooses to take as additional salary. The engagement letter is terminable by six months’ notice in writing by either party. Mr Cole is subject to a confidentiality undertaking that is without limit in time. Mr Cole does not have the right to receive any benefits on termination of his appointment. 12.4 On 1 June 2020, Andrew Botha entered into a letter of appointment with the Company. The letter provides for Mr Botha to act as a non-executive director of the Company in consideration of a fee of £50,000 per annum. The engagement letter is terminable by three months’ notice in writing by either party. Mr Botha is subject to a confidentiality undertaking that is without limit in time. Mr Botha does not have the right to receive any benefits on termination of his appointment. 12.5 On 1 June 2020, Grant Dollens entered into a letter of appointment with the Company. The letter provides for Mr Dollens to act as a non-executive director of the Company and Mr Dollens has agreed not to receive a fee for his services as a non-executive director of the Company. The engagement letter is terminable by three months’ notice in writing by either party. Mr Dollens is subject to a confidentiality undertaking that is without limit in time. Mr Dollens does not have the right to receive any benefits on termination of his appointment. 12.6 Other than as set out in this paragraph 12, no service contracts or have been entered into or amended in the last six months.

13. ADDITIONAL INFORMATION ON THE DIRECTORS 13.1 In addition to directorships of the Company, the Directors hold or have held the following directorships or have been partners in the following partnerships within the five years prior to the date of this document:

Current Directorships and Partnerships (other than Past Directorships and Director Age the Company) Partnerships

Anthony Matchett 32 MelodyVR Holdings Limited Boxful Limited MelodyVR Ltd Matchett & Company Limited Immersive Construction Ltd That Design Store Trading Limited Stephen Hancock 37 MelodyVR Holdings Limited Zest Caterers Limited Vodka Haze Limited The Zest Hospitality Group Immersive Construction Ltd Limited MelodyVR Ltd Zest Recruitment Limited Maple Green Property Limited Zest Prestige Limited Zest Catering Limited Zest Venues Limited Zest Consultants Limited

101 Current Directorships and Partnerships (other than Past Directorships and Director Age the Company) Partnerships

Zest Restaurants Limited Zest Event Hire Limited Simon Cole 62 Calmwater Yacht Above the Title Limited Management Limited 7Digital Group PLC 3 Pembridge Crescent Unique Interactive Limited Limited Oneword Radio Limited Central School of Ballet Smooth Operations Charitable Trust Limited (Productions) Limited 7Digital Trading Limited 7Digital Creative Limited 7Digital Limited UBC Interactive Limited Ideadrop Limited 7Digital Projects Limited Audio Producers Association Grant Dollens 42 Wandisco PLC Coldquanta Inc Andrew Botha 53 BFL Property Management CFP Software Limited Limited Core Estates Ltd Geek Vintique Ltd Dot Zinc Holdings Limited Orange Grove Limited Dot Zinc Limited Purplebricks Group plc Hometrack Data Systems Limited Hometrack.co.uk Limited Jupix Ltd Moveit Network Limited Notonthehighstreet Enterprises Limited Property Software Holdings Limited Property Software Limited PSG Web Services Limited Ravensworth Printing Services Limited Real Estate Technology Limited Secret Escapes Limited Sia Limited Technicweb Limited Ulysses Enterprises Limited USwitch Limited Vebra Investments Limited Vebra Limited Vebra Solutions Limited W New Holdings Limited Websky Limited Zephyr Bidco Limited Zoopla Limited ZPG Comparison Services Holdings UK Limited ZPG Comparison Services Limited ZPG Limited ZPG Property Services

102 Current Directorships and Partnerships (other than Past Directorships and Director Age the Company) Partnerships

Holdings UK Limited ZPG Property Services Limited

13.2 Save as disclosed above none of the Directors has: 13.2.1 any unspent convictions in relation to indictable offences; 13.2.2 had any bankruptcy order made against him or entered into any voluntary arrangements; 13.2.3 been a director of a company which has been placed in receivership, compulsory liquidation, creditors’ voluntary liquidation, administration, been subject to a company voluntary arrangement or any composition or arrangement with its creditors generally or any class of its creditors whilst he was a director of that company or within the 12 months after he ceased to be a director of that company; 13.2.4 been a partner in any partnership which has been placed in compulsory liquidation, administration or been the subject of a partnership voluntary arrangement whilst he was a partner in that partnership or within the 12 months after he ceased to be a partner in that partnership; 13.2.5 been the owner of any assets or a partner in any partnership which has been placed in receivership whilst he was a partner in that partnership or within the 12 months after he ceased to be a partner in that partnership; 13.2.6 been publicly criticised by any statutory or regulatory authority (including recognised professional bodies); or 13.2.7 been disqualified by a court from acting as a director of any company or from acting in the management or conduct of the affairs of a Company.

14. EMPLOYEES 14.1 As at the date of this document the Company has 84 employees. 14.2 On Admission the Enlarged Group will have 161 employees.

15. MATERIAL CONTRACTS The following contracts, not being contracts entered into in the ordinary course of business, have been: (i) entered into by a member of the Enlarged Group within the two years immediately preceding the date of this document and are, or may be, material; or (ii) entered into by a member of the Enlarged Group and contain any provision under which any member of the Enlarged Group has any obligation or entitlement which is (or may be) material to the Enlarged Group as at the date of this document.

The Company 15.1 Merger Agreement dated 24 August 2020 between: (1) the Company, (2) MelodyVR Inc., (3) MVR USA 2, Inc. and (2) Rhapsody Under the terms of the Merger Agreement, a wholly-owned subsidiary of the Company will be merged with and into Napster (with Napster being the surviving entity). The Company will pay consideration totalling approximately $26.3 million to the vendors of Napster to be satisfied in aggregate by $15.0 million in cash, and the issuance of approximately 200 million MelodyVR shares. Upon completion of the Acquisition, Napster will be a wholly-owned subsidiary of the Company.

103 15.2 Lock-in and Orderly Market Agreements dated 8 December 2020 between (1) the Company, (2) Arden and (3) each of the Locked-in Persons, other than Grant Dollens Pursuant to the Lock-in and Orderly Market Agreements, each of the Locked-in Persons (other than Grant Dollens) has undertaken to the Company and Arden that, subject to certain limited exceptions, they will not dispose of Ordinary Shares held by them for a period of 12 months from the date of Admission. Each Locked-in Person (other than Grant Dollens) has also undertaken that for the period of 12 months following the anniversary of the date of Admission, they will only dispose of Ordinary Shares held by them on an orderly market basis through the Company’s broker from time to time.

15.3 Orderly Market Agreement dated 8 December 2020 between (1) the Company, (2) Arden and (3) Grant Dollens Grant Dollens has undertaken to the Company and Arden that, subject to certain limited exceptions, they will only dispose of Ordinary Shares held by them on an orderly market basis through the Company’s broker from time to time for the period of 12 months from the date of Admission.

15.4 Arden Engagement letter dated 23 August 2020 between (1) Arden and (2) the Company On 23 August 2020, the Company and Arden entered into an agreement to appoint Arden to act as its financial adviser, in relation to the reverse takeover of Rhapsody. Under this agreement, Arden will receive from the Company a corporate finance fee of £225,000 plus VAT.

15.5 Engagement letter dated 9 October 2020 between (1) Beech Hill and (2) the Company On 9 October 2020, the Company and Beech Hill entered into an agreement to appoint Beech Hill to act as its US financial adviser in relation to the placing. Under this agreement, Beech Hill is entitled to receive four per cent. of the gross proceeds of the placing.

15.6 NOMAD Agreement dated 2 July 2019 between (1) Arden and (2) the Company The Company appointed Arden to act as NOMAD to the Company on an ongoing basis as required by the AIM Rules. The Company has agreed to pay Arden, a fee of £75,000 per annum (plus VAT) for retaining its services as nominated adviser. The agreement contains certain undertakings and indemnities given by the Company in respect of, among other things, compliance with all applicable laws and regulations. The Company agreed to comply with its legal obligations and those of AIM and the London Stock Exchange and to consult and discuss with Arden all of its announcements and statements and to provide Arden with any information Arden believes is necessary to enable it to carry out its obligations to the Company or the London Stock Exchange as NOMAD. Pursuant to these arrangements, Arden has agreed, among other things, to provide such independent advice and guidance to the Directors as they may require to ensure compliance by the Company on a continuing basis with the AIM Rules. These arrangements contain certain undertakings and indemnities given by the Company in respect of, among other things, compliance with all applicable laws and regulations. This arrangement may be terminated by either party by giving not less than three months written notice in accordance with the terms of the agreement.

15.7 Admission Agreement dated 8 December 2020 between (1) the Company, (2) the Directors, (3) Arden, and (4) Beech Hill On 8 December 2020, the Company entered into an agreement with the Directors, Arden and Beech Hill in relation to the Admission. The agreement is conditional, inter alia, upon Admission taking place on or before 29 December 2020 or such later date as the parties may agree but in any event no later than 30 December 2020. The Company will pay to Arden a corporate finance fee. The agreement provides for the Company to pay all expenses of and incidental to the application for Admission, including the fees and costs of other professional advisers, all costs relating thereto, including printing, advertising and distribution charges, the fees of the Registrars and the fees payable to the London Stock Exchange.

104 The agreement contains customary indemnities given by the Company in favour of Arden and Beech Hill and customary warranties given by the Company and the Directors in favour of Arden and Beech Hill as to the accuracy of information contained in this document and other matters relating to the Enlarged Group and its business. Arden and Beech Hill may terminate the agreement in specified circumstances prior to Admission, principally in the event of a material breach of the agreement or any of the warranties contained in it, or where any event of omission relating to the Enlarged Group is, or will be in the opinion of Arden and Beech Hill (as the case may be) monetary, economic, political or market conditions is, or will be in the opinion of Arden or Beech Hill, materially adverse to the Company or Admission. 15.8 Commitment Letter dated 8 December 2020 between: (1) Rhapsody International, Inc. and (2) Davis Partnership, LP On 8 December 2020, the Company entered into a binding commitment letter setting out the terms in respect of a US$25 million delayed draw term loan facility (the “Loan Facility”) from Davis Partnership, LP to Rhapsody. The Loan Facility will be closed between the date of publication of this document and Admission. The repayment date of the loan will be 20 months from the date of closing the Loan Facility and Rhapsody may drawdown in minimum tranches of US$5 million at an interest rate of 10 per cent per annum calculated daily from the date of drawdown until the date of repayment (inclusive). At its option, Rhapsody can make interest payments by either (a) allowing the interest to accrue or (b) the Company issuing Ordinary Shares to the lender, instead of making cash interest payments. Rhapsody will also be subject to a 2 per cent draw fee in connection with each draw upon the Loan Facility. In consideration for the Loan Facility, Davis Partnership, LP will receive warrants granting the ability to invest US$20 million in the Company within a period of 10 years, at the Issue Price. Ahead of signing the Loan Facility, the Company intends to enter into a secured bridge facility agreement and debenture with Davis Partnership, LP (the “Bridge Facility”). The Bridge Facility will be for the principal amount of US$5 million and will bear interest at a rate 15 per cent per annum, which interest is due and payable on the maturity date of 31 March 2021. The Company will repay and terminate the Bridge Facility with proceeds from a subsequent equity offering or by drawing on the Loan Facility prior to the maturity date. While any amounts are outstanding under the Bridge Facility, the Loan Facility will be decreased by such corresponding amount.

16. DEPENDENCE ON INTELLECTUAL PROPERTY The primary assets of the Enlarged Group are its agreements with artists, music publishers and live venues.

17. RELATED PARTY TRANSACTIONS 17.1 Other than set out in Part V and any arrangements summarised in this paragraph, no member of the Group or the Enlarged Group has been a party to any related party transaction (as that term is defined in the AIM Rules for Companies) since 31 December 2019: (i) Davis Partnership, LP is party to a commitment letter in respect of the Loan Facility as detailed at paragraph 15.7 of Part VI. The loan by Davis Partnership, LP constitutes a related party transaction for the purposes of the AIM Rules by virtue of Davis Capital Partners, LLC being a substantial shareholder of the Company. The Directors consider, having consulted with the Company’s nominated adviser, Arden, that the terms upon which Davis Partnership, LP is providing the Loan Facility to the Company are fair and reasonable insofar as the Company’s shareholders are concerned. (ii) The Bridge Facility by Davis Partnership, LP constitutes a related party transaction for the purposes of the AIM Rules by virtue of Davis Capital Partners, LLC being a substantial shareholder of the Company. The Bridge Facility, has been entered into in order to ensure sufficient capital is available to the Company until it is able to draw down on the Loan Facility. The Directors are entering into the Bridge Facility having

105 considered the Company’s immediate working capital requirements and no alternate sources of finance being immediately available. The Directors therefore consider, having consulted with the Company’s nominated adviser, Arden, that the terms upon which Davis Partnership, LP is providing the Bridge Facility in the Company are fair and reasonable insofar as the Company’s shareholders are concerned. (iii) Anthony Matchett, Steven Hancock and Grant Dollens, (being current Directors of the Company) are related parties for the purposes of the AIM Rules and have agreed to subscribe for Ordinary Shares pursuant to the Subscription. Simon Cole and Andrew Botha, being the Directors not participating in the Subscription, are considered to be independent directors of the Company for the purposes of AIM Rule 13 in connection with the Subscription. They consider, having consulted with the Company's nominated adviser, Arden, that the terms of the Subscription by Anthony Matchett, Steven Hancock and Grant Dollens are fair and reasonable insofar as the Shareholders are concerned.

18. LITIGATION 18.1 In March 2016, the Company was notified of a putative consumer class action lawsuit relating to an alleged failure to pay so-called “mechanical royalties” on behalf of the plaintiffs and “other similarly situated holders of mechanical rights in copyrighted musical works.” On 7 April 2017, the plaintiffs and Rhapsody agreed to settlement terms during a mediation session. The long form settlement agreement was executed effective on 16 January 2019. The damages payable under the settlement agreement will be calculated on a claims made basis, subject to an overall maximum of $10 million. Despite the settlement agreement, there is a hearing scheduled in December 2020 for final approval of the class action settlement. 18.2 Save as described in this paragraph 18 there are no, and during the 12 month period prior to the date of this document there have not been any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware) which may have, or have had in the recent past, significant effects on the Company’s or the Enlarged Group’s financial position or profitability.

19. NO SIGNIFICANT CHANGE 19.1 Save for matters disclosed in this document, there has been no significant change in the financial or trading position of the Group since 30 June 2020, being the end of the last financial period included in the most recently published Historical Financial Information (as set out in Part IV of this document.) 19.2 Save for matters disclosed in this document, there has been no significant change in the financial or trading position of the Enlarged Group since 30 June 2020, being the end of the last financial period included in the Historical Financial Information on Acquisition published in Part V of this document.

20. WORKING CAPITAL The Directors are of the opinion, having made due and careful enquiry that, taking into account the net proceeds of the Subscription and the Loan Facility, the Enlarged Group will have sufficient working capital for its present requirements, that is for at least 12 months from the date of Admission.

21. TAXATION 21.1 Introduction The following paragraphs are intended as a general guide only to the United Kingdom tax position of Shareholders who are the beneficial owners of Ordinary Shares in the Company who are United Kingdom tax resident and, in the case of individuals, domiciled in the United Kingdom for tax purposes and who hold their shares as investments (otherwise than under an individual savings account (ISA)) only and not as securities to be realised in the course of a trade.

106 Certain Shareholders, such as dealers in securities, collective investment schemes, insurance companies and persons acquiring their Ordinary Shares in connection with their employment or as an office holder may be taxed differently and are not considered. Furthermore, the following paragraphs do not apply to:

* potential investors who intend to acquire Ordinary Shares as part of a tax avoidance arrangement; or

* persons with special tax treatment such as pension funds or charities. Any prospective purchaser of Ordinary Shares in the Company who is in any doubt about their tax position or who is subject to taxation or domiciled in a jurisdiction other than the United Kingdom, should consult their own professional adviser immediately. Unless otherwise stated the information in these paragraphs is based on current United Kingdom tax law and published HMRC practice as at the date of this document. Shareholders should note that tax law and interpretation can change (potentially with retrospective effect) and that, in particular, the levels, basis of and reliefs from taxation may change. Such changes may alter the benefits of investment in the Company.

21.2 Income Tax – taxation of dividends The taxation of dividends paid by the Company and received by a Shareholder resident for tax purposes in the United Kingdom is summarised below.

United Kingdom resident individuals Individuals who are resident in the United Kingdom for tax purposes will be subject to income tax on amounts they receive as dividends, as if it were the top slice of income. Each individual will have an annual Dividend Allowance of £25,000, which means that they will not have to pay tax on the first £25,000 of all dividend income they receive. Dividends in excess of the Dividend Allowance will be taxed at the individual’s marginal rate of tax, with dividends falling within the basic rate band taxable at 7.5% (the “dividend ordinary rate”), those within the higher rate band taxable at 32.5% (the “dividend upper rate”) and those within the additional rate band taxable at 38.1% (the “dividend additional rate”).

United Kingdom discretionary trustees The annual Dividend Allowance available to individuals will not be available to United Kingdom resident trustees of a discretionary trust. United Kingdom resident trustees of a discretionary trust in receipt of dividends are liable to income tax at a rate of 38.1%, which mirrors the dividend additional rate.

United Kingdom resident companies Shareholders that are bodies corporate resident in the United Kingdom for tax purposes, may (subject to anti-avoidance rules) be able to rely on Part 9A of the Corporation Tax Act 2009 to exempt dividends paid by the Company from being chargeable to United Kingdom corporation tax. Such shareholders should seek independent advice with respect to their tax position. United Kingdom pension funds and charities are generally exempt from tax on dividends that they receive.

Non-United Kingdom residents Generally, non-United Kingdom residents will not be subject to any United Kingdom taxation in respect of United Kingdom dividend income. Non-United Kingdom resident shareholders may be subject to tax on United Kingdom dividend income under any law to which that person is subject outside the United Kingdom. Non-United Kingdom resident shareholders should consult their own tax advisers with regard to their liability to taxation in respect of the cash dividend.

107 Withholding tax Under current United Kingdom tax legislation no tax is withheld from dividends or redemption proceeds paid by the Company to Shareholders.

21.3 United Kingdom Taxation of capital gains The following paragraphs summarise the tax position in respect to a disposal of Ordinary Shares by a Shareholder resident for tax purposes in the United Kingdom. To the extent that a Shareholder acquires Ordinary Shares allotted to him, the amount paid for the Ordinary Shares will generally constitute the base cost of the Shareholder’s holding. A disposal of Ordinary Shares by a Shareholder who is resident in the United Kingdom for United Kingdom tax purposes or who is not so resident but carries on business in the United Kingdom through a branch, agency or permanent establishment with which their investment in the Company is connected may give rise to a chargeable gain or an allowable loss for the purposes of United Kingdom taxation of chargeable gains, depending on the Shareholder’s circumstances and subject to any available exemption or relief. For individual Shareholders who are United Kingdom tax resident or only temporarily non- United Kingdom tax resident, capital gains tax at the rate of 10 per cent. for basic rate taxpayers or 20 per cent. for higher or additional rate taxpayers may be payable on any gain (after any available exemptions, reliefs or losses). For Shareholders that are bodies corporate, any gain may be within the charge to corporation tax. Individuals may benefit from certain reliefs and allowances (including a personal annual exemption allowance) depending on their circumstances. Shareholders that are bodies corporate resident in the United Kingdom for taxation purposes will benefit from indexation allowance which, in general terms, increases the chargeable gains tax base cost of an asset in accordance with the rise in the retail prices index, but will not create or increase an allowable loss. Individual Shareholders who continuously hold their Ordinary Shares for no less than three years from their issue date may, on a subsequent disposal of those Ordinary Shares, qualify for “Investors’ relief”. Investors’ relief provides for a reduced rate of capital gains tax of 10% on gains realised on the disposal of certain ordinary shares, up to a lifetime limit of £10m of gains, subject to various conditions being met by both the investor and investee company. The relevant qualifying conditions of Investors’ Relief are considered to be met by the Company and/or the MelodyVR Group. However neither the Company, nor its Directors or advisors can guarantee that those conditions will be or will continue to be met throughout the required share-holding period. For trustee Shareholders of a discretionary trust who are United Kingdom tax resident, capital gains tax at the rate of tax of 20 per cent. may be payable on any gain (after any available exemptions, reliefs or losses). Non-United Kingdom resident Shareholders will not normally be liable to United Kingdom taxation on gains unless the Shareholder is trading in the United Kingdom through a branch, agency or permanent establishment and the Ordinary Shares are used or held for the purposes of the branch, agency or permanent establishment.

21.4 Stamp duty and stamp duty reserve tax (SDRT) No UK stamp duty or SDRT will be payable on the issue or allotment of Ordinary Shares, nor on subsequent transfers or agreements to transfer Ordinary Shares by virtue of the exemption from stamp duty and SDRT on shares traded on AIM. The statement in this paragraph 21.4 applies to any holders of Ordinary Shares irrespective of their residence, and it is a summary of the current position and is intended to be a general guide to the current stamp duty and SDRT position. Certain categories of person are not liable to stamp duty or SDRT and others may be liable at a higher rate than that referred to above or may, although not primarily liable for the tax, be required to notify and account for it. Special rules apply to agreements made by market intermediaries and to certain sale and repurchase and stock borrowing arrangements. Agreements to transfer shares to charities should not give rise to a liability to stamp duty or SDRT.

108 21.5 Inheritance Tax Shares in AIM listed trading companies or holding companies of a trading group may qualify for Business Property Relief for United Kingdom inheritance tax purposes.

22. GENERAL 22.1 The total costs and expenses relating to Admission are payable by the Company and are estimated to amount to approximately $1.7 million (excluding VAT). 22.2 Arden has given and not withdrawn its written consent to the inclusion in this document of reference to its name in the form and context in which it appears. 22.3 Beech Hill has given and not withdrawn its written consent to the inclusion in this document of reference to its name in the form and context in which it appears. 22.4 Where information has been sourced from a third party this information has been accurately reproduced. So far as the Company and the Directors are aware and are able to ascertain from information provided by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. 22.5 No agreement, arrangement or understanding exists whereby the New Ordinary Shares acquired pursuant to the Acquisition will be transferred to any other person. 22.6 No agreement, arrangement or understanding (including any compensation agreement) exists between the Company, any person acting in concert with Company and any of the Directors, recent directors, Shareholders or recent shareholders of the Company having any connection with or dependence upon the matters referred to in this document. 22.7 There are no external financing arrangements being sourced in connection with the proposals in this document. There are therefore no arrangements in place nor any required for the payment of interest on, repayment of or security for any external liability (contingent or otherwise) as a result of the proposals in this document. 22.8 The accounting reference date of the Company is 31 December. The current accounting period will end on 31 December 2020. 22.9 The Issue Price of £0.0375 represents a premium of £0.0275 over the nominal value of £0.01 per New Ordinary Share. 22.10 Save as disclosed in this document, no person (other than the Company’s professional advisers named in this document and trade suppliers) has at any time within the 12 months preceding the date of this document received, directly or indirectly, from the Company or entered into any contractual arrangements to receive, directly or indirectly, from the Company on or after Admission any fees, securities in the Company or any other benefit to the value of £10,000 or more.

23. AVAILABILITY OF ADMISSION DOCUMENT Copies of this Admission Document are available for download from the Company’s website at www.melodyVR.group and are available free of charge at the offices of Arden at 125 Old Broad Street, London EC2N 1AR or by calling 0207 614 5900 and at the Company’s registered office during normal business hours on any weekday (Saturdays and public holidays excepted) and shall remain available for at least one month after Admission. Dated: 8 December 2020

109 PART VII

NOTICE OF GENERAL MEETING

MELODYVR GROUP PLC (Incorporated and registered in England with registered number 05628362)

NOTICE IS HEREBY GIVEN that a general meeting of MelodyVR Group PLC (the “Company”) will be held virtually at 10.00 a.m. on 24 December 2020 (the “General Meeting”) to consider and, if thought fit, to pass the following resolutions which in respect of resolutions 1, 2 and 3 shall be proposed as ordinary resolutions and resolutions 4 and 5 shall be proposed as special resolutions. Unless expressly stated otherwise, terms defined in the admission document of the Company dated 8 December 2020 (the “Admission Document”) shall have the same meaning in this Notice of General Meeting.

ORDINARY RESOLUTIONS

1. THAT the Acquisition pursuant to the terms of the Merger Agreement be approved and the Directors be and are hereby authorised to exercise all powers of the Company to issue the Consideration Shares in accordance with the provisions of the Merger Agreement in accordance with the Articles, provided that any shares to be issued under such authority shall be issued upon Admission. 2. THAT the Directors be generally and unconditionally authorised for the purpose of section 551 of the Companies Act 2006 (the “Act”) to exercise all the powers of the Company to allot or grant rights to subscribe for or to convert any security into shares in the Company up to an aggregate nominal amount of £10,309,229.95 (representing 50% of the Existing Issued Share Capital) provided that: a. (except as provided in paragraph 2(b) below) this authority shall expire on the date of the next annual general meeting of the Company; and b. the Company may before such expiry make an offer or agreement which would or might require shares or equity securities, as the case may be, to be allotted or such rights granted after such expiry and the Directors may allot shares or equity securities or grant such rights, as the case may be, in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired. All unexercised authorities previously granted to the Directors to allot shares or to grant rights to subscribe for or to convert any security into shares be and are hereby revoked. 3. THAT the Directors be unconditionally authorised for the purpose of section 551 of the Act to exercise all the powers of the Company to allot shares in the Company up to an aggregate nominal amount of £2,000,000 in connection with the Consideration Shares provided that this authority shall expire on the date of the next annual general meeting of the Company.

SPECIAL RESOLUTIONS

4. THAT, subject to the passing of resolution 2 above, the Directors, pursuant to the general authority conferred on them, be empowered pursuant to section 570 of the Act to allot for cash, either pursuant to the authority so conferred or where the equity securities are held by the Company as treasury shares (within the meaning of section 724(5) of the Act), equity securities (within the meaning of section 560 of the Act) as if section 561 of the Act did not apply to any such allotment provided that this power shall be limited to the allotment of equity securities: a. made in connection with an offer of securities, open for acceptance for a fixed period, by the Directors to holders of ordinary shares of the Company on the register on a fixed record date in proportion (as nearly as may be) to their then holdings of such shares (but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient to deal with treasury shares or any legal or practical problems under the

110 laws or requirements of any recognised regulatory body or any stock exchange in any overseas territory or in connection with fractional entitlements or by virtue of shares being represented by depositary receipts or any other matter whatsoever); and/or b. wholly for cash (otherwise than pursuant to paragraph 3(a) above) up to an aggregate nominal value of £10,309,229.95 (representing 50% of the Existing Issued Share Capital), and shall expire on the conclusion of the next annual general meeting of the Company provided that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities pursuant to such an offer or agreement notwithstanding that the power conferred by this resolution has expired. All unexercised authorities previously granted to the Directors under section 570 of the Act are hereby revoked. 5. THAT, subject to the passing of resolution 3 above, the Directors, pursuant to the specific authority conferred on them, be empowered pursuant to section 570 of the Act to allot for cash, pursuant to the authority so conferred, equity securities (within the meaning of section 560 of the Act) as if section 561 of the Act did not apply to any such allotment provided that this power shall be limited to the allotment of equity securities made in connection with the Consideration Shares and wholly for cash up to an aggregate nominal value of £2,000,000 and shall expire on the conclusion of the next annual general meeting of the Company.

By order of the Board Registered office: Company Secretary 55 Poland Street London England W1F 7NN

8 December 2020

111 Important Notes 1. Arrangements for the meeting – Covid-19 outbreak The continuing coronavirus (COVID-19) pandemic has led to the imposition of severe restrictions on public gatherings which remain in place at the date of publication of this document. The meeting will therefore be held remotely via a Zoom conference call. If you wish to use this facility, please register via the Company’s website at https://melodyvr.group/ and you will be provided with further information. Please note that shareholders will not be able to use this facility to actively participate in the meeting by voting on the resolutions or asking questions. Pending further developments, the Board:

* Encourages shareholders to submit their votes via proxy as early as possible, and shareholders should appoint the Chairman of the meeting as their proxy. If a shareholder appoints someone else as their proxy, that proxy will not be able to attend the General Meeting in person or cast the shareholder’s vote. All proxy appointments should be received by no later than 10.00 a.m. on 22 December 2020.

* Strongly recommends CREST members to vote electronically through the CREST electronic proxy appointment service as your vote will automatically be counted

* Proposes that voting at the meeting will be conducted by means of a poll on all resolutions, with each shareholder having one vote for each share held, thereby allowing all those proxy votes submitted and received prior to the meeting to be counted.

* Will continue to closely monitor the COVID-19 situation in the lead up to the meeting and make further updates about the meeting on the Company’s website at https://melodyvr.group/. Please ensure that you regularly check this page for updates. The Company is taking these precautionary measures to comply with the current restrictions on travel and public gatherings imposed by the UK Government and to safeguard its shareholders’ and employees’ health and make the meeting as safe and as efficient as possible. The Company will take such further steps as are required with the health and wellbeing of its shareholders and employees in mind.

2. Procedure for appointing a proxy A Form of Proxy for use at the General Meeting is provided to Shareholders and accompanies this Admission Document. As an alternative to completing a hard copy Form of Proxy, Shareholders can submit their proxy electronically at www.sharegateway.co.uk by completing the authentication requirements on the website so as to be received by no later than 48 hours before the start of the meeting (excluding weekends and public holidays), or, in the case of an adjourned meeting, 48 hours prior to the time and date set for the adjourned meeting (excluding any part of a day that is not a working day). Shareholders will need to use their personal proxy registration code, which is printed on the Form of Proxy, to validate the submission of their proxy online. Should the Form of Proxy be completed electronically and a hard copy then posted, the Form of Proxy that arrives last will be counted to the exclusion of instructions received earlier, whether electronically or posted.

3. Corporate representatives Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares provided that, except in relation to a vote on a show of hands, if two or more corporate representatives of one member purport to exercise a power in respect of the same shares, then: (i) if they exercise the power in the same manner, it shall be exercised in the same manner; but (ii) if they exercise the power in a different manner, it shall be deemed not to have been exercised.

4. Changing or revoking proxy instructions To change your proxy instructions simply submit a new proxy appointment using the methods set out in the paragraph above titled “Procedure for appointing a proxy”. Any amended proxy appointment must be received no later than the time referred to in the paragraph above titled “Procedure for appointing a proxy” and any amended proxy appointment received after the relevant cut-off time will be disregarded.

112 If you have appointed a proxy using the hard-copy proxy form and would like to change the instructions using another hard-copy proxy form, please contact the Company’s registrars, Neville Registrars Limited, on 0121 585 1131, and ask for another proxy form. In order to revoke a proxy instruction you will need to inform the Company by sending notice in writing clearly stating your intention to revoke your proxy appointment by one of the methods referred to in the paragraph above titled “Procedure for appointing a proxy” (accompanied by the power of attorney or other authority (if any) under which the revocation notice is signed or a copy of such power or authority). The revocation notice must be received by the commencement of the meeting. If you attempt to revoke your proxy appointment but the revocation is received after the time specified above then your proxy appointment will remain valid.

5. Record Date Members who hold Ordinary Shares must have been entered on the Company’s Register of Members 48 hours prior to the meeting in order to attend, speak and vote at the meeting. Such members may only vote at the meeting in respect of Ordinary Shares in the Company held at that time.

6. Resolution thresholds To be passed, an ordinary resolution requires a majority of 50 per cent plus one vote of the votes cast by shareholders and a special resolution requires a majority of at least 75 per cent of the votes cast by those shareholders voting either in person or by proxy at the general meeting (excluding any votes which are withheld) to be voted in favour of the resolution.

7. Total voting rights The total number of Ordinary Shares of £0.01 in issue as at 7 December 2020, being the latest practicable date before the publication of this Notice of General Meeting, was 2,061,845,991 Ordinary Shares carrying one vote each. There are no Ordinary Shares held in treasury as at 7 December 2020. The total level of voting rights in the Company as at this date was therefore 2,061,845,991.

8. Communications Members who have general enquiries about the meeting should email the Company’s registrars, Neville Registrars Limited, on 0121 585 1131; lines are open 9.00 a.m. to 5.00 p.m. Monday to Friday. You may not use any electronic address provided in this notice of general meeting or any related documents (including the proxy form) for communicating with the Company for any purposes other than those expressly stated. Please note that the Company takes all reasonable precautions to ensure no viruses are present in any electronic communication it sends out but the Company cannot accept responsibility for loss or damage arising from the opening or use of any email or attachments from the Company and recommends that members subject all messages to virus checking procedures prior to use. Please note that any electronic communication received by the Company that is found to contain any virus will not be accepted

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