Scientific Learning Corp. Announces Initial Financing Round to Support Expected Capital Raise for China Expansion

[January 12, 2018]

Scientific Learning Corp. Announces Initial Financing Round to Support Expected Capital Raise for China Expansion

Scientific Learning Corp. ("SCIL") announced today that it has executed binding purchase agreements for the sale of 2,864,000 shares of its common stock at a price of $0.625 per share, nearly a 23 percent premium over the past 12 months' weighted average price, for aggregate proceeds of $1,790,000 (the "Financing"). Investors in the round include a majority of the members of SCIL's Board of Directors; members of SCIL's management team; Rick Lee, founder and CEO of BrainMaps, China; SCIL international partners; and SCIL's largest shareholder. Proceeds from the Financing are expected to be used for expenses associated with SCIL's previously announced plans to purchase BrainMaps and raise additional capital to accelerate the rapid expansion of BrainMaps English language learning centers.

On Dec. 1, 2017 SCIL announced that it had signed a non-binding Letter of Intent (LOI) with BrainMaps to acquire the Shanghai-based blended learning company, which currently has more than 70 franchised English language learning centers across China. BrainMaps combines SCIL's patented online neuroscience-based language learning technologies with BrainMaps offline methodology to enable Chinese students to achieve fluency in English in as little as three years. Rick Lee of BrainMaps commented, "Combining Scientific Learning's online programs with BrainMaps' classroom activities and performance opportunities gives students an edge in gaining English skills fast - and in a highly motivating and enduring way."

The proposed acquisition of BrainMaps is contingent upon finalization of definitive transaction agreements, completion of financing transactions to obtain the capital required to acquire and expand BrainMaps, and board of director and shareholder approval, among other conditions. SCIL has engaged Tyton Partners, the leading provider of investment banking and strategy consulting services to the global knowledge sector, as its exclusive investment banking advisor to assist with the transaction.

"This current round of financing will cover transaction costs, allowing more of the future capital raise to be used for the rapid expansion of BrainMaps in China, the country with the largest English language learning market in the world," said Robert Bowen, CEO and chairman of the board of SCIL. "Participants in this round understand the potential for growth that the combination of Scientific Learning's neuroscience-based learning innovations and BrainMaps' operational excellence can achieve."

The Financing is conditioned upon SCIL obtaining any requisite state securities law permits and other standard conditions. SCIL expects to close the Financing and obtain the funds before the end of January 2018.

About Scientific Learning Corp.

Based in Oakland, Calif., Scientific Learning is a leading SaaS (News - Alert) service provider that delivers neuroscience-based educational technologies. Scientific Learning's programs, Fast ForWord® and Reading Assistant™, have been used by more than 2.8 million learners in more than 2,600 K-12 schools in the United States, by over 500 private practice clinicians, by thousands of students via a direct-to-consumer channel, and in over 55 countries via value-added resellers (VAR). The Fast ForWord programs cross-train foundational language and cognitive skills necessary for rapid English language development, while Reading Assistant uses speech verification technology to provide real-time corrective feedback to students as they read and speak, in a manner similar to that of an individualized language and reading coach.

About BrainMaps

BrainMaps, a VAR partner of Scientific Learning's for over 10 years, was founded by Rick Lee and Tiffany Koo, who are using their past experience as national directors for companies such as Wall Street English and Gymboree to rapidly expand the BrainMaps model across China. Based on its compelling student outcomes and rapid growth, BrainMaps was named a top 10 franchise in China by Entrepreneur magazine in 2016.

Safe Harbor Statement: The information posted in this release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements by use of the words "may," "will," "should," "plans," "explores," "expects," "anticipates," "continue," "estimate," "project," "intend," and similar expressions. The forward-looking statements in this release include statements regarding the closing of the announced Financing; and SCIL's proposed acquisition of BrainMaps. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Factors which could cause results or events to differ from current expectations include, among other things: the inability to obtain necessary state securities law permits for the Financing; the inability complete a subsequent financing transaction sufficient to complete the acquisition of BrainMaps or at all; the inability to secure approval of the acquisition from SCIL's board of directors or its shareholders for the BrainMaps acquisition; general economic and business conditions; effects of potential geopolitical unrest and regional conflicts; competition; and various other factors beyond SCIL's control. Although SCIL believes that the expectations reflected in such forward-looking statements are reasonable, it can provide no assurance that such expectations will prove to have been correct. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as required by law, SCIL assumes no obligation to update or revise any forward-looking statements.