TIDMTEK
RNS Number : 1482X
Tekcapital plc
30 April 2021
The information contained within this announcement is deemed by
the Company (Companies House registration number 08873361) to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014 ("MAR")s. With the publication of
this announcement via a Regulatory Information Service ("RIS"),
this inside information is now considered to be in the public
domain.
Tekcapital PLC
("Tekcapital", "the Company" or the "Group")
Final Results for the year-ended 30 November 2020
Record Results for the Period
Tekcapital plc (AIM: TEK), the UK intellectual property (IP)
investment group focused on creating valuable products from
investing in university technologies that can improve the quality
of life, announces its audited results for the year ended 30
November 2020.
Financial highlights
-- Net Assets increased 45% to US$32.7m, a record level (2019: US$22.5m)
- NAV per share US$0.35 (2019: US$0.35)
-- Portfolio valuation increased 50% to US$30.5m (2019: US$20.3m)
-- Total revenue US$9.9m (2019: US$7.7m)
- Revenue from services US$1.19m (2019: US$1.20m)
- Net increase of US$8.7m in fair value of portfolio companies (2019: US$6.5m)
-- Profit after tax: US$7.7m (2019: US$5.5m)
-- Service revenues cover approximately 54% of cost base (cost of sales and operating expenses)
-- Share placings totalling US$2.6m completed during the period,
plus an additional raise of US$5.3m completed post-period end.
Operational highlights: Material Portfolio Companies
Salarius(R) Limited ("Salarius") (97.2% ownership) www.salarius.co
Salarius Ltd manufactures Microsalt(R), a new, patented, all
natural, non-GMO, Kosher, low-sodium salt that tastes great and has
half of the sodium of regular table salt.
Investment Rationale:
The snack food industry is focused on developing and providing
"better for you" products that both taste good and help reduce
sodium intake. The reason for this is that excess sodium
consumption contributes to cardiovascular disease, a leading cause
of premature death globally. To help address this problem, Salarius
has developed a patented process for producing micron sized salt
crystals. Microsalt(R) has all the flavour of salt with roughly
half the sodium for topical applications such as crisps, pretzels,
nuts, popcorn and other salty snacks.
Recent developments:
-- Signed a distribution agreement with Gehring-Montgomery Inc.,
a leading national ingredient distributor to expand B2B sales of
Microsalt(R) across the United States.
-- Signed a partnership agreement with FXM Ingredients, Inc. to
lead B2B sales and marketing of MicroSalt(R) in Mexico and Latin
America.
-- Formed Microsalt Inc, a fully owned subsidiary of Salarius
Ltd to expand its operations in the United States.
Lucyd(R) Limited ("Lucyd") (100% ownership) www.lucyd.co
Lucyd is seeking to Upgrade Your Eyewear(R) by developing and
selling designer prescription eyewear with smart features at
affordable prices. Lucyd was the first company to deliver
prescription glasses with Bluetooth(R) technology in 2019. Their
frames help you stay connected safely and conveniently, by enabling
many common smartphone tasks to be performed handsfree via voice
assistants.
Investment Rationale:
In the U.S. pedestrian fatalities have increased more than 50%
from 2009 to 2018. This is primarily because drivers and
pedestrians alike are distracted with their smartphones.
Approximately 2/3rds of the population wear corrective lenses, and
the advancements in Bluetooth technology have enabled it to be
incorporated into traditional eyeglass form factors. This
combination created a new type of glasses with built-in speakers,
microphone and touch controls, Lucyd e-glasses, which allow the
wearer to forego headphones and headsets and use their glasses to
listen to audio content and talk to others. Since the speakers are
open-ear, Lucyd e-glasses enable the wearer to stay connected to
their digital life while maintaining situational and social
awareness.
Recent Developments:
-- Announced it had filed patent and trademarks on its
forthcoming Vyrb(TM) app. Vyrb users will be able to listen and
produce social media posts on select platforms with their voice,
without having to look at their smartphones or type messages. The
app is designed to improve utility of Lucyd's Bluetooth(R) glasses
and other wireless hearables like AirPods(R). The beta version of
the app is slated to be launched in August 2021.
-- Formed Innovative Eyewear, Inc, a new, fully owned subsidiary
of Lucyd Ltd, and commenced a Regulation Crowdfunding program on
StartEngine, where it sought to raise approximately US$400,000 at a
$3.75m pre-money valuation. The funding target was achieved and
subsequently extended to US$1,070,000. More than 4,000 investors
participated in the fundraise. The purpose of the fundraise was to
provide additional capital for the further development and launch
of its new Lucyd Lyte(TM) e-glasses and its Vyrb(TM) voice-focused
social media app. As of 30 November 2020, Lucyd Ltd held 90%
ownership in Innovative Eyewear Inc with crowdfund investors
holding remaining 10%. At the completion of the crowdfund (April
2021), Lucyd Ltd held 75% ownership of Innovative Eyewear, Inc.,
the U.S. subsidiary that owns the exclusive license to Lucyd's
technology.
-- Filed two design patents on their Lucyd Lyte(TM) e-glasses,
which were launched in December 2020.
-- Lucyd's in-house developed utility patent, for a software
system to control wearables and IOT devices, was granted by the
USPTO.
Guident Limited ("Guident") (100% ownership) www.guident.co
Guident is developing remote monitoring and control software to
improve the safety of autonomous vehicles and land-based delivery
devices. Guident's software will incorporate artificial
intelligence and advanced network technologies to minimize signal
latency and improve reliability.
Investment Rationale:
Vehicles of all types are rapidly becoming electric and
autonomous. While Autonomous Vehicles ("AVs") are projected to be
significantly safer than traditional vehicles, there will still be
mishaps and in many instances there will be no vehicle operator
present to help resolve these problems. We believe remote human
interaction will be needed to address these mishaps. Guident is
seeking to build a remote monitoring and control centre that will
monitor vehicles and if necessary provide additional support such
as calling first responders, taking over control of the vehicle to
move it out of harm's way and providing real-time communication
with passengers or pedestrians. Over time we believe remote
monitoring centres will be required in many jurisdictions.
Recent Developments:
-- Announced key management appointments of Harald Braun as
Company's CEO and Daniel Grossman as the company's Chief Revenue
Officer. The company also appointed Michael Trank as VP Software
Development and Dr. Gabriel Castaneda as Lead Architect, Artificial
Intelligence Software.
-- Won the Florida Atlantic University (FAU) competition as one
of the most promising start-ups in South Florida, from a field of
over 200 contestants. The judges were convinced that Guident's
creation of the first Remote Monitoring and Control Centre in
Florida for autonomous vehicles, applying artificial intelligence,
and their first use-case for 'zero-touch' ground-based delivery of
groceries and medicines, would be the right choice to create
significant value in South Florida and subsequently nationwide.
-- Entered into a Strategic Alliance with Bestmile USA, Inc.
This strategic alliance with Bestmile will focus on several areas
of collaboration in Europe and North America. This will include
providing Guident's patented, advanced teleoperation system for
autonomous and human-driven vehicles, to enhance customer safety
and security, incorporating a reliable, low latency connection to
any advanced mobile network solution.
-- Guident announced it had acquired the exclusive license to
U.S. patent # 8,941,251 from the Research Foundation of the State
of New York. The patent enables the manufacture of electromagnetic
regenerative shock absorbers with high energy densities that are
able to recover a vehicle's vibration energy which is otherwise
lost due to road irregularities, vehicle accelerations and braking.
In addition, this unique design utilizing rotary mechanical motion
rectifiers can be tuned to achieve better damping characteristics
than existing shock absorbers. This technology received the R&D
100 Award by R&D Magazine, for one of the 100 most significant
technology innovations of the year from around the world. Two
listed original equipment manufacturers (OEM's) have signed NDA's
to evaluate the potential of incorporating these new shock
absorbers into their electric vehicles.
Belluscura(R) Plc (17.8% ownership) www.belluscura.com
Respiratory medical device company that has developed an
improved portable oxygen concentrator (POC) to provide on-the-go
supplemental O2. The company believes its product is the first FDA
cleared, modular POC with a user-replaceable filter cartridge.
Belluscura aims to make POC's more affordable to those who need
them.
Investment Rationale:
Worldwide, approximately 250m individuals suffer from Chronic
Obstructive Pulmonary Disease (COPD). Many of these patients
require supplemental oxygen. As there is no cure for COPD, over
time patients require greater amounts of oxygen, and if they use a
portable oxygen concentrator, this means they must replace their
devices with with greater capacity models as their disease
progresses. With Belluscura's new patented device, recently cleared
by the FDA, users can swap out the filter cartridges to enable
higher capacity oxygen flow without having to buy a new device;
like upgrading memory on a laptop. The result is significantly more
affordable oxygen therapy for the life of the patient.
Recent Developments:
-- Belluscura received FDA clearance for their POC in March 2021
-- Belluscura filed an additional patent application (26 patents
filed or licensed to-date) entitled "Improved Extracorporeal
Membrane Oxygenation Device, System and Related Methods," covering
devices and systems for treating people suffering from acute
respiratory distress caused by the Coronavirus.
-- The need for oxygen concentrators has been exacerbated by the COVID-19 pandemic.
-- Belluscura announced it is considering an IPO on the AIM
Market of the London Stock Exchange (or other recognized stock
exchange) and expects investments should qualify for Enterprise
Investment Scheme relief.
Operational highlights: Corporate
As part of our continuing efforts to develop our team and expand
our services:
-- Konrad Dabrowski, CPA, who for the past three years has
served as the Group's Financial Controller, has been promoted to
non-board CFO, replacing Mr. Malcolm Groat who provided five years
of good service to the Company. Concomitant with this change,
Malcolm stepped down from the Board of Directors at the conclusion
of his term.
-- Universities worldwide purchased more than 400 Invention
Evaluator reports to assess the market potential of new
technologies in 2020.
-- Tekcapital delivered a webinar on commercialising university
IP with the Creativity and Innovation Center 4.0 of the Universidad
Tecnológica de Querétaro. This resulted in the formation of a
strategic alliance with Universidad Tecnológica de Querétaro for
providing Tekcapital's services in Mexico.
-- Tekcapital delivered a webinar in Brazil titled "Agritech
Startups", which gathered more than 60 key players from the
Brazilian technology and innovations ecosystem.
-- Tekcapital was invited to Petróleo Brasileiro S.A (Petrobras)
to deliver a presentation on global opportunities in intellectual
property licensing.
-- Tekcapital executed a strategic alliance agreement with
LicenciArte Colombia, a consultancy firm that offers services to
strengthen, protect and commercialise technologies from
universities and research laboratories.
Dr. Clifford Gross, Executive Chairman said: "Through the
collective efforts of our dedicated and capable team we have
achieved record results in 2020. Our portfolio companies have
demonstrated significant growth and we believe they are well
positioned to further expand and achieve meaningful milestones in
2021."
Post period end portfolio company highlights
-- On 2 December 2020, Salarius Ltd has successfully launched
its innovative SaltMe!(R) snack line on Amazon in North America.
The company commenced sales of all four flavours on the e-commerce
platform, offering six-count boxes of five-ounce packages. To date,
the product received more than 70% 5-star ratings on Amazon.
-- On 3 December 2020 Belluscura submitted the X-PLO (2) R(TM)
portable oxygen concentrator for 510(k) clearance with the U.S.
FDA.
-- On 6 January 2021, Lucyd announced the launch of Lucyd(R)
Lyte(TM) its tech-enhanced, prescription eyewear for active
lifestyles. Lyte looks and feels just like designer fashion frames,
are available in any prescription, yet are priced similar to
ordinary prescription glasses. To date, the product received more
than 65% 5-star ratings on Amazon, and a near-perfect rating on
Lucyd.co where customers are able to customize the pairs with any
prescription lens.
-- On 5 February 2021, MicroSalt, Inc, a U.S. subsidiary of
Salarius Ltd, commenced its Regulation Crowdfunding program on the
MicroVentures platform, where it is seeking to raise approximately
US$750K at a US$5m pre-money valuation.
-- On 2 March 2021, Innovative Eyewear products were onboarded
on Brookstone, an online B2B marketplace.
-- On 8 March 2021, Belluscura plc announced the receipt of
510(k) Clearance from the US Food and Drug Administration (the
"FDA") for its X-PLO2R(TM) portable oxygen concentrator.
-- On 10 March 2021, Salarius Ltd announced it has appointed
Eduardo Souchon as V.P. of Business Development and Jay Shah, M.D.,
a Mayo Clinic cardiologist as a medical advisor.
-- On 22 March 2021, Lucyd Ltd announced it has signed a
distribution agreement with D. Landstrom Associates, to build
distribution of Lucyd Lyte(TM) bluetooth e-glasses in big box
retail stores in the U.S.
-- On 1 April 2021, Lucyd Ltd announced that its US subsidiary
Innovative Eyewear Inc has closed its over-subscribed Regulation
Crowdfund, raising US$1.07m. Following completion of the crowdfund,
Lucyd Ltd owned 75% of shares of Innovative Eyewear Inc.
-- In April 2021, the Company converted its warrants and options
for shares of Belluscura plc, bringing total shares held to 17.1
million (23%).
Posting of Annual Report and Accounts
The Company's annual report and accounts for the year ended 30
November 2020 will be available on the Company's website
www.tekcapital.com shortly and will be posted to shareholder on 04
May 2021.
For further information, please contact:
Tekcapital Plc Via Flagstaff
Clifford M. Gross, Ph.D.
SP Angel Corporate Finance LLP
(Nominated Adviser and Broker) +44 (0) 20 3470 0470
Richard Morrison/Charlie Bouverat (Corporate
Finance)
Abigail Wayne / Rob Rees (Corporate Broking)
Flagstaff Strategic and Investor Communications +44 (0) 20 7129 1474
Tim Thompson/Andrea Seymour/Fergus Mellon
About Tekcapital plc
Tekcapital creates value from investing in new,
university-developed discoveries that can enhance people's lives
and provides a range of technology transfer services to help
organisations evaluate and commercialise new technologies.
Tekcapital is quoted on the AIM market of the London Stock Exchange
(AIM: symbol TEK) and is headquartered in the UK. For more
information, please visit www.tekcapital.com
General Risk Factors and Forward-Looking Statements
The information contained in this document has been prepared and
distributed by the Company and is subject to material updating,
completion, revision, verification and further amendment. This
Report is directed only at Relevant Persons and must not be acted
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descrip-tion of persons entitled to receive the Report; (ii) they
have read, agree and will comply with the contents of this notice.
The securities mentioned herein have not been and will not be,
registered under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), or under any U.S. State securities laws, and may
not be offered or sold in the United States of America or its
territories or possessions (the "United States") unless they are
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Investors must rely on their own examination of the legal,
taxation, financial and other consequences of an investment in the
Com-pany, including the merits of investing and the risks involved.
Prospective investors should not treat the contents of this Report
as advice relating to legal, taxation or investment matters and are
advised to consult their own professional advisers concerning any
acquisition of shares in the Company. Certain of the information
contained in this Report has been obtained from published sources
prepared by other parties. Certain other information has been
extracted from unpublished sources prepared by other parties which
have been made available to the Company. The Company has not
carried out an independent investigation to verify the accuracy and
completeness of such third party information. No responsibility is
accepted by the Company or any of its directors, officers,
em-ployees or agents for the accuracy or completeness of such
information.
All statements of opinion and/or belief contained in this Report
and all views expressed represent the directors' own current
as-sessment and interpretation of information available to them as
at the date of this Report. In addition, this Report contains
certain "forward-looking statements", including but not limited to,
the statements regarding the Company's overall objectives and
strategic plans, timetables and capital expenditures.
Forward-looking statements express, as at the date of this Report,
the Company's plans, estimates, valuations, forecasts, projections,
opinions, expectations or beliefs as to future events, results or
performance. Forward-looking statements involve a number of risks
and uncertainties, many of which are beyond the Company's control,
and there can be no assurance that such statements will prove to be
accurate. No assurance is given that such forward looking
statements or views are correct or that the objectives of the
Company will be achieved. Further, valuations of Company's
portfolio investments and net asset value can and will fluctuate
over time due to a wide variety of factors both company specific
and macro-economic. Changes in net asset values can have a
significant impact on revenue and earnings of the Company and its
future prospects. Additionally, the current Coronavirus pandemic
may produce negative economic activities which could reduce the
company's economic performance and the performance of its portfolio
companies in ways that are difficult to quantify at this juncture.
It may cause a downturn in the markets in which the Company
operates, reduce the Company's net asset values, revenue, cash
flow, access to investment capital
and other factors which could negatively impact the Company. As
a result, the reader is cautioned not to place reliance on these
statements or views and no responsibility is accepted by the
Company or any of its directors, officers, employees or agents in
respect thereof. The Company does not undertake to update any
forward-looking statement or other information that is contained in
this Report. Neither the Company nor any of its shareholders,
directors, officers, agents, employees or advisers take any
responsibility for, or will accept any liability whether direct or
indirect, express or implied, contractual, tortious, statutory or
otherwise, in respect of, the accuracy or completeness of the
information contained in this Report or for any of the opinions
contained herein or for any errors, omissions or misstatements or
for any loss, howsoever arising, from the use of this Report.
Neither the issue of this Report nor any part of its contents is to
be taken as any form of contract, commitment or recommendation on
the part of the Company or the directors of the Company. In no
circumstances will the Company be responsible for any costs, losses
or expenses incurred in connection with any appraisal, analysis or
investigation of the Company. This Report should not be considered
a recommendation by the Company or any of its affiliates in
relation to any prospective acquisition or disposition of shares in
the Company. No undertaking, Report, warranty or other assurance,
express or implied, is made or given by or on behalf of the Company
or any of its affiliates, any of its directors, of-ficers or
employees or any other person as to the accuracy, completeness or
fairness of the information or opinions contained in this Report
and no responsibility or liability is accepted for any such
information or opinions or for any errors or omissions.
Intellectual Property Risk Factors
Tekcapital mission is to create valuable products from
university intellectual property that can improve people's lives.
Therefore, our ability to compete in the market may negatively
affected if our portfolio companies lose some or all of their
intellectual property rights. If patent rights that they rely on
are invalidated, or if they are unable to obtain other intellectual
property rights. Our success will depend on the ability of our
portfolio companies to obtain and protect patents on their
technology and products, to protect their trade secrets, and for
them to maintain their rights to licensed intellectual property or
technologies. Their patent applications or those of our licensors
may not result in the issue of patents in the United States or
other countries. Their patents or those of their licensors may not
afford meaningful protection for our technology and products.
Others may challenge their patents or those of their licensors by
proceedings such as interference, oppositions and re-examinations
or in litigation seeking to establish the invalidity of their
patents. In the event that one or more of their patents are
challenged, a court may invalidate the patent(s) or determine that
the patent(s) is not enforceable, which could harm their
competitive position and ours. If one or more of our portfolio
company patents are invalidated or found to be unenforceable, or if
the scope of the claims in any of these patents is limited by a
court decision, our portfolio companies could lose certain market
exclusivity afforded by patents owned or in-licensed by us and
potential competitors could more easily bring products to the
market that directly compete with our own. The uncertainties and
costs surrounding the prosecution of their patent applications and
the cost of enforcement or defense of their issued patents could
have a material adverse effect on our business and financial
condition.
To protect or enforce their patent rights, our portfolio
companies may initiate interference proceedings, oppositions,
re-examinations or litigation against others. However, these
activities are expensive, take significant time and divert
management's attention from other business concerns. They may not
prevail in these activities. If they are not successful in these
activities, the prevailing party may obtain superior rights to our
claimed inventions and technology, which could adversely affect
their ability of our portfolio companies to successfully market and
commercialize their products and services. Claims by other
companies may infringe the intellectual property rights on which
our portfolio companies rely, and if such rights are deemed to be
invalid it could adversely affect our portfolio companies and
ourselves as investors in these companies.
From time to time, companies may assert, patent, copyright and
other intellectual proprietary rights against our portfolio
company's products or technologies. These claims can result in the
future in lawsuits being brought against our portfolio companies or
their holding company. They and we may not prevail in any lawsuits
alleging patent infringement given the complex technical issues and
inherent uncertainties in intellectual property litigation. If any
of our portfolio company products, technologies or activities, from
which our portfolio companies derive or expect to derive a
substantial portion of their revenues and were found to infringe on
another company's intellectual property rights, they could be
subject to an injunction that would force the removal of such
product from the market or they could be required to redesign such
product, which could be costly. They could also be ordered to pay
damages or other compensation, including punitive damages and
attorneys' fees to such other company. A negative outcome in any
such litigation could also severely disrupt the sales of their
marketed products to their customers which in turn could harm their
relationships with their customers, their market share and their
product revenues. Even if they are ultimately successful in
defending any intellectual property litigation, such litigation is
expensive and time consuming to address, will divert our
management's attention from their business and may harm their
reputation and ours.
Several of our portfolio companies may be subject to complex and
costly regulation and if government regulations are interpreted or
enforced in a manner adverse to them, they may be subject to
enforcement actions, penalties, exclusion, and other material
limitations on their operations and have a negative impact on their
financial performance. All of the above listed risks can have a
material, negative affect on our net asset value, revenue,
performance and the success of our business and the portfolio
companies we invested in.
STRATEGIC REPORT
Chairman's statem ent
Tekcapital brings new scientific innovations from lab to market
to enhance safety and health and improve the quality of life of the
customers we serve. Achieving our mission has never been more
important than right now, as the COVID 19 pandemic has resulted in
significant and unprecedented global health and financial
distress.
In 2020, despite these events, all of our active portfolio
companies made significant progress and the value of our portfolio
holdings increased by 50%. As a result, for the year, our net
assets increased by approximately 45% to US$32.7m, a record level
for our Company. Total revenues increased 28% to US$9.9m while our
after-tax profit increased by 39% to US$7.7m.
Key portfolio companies
Using our proprietary global university network, we provide
services to universities and companies to help them commercialize
their innovations. Additionally, over the past four years, using
these services, we have built a valuable group of portfolio
companies to commercialize select intellectual properties we or our
portfolio companies have uncovered. We believe that when you couple
commercialization ready, compelling university IP with visionary
management, vibrant companies will likely emerge, net assets are
likely to grow, returns on invested capital will outperform the
sector and exits, if they occur, will occur faster. When we realise
exits through trade sales or IPO's, the Group's goal is to
distribute a portion of the proceeds as a special dividend to our
shareholders.
Our current portfolio companies were all started by Tekcapital
from a clean sheet of paper. Whilst few in number, they are diverse
and span multiple sectors including food tech, autonomous vehicles,
smart eyewear and respiratory medical devices. In our view, all of
our portfolio companies have compelling intellectual properties,
capable and inspired management and address US$B+, fast growing
markets. The entire team at Tekcapital is committed to helping
these companies grow to achieve their full potential and value,
which we view as significant.
Salarius is a food tech business that owns a patented process to
produce nanoparticle sized salt. These small crystals dissolve
faster on the tongue, so you need to use less salt, whilst still
having the same salty taste. Less salt means about 50% less sodium
for most applications. Less sodium means a reduced likelihood of
developing high blood pressure and heart disease, the world's
leading cause of death . In addition to its focus on B2B sales of
MicroSalt(R) to snack food companies, as proof of concept, Salarius
has launched its own snack food brand called SaltMe!(TM) .
Beginning in August 2020 they started shipping their first product,
SaltMe! potato chips, to stores throughout the U.S. According to
Future Market Insights, the low sodium ingredient market is
estimated to reach US$1.76bn [1] by 2025. Tekcapital owns 97.15% of
Salarius and 87.1% of its U.S. subsidiary Microsalt Inc. as of the
date of this report.
Lucyd has built a new, online eyeglass business that combines
technology with traditional eyewear. Recently they launched Lucyd
Lyte(TM) , their most advanced and compelling Bluetooth(R) eyewear.
This product combines proper prescription, designer glasses with
Bluetooth technology that you can use to answer your phone, listen
to music , and talk with Siri(R) or Alexa(R). The product has
initially been very well received. Lucyd is focused on expanding
its sales online and leveraging retail distribution after the
pandemic subsides, through existing specialty and large format
stores in late 2021. Lucyd has developed and filed 24 U.S. utility
and design patents covering its products. According to Statista [2]
, the current U.S. online market for eyewear is $3.8b per year.
Tekcapital owned 100% of Lucyd and 90% of its U.S. subsidiary
Innovative Eyewear Inc as of 30 November 2020.
Guident owns or holds the exclusive licence to a group of
patents that we believe can improve the safety of autonomous
vehicles and land-based autonomous delivery devices once brought to
market. Guident has significantly progressed it R&D efforts,
increased its intellectual capital in 2020 with several additional
patent acquisitions and in-house developed properties and software,
along with key team additions. Guident has begun its B2B marketing
program for its Remote Control and Monitoring Center and is seeking
to consummate strategic alliances and partnerships in the last mile
delivery, smart city and AV sectors. Such monitoring has recently
been required by law in the State of Florida and is being reviewed
in other jurisdictions. According to Allied Market Research[3], the
global market for autonomous last mile delivery is projected to
reach US$11.9 billion in 2021. Additionally, Guident has a acquired
an exciting, new regenerative shock absorber technology, to help
extend the range of electric vehicles. Guident has executed NDA's
with two listed OEM's to test these new shocks for potential use in
their electric vehicles and is currently fabricating prototypes for
testing. Tekcapital owned 100% of Guident and approximately 96% of
its U.S. subsidiary Guident Corporation as of 30 November 2020.
Belluscura has developed an improved portable oxygen
concentrator to provide on-the-go supplemental O(2) , with user
replaceable filter cartridges. When a patient's respiratory disease
progresses, they now can upgrade the filter cartridge to provide
more liters of O(2) per minute, similar to upgrading memory on a
laptop, rather than having to replace an expensive medical device.
We believe the cost-savings will be beneficial to patients and
insurance companies, and should help make respiratory healthcare
more affordable which is core to Belluscura's mission. Belluscura
filed for 510(K) clearance from the US FDA in December 2020 and
received clearance in March 2021.
Belluscura have announced that they may plan to float on AIM or
conduct an alternative financing, in the near-term, to finance and
accelerate the manufacture and distribution of their portable
oxygen concentrators. According to Global Market Insights, the
medical portable O(2) market is currently US$1.4bn ([4]) a year and
growing by more thanUS$100m/year(4) . Belluscura has 18 patents
filed or licensed to-date covering devices and systems for treating
people suffering from acute respiratory distress caused by COPD or
the Coronavirus pandemic. Tekcapital owned 17.8% of Belluscura as
of 30 November 2020 and 23% as of the date of this report.
Financial Performance
In 2020, despite the global COVID 19 pandemic and the related
social and economic hardship, we are fortunate that our team is
healthy, all of our active portfolio companies made significant
progress and the value of our portfolio holdings increased by 50%.
This increase was driven primarily by:
- increase in the fair value of Group's holding in Guident Ltd
(increase of US$6.5m), as a result of the addition of new
intellectual property and discounting of management's projections
to 30 November 2020
- increase in the fair value of Group's shares in Lucyd Ltd
(increase of US$1.6m) driven by commercial progress and extending
management's forecasts to 5 years
- increase in the fair value of Group's shares in Salarius Ltd
(increase of US$0.7m) driven by commercial progress
As a result, for the year, our net assets increased by
approximately 45% to US$32.7m, a record level for our Company.
Total revenues increased 28% to US$9.9m with unrealised profit on
the revaluation of investments driving that increase by US$8.7m.
Our after-tax profit increased by 39% to US$7.7m.
Principal Risks and Uncertainties
The specific financial risks are discussed in the notes to the
financial statements. Other risks are as follows:
- We believe the principal financial risks and benefits of the
business relate to the value and performance of the Group's
portfolio companies. We believe that the fair value of each
portfolio company is a time dependent valuation that may become
impaired if the business does not achieve it milestones, growth
trajectory, product development goals, market acceptance, capital
raises or other key performance metrics. Individually and as a
group our portfolio companies have a material impact on our
financial performance.
- The risk of individual portfolio company negative performance,
in the future, may be ameliorated, as our portfolio becomes more
mature, and when our portfolio companies develop significant
capital reserves, predictable revenues and have demonstrated
significant increases in value.
- The principal operational risk of the business is management's
ability to assist our portfolio companies in achieving their goals
and ultimate exits whilst having a small team and an additional
goal of increasing our service revenues.
- The Group is dependent on its executive team and directors for
its operations and ultimate success and there can be no assurance
that it will be able to retain the services of these key personnel
in the futures.
- The COVID-19 pandemic may produce negative economic activities
which could reduce the Group's economic performance. Further, until
the Group covers all of its operating costs from service revenue
and or portfolio company exits, it will seek to raise additional
capital to fund operations and provide follow-on investments in
portfolio companies.
Fundraisings during the period
Early-stage businesses facing large market opportunities need
talent, technology and capital to succeed. To help address this we
completed the following fundraises in 2020:
On 6 February 2020, the Group announced it had completed a
fundraising of US$0.96m (before expenses) through the placing of
14,800,000 new Ordinary Shares with new and existing investors at a
price of 5 pence per new Ordinary Share.
On 1 May 2020, the Group announced it had completed a
fundraising of US$1.15m through placing of 9,250,000 new Ordinary
Shares with new and existing investors at a price of 10 pence per
new Ordinary Share.
On 17 September 2020, the Group announced it completed a
fundraise US$0.5m (before expenses) through placing of 4,750,000
new ordinary shares with existing investors at a price of 8 pence
per new Ordinary Share.
Post end of period fundraising:
On March 18, 2021, the Company announced that it had raised
US$5.28m (before expenses) through placing of 38,000,000 new
Ordinary Shares with existing and new investors at a price of 10
pence per new Ordinary Share.
Current Trading and Outlook
We are enthusiastic about the development of Tekcapital's
portfolio companies, their performance to-date and their prospects
to significantly expand in 2021. The Board is confident that
continued investment in our portfolio companies remains the right
approach for potential long-term value creation. Additionally, we
are currently exploring early-stage venture funding and conducting
equity crowdfunding for a number of our portfolio companies, to
accelerate growth and brand awareness for these companies.
Whilst the Company is progressing very well, investors should
note that net asset values will fluctuate from period to period due
to individual portfolio company performance, valuations and changes
in market conditions and macro-economic financial conditions,
including the current COVID 19 pandemic, and that changes in the
value of our portfolio companies can have a significant impact on
our NAV, revenue, income and future prospects.
We are grateful for the patience and support of our
shareholders. We are also sincerely appreciative of our dedicated,
creative and incredibly hardworking team, without whom, none of the
results reported herein would be possible.
Section 172 (1) statement
Our Board ensures that all decisions are taken for the long
term, and collectively and individually aims to always uphold the
highest standard of conduct. Similarly, our Board acknowledges that
the business can only grow and prosper over the long-term if it
understands and respects the views and needs of the Company's
investors, customers, employees, suppliers and other stakeholders
to whom we are accountable, as well as the environment we operate
within.
When making decisions, each director ensures that they act in
the way that would most likely promote the Company's success for
the benefit of its members as a whole, and in doing so have regard
(amongst other matters) to the following matters:
(a) The likely consequences of any decision in the long term
In line with our strategy, Tekcapital's purpose is to find and
invest in exciting new discoveries from our global university
network that can enhance people's lives. We believe that when you
couple commercialization ready, compelling university IP with
strong senior management, vibrant companies will likely emerge.
When we realise exits the Group's goal is to distribute a portion
of the proceeds as a special dividend to our shareholders.
With this in mind, we apply the same high standards of
responsible stewardship to our businesses as if we were to own them
forever, and it is this approach to decision making that requires
the Directors to have regard to the likely consequences of
decisions in the long-term.
(b) The interests of the Company's employees
The Board strives to maintain and develop a culture where
everyone feels valued and included. The Board also considers the
health, safety and wellbeing of all Tekcapital employees in
everyday decisions. Feedback from employees is actively encouraged
and is considered a key driver in developing our business
activities, processes and workplace environment. Initiatives to
encourage wellbeing are well established and continue to evolve and
are strongly influenced by the workforce. Professional and personal
development of employees is viewed as fundamental to the continued
success of the Company.
(c) The need to foster the Company's business relationships with
suppliers, customers and others
The Board ensures that the Company's mission is focused on
improving the world with university discoveries, and focuses on
innovations that, if successful, can improve the quality of life of
customers we serve.
The Board recognises that it is crucial that we deliver a
reliable service to our customers and maintain excellent
relationships with suppliers. The Board also considered near-term
demand and how customers' priorities might change over a longer
period of time, including effect of the COVID-19 pandemic.
(d) The impact of the company's operations on the community and the environment
In their decision making, the Directors need to have regard to
the impact of the Company's operations on the community and
environment. The Board plays a constructive role in tackling issues
through engagement and making sure the Company's investments focus
on improving quality of life and attempt to solve significant
health and safety problems facing communities.
(e) The desirability of the Company maintaining a reputation for
high standards of business conduct
The Board recognises that culture, values and standards are key
contributors to how a company creates and sustains value over the
longer term, and to enable it to maintain a reputation for high
standards of business conduct. High standards of business conduct
guide and assist in the Board's decision making, and in doing so,
help promote the Company's success, recognising, amongst other
things, the likely consequences of any decision in the long-term
and wider stakeholder considerations. The standards set by the
Board mandate certain requirements and behaviours with regards to
the activities of the Directors, the Group's employees and others
associated with the Group.
(f) The need to act fairly as between members of the Company
The Company has one class of ordinary shares, which have the
same rights as regards voting, distributions and on a liquidation.
Management are also significant shareholders in the Company,
holding approximately 9.3% of the register, together putting them
in the top 3 shareholders of the Company. On this basis the Board
feels that the executive Directors are fully aligned with
shareholders.
On the basis of the above, the members of the Board consider,
both individually and together, that they have acted in the way
they consider, in good faith, would be most likely to promote the
success of the Company for the benefit of its members as a whole
(having regard to the stakeholders and matters set out in
s172(1)(a-f) of the Companies Act 2006) in the decisions taken
during the year ended 30 November 2020.
Dr Clifford M Gross
Chairman and CEO
29 April 2021
Directors Report
Directors
The following Directors held office during the period, or as of
the date of this report.
Clifford M Gross, Ph. D.
Robert Miller, M. D.
Louis Castro (appointed on 2 December 2019)
The RT Hon Lord David Willets FRS (appointed on 6 January
2020)
The following officers no longer hold office with the
Company:
M J Malcolm Groat (held office from April 2014 through
completion of term in July 2020)
Robert Payne (resigned 31 December 2019)
The Group has chosen to set out in the groups strategic report
information required to be contained in the directors' report. It
has done so in respect of future developments. The principal
activity of the parent company is that of an investment entity.
Statement of Directors' responsibilities
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulations. Company law requires the Directors to prepare
financial statements for each financial year. Under that law the
Directors have prepared the Group and parent company financial
statements in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union. Under company
law the Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state
of affairs of the Group and the Company and of the profit or loss
of the Group for that period. In preparing these financial
statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRSs as adopted by the European
Union have been followed, subject to any material departures
disclosed and explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to
presume that the Group and the Company will continue in
business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and the Group to enable them to
ensure that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the
Company and the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Each of the current Directors, whose names are listed in the
Directors' report on page 30 of the financial statements confirm
that, to the best of each person's knowledge and belief:
-- the financial statements, prepared in accordance with IFRS as
adopted by the European Union, give a true and fair view of the
assets, liabilities, financial position and profit (or Loss) of the
Group and
Company; and
-- the chairman's statement contained in the annual financial
statements includes a fair review of the development and
performance of the business and the position of the Group and
Company, together with a description of the principal risks and
uncertainties that they face.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Group's
website www.tekcapital.com. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Going Concern
The Group meets its day to day working capital requirements
through its service offerings and monies raised through the
issuances of equity. The Group's forecasts and projections indicate
that the Group has sufficient cash reserves to operate within the
level of its current facilities. Whilst it is the Group's intention
to rely on the available cash reserves, future income generated
from its service offerings and reductions in its cost base, a
negative variance in the forecasts and projections would make the
Group's ability to continue as going concern dependent on an
additional fund raise. If the Group's forecasts are not achieved,
the Directors would seek to raise the additional funds through
equity issues. Whilst the COVID-19 epidemic is contributing to
uncertainty in the markets and the full impact is difficult to
measure, at the time of approving the accounts after making
enquiries, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future.
Information has been included in the strategic report in
relation to disclosures under S414C(11) of the Companies Act
2006.
Dividends
No dividend was paid or was proposed during the year ended 30
November 2020.
Audit Committee
The Board operates an Audit Committee, chaired by Louis Castro.
This Committee carries out duties as set out in the AIM Admission
Document, supervising the financial and reporting arrangements of
the Group. During the period, no issues arose that the Directors
consider appropriate to disclose in their Report.
Research and Development
The Group incurred expenses related to research and development
activities. The activities were limited to improvement of the
Innovation Discovery Network solution, developed to facilitate an
improved technology search engine.
Remuneration Committee
The Board has delegated to its Remuneration Committee, chaired
by Dr Robert Miller, certain responsibilities in respect of the
remuneration of senior executives. During the period, no issues
arose that the Directors consider appropriate to disclose in their
Report.
Directors Emoluments
Salary Benefits Bonus 2020 2019
&
fees in kind Total Total
US $ US $ US $ US $ US $
--------------- -------- --------- -------- -------- --------
Clifford M
Gross 191,865 22,745 154,375 368,985 208,810
M J Malcolm
Groat 10,247 - - 10,247 15,284
R W "Bill"
Payne 3,802 - - 3,802 19,105
Robert Miller 21,600 - - 21,600 21,600
Louis Castro 37,146 - - 37,146 -
Lord David
Willets 28,218 - - 28,218 -
292,879 22,745 154,375 469,998 264,799
--------------- -------- --------- -------- -------- --------
Director's proportion of the stock option expense is below
US$20,000.
The Group did not make any contributions to a pension scheme in
the year ended 30 November 2020 (2019: Nil).
Directors' beneficial interests in shares:
2020 2019 2020 2019
No of Shares No of Shares No of No of Options
Options
Clifford M Gross 8,657,500 8,657,500 3,000,000 450,000
Lord David Willets - - 100,000 -
Robert Miller 2,664 2,664 200,000 320,000
-------------------- ------------- ------------- ---------- --------------
Please note the above figure for Clifford M Gross does not
include 100,000 shares held by both of Dr. Gross's adult children,
who are not considered a PCA as defined in the Article 3(1)(26) of
the UK Market Abuse Regulation.
No of Options Exercise Grant Date from which Life
Price Date exercisable
-------------- -------------- ---------- ---------- --------------------- --------
Clifford M 3,000,000 GBP0.12 28-Aug-20 Special Conditions* 5 Years
Gross
Robert Miller 100,000 GBP0.375 29-Jun-16 Special Conditions* 5 Years
100,000 GBP0.0783 30-Aug-19 Special Conditions** 5 Years
Lord David 100,000 GBP0.0525 6-Jan-20 Special Conditions** 5 Years
Willets
The details of the options held by each director as of 30
November 2020 re as follows:
* The options vest in three equal annual instalments from the
date of grant and there is a special condition which means the
options will vest when the closing price for a share has been
traded at more than 50 pence (sterling) for ten consecutive trading
days.
** The options shall vest when the net asset value, as stated in
the annual consolidated accounts, meets, or exceeds USD$20.53m
during the 36 months after the grant date. The threshold shall be
re-tested when each set of accounts published during the 36 months
are finalised.
525,000 options were held by Harrison Gross, received as part of
his employment compensation with the Company. Harrison is an adult
family member of Dr. Clifford Gross and Dr. Gross disclaims any
ownership or control of these options.
Principal Risks and Uncertainties
Please refer to Strategic Report.
Post Balance Sheet Events
For further details, please refer to note 28 in the notes to the
financial statements.
Independent auditors
HW Fisher LLP were appointed as auditor to the Company and in
accordance with section 485 of the Companies Act 2006, a resolution
proposing that they be re-appointed will be put at a General
Meeting. Statement of disclosure of information to auditors
Each of the persons who was a Director at the date of approval
of this report confirms that:
- so far as the Director is aware, there is no relevant audit
information of which the Company's auditor is unaware; and
- the Director has taken all the steps that he ought to have
taken as a Director in order to make himself aware of any relevant
audit information and to establish that the Company's auditor is
aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of s418 of the Companies Act
2006.
By order of the Board of Directors and signed on behalf of the
Board
Louis Castro
Director
29 April 2021
Tekcapital Plc
Consolidated Statement of comprehensive income
For the year ended 30 November 2020
Group Note Year ended Year ended
30 November 30 November
2020 2019
US $ US $
-------------------------------------- ------ ---------------- ----------------
Continuing Operations
Revenue from services 6 1,195,252 1,200,551
Unrealised profit on the revaluation
of investments 12 8,688,111 6,516,813
Total Revenue 9,883,363 7,717,364
-------------------------------------- ------ ---------------- ----------------
Cost of sales (458,728) (606,166)
Gross Profit 9,424,635 7,111,198
-------------------------------------- ------ ---------------- ----------------
Administrative expenses 7 (1,742,641) (1,590,563)
Operating Profit 7,681,994 5,520,635
-------------------------------------- ------ ---------------- ----------------
Profit on ordinary activities
before income tax 7,681,994 5,520,635
Income tax expense 9 (2,076) (2,345)
Profit after tax for the year 7,679,918 5,518,290
Other comprehensive income
Foreign exchange profit 92,949 31,855
-------------------------------------- ------ ---------------- ----------------
Total other comprehensive
income 92,949 31,855
-------------------------------------- ------ ---------------- ----------------
Total comprehensive profit
for the year 7,772,867 5,550,145
-------------------------------------- ------ ---------------- ----------------
Profit per share
Basic earnings per share 10 0.095 0.095
Diluted earnings per share 10 0.094 0.095
The Group has used the exemption under S408 CA 2006 not to
disclose the Company income statement.
Items in the statement above are disclosed net of tax.
The notes on pages 23 to 60 are an integral part of these
consolidated financial statements.
Tekcapital Plc
Consolidated Statement of financial position
At 30 November 2020
Group Note As at As at
30 November 30 November
2020 2019
US $ US $
----------------------------------- ------ --- ----------------- --------------
Assets
Non-current assets
Intangible assets 13 838,770 838,770
Financial assets at fair value
through profit and loss 12 30,491,657 20,335,925
Convertible loan notes 15 588,169 476,122
Property, plant and equipment 14 9,622 17,353
----------------------------------- ------ --- ----------------- --------------
31,928,218 21,668,170
----------------------------------- ------ --- ----------------- --------------
Current assets
Trade and other receivables 15 647,436 815,866
Cash and cash equivalents 16 538,473 472,899
----------------------------------- ------ --- ----------------- --------------
1,185,909 1,288,765
----------------------------------- ------ --- ----------------- --------------
Total assets 33,114,127 22,956,935
Current liabilities
Trade and other payables 20 247,442 310,160
Current income tax liabilities 21 500 500
Deferred Revenue 154,721 118,595
----------------------------------- ------ --- ----------------- --------------
402,663 429,255
----------------------------------- ------ --- ----------------- --------------
Total liabilities 402,663 429,255
----------------------------------- ------ --- ----------------- --------------
Net assets 32,711,464 22,527,680
----------------------------------- ------ --- ----------------- --------------
Equity attributable to the owners
of the Parent
Ordinary shares 18 521,830 372,984
Share premium 18 13,211,344 10,993,546
Retained earnings 19 18,780,012 11,055,821
Translation Reserve 19 270,447 177,498
Merger Reserve 19 (72,169) (72,169)
Total Equity 32,711,464 22,527,680
----------------------------------- ------ --- ----------------- --------------
The notes on pages 23 to 60 are an integral part of these
financial statements.
The financial statements on pages 17 to 60 were authorised for
issue by the Board of Directors on 29 April 2021 and were signed on
its behalf.
Louis Castro Dr Clifford Gross
Director Chairman and CEO
Tekcapital Plc
Company Statement of financial position
At 30 November 2020
Company Note As at As at
30 November 30 November
2020 2019
US $ US $
----------------------------- ------ ---------------- ----------------
Assets
Non-current assets
Investment in subsidiaries 11 1,955,215 1,959,003
Financial assets at fair
value through profit and
loss 12 2,081,027 1,804,120
Convertible Loan Notes 15 588,169 476,122
----------------------------- ------ ---------------- ----------------
4,624,411 4,239,245
----------------------------- ------ ---------------- ----------------
Current assets
Trade and other receivables 15 3,560,188 2,321,731
Cash and cash equivalents 16 239,991 112,114
----------------------------- ------ ---------------- ----------------
3,800,179 2,433,845
----------------------------- ------ ---------------- ----------------
Total assets 8,424,590 6,673,090
Current Liabilities
Trade and other payables 20 79,249 484,375
79,249 484,375
----------------------------- ------ ---------------- ----------------
Total liabilities 79,249 484,375
----------------------------- ------ ---------------- ----------------
Net assets 8,345,341 6,188,715
----------------------------- ------ ---------------- ----------------
Equity attributable to the
owners of the parent
Ordinary shares 18 521,830 372,984
Share Premium 18 13,211,344 10,993,546
Retained Earnings 19 (5,351,695) (5,079,729)
Translation Reserve 19 (36,138) (98,086)
----------------------------- ------ ---------------- ----------------
Total Equity 8,345,341 6,188,715
----------------------------- ------ ---------------- ----------------
The Company's loss before tax for the year ended 30 November
2020 was $316,239.
The notes on pages 23 to 60 are an integral part of these
financial statements.
The financial statements on pages 17 to 60 were authorised for
issue by the Board of Directors on 28 April 2021 and were signed on
its behalf.
Louis Castro Dr Clifford Gross
Director Chairman and CEO
Tekcapital Plc
Consolidated Statement of changes in equity
For the year ended 30 November 2020
Attributable to equity holders of the parent company
--------------------------------------------------------------------
Ordinary Share Translation Merger Profit Total Equity
Group Note Shares Premium Reserve reserve and loss US $
US $ US $ US $ US $ account
US $
-------------------- ------- ----------- ----------- -------------- ---------- -------------- ---------------
Balance at 30
November
2018 326,036 10,218,805 145,643 (72,169) 5,516,655 16,134,970
Share issue 18 46,948 892,018 - - - 938,966
Cost of share issue 18 - (117,277) - - - (117,277)
Profit for the year 19 - - - - 5,518,290 5,518,290
Other comprehensive
income 19 - - 31,855 - - 31,855
Share based
payments 26 - - - - 20,876 20,876
Balance at 30
November
2019 372,984 10,993,546 177,498 (72,169) 11,055,821 22,527,680
-------------------- ------- ----------- ----------- -------------- ---------- -------------- ---------------
Share issue 18 147,298 2,450,245 - - - 2,597,543
Share options
exercised 18 1,548 29,805 - - - 31,353
Cost of share issue 18 - (262,252) - - - (262,252)
Profit for the year 19 - - - - 7,679,918 7,679,918
Other comprehensive
income 19 - - 92,949 - - 92,949
Share based
payments 26 - - - - 44,273 44,273
Balance at 30
November
2020 521,830 13,211,344 270,447 (72,169) 18,780,012 32,711,464
-------------------- ------- ----------- ----------- -------------- ---------- -------------- ---------------
Share premium - amount subscribed for share capital in excess of
nominal value, net of directly attributable costs.
Translation reserve - amount recognised for foreign exchange
differences recognised in Other Comprehensive Income.
Merger reserve - amount subscribed for share capital in excess
of nominal value in relation to the qualifying acquisition of
subsidiary undertakings.
Profit and loss account - cumulative net gains and losses
recognised in the consolidated statement of comprehensive
income.
The notes on pages 23 to 60 are an integral part of these
financial statements.
Tekcapital PLC
Company Statement of changes in equity
For the year ended 30 November 2020
Attributable to owners of the parent company
Ordinary Share Translation Profit Total
Company Note Shares Premium Reserve and loss Equity
US $ US $ US $ account US $
US $
------------------------- ------- ----------- ----------- -------------- ------------ ------------
Balance at 30 November
2018 326,036 10,218,805 (101,969) (5,131,273) 5,311,599
Share issue 18 46,948 892,018 - - 938,966
Cost of share issue 18 - (117,277) - - (117,277)
Profit for the year 19 - - - 30,668 30,668
Other comprehensive
income 19 - - 3,883 - 3,883
Share based payments 26 - - - 20,876 20,876
Balance at 30 November
2019 372,984 10,993,546 (98,086) (5,079,729) 6,188,715
------------------------- ------- ----------- ----------- -------------- ------------ ------------
Share issue 18 147,298 2,450,245 - - 2,597,543
Share options exercised 18 1,548 29,805 31,353
Cost of share issue 18 - (262,252) - - (262,252)
Profit for the year 19 - - - (316,239) (316,239)
Other comprehensive
loss 19 - - 61,948 - 61,948
Share based payments 26 - - - 44,273 44,273
Balance at 30 November
2020 521,830 13,211,344 (36,138) (5,351,695) 8,345,341
------------------------- ------- ----------- ----------- -------------- ------------ ------------
Share premium - amount subscribed for share capital in excess of
nominal value, net of directly attributable issue costs.
Translation reserve - amount recognised for foreign exchange
differences recognised in Other Comprehensive Income.
Profit and loss account - cumulative net gains and losses
recognised in the consolidated financial statements of
comprehensive income.
The notes on pages 23 to 60 are an integral part of these
financial statements.
Tekcapital Plc
Consolidated Statement of cash flows
For the year ended 30 November 2020
Group Note For the year For the year
ended ended
30 November 30 November
2020 2019
US $ US $
---------------------------------- ------ ------------------ ------------------
Cash flows from operating
activities
Cash outflows from operations 24 (948,166) (1,397,294)
Tax paid (2,076) (2,345)
Net cash outflows from operating
activities (950,242) (1,399,639)
---------------------------------- ------ ------------------ ------------------
Cash flows from investing
activities
Purchase of financial assets
at fair value through profit
and loss 12 (1,345,679) (111,810)
Purchases of property, plant
and equipment 14 (950) (862)
Net cash outflows from investing
activities (1,346,629) (112,672)
Cash flows from financing
activities
Proceeds from issuance of
ordinary shares 18 2,628,896 938,966
Costs of raising finance 18 (262,252) (117,277)
Net cash inflows from financing
activities 2,366,644 821,689
---------------------------------- ------ ------------------ ------------------
Net increase/(decrease) in
cash and cash equivalents 69,773 (690,622)
Cash and cash equivalents
at beginning of year 16 472,899 1,165,442
Exchange (losses)/gains on
cash and cash equivalents (4,199) (1,921)
Cash and cash equivalents
at end of year 16 538,473 472,899
---------------------------------- ------ ------------------ ------------------
Notes
1. General Information
Tekcapital PLC (Companies House registration number: 08873361)
is a company incorporated in England and Wales and domiciled in the
UK. The address of the registered office is detailed on page 1 of
these financial statements. The Company is a public limited company
limited by shares, which listed on the AIM market of the London
Stock Exchange Group Plc in 2014. The principal activity of the
parent company is that of an investment entity and that of the
Group is to provide universities and corporate clients with
valuable technology transfer services. The Group and the parent
company also acquire exclusive licences to university technologies
that it believes can positively impact people's lives, for
subsequent commercialisation.
The principal accounting policies applied in the preparation of
these consolidated and parent company financial statements are set
out below. These policies have been consistently applied to all the
years presented, unless otherwise stated.
Amounts presented in this report are rounded to nearest
US$1.
2. Accounting policies
2.1 Statement of compliance
The consolidated financial statements of Tekcapital PLC Group
have been prepared in accordance with International Financial
Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS
IC) as adopted by the European Union and the Companies Act 2006
applicable to companies reporting under IFRS. The consolidated
financial statements have been prepared under the historical cost
convention. The consolidated financial statements comprise the
financial statements of Tekcapital plc and its subsidiaries,
Tekcapital Europe Ltd and Tekcapital LLC.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgment or complexity, or areas where assumptions
and estimates are significant to the consolidated financial
statements are disclosed in note 4.
The consolidated financial statements of the parent company have
been prepared in accordance with Financial Reporting Standard 101
"Reduced disclosure framework" ('FRS 101'). The company will
continue to prepare its financial statements in accordance with
FRS101 on an ongoing basis until such time as it notifies
shareholders of any change to its chosen accounting framework.
The Company financial statements have been prepared using the
historical cost convention except where other measurement basis are
required to be applied and in accordance with IFRS under FRS 101.
In accordance with FRS101, the Company has taken advantage of the
following exemptions:
-- IAS 7, 'Statement of Cash Flows'
2.1.1 Going concern
The Group and the Company meets its day to day working capital
requirements through its service offerings and monies raised
through the issues of equity. The Group's forecasts and projections
indicate that the Group and the Company have sufficient cash
reserves to operate within the level of its current facilities.
Whilst it is the Group's and the Company's intention to rely on the
available cash reserves, future income generated from its growing
service offerings and continued reductions in its cost base, a
negative variance in the forecasts and projections would make the
Group's ability to continue as a going concern dependent on an
additional fund raise. If the Group's forecasts are not achieved,
the Directors would seek to raise the additional funds through
equity issues. Whilst the COVID-19 pandemic is contributing to
uncertainty in the markets and the full impact is difficult to
measure, at the time of approving the accounts after making
enquiries, the Directors have a reasonable expectation that the
Group and the Company have adequate resources to continue in
operational existence for the foreseeable future. The Group and the
Company therefore continue to adopt the going concern basis in
preparing both its consolidated financial statements and for its
own financial statements.
2.1.2 Changes in accounting policy and disclosures
New standards and interpretations not yet adopted by the
Group
IFRS 17 Insurance Contracts
IFRS 17 was issued in May 2017 and is effective for accounting
periods beginning on or after 1 January 2023. The Group has not
chosen to early adopt this standard and will adopt it for the
accounting period beginning 1 December 2023. Directors do not
expect any material impact on the consolidated financial
statements.
No other issued but not endorsed amendments to IFRS will have a
material impact on the Group's financial statements once they
become endorsed and effective.
New standards and interpretations adopted by the Group:
IFRS 16 Leases
The Group adopted this standard for the accounting period
beginning 1 December 2019. The adoption of this standard has not
had an impact on the financial performance or position of the Group
for the year or comparative period
2.2 Business combinations
Tekcapital PLC was incorporated on 3 February 2014 and on 18
February 2014 entered into an agreement to acquire the issued share
capital of Tekcapital Europe Limited by way of share issue. On 19
February 2014 it acquired the issued share capital of Tekcapital
LLC also by share issue. This has been accounted for as a common
control transaction under IFRS 3 using the pooling of interest
method by using the nominal value of shares exchanged in the
business combination and no fair value adjustment. The consolidated
financial statements comprise the financial statements of
Tekcapital PLC and all subsidiaries controlled by it. Subsidiaries
are entities that are controlled by the Group. Control is achieved
when the Group has the power to govern the financial and operating
policies of an entity so as to obtain economic benefit from its
activities. Inter-company transactions, balances and unrealised
gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated when necessary amounts
reported by subsidiaries have been adjusted to conform to the
Group's accounting policies.
2.3 Foreign currencies
(a) Functional and presentation currency
These consolidated financial statements are presented in US
Dollars which is the presentation currency of the Group. This is
because the majority of the Group's transactions are undertaken in
US Dollars. Each subsidiary within the Group has its own functional
currency which is dependent on the primary economic environment in
which that subsidiary operates. Effective 1 December 2014
Tekcapital PLC and Tekcapital Europe Limited changed their
functional currency to UK Sterling. This is because, the primary
economic activity of these entities is undertaken in the UK.
(b) Transactions and balances
Foreign currency transactions are translated into functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at the year-end exchange
rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement. Foreign exchange
gains and losses that relate to borrowings and cash and cash
equivalents are presented in the income statement within 'finance
income or costs'.
(c) Group companies
The results and financial position of all Group entities (none
of which has the currency of a hyper-inflationary economy) that
have a functional currency different from the presentation currency
are translated into the presentation currency as follows:
(i) assets and liabilities for each balance sheet presented are
translated at the closing exchange rates at the date of that
balance sheet.
(ii) income and expense for each income statement are translated
at the average rates of exchange during the period (unless this
average is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the rate on the dates of the
transactions)
(iii) all resulting exchange differences are recognised in other comprehensive income.
2.4 Investment in subsidiaries
Investments in subsidiaries including Tekcapital Europe Ltd and
Tekcapital LLC are recognised initially at cost. The cost of the
investment includes transactions costs. The carrying amounts are
reviewed at each reporting dated to determine whether there is any
indication of impairment.
Investments in portfolio companies are held at fair value
through the profit and loss. Directors' judgment was exercised in
determination that the Group meets the following criteria and
should be recognized as an investment entity under IFRS 10 par. 27.
Directors re-evaluated the below criteria and concluded they were
met as at 30 November 2020:
-- Obtains funds from one or more investors for the purpose of
providing clients with investment management services
-- Commits to its investors that its business purpose is to
invest funds solely for return from capital appreciation,
investment income or both
-- Measures and evaluate the performance of substantially all of
its investments on a fair value basis.
Tekcapital's IP search and technology transfer investment
services represent investment advisory services, and therefore
Tekcapital Europe Limited and Tekcapital LLC continue to be treated
as subsidiaries and are consolidated in the Group financial
statements. These services may be provided to investors, clients
and third parties. The Board considers that the criteria are met in
the Group's current circumstances.
The Board envisages that Tekcapital's shareholder returns will
derive primarily from mid to long-term capital appreciation of a
portion of its intellectual property investments, as well as from
providing IP investment services to clients. Consequently, the
Group's portfolio companies are measured at fair value in
accordance with IFRS 9 as disclosed in Note 2.9.
2.5 Non-controlling interests
Losses applicable to non-controlling interests in a subsidiary
are allocated to the non-controlling interests, even if doing so
causes the non-controlling interests to have a deficit balance.
Adjustments to non-controlling interests arising from transactions
that do not involve the loss of control are based on a
proportionate amount of the net assets of the subsidiary. Upon the
loss of control the assets and liabilities of the subsidiary, any
non-controlling interests and other components of equity related to
the subsidiary are derecognised. Any resulting gain or loss is
recognised in the profit and loss.
2.6 Property, plant and equipment
Property, plant and equipment is stated at historical cost less
accumulated depreciation. Historical cost includes expenditure that
is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the
income statement during the financial period in which they are
incurred.
Depreciation of assets are calculated to write off the cost less
the estimated residual value of tangible fixed assets by equal
instalments over the estimated useful economic lives as
follows:
Furniture - 3 years
Computer equipment - 3 years
Leasehold improvements - 5 years
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period. An
asset's carrying amount is written down immediately to its
recoverable amount if the assets carrying value is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with the carrying amount and are recognised within 'Other
gains / (losses) - net' in the income statement. When re-valued
assets are sold, the amounts are included in other reserves are
transferred to retained earnings.
2.7 Intangible assets
(a) Invention Evaluator
This is an intangible asset and a piece of computer software
acquired for use by one of the subsidiaries of the Group and is
shown at original cost of purchase less impairment losses.
Under IAS38, this asset is regarded by the Directors as being an
intangible asset with an indefinite useful life. The Directors
believe that the asset is unique in that no competitor offering
currently exists, the service appeals globally to many types of
clients including Fortune 100 companies, there is no expectation of
obsolescence in the foreseeable future, and the service provided by
the asset generates sufficient ongoing revenue streams.
Consequently, no write down in the value of this asset either by
way of amortisation or impairment has occurred in this financial
year. In the Directors' opinion this asset has an indefinite useful
life.
(b) Computer software and website development
Costs associated with maintaining computer software programmes
and the Company website are recognised as an expense as incurred.
Development costs that are directly attributable to the design and
testing of identifiable and unique software products controlled by
the Group are recognised as intangible assets when the following
criteria are met:
(i) it is technically feasible to complete the software product
so that it will be available for use;
(ii) management intends to complete the software product and use or sell it;
(iii) there is an ability to use or sell the software product;
(iv) it can be demonstrated how the software product will
generate probable future economic benefits;
(v) adequate technical, financial and other resources to
complete the development and to use or sell the
software product are available; and
(vi) the expenditure attributable to the software product during
its development can be reliably
measured.
Computer software development costs recognised as assets are
amortised over their estimated useful lives, which do not exceed
four years.
(c) Licences
Costs associated with the acquisition of Licences for
technologies with the express purpose of developing them further
for a commercial market are recognised as an intangible asset when
they meet the criteria for capitalisation. That is, they are
separately identifiable and measurable and it is probable that
economic benefit will flow to the entity.
Further development costs attributable to the Licenced
technology and recognised as an intangible asset when the following
criteria are met:
(i) it is technically feasible to complete the technology for
commercialisation so that it will be available for use;
(ii) management intends to complete the technology and use or sell it;
(iii) there is an ability to use or sell the technology;
(iv) it can be demonstrated how the technology will generate
probable future economic benefits;
(v) adequate technical, financial and other resources to
complete the development and to use or sell the technology are
available; and
(vi) the expenditure attributable to the technology during its
development can be reliably measured.
Licences and their associated development costs are amortised
over the life of the licence or the underlying patents, whichever
is shorter.
(d) Vortechs Group
This is an intangible asset acquired for use by one of the
subsidiaries of the Group and is valued at original cost of
purchase.
Under IAS38, the Group's Vortechs Group asset is regarded by the
Directors as being an intangible asset with an indefinite useful
life. The Directors believe that this asset is unique as it
operates in a niche market, it generates an ongoing revenue stream,
and there is no expectation of obsolescence. This asset meets the
requirements of IAS38 as it is separately identifiable, controlled
by the Group, the cost can be measured reliably, and as a result of
owning this asset future economic benefits in the form of service
revenue are generated for the Group.
In the opinion of the Directors this asset as an indefinite
useful life and there has been no amortisation or impairment
provided in the current year.
2.8 Impairment of non-financial assets
Intangible assets that have an indefinite useful life or
intangible assets not ready to use are not subject to amortisation
and are tested annually for impairment. Assets that are subject to
amortisation are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by
which the asset's carrying value exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less
costs of disposal and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are largely independent cash inflows, (CGUs). Prior impairments of
non-financial assets (other than goodwill) are reviewed for
possible reversal at each reporting date.
2.9 Financial instruments
2.9.1 Classification
The Group and the Company classify their financial assets
depending on the purpose for which the asset was acquired.
Management determines the classification of its financial assets at
initial recognition.
During the financial year the Group and the Company held
investments into portfolio companies classified as equity
investments. They are included in current assets and are measured
at fair value through profit and loss in accordance with IFRS
9.
The Company also has loans, convertible loan notes and
receivables that are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
are included in current assets, except for maturities that are
greater than 12 months after the end of the reporting year. These
are classified as non-current assets. The Group's loans and
receivables comprise 'trade and other receivables' in the balance
sheet. The Group also has cash and cash equivalents.
All short-term liabilities are measured at cost, the Group does
not hold any long-term financial liabilities.
2.9.2 Recognition and measurement
The Company's investments into the portfolio companies are
recognised on the acquisition or formation date and measured at
fair value through profit or loss in accordance with IFRS 9.
Loans and receivables are recognised on the trade date in which
the transaction took place and are recognised at their fair value
(which equates to cost) with transaction costs expensed in the
income statement. Financial assets are derecognised when the rights
to receive cash flows from the loans or receivables have been
collected, expired or transferred and the Group has subsequently
transferred substantially all risks and rewards of ownership. Short
term financial liabilities are initially measured at fair value and
subsequently measured at amortised cost using the effective
interest rate method.
2.9.3 Fair value
Financial instruments are measured at fair value including
investments in portfolio companies, cash and cash equivalents,
trade and other receivables, trade and other payables, and
borrowings. This measurement policy does not apply to subsequent
measurement at amortised cost of short-term financial liabilities
and trade receivables.
The Group measures portfolio companies using valuation
techniques appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximising the
use of relevant observable inputs and minimising the use of
unobservable inputs. Our fair value valuation policy is as
follows:
-- The fair value of new portfolio companies is estimated at the
cost of the acquired IP or equity plus associated expenses to
facilitate the acquisition.
-- Existing portfolio companies are valued as follows:
Ø If a market transaction such as third-party funding has
occurred during the past 18 months we will value our ownership in
the portfolio company at this observed valuation, taking account of
any observed material changes during the period.
Ø In the absence of a recent market transaction, fair value will
be estimated by alternative methods and where appropriate by an
external, qualified valuation expert. The valuation technique used
fall under Level 2 - Observable techniques other than quoted prices
and Level 3 - other techniques as defined by IFRS 13.
Due to their short-term nature, the carrying value of cash and
cash equivalents, trade and other receivables, and trade and other
payables approximate their fair value. The fair value of borrowings
equals their carrying amounts, as the impact of discounts is not
significant.
2.10 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount
reported in the balance sheet when there is a legally enforceable
right to offset the recognised amounts and there is the intention
to settle on a net basis or realise the asset and settle the
liability simultaneously.
2.11 Impairment of financial assets
The Group assesses at the end of each reporting year whether
there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or group of
financial assets is impaired and impairment losses are incurred
only if there is objective evidence of impairment as a result of
one or more events that have occurred after the initial recognition
of the asset (a 'loss event') and the loss event (or events) has an
impact on the estimated future cash flows of the financial asset or
group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors
or a group of debtors is experiencing significant financial
difficulty, default or delinquency in interest or principal
payments, the probability that they will enter bankruptcy or other
financial reorganisation, and where observable data indicate that
there is a measurable decrease in the estimated future cash flows,
such as changes in arrears or economic conditions that correlate
with defaults.
For the loans and receivables category, the amount of the loss
is measured as the difference between the assets carrying amount
and the present value of estimated future cash flows (excluding
future credit losses that have not been incurred) discounted at the
financial asset's original effective interest rate. The carrying
amount of the asset is reduced and the amount of the loss is
recognised in the consolidated income statement. If a loan or
held-to maturity investment has a variable interest rate, the
discount rate for measuring any impairment loss is the current
effective interest rate determined under the contract. As a
practical expedient, the Group may measure impairment on the basis
of an instrument's fair value using an observable market price.
If, in a subsequent year, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised (such as the
improvement in the debtor's credit rating), the reversal of the
previously recognised impairment loss is recognised in the
consolidated income statement.
2.12 Trade receivables
Trade receivables are amounts due from customers for the
provision of services performed in the ordinary course of business.
Collection is normally expected within three months or less (in the
normal operating cycle of the business) and is classified as
current assets. In the rare circumstances that they exceed a period
of greater than one year they are presented as non-current assets.
In some instances, the Group accepts convertible loan notes for
trade debts these are held separately on the statement of financial
position until maturity or disposal on the open market. Any value
received which is greater or less than the value of the original
debt is taken to the consolidated statement of comprehensive
income.
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less any provision for impairment.
2.13 Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash
equivalents includes cash in hand, deposits held at call with other
banks, other short term highly liquid investments with maturities
of three months or less and bank overdrafts. In the consolidated
statement of financial position, bank overdrafts are shown within
borrowings in current liabilities.
2.14 Share capital
Ordinary Shares
Ordinary shares are classified as equity.
Share premium
The share premium account has been established to represent the
excess of proceeds over the nominal value for all share issues,
including the excess of the exercise share price over the nominal
value of the shares on the exercise of share options as and when
they occur. Incremental costs directly attributable to the issue of
new ordinary shares and new shares options are shown in equity as a
deduction, net of tax, from the proceeds.
Merger Reserve
The consolidated financial statements are accounted for using
the 'pooling of interests' method', which treats the Group as if it
had been combined throughout the current and comparative accounting
periods. Pooling of interests principles for this combination gave
rise to a merger reserve in the consolidated statement of financial
position, being the difference between the nominal value of new
shares issued by the Company for the acquisition of the shares of
the subsidiary and the subsidiary's own share capital.
Non-controlling interest
Non-controlling interest is the portion of equity ownership in a
subsidiary not attributable to the parent company.
2.15 Trade payables
Trade payables are obligations to pay for goods and services
that have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less (or in the normal
operating cycle of business if longer). If not, they are presented
as non-current liabilities.
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest rate method.
2.16 Share based payments
The Company operates a number of equity-settled, share-based
compensation plans, under which the entity receives services from
employees as consideration for equity instruments (options) of the
Company. The fair value of the employee services received in
exchange for the grant of options is recognised as an expense. The
total amount to be expensed is determined by reference to the fair
value of the options granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability, sales
growth targets and remaining an employee of the entity over a
specified time period); and
-- excluding the impact of any non-vesting conditions (for
example the requirement of the employees to save).
Assumptions about the number of options that are expected to
vest include consideration of non-market vesting conditions. The
total expense is recognised over the vesting period, which is the
period over which all of the specified vesting conditions are to be
satisfied. At the end of each reporting period, the entity revises
its estimates of the number of options that are expected to vest
based on the non-market vesting conditions. It recognises the
impact of the revision to the originally estimates, if any, in the
income statement, with a corresponding adjustment to equity.
When the options are exercised, the Company issues new shares.
The proceeds received net of any directly attributable transactions
costs are credited to share capital (nominal value) and share
premium when the options are exercised.
2.17 Current and deferred tax
The tax expense for the year comprises current and deferred tax.
Tax is recognised in the consolidated income statement, except to
the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax
is also recognised in other comprehensive income or directly in
equity, respectively.
The current income tax charge is calculated on the basis of tax
laws enacted or substantively enacted at the balance sheet date in
the countries where the Company and its subsidiaries operate and
generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is recognised on temporary timing
differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial
statements. However, deferred tax liabilities are not recognised if
they arise from the initial recognition of goodwill; deferred
income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws)
that have been enacted or substantively enacted by the balance
sheet date and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability
is settled.
Deferred income tax assets are recognised only to the extent
that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable
temporary differences arising from investments in subsidiaries
except for deferred income tax liability where the timing of the
reversal of the temporary difference is controlled by the Group and
it is probable that the temporary difference will not reverse in
the foreseeable future.
Deferred income tax assets are recognised on deductible
temporary differences arising from investments in subsidiaries only
to the extent that it is probable the temporary difference will
reverse in full in the future and there is sufficient taxable
profit available against which the temporary difference can be
utilised.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income tax assets and
liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable
entities where there is an intention to settle balances on a net
basis.
2.18 Provisions
Provisions and any other anticipated foreseen liabilities are
recognised: when the Group has a present legal or constructive
obligation as a result of past events; it is probable that an
outflow of resources will be required to settle the obligation; and
the amount has been reliably estimated. Restructuring provisions
comprise lease termination penalties, and employee termination
payments. Provisions are not recognised for future operating
losses.
Where there are a number of similar obligations, the likelihood
that an outflow will be required in settlement is determined by
considering a class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to any
one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the
provision due to the passage of time is recognised as an interest
expense.
2.19 Leases
At inception, the Company assesses whether a contract is, or
contains, a lease within the scope of IFRS 16. A contract is, or
contains, a lease if the contract conveys the right to control the
use of an identified asset for a period of time in exchange for
consideration. Where a tangible asset is acquired through a lease,
the Company recognises a right-of-use asset and a lease liability
at the lease commencement date. Right-of-use assets are included
within property, plant and equipment.
The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the commencement date plus any
initial direct costs and an estimate of the cost of obligations to
dismantle, remove, refurbish or restore the underlying asset and
the site on which it is located, less any lease incentives
received.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of
the lease term. The estimated useful lives of right-of-use assets
are determined on the same basis as those of other property, plant
and equipment. The right-of-use asset is periodically reduced by
impairment losses, if any, and adjusted for certain remeasurements
of the lease liability.
The lease liability is initially measured at the present value
of the lease payments that are unpaid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Company's incremental
borrowing rate. Lease payments included in the measurement of the
lease liability comprise fixed payments, variable lease payments
that depend on an index or a rate, amounts expected to be payable
under a residual value guarantee, and the cost of any options that
the Company is reasonably certain to exercise, such as the exercise
price under a purchase option, lease payments in an optional
renewal period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a change
in: future lease payments arising from a change in an index or
rate; the Company's estimate of the amount expected to be payable
under a residual value guarantee; or the Company's assessment of
whether it will exercise a purchase, extension or termination
option. When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the
carrying amount of the right-of-use asset has been reduced to
zero.
2.20 Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable, and represents amounts receivable for the
services supplied, stated net of discounts, and value added taxes.
The Group recognises revenue when the contract is identified,
performance obligation is determined, transaction price is
determined and allocated to performance obligation in accordance
with IFRS 15.
The Group also recognises an unrealised profit/loss on the
revaluation of investments in share of portfolio companies in
accordance with the fair value policy outlined in Note 2.9.
Provision of services
The Group provides following lines of services:
- Invention Evaluator services: provision of reports assessing
potential of any new technology. Revenue is recognized upon
delivery of a complete report
- IP Acquisition Opportunities services: provision of reports
identifying attractive university developed IP. Revenue is
recognised upon delivery of a complete report
- Tech transfer recruitment services: recruitment services
specialising in technology transfer executives. Revenue is
recognised when the placement is successfully completed
- Training services: custom solutions for new tech transfer
offices, spin out companies and accelerators delivered via in
person trainings. Revenue is recognised over time based on
completion stage of each session.
Interest income
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate
applicable.
3. Financial Risk Management
3.1 Financial risk factors
(a) Portfolio Risk/Investments Risk Management
Investment into portfolio companies held by the Group requires
long-term commitment with no certainty of return.
The fair value of each portfolio company represents the best
estimate at a point in time and may be impaired if the business
does not perform as well as expected, directly impacting the
Group's value and profitability. This risk is mitigated as the size
of the portfolio increases. The Group performed sensitivity
analysis with regards to assumptions used in determination of fair
value of the portfolio in Note 12.
The Group also regularly monitors portfolio companies' liquidity
required for returns to occur.
(b) Credit Risk Management
Credit risk is managed on a Group basis. In order to minimise
this risk, the Group endeavours to only deal with companies that
are demonstrable creditworthy, and the Directors continuously
monitor the exposure. The Group's maximum exposure to credit risk
for the components of financial position at 30 November 2020 and
2019 is the carrying amount of its current trade and other
receivables as illustrated in Note 15.
The Group monitors credit risk related to performance of
portfolio companies, including considerations related to
recoverability of convertible loan notes issued. Progress is
monitored and regular discussions are held with management of
portfolio companies to assess commercial progress and financial
information provided. The Group also monitors credit risk related
to creditor amounts due from portfolio companies.
(c) Liquidity Risk Management
Cash flow forecasting is performed on a Group basis. The
Directors monitor rolling forecasts of the Group's liquidity
requirements to ensure it has sufficient cash to meet operational
needs. At the reporting date the Group held bank balances of
US$538,473. Post period end, the Group completed a post period end
placement for gross US$5.28m. All amounts shown in the consolidated
statement of financial position under current assets and current
liabilities mature for payment within one year, with Trade and
Other Receivables exceeding Trade and Other Payables by
US$399,994.
(d) Financial Risk Management
The Company's Directors review the financial risk of the Group.
Due to the early stage of its operations the Group has not entered
into any form of financial instruments to assist in the management
of risk during the period under review.
(e) Market Risk Management
Due to low value and number of financial transactions that
involve foreign currency and the fact that the Group has no
borrowings to manage, the Directors have not entered into any
arrangements, adopted or approved the use of derivative financial
instruments to assist in the management of the exposure of these
risks. It is their view that any exchange risks on such
transactions are negligible.
The Group also regularly monitors risk related to fair value of
financial instruments held such as convertible loan notes held.
(f) Foreign exchange risk
Foreign exchange risk arises when individual Group entities
enter into transactions denominated in a currency other than their
functional currency. The Group's policy is, where possible, to
allow Group entities to settle liabilities denominated in their
functional currency, with the cash generated from their own
operations in that currency. Where Group entities have liabilities
denominated in a currency other than their functional currency (and
have insufficient reserves of that currency to settle them), cash
already denominated in that currency will, where possible, be
transferred from elsewhere within the Group.
A sensitivity analysis has been performed to assess the exposure
of the Group to foreign exchange movements. If the exchange rate
weakened by 10 percent then the effect on the gain before tax would
increase by US$46,198 and equity would decrease by US$38,608.
(g) Impact of the COVID-19 pandemic
The current Coronavirus epidemic may produce negative economic
activities which could reduce the Group's economic performance and
the performance of its portfolio companies in ways that are
difficult to quantify at this juncture. It may cause a recession in
the markets in which the Group operates, reduce the Group's net
asset values, revenue, cash flow, access to investment capital and
other factors which could negatively impact the Group.
3.2 Capital management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders, benefits for other stakeholders
and to maintain an optimal capital structure to reduce the cost of
capital.
In order to adjust or maintain the capital structure, the Group
may adjust the level of dividends paid to its shareholders, return
capital to shareholders, issue new shares or sell assets to reduce
borrowings. The Group has no external borrowings. This policy is
periodically reviewed by the Directors, and the Group's strategy
remains unchanged for the foreseeable future.
The capital structure of the Group consists of cash and bank
balances and equity consisting of issued share capital, reserves
and retained losses of the Group. The Directors regularly review
the capital structure of the Company and consider the cost of
capital and the associated risks with each class of capital. The
Company has no external borrowings and this has no impact on the
gearing levels of the Group as at 30 November 2020.
The Company's historic cost of capital has been the cost of
securing equity financings, which have averaged around 10%. The
company's long-term financial goal is to optimise its returns on
invested capital (ROIC) in excess of our weighted average cost of
capital (WACC) and as such create value for our shareholders. The
method the Company seeks to employ for achieving this is to utilise
its structural intellectual capital developed through its Discovery
Search Network, its Invention Evaluator service and its Vortechs
Group Service to mitigate selection bias and improve returns on
invested capital. Ultimately, management will seek to monetize
these returns with exits from its investments in portfolio
companies.
4. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances. The Directors made the following judgements:
- determination as to the classification of the Group as an
investment entity as discussed in Note 2.4
- determination of operating segments as disclosed in Note 5
- determination of reliance of the Group's portfolio companies
on funding to achieve their fair values discussed in Note 12.
The Directors also make estimates and assumptions concerning the
future. The resulting accounting estimates will by definition,
seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying value of the assets and liabilities
within the next financial year are detailed below.
Key Key assumption Potential Potential Note
estimate/judgment impact impact reference
area within in the for
the next longer sensitivity
financial term analysis
year
Valuation of In applying ü ü Note 12
unquoted equity valuation
investments techniques
to determine
the fair value
of unquoted
equity
investments
the Group and
the Company
make estimates
and assumptions
regarding the
future
potential
of the
investments.
The policy
of the Group
and the Company
is to value new
portfolio
companies at
cost of the
acquired IP or
equity plus
associated
expenses to
facilitate
the
acquisition.
Existing
portfolio
companies are
valued
using either a
market
transaction
such as
third-party
funding
or, in the
absence of a
recent
market
transaction, by
alternative
methods and
where
appropriate
by an external,
qualified
valuation
expert.
The fair value
of Guident
Limited
reflects the
fair
value of
Guident's net
assets.
This value is
primarily based
on its IP
portfolio
detailed
in Note 12,
valued using
the royalty
relief method.
The estimates
used in this
valuation
include market
size market
penetration
used
to determine
projected
sales,
the royalty
relief rate and
the discount
factor. These
estimates are
key to
calculation
of the net
present value
of future
cashflows
associated
with the
patent. The
fair
value
calculation
assumes
Guident Limited
obtains
sufficient
funding to
execute their
strategy.
The fair value
of Salarius
Limited
reflects the
fair
value of
Salarius
Limited
net assets.
This value is
primarily based
on the
independent
patent
valuation of US
patent
8,900,650
portfolio
detailed
in Note 12,
valued using
the royalty
relief method.
The estimates
used in this
valuation
include market
size market
penetration
used
to determine
projected
sales,
the royalty
relief rate and
the discount
factor. These
estimates are
key to
calculation
of the net
present value
of future
cashflows
associated
with the
patent. The
fair
value
calculation
assumes
Salarius
Limited obtains
sufficient
funding to
execute
their strategy.
The fair value
of Lucyd
Limited
reflects:
- Lucyd's
ecommerce
platform
valued by
estimating the
net present
value of future
cashflows
associated with
the e-shop. Key
assumptions
used in
estimating
future
cash flows are
projected
profits
including
eyewear
unit sales for
company's
e-commerce
channels as
well
as number of
retail stores
to determine
projected sales
, and a
discount factor
applied
for the net
present value
of future
cashflows from
the platform.
- Lucyd's
trademark value
based on the
Net book value
stated at cost.
The Group
corroborated
this
valuation with
secondary
observable
input in the
form
of value of
Lucyd Ltd's
shares
in its US
subsidiary
(Innovative
Eyewear Inc) as
determined
by recent
market
transactions
of these
shares.
--------------------------- --------------------- --------------------- -----------------------
Useful life The Directors ü ü Note 13
of Invention have considered
Evaluator website the useful life
of the
Invention
Evaluator
website to be
indefinite
because of the
uniqueness
of the service
it provides
and that there
is no
competitor
in the market
in which the
Group operates
who is able
to provide a
similar
service.
The Directors
undertake an
annual review
that considers
an
appropriateness
of the
use of an
indefinite
useful
life in
addition to
impairment
review and if
required make
a provision in
the financial
statements.
--------------------------- --------------------- --------------------- -----------------------
Useful life The Directors ü ü Note 13
of Vortechs have considered
Group the useful life
of Vortechs
Group to be
indefinite
because
of the ongoing
service revenue
that is being
generated.
The business
operates in
a specialised
market, with
few
competitors.
The Directors
undertake an
annual review
that considers
an
appropriateness
of the use of
an indefinite
useful life in
addition to
impairment
review and if
required make a
provision
in the
financial
statements.
--------------------------- --------------------- --------------------- -----------------------
Deferred Taxes Deferred tax is ü ü Note 22
the tax
expected
to be payable
or recoverable
on differences
between the
carrying
amounts of
assets
and liabilities
in the
financial
statements and
the
corresponding
tax bases used
in the
computation
of taxable
profit, and is
accounted for
using the
balance
sheet liability
method.
Deferred
tax assets are
recognised
to the extent
that it is
probable that
taxable profits
will be
available
against
which
deductible
temporary
differences can
be utilised.
The carrying
amount of
deferred
tax assets is
reviewed at
each balance
sheet date and
reduced to the
extent that
it is no longer
probable
that sufficient
taxable profits
will be
available to
allow
all or part of
the asset
to be
recovered.
Deferred
tax is
calculated at
the
tax rates that
are expected
to apply in the
period when
the liability
is settled
or the asset is
realised
based on tax
laws and rates
that have been
enacted or
substantively
enacted at
the balance
sheet date. The
Group did not
recognize
deferred
tax liability
on fair value
gains
associated with
the
revaluation of
shares in
its portfolio
companies due
to availability
of the
substantial
shareholdings
exemption.
This is
considered a
permanent
difference and
not a temporary
difference.
--------------------------- --------------------- --------------------- -----------------------
Share based The estimate of ü ü Note 26
payment share based
payment
requires the
Director
to select an
appropriate
valuation model
and make
decisions about
various inputs
into the model
including
the volatility
of its own
share price,
the probable
life of options
and the risk
free interest
rate
--------------------------- --------------------- --------------------- -----------------------
5. Segmental reporting
The Directors consider the business to have two segments for
reporting purposes under IFRS 8 which are:
-- professional services, including the provision of recruitment
services via Vortechs Group, provision of reports and services
provided to locate and transfer technologies to customers, as well
as R&D tax relief credits and provision of management services
to its portfolio companies. The activities grouped under this
segment share similar economic characteristics of provision of
intellectual property services to third party services;
-- licensing and investment activities, including acquiring
licences for technologies, portfolio company investment,
development and commercialisation. The activities share the goal of
increasing the fair value of investments made into portfolio
companies by the Group.
Segmental revenues and results
2020 Professional Licensing TOTAL
Consolidated income Services & Investment
statement US $ US $ US $
------------------------------- -------------- ----------------------------- ------------
Net Revenue 1,099,305 8,688,111 9,787,416
Interest Income 95,947 95,947
Cost of Sales (458,728) (458,728)
Administrative Expenses (528,722) (1,204,482) (1,733,204)
Depreciation and Amortisation (2,359) (7,078) (9,437)
Group operating profit 109,496 7,572,498 7,681,994
Profit tax expense (519) (1,557) (2,076)
Profit after tax 108,977 7,570,941 7,679,918
------------------------------- -------------- ----------------------------- ------------
2019 Professional Licensing TOTAL
Consolidated income Services & Investment
statement US $ US $ US $
------------------------------- ---------------- --------------- ------------
Net revenue 1,170,733 6,516,813 7,687,546
Interest Income 29,818 29,818
Cost of sales (606,166) - (606,166)
Administrative Expenses (503,840) (1,069,725) (1,573,656)
Depreciation and amortisation (4,249) (12,749) (16,998)
Group operating profit 56,478 5,464,157 5,520,635
Profit tax expense (586) (1,759) (2,345)
Profit after tax 55,892 5,462,398 5,518,290
------------------------------- ---------------- --------------- ------------
Segment assets and liabilities
2020 Professional Licensing TOTAL
Consolidated statement Services and Investment
of financial position US $ US $ US $
------------------------- ------------- ---------------- -----------
Assets 2,034,302 31,079,825 33,114,127
Liabilities (402,663) (402,663)
Net assets 1,631,639 31,079,825 32,711,464
------------------------- ------------- ---------------- -----------
2019 Professional Licensing TOTAL
Consolidated statement Services Activities
of financial position US $ US $ US $
------------------------- ------------- ------------ -----------
Assets 1,614,014 21,342,921 22,956,935
Liabilities (429,255) (429,255)
Net assets 1,184,759 21,342,921 22,527,680
------------------------- ------------- ------------ -------------
Geographical information
2020 2019
US $ US $
---------------- ---------- ----------
United Kingdom 8,688,111 6,516,813
United States 1,195,252 1,200,551
---------------- ---------- ----------
Total revenue 9,883,363 7,717,364
---------------- ---------- ----------
Geographical information
2020 2019
US $ US $
--------------------------- ------------ ------------
United Kingdom
Assets 31,079,825 21,342,921
Liabilities - -
United States 2,034,302 1,614,014
Assets (402,663) (429,255)
Liabilities
--------------------------- ------------ ------------
Total Net Assets 32,711,464 22,527,680
--------------------------- ------------ ------------
6. Revenue from Services
The below table discloses disaggregated Revenue from Services by
their nature/categories as well as timing of the revenue. Please
refer to Note 12 for disaggregation of Group's Unrealized profit on
the revaluation of investments.
Group Transferred Transferred Total Transferred Transferred Total
at a point over time 2020 at a point over time 2019
in time US$ in time US$
Major service
lines:
Sales of Invention
Evaluator 174,905 - 174,905 199,184 - 199,184
Tech transfer
recruitment services
Technology reports 261,311 - 261,311 454,452 - 454,452
Training services
Management services - - - 45,800 - 45,800
R & D relief
income* - - - - - -
Loan convertible
interest income - - -
Other** - 506,351 506,351 - 413,278 413,278
- 67,688 67,688 - 58,019 58,019
- 95,947 95,947 - 29,818 29,818
- 89,050 89,050 - - -
----------------------- ----------------------- --------------------- ----------------------- ----------------------- ---------------------
Total Revenue
from Services 436,216 759,036 1,195,252 699,436 501,115
1,200,551
* The Group received an R&D tax relief, the directors
consider this to be income.
** Includes PPP grant totalling US$77,837 received by Tekcapital
LLC which has been forgiven in full.
All of the Group's major service lines are sold directly to
consumers and not through intermediaries. All revenue recognised in
the reporting period represent performance obligations satisfied in
the current period.
7. Expenses
7.1 Expenses by nature
Group 2020 2019
US $ US $
------------------------------- ---------- ----------
Depreciation of property
plant and equipment 9,437 16,998
Research and development
expenses 417,569 173,947
Other administration expenses 1,316,002 1,463,289
Foreign exchange movements (367) (63,671)
-------------------------------- ---------- ----------
Total expenses 1,742,641 1,590,563
-------------------------------- ---------- ------------
Included in the Other administration expenses in the amount of
US$70,766 related to payments under operating lease for the office
rental agreement.
7.2 Auditor remuneration
Group 2020 2019
US $ US $
-------------------------------------------- ------------ ---------------
Fees payable to the Group's auditor
and its associated for the audit
of the Group and Company financial
statements 90,919 95,313
Fees payable to the Company's auditor
and its associates for other
* The audit of company's subsidiaries 10,247 15,920
101,166 111,233
------------------------------------------------ -------- ---------------
8. Employees
8.1 Directors' emoluments
Group 2020 2019
US $ US $
---------------------------------- ---------------- ---------------
Directors emoluments 469,998 264,799
Directors portion of Share Based
Payments 10,465 486
Total 480,463 265,285
----------------------------------- ---------------- ---------------
The highest paid Director received a salary of US$191,865 (2019:
$187,760) and benefits of US$22,745 (2019: US$21,050). The highest
paid Director received a bonus of US$154,375 (2019: US$0). The
highest paid Director did not exercise any share options; he
received 3,000,000 share options in August 2020. The share-based
payments associated with the highest paid Director amounted to
US$9,275. No termination benefits, post-employment benefits were
provided to Directors. Total of short-term benefits in kind of
US$22,745 were provided during the year. The amounts in the table
above do not include Employers NI in the amount of US$22,500.
Key management personnel (including Directors and Group
Financial Controller) received salary of US$574,995, excluding
Stock Base Compensation disclosed in Directors Remuneration Report.
Please also refer to Director's Report.
8.2 Employee benefit expense
Group 2020 2019
US $ US $
-------------------------------------------- -------- --------
Wages and salaries including restructuring
costs and other termination benefits 281,248 275,765
Social security costs 48,032 40,644
Share options granted to directors
and employees 44,273 20,876
Total 373,553 337,285
--------------------------------------------- -------- --------
8.3 Average number of people employed
Group 2020 2019
------------------------------------- ----- -----
Average number of people (including
executive directors) employed
Operations 4 4
Management 2 2
Total average headcount 6 6
-------------------------------------- ----- -----
Average number of employees with the Company in 2020 and 2019
was two (Management).
To enhance flexibility and improve cost control, the Group
utilizes consultants for scientific review, administrative and
operations support, software development and other
knowledge-intensive services.
9. Income tax expense
Group 2020 2019
US $ US $
----------------------------------------------------- -------------- -----------------
Current tax
Current tax on profits for the year 2,076 2,345
Total current tax 2,076 2,345
------------------------------------------------------ -------------- -----------------
Income tax expense 2,076 2,345
------------------------------------------------------ -------------- -----------------
Group 2020 2019
US$ US $
----------------------------------------------------- -------------- -----------------
Profit before tax 7,681,994 5,520,635
------------------------------------------------------ -------------- -----------------
Tax calculated at domestic tax rates
applicable to profits 1,459,579 1,048,921
Tax effects of:
* Expenses not deductible for tax purposes 22,712 19,154
* Income not taxable (1,650,744) (1,238,195)
* Capital allowances in excess of depreciation 1,793 3,230
* Unrelieved tax losses and other deductions 168,736 169,235
Total corporation tax 2,076 2,345
------------------------------------------------------ -------------- -----------------
The weighted average applicable tax rate was 19% (2019:
19%).
Unused tax losses for which no deferred tax assets have been
recognised is attributable to the uncertainty over the
recoverability of those losses through future profits.
10. Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of Ordinary Shares outstanding during the period.
Diluted earnings per share is calculated by dividing the
earnings attributable to ordinary shareholders by the sum of
weighted average number of (1) Ordinary Shares outstanding during
the period and (2) any dilutive potential Ordinary Shares
outstanding at 30 November 2020.
2020 2019
Earnings attributable to equity holders
of the Company (US$) 7,679,918 5,518,290
Weighted average number of Ordinary
Shares in issue:
Basic 80,713,247 58,010,322
Diluted 81,335,979 58,918,289
Basic earning per share 0.095 0.095
Diluted earning per share 0.094 0.095
The Company completed placements of total of 28,800,000 new
ordinary shares during the financial year and issued 300,000 shares
due to share option exercise by an employee.
11. Investments in subsidiaries
Company Shares in Loans to Total
subsidiaries subsidiaries US $
US$ US$
------------------------------------------ -------------- -------------- -----------------
Cost and net book value
As at 1 December 2019 79,426 1,879,577 1,959,003
Additions during the year - - -
Disposal during the year - - -
Foreign currency translation differences (3,788) - (3,788)
------------------------------------------ -------------- -------------- -----------------
Balance at 30 November 2020 75,638 1,879,577 1,955,215
------------------------------------------ -------------- -------------- -----------------
Subsidiaries name Proportion Nature Capital Net Profit/
(consolidated) of ordinary of business and reserves (Loss)
shares directly
held
--------------------------- ----------------- ----------------- ----------------------
Direct
Provision
of Intellectual
Tekcapital Europe Limited property
England research
and Wales 100% services 26,267,890 8,424,175
Provision
of Intellectual
property
research
Tekcapital LLC USA 100% services (2,422,933) (382,023)
Indirect (not consolidated)
The following are directly owed by Tekcapital Europe Limited
England Provider of
Lucyd Limited and Wales 100.00% high-tech eyewear (971,831) (3,360,135)
Innovative Eyewear United Provider of
Inc States 90.00% high-tech eyewear 107,793 (434,620)
Developer of
England low sodium salt
Salarius Limited and Wales 97.13% and snack foods 4,356,486 4,356,486
Developer of
United low sodium salt
Microsalt Inc States 87.13% and snack foods 58,088 (520,603)
Developer of
England autonomous vehicle
Guident Limited and Wales 100.00% software (435,336) (252,587)
Developer of
United autonomous vehicle
Guident Corp States 100.00% software (435,336) (252,587)
Developer for
Smart Food Tek England baked food coating
Limited and Wales 100.00% to reduce fat (116,114) (103,312)
* As at the year end, the Company has no interest in the
ownership of any other entities or exerts any significant influence
over or provides funding which constitutes an "unconsolidated
structured entity".
All UK subsidiaries are exempt from the requirement to file
audited accounts by virtue of section 479A of the Companies Act
2006.
Tekcapital Europe Ltd (registered address 12 New Fetter Lane,
London, United Kingdom, EC4A 1JP) and Tekcapital LLC (registered
address 66 West Flagler Street, Suite 900, Miami, Florida, 33130,
United States) are consolidated by Tekcapital plc because they
continue to provide advisory services in IP search and technology
transfer.
All other entities are measured at fair value through profit and
loss under IFRS 10 as referenced in Note 2.4. The Group provides
management service support to Lucyd Limited, Salarius Limited and
Guident Limited, as well as providing working capital assistance to
Salarius Limited through convertible loan note financing (see also
Note 15). The Group also assists the entities, and their
subsidiaries, with their fundraising activities.
Registered office of all subsidiaries owned by Tekcapital Europe
Limited: Acre House, 11-15 William Road, London, England, NW1
3ER.
During the year Salarius Limited incorporated Microsalt Inc, a
U.S subsidiary to advance sales of its product in the United
States. Salarius Limited owns 87.13% of Microsalt Inc.
During the year Lucyd Limited incorporated Innovative Eyewear
Inc, a U.S. subsidiary to advance sales of its product in the
United States. Lucyd Limited owns 90% shares of Innovative Eyewear
Inc.
During the year Guident Limited incorporated Guident CORP, a
U.S. subsidiary to advance sales of its product in the United
States. Guident Limited owns 100% of Guident CORP.
12. Financial Assets at Fair Value through Profit and Loss
Group's investments in portfolio companies in the years ended 30
November 2020 and 30 November 2019 are listed below and classified
as equity instruments. The principal place of business for
portfolio companies listed below is England and Wales.
Group Proportion Additions Disposal FX reval Fair Value 30 Nov
of ordinary change 2020
shares 1 Dec
held 2019
US $ US $ US $ US $ US $ US $
Guident Limited 100.00% 15,526,195 46,294 6,457,345 22,029,834
Lucyd Limited 100.00% 1,129,022 1,570,309 2,699,331
Salarius Limited 97.15% 1,833,426 1,121,516 22,905 660,457 3,638,304
Belluscura
Limited 17.82% 1,804,121 224,163 52,743 2,081,027
Smart Food
Tek Limited 100.00% 43,161 - 43,161
Total Balance 20,335,925 1,345,679 - 121,942 8,688,111 30,491,657
------------------ ------------- ----------- ----------- --------- -------------- -------------- -----------
Company Proportion Additions Disposal FX reval Fair Value 30 Nov
of ordinary change 2020
shares 1 Dec
held 2019
US $ US $ US $ US $ US $ US $
Belluscura
Limited 17.82% 1,804,121 224,163 - 52,743 - 2,081,027
Total Balance 1,804,121 224,163 - 52,743 - 2,081,027
--------------- ------------- -------------- ---------- --------- --------- ----------- ----------
Group Proportion Additions Disposal FX reval Fair Value 30 Nov
of ordinary change 2019
shares 1 Dec
held 2018
US $ US $ US $ US $ US $ US $
Guident
Limited 100.00% 8,545,103 - - - 6,981,092 15,526,195
Lucyd Limited 100.00% 3,040,616 - - 500 (1,912,094) 1,129,022
Salarius
Limited 97.15% 923,830 633 - 22 908,941 1,833,426
Belluscura
Limited 18.90% 1,126,315 111,177 - 2,338 564,291 1,804,121
Smart Food
Tek Limited 100.00% 43,073 - - 89 - 43,162
eSoma Limited 100% 24,750 - - - (24,750) -
Non Invasive
Glucose Tek
Limited 100% 667 - - - (667) -
Total Balance 13,704,354 111,810 - 2,949 6,516,813 20,335,925
--------------- ------------- ------------- -------------- --------- ----------------- ------------ -----------
Company Proportion Additions Disposal FX reval Fair Value 30 Nov
of ordinary change 2019
shares 1 Dec
held 2018
US $ US $ US $ US $ US $ US $
Belluscura
Limited 18.90% 1,126,315 111,177 - 2,338 564,291 1,804,121
Total Balance 1,126,315 111,177 - 2,338 564,291 1,804,121
--------------- ------------- ---------- ---------- --------- --------- ----------- ----------
Total fair value gain of $8.7m for the year reflects uplift in
value of shares of Guident, Lucyd and Salarius, with no changes
Belluscura. Considering early stage of commercialisation, fair
value of Smart Food Tek was recorded based on the cost of acquired
IP, as their carrying amounts represent a reasonable approximation
of fair value.
The valuation techniques used fall under, Level 2 - Observable
techniques, other than quoted prices, and Level 3- Other techniques
as defined by IFRS 13. These techniques were deemed to be the best
evidence of fair values considering early stage of portfolio
companies.
Fair value measurement hierarchy for financial assets as at 30
November 2020 with comparative amounts as of 30 November 2019:
Date of Valuation Significant Significant
observable unobservable
inputs (Level inputs (Level
Total 2) 3)
US $ US $ US $
Guident and 30 November
others 2020 28,410,630 28,410,630
30 November
Belluscura Limited 2020 2,081,027 2,081,027
30 November
Total Balance 2020 30,491,657 2,081,027 28,410,630
-------------------- ------------------- ----------- --------------- ---------------
Guident and 30 November
others 2019 18,531,804 18,531,804
30 November
Belluscura Limited 2019 1,804,121 1,804,121
30 November
Total Balance 2019 20,335,925 1,804,121 18,531,804
-------------------- ------------------- ----------- --------------- ---------------
Guident (US$6.5m gain)
An external valuation by an independent patent valuation expert
was prepared for Guident' s IP portfolio including:
1. US patent 9,429, 943 ("FAMU 943")
2. International Patent Filing WO2019/147569: Visual Sensor
Fusion and Data Sharing Across Connected Vehicles (MSU 569)
3. US Patent No. 9,964,948 ("FIU 948")
4. US Patent No. 8,941,251 ("SUNY 251") - new intellectual
property licensed during the period
The total fair value of $22m reflects the fair value of Guident'
s net assets as determined by:
-- Valuation of SUNY 251 of US$4.8m conducted by an external,
qualified valuation expert using the Income Approach, Royalty
Relief Method. Following valuation inputs were applied by the
valuation expert:
- Total market of electronic vehicles ("EVs") sold of 21,952,420
sold in the U.S. between 2023 (start of projections) and 2031
(patent life end). 1% market penetration of Guident's patent
starting in 2023 leading to 6% market penetration by 2028 through
2031, resulting in projected 1,137,000 vehicles subject to the
licensing revenue. This market penetration assumption is based on a
number of factors:
o Broad protection and claims included in the IP
o The protection given to the product by its US patent, which
effectively gives Guident a barrier to entry in the US through
2031
o The strength and experience of the management team, whose
proven expertise is in the exact areas required to bring the
product to market and build the brand;
o Well documented "range anxiety" issue within the EV market as
one of the largest barriers for new EV purchasers. The EV
manufacturers are aggressively competing for the increase in their
vehicles' operational range and the technology described by SUNY
251 provides the competitive advantage sought.
o Ongoing discussions with major auto makers regarding this technology.
-- Valuation of FAMU 943 of US$19.2m (2019:US$16.2m) conducted
by an external, qualified valuation expert using the Income
Approach, Royalty Relief Method. Following valuation inputs were
applied by the valuation expert:
- Total US market size of US$35b for autonomous vehicles and
drones (as the patent applies to both) for the 11 years period
ended 30 December 2033. 1% market penetration of Guident's patent
starting in 2022 with annual increase of 1% leading to a 12% market
penetration by 2033, resulting in projected US$3b in sales of
drones/vehicles underlying licensing revenue between 2022 and 2033.
This market penetration assumption is based on a number of
factors:
o Broad protection and claims included in the IP
o The protection given to the product by its US patent, which
effectively gives Guident a barrier to entry in the US through
2033
o The strength and experience of the management team, whose
proven expertise is in the exact areas required to bring the
product to market and build the brand;
o There are no foreseeable software development barriers in the
commercialisation process o Other foreseeable challenges for
directors to deliver successful commercialisation appear to be well
within the abilities of directors to handle.
o Innovative nature of Guident's IP and the fact that the AV
market is dependent on innovators.
o Improving regulatory environment with more states in the
United States legalizing autonomous vehicles operation in 2019
including large states such as Florida and California, and more
states in 2020.
While management's projection remained unchanged compared to 30
November 2019 valuation, the valuation increased due to discounting
of underlying cash flows to 30 November 2020.
-- Valuation of MSU 569 of US$3.4m (2019: US$2.8m) conducted by
an external, qualified valuation expert using the Income Approach,
Royalty Relief Method. Following valuation inputs were applied by
the valuation expert:
- In January 2024, Guident also expects to introduce an
additional, complementary component featuring the MSU 569
technology (Sensory Fusion Component). This component would enable
sensory data sharing between the vehicles, providing for new safety
standard. Guident expects the Sensor Fusion Component to be sold to
customers of the Standard Initial Component when 5G is available so
as to further generate an additional US$500 of revenue for each
sale of the Sensor Fusion.
For the estimate of the US market derived revenue, using the
units of underlying Autonomous Vehicles from FAMU 943, the
management assumed 10% of FAMU customers would choose to pay for
this additional safety improving capability, starting with 10% of
them in 2024 with the share growing to 40% in 2027.
For the estimate of the international market derived revenue,
the management applied comparative share of countries included in
the international filing based on authoritative literature from the
Allied Market Research report.
These market penetration assumptions are based on assumptions
similar to those considered for the patent FAMU 943.
In their review of assumptions used in the 30 November 2019
valuation, the management noted only positive developments related
to commercialisation of this IP. While management's projection
remained unchanged compared to 30 November 2019 valuation, the
valuation increased due to discounting of underlying cash flows to
30 November 2020.
-- Valuation of FIU 948 of US$0.4m (2019: US$0.3m) conducted by
an external, qualified valuation expert using the Income Approach,
Royalty Relief Method. Following valuation inputs were applied by
the valuation expert:
- US sidewalk delivery drone market size of US$1.27b between
2022 and 2036. 1% market penetration starting in2022 with annual
increase leading to 25% in 2027. This market penetration rate
assumptions is based on factors analogous to those listed for FAMU
943, with additional legislative/regulatory requirements included
as well. Recent regulatory developments in United States make it
mandatory to have back-up human control operators taking control of
an AV in the event of an accident or mishap.
In their review of assumptions used in the 30 November 2019
valuation, the management noted only positive developments related
to commercialisation of this IP. While management's projection
remained unchanged compared to 30 November 2019 valuation, the
valuation increased due to discounting of underlying cash flows to
30 November 2020.
-- Assumptions applied to valuations of patents above:
- Total 6% license royalty rate, with 3% royalty attributable to
the university and 3% comprising Guident's licencing revenue based
on comparable market transactions for FAMU 943 and MSU 569 and 30%
for FIU 48 (whereby 2.5% is due to the university). The valuation
of SUNY 251 used royalty rate of 4.66% based on comparable market
transactions, with range of US$1.50 to US$2.00 per underlying
product utilizing the IP due to the university.
- Corporate income tax rate of 19% applied to projected
licensing costs saved 17% discount rate used to discount proceeds
as determined by opportunity cost (10%), inflation rate (2%) and
technology risk (5%)
- The deferred tax liability of (US$5.3m) recorded by Guident
based on UK corporate tax rate of 19%
applied to the fair value gain associated with the patent
- Net book value of other assets and liabilities of <(US$0.45m).
- Guident Ltd obtains sufficient funding to execute their strategy.
Salarius (US$ 0.7m gain)
The fair value of US$3.6m was recorded by the Group based on
following considerations:
-- Valuation of US patent 8,900,650 of US$5m (2019: US$3m)
conducted by an external, qualified valuation expert using the
Income Approach, Royalty Relief Method. Following valuation inputs
were applied by the valuation expert:
- Sales of low sodium salt to snack food manufacturers ("B2B")
of US$146m for the 10-year period ended 2030. The sales assumption,
increased compared to last year, is based on a number of
factors:
o Microsalt is a unique product substantially in advance of
alternative, developed, and tested in terms of market acceptability
and ready to market;
o The protection given to the product by its US patent, which
effectively gives Salarius a barrier to entry in the US for 10 more
years;
o The strength and experience of the management team, whose
proven expertise is in the exact areas required to bring the
product to market and build the brand;
o The company has undertaken efforts to increase its funding
needed to drive sales and marketing efforts needed to meet the
forecast.
o The company effectuated its planned international expansion by
entering into an agreement with FXM Mexico, covering logistics,
professional and technical consulting, R&D testing and sales
assistance including building a robust pipeline of potential
customers
o Engaged Gehring-Montgomery Inc, adding a distributor of food
and raw materials for commercial and industrial manufacturers to
assist in the sales of MicroSalt in the US.
o The company expanded its pipeline of customers testing the
product during the year
o Other foreseeable challenges for management to deliver
successful commercialisation appear to be well within the abilities
of management to handle.
- Sales of salty snacks ("B2C") estimated at US$33m for the 10
year period ended in 2030. The projections assume Salarius chips
being sold in 348 individual stores by the end of 2021 growing
annually to 3,548 by the end of 2023, and by 5% annually
thereafter. This assumption is based on factors analogous to the
B2B segment, with the addition of following factors:
o Commencement of in-store sales for SaltMe potato chips via
UNFI in the summer of 2020
o Onboarding of Chef's Warehouse in September 2020, bringing
more high velocity stores
o Successful completion of logistical, distribution and sales
channels necessary to open e-commerce sales of SaltMe chips on
Amazon
- Licence royalty rate of 8% with 3% royalty attributable to the
university and 5% comprising Salarius' licencing revenue based on
comparable market transactions
- 12% discount rate used to discount proceeds as determined by
opportunity cost (10%) and inflation rate (2%). Technology risk was
determined at 0%, as the patent describes easily manufactured salt
compositions, maybe manufactured in many production facilities
without extensive modifications. The end product has already been
manufactured and used to conduct consumer acceptance tests. Sales
and distribution channels have been established.
- The deferred tax liability of (US$0.7m) recorded by Salarius
based on UK corporate tax rate of 19%
applied to the fair value gain associated with the patent.
Salarius' 87.13% ownership of Microsalt Inc was applied to
resulting US$4.3m valuation, resulting in US$3.7m valuation of
shares held by Salarius Ltd in its US subsidiary. Subsequently,
Group's 97.15% ownership in Salarius Ltd was applied resulting in
fair value of US$3.6m.
During the period, the Group converted US$1,121,516 in
convertible note receivable into shares of Salarius Ltd resulting
in classification of the amount as addition to the Financial Assets
Held at Fair Value.
Lucyd Ltd (US$1.6m gain)
The fair value of US$2.7m was recorded by the Group based on
following considerations:
-- Valuation of Lucyd's significant assets performed by an
external, qualified valuation expert:
- Lucyd's e-commerce platform selling advanced and fashionable
eyewear valued at US$3.8m as determined by applying an 15% discount
rate on US$10.3m of adjusted net profit projected through 2025. The
15% discount rate was calculated as a total of 10% opportunity
cost, 2% inflation rate and 3% technology risk. The projections of
profit were increased compared to 30 November 2019 valuation
considering:
o The company achieved significant R&D improvement related
to its new product, making it easier to market and advertise in
management's opinion, also expanding potential e-commerce channels
from electronic to also optical thanks to its better look and less
weight compared to previous version of the product;
o The company solidifying its plans to hybrid, having expanded
from an online-only company to include brick-and-mortar store
sales. While the forecast used by management in the 30 November
2019 valuation assumed some level of in store sales, the improved
quality of its new product better fitting optical sections of
retail stores, together with creating a plan of target retailers
and distributors justified, in management's opinion, increasing the
focus on these channels it its projections.
o Extending projection period to 5 years due to developments in
the product, Vyrb app development and matching industry standards
of forecast timelines.
- Lucyd's trademarks valued at US$0.2m, assessed using Cost
Approach Reproduction Method. Through cost analysis, the fair value
approximates cost recognized in Lucyd's balance sheet.
- The deferred tax liability of (US$0.68m) recorded by Lucyd
based on UK corporate tax rate of 19% applied to the fair value
gain associated with the patent.
- Other assets and liabilities of (US0.45m).
-- At the same time, Lucyd's wholly owned U.S. subsidiary,
Innovative Eyewear Inc sold over 418,000 of its shares through 30
November 2020 at pre-money valuation of US$3.75m (or US$1 per
share) as part of the Regulation Crowdfund fundraising undertaken
by the company. The management believes this input corroborates the
valuation of Lucyd's significant assets.
Belluscura (US $0.0m gain)
The fair value of the holding increased by US$0.6m due to the
cost basis addition as the Company participated in the most recent
private placement held at 15 pence per share in May 2020. This
price per share remained unchanged from preceding placement at 15
pence per share in April 2019 used by the Company and the Group to
value its holding in Belluscura as of 30 November 2019. The Group
contributed US$224,000 during this placement.
Smart Food Tek (Nil Gain / Nil loss)
Considering early commercialisation stage, the Group records its
investment in Smart Food Tek at cost. The directors do not consider
that any other available information would materially change or
give a more reliable representation of the value.
The Group exercised judgment in determination of sufficiency of
portfolio companies' cash reserves, forecasts and ability to raise
money to achieve their fair values. Directors reviewed and
questioned the forecasts used, standing liquidity and working
capital balances, as well as discussed capability and plans to
raise money in the future with directors or management of portfolio
companies. Based on the review, the Group made a positive
determination as to portfolio companies' likely ability to achieve
fair values considering liquidity factors.
Description of significant unobservable inputs to valuation:
The significant unobservable inputs used in the fair value
measurement categorised within Level 3 of the fair value hierarchy,
together with a quantitative sensitivity analysis as at 30 November
2020 are shown as below. No sensitivities have been included on the
other investments not listed in the table below as their fair value
equates to cost.
Investment Valuation Significant Estimate Sensitivity of the input
Technique unobservable applied to fair value
input
Lucyd Income Discount 15% 2% increase in the discount
Approach to Future factor would decrease the
Cash Flows Lucyd valuation by US$0.2m
from Eshop a 2% decrease in the discount
Sales factor would increase the
Lucyd valuation by US$0.2m
Eshop adjusted US$6.5m A 20% increase in net profit
net profit would increase the Lucyd
through December valuation by US$0.6m. A 20%
decrease in gross profit
would decrease the Lucyd
valuation by US$0.6m.
Guident Income Discount 17% 2% increase in the discount
Approach to Future factor would decrease the
Royalty Cash Flows Guident valuation by US$3.1m,
Relief from licensing a 2% decrease in the discount
Method factor would increase the
value by US$3.9m
Royalty Relief 6%(FAMU, A 1% increase in the royalty
Rate MSU US, relief rate would increase
MSU OUS) the Guident valuation by
27.5% US$7.0m, a 1% decrease in
(FIU 948), the royalty relief rate would
4.66% decrease the valuation by
(SUNY US$7.0m
251)
Gross licensing US$3.0b A 20% increase in the gross
proceeds (FAMU), licensing proceeds and gross
& gross revenue US$286m revenue would increase the
(MSU US), Guident valuation by US$4.7m.
US$189m A 20% decrease would decrease
(MSU OUS), the Guident valuation by
US$8.7m US$4.7m.
(FIU948),
US$42m
(SUNY
251)
Salarius Income Discount 12% 2% increase in the discount
Approach to Future factor would decrease the
Royalty Cash Flows Salarius valuation by US$0.4m,
Relief from licensing a 2% decrease in the discount
Method factor would increase the
value by US$0.4m
Licence Royalty 8% A 1% increase in the royalty
Rate rate would increase the Salarius
valuation by US$0.7m a 1%
decrease in the royalty rate
would decrease the Salarius
valuation by US$0.7m.
Projected US$179m A 20% increase in the projected
sales sales would increase the
Salarius valuation by US$0.7m.
A 20% decrease in the projected
sales would decrease the
Salarius valuation by US$0.7m.
13. Intangible assets
Group Vortechs Website development Invention Total
Group US $ Evaluator US $
US $ US $
-------------------------- --------- -------------------- ----------- ---------
At 30 November 2019 500,000 28,121 338,770 866,891
-------------------------- --------- -------------------- ----------- ---------
At 30 November 2020 500,000 28,121 338,770 866,891
-------------------------- --------- -------------------- ----------- ---------
Accumulated amortisation
and impairment
-------------------------- --------- -------------------- ----------- ---------
At 30 November 2019 - (28,121) - (28,121)
-------------------------- --------- -------------------- ----------- ---------
At 30 November 2020 - (28,121) - (28,121)
-------------------------- --------- -------------------- ----------- ---------
Net book value
-------------------------- --------- -------------------- ----------- ---------
At 30 November 2020 500,000 - 338,770 838,770
-------------------------- --------- -------------------- ----------- ---------
At 30 November 2019 500,000 - 338,770 838,770
-------------------------- --------- -------------------- ----------- ---------
The intangible assets presented above are included within
Professional Services segment under Note 5 disclosure. Costs of the
Group's website development have been fully amortized as of 30
November 2018.
Under IAS38, the Group's Invention Evaluator is regarded by the
Directors as being an intangible asset with an indefinite useful
life. The Directors believe that the asset is unique in that no
competitor offering currently exists, the service is already proven
to have appealed globally to many types of clients including
Fortune 100 companies, there is no expectation of obsolescence in
the foreseeable future, and the service from the use of the asset
generates sufficient ongoing revenue streams. The Directors have
carried out an impairment review and believe that the value in use
is significantly greater than book value.
The Directors have considered the recoverable amount by
assessing the value in use by considering the future cash flow
projections of the revenue generated by the Invention Evaluator
intangible, cash flows were based on the past revenue generation.
The projections were assessed for a five year period in order to
determine no impairment. The projections are based off revenue
generation at US$300k less cost of sales at 50% gross profit
margin, no growth has been applied forecasts. A discount factor at
10% (consistent with Group's cost of capital) was used to determine
no impairment. The revenue projections are based on company's
historical performance and existing pipeline of sales orders. The
Invention Evaluator intangible's recoverable amount exceeds its
carrying amount by US$229,848.
Under IAS38, the Group's Vortechs asset is regarded by the
Directors as being an intangible asset with an indefinite useful
life. The Directors believe that this asset is unique as it
operates in a niche market, it generates an ongoing revenue stream,
and there is no expectation of obsolescence. This asset meets the
requirements of IAS38 as it is:
- Separately identifiable
- The Group controls this asset
- Future economic benefits flow to the Group in the form of
service revenues from this asset
- The cost of this asset can be measured reliably
The Directors have carried out an impairment review and consider
the value in use to be greater than the book value.
The Directors have considered the recoverable amount by
assessing the value in use by considering the future cash flow
projections of the revenue generated by the Vortechs intangible,
cash flows were based on the past revenue generation plus expected
growth. The projections were assessed over a period in excess of 5
years on the basis the directors consider the projections can be
reasonably forecast. The projections are based off revenue
generation at US$400,000 per annum for 2021 (approximating actual
revenue from 2019), reducing to US$300,000 for 2022, US$350,000 for
2023 and back to US$400,000 until 2028. The cost of sales element
for 2021 was determined at 90% in line with the agreement,
thereafter it drops to US$120,000 p.a. plus inflation at 5%. The
reduction in cost of sale is due to the end of a term in the
purchase agreement. A discount factor at 10% (consistent with
Group's cost of capital) was used to determine no impairment.
Vortech's intangible's recoverable amount exceeds its carrying
amount by US$678,113.
The tech-transfer recruiting is viewed by directors as permanent
part of the Group's business and its offering. This together with
the high turnover in this industry leading to continuous hiring
needs leads Directors to apply projections of over 5 years in the
impairment determination.
14. Fixed Assets
Group Leasehold Office Equipment Computer Total
Improvements US $ Equipment US $
US$ US $
-------------------------- -------------- ----------------- ----------- ---------
Closing cost 30 November
2018 13,775 24,286 26,856 64,917
-------------------------- -------------- ----------------- ----------- ---------
Exchange differences 14 14
Additions - - 862 862
Closing cost 30 November
2019 13,775 24,286 27,732 65,793
-------------------------- -------------- ----------------- ----------- ---------
Exchange differences
Additions - - 950 950
Closing cost 30 November
2020 13,775 24,286 28,682 66,743
-------------------------- -------------- ----------------- ----------- ---------
Accumulated depreciation
and impairment
At 30 November 2018 (6,888) (6,142) (18,398) (31,428)
-------------------------- -------------- ----------------- ----------- ---------
Depreciation charge (6,888) (4,839) (5,271) (16,998)
Exchange differences - (14) (14)
-------------------------- -------------- ----------------- ----------- ---------
At 30 November 2019 (13,775) (10,981) (23,683) (48,440)
-------------------------- -------------- ----------------- ----------- ---------
Depreciation charge (4,526) (4,232) (8,758)
Exchange differences 76 76
-------------------------- -------------- ----------------- ----------- ---------
At 30 November 2020 (13,775) (15,431) (27,914) (57,121)
-------------------------- -------------- ----------------- ----------- ---------
Closing net book value
-------------------------- -------------- ----------------- ----------- ---------
At 30 November 2019 - 13,304 4,049 17,353
-------------------------- -------------- ----------------- ----------- ---------
At 30 November 2020 - 8,854 767 9,622
-------------------------- -------------- ----------------- ----------- ---------
15. Trade and other receivables
Group 2020 2019
US $ US $
-------------------------------------- -------- --------
Trade receivables 54,014 144,944
Less provision for impairment of - -
trade receivables
-------------------------------------- -------- --------
Trade receivables - net 54,014 144,944
VAT recoverable (934) 14,333
Receivables from related parties 579,089 530,874
Prepayments and debtors 15,267 125,715
--------------------------------------- -------- --------
Total trade and other receivables 647,436 815,866
--------------------------------------- -------- --------
Non-current: convertible loan notes* 588,169 476,122
--------------------------------------- -------- --------
Company 2020 2019
US $ US $
-------------------------------------- -------------- ---------------
Receivables from Group companies 3,544,286 2,277,783
VAT 2,300 9,025
Prepayments 13,602 34,923
--------------------------------------- -------------- ---------------
Total trade and other receivables 3,560,188 2,321,731
--------------------------------------- -------------- ---------------
Non-current: convertible loans notes 588,169 476,122
--------------------------------------- -------------- ---------------
The fair value of trade and other receivables are not materially
different to those disclosed above. The Group's exposure to credit
risk related to trade receivables is detailed in Note 3 to the
consolidated financial statements.
The Company held multiple convertible loans issued by its
portfolio company, Salarius Ltd for the total US$1,100,000, which
was fully drawn by September 2020. In September 2020, at mutual
agreement between the Company and Salarius Ltd, the full amount of
outstanding receivable was converted into 718 shares of Salarius
Ltd issued to Tekcapital Europe at $1,562 per share. Consequently,
the Group presented the amount of US$1,121,025 under additions to
"Financial Assets Held at Fair Value" as of 30 November 2020 (see
Note 12).
The Group and the Company also held:
- Convertible note issued by its portfolio company, Guident Ltd,
for the total of US$300,000, issued at 10% coupon rate including
option to convert the debt into shares at market price (no discount
against future equity placements offered). The note can be
converted into Guident's equity upon occurrence of certain
conversion events. The US$300,000 note originated in December 2018
is payable in December 2021 or can be converted into Guident's
equity upon occurrence of certain conversion events. The note was
fully drawn as at 30 November 2020.
- Convertible note issued by its portfolio company, Guident Ltd,
for the total of US$500,000, issued at 10% coupon rate including
option to convert the debt into shares at market price (no discount
against future equity placements offered). The note can be
converted into Guident's equity upon occurrence of certain
conversion events. The US$500,000 note originated in March 2020 is
payable in March 2023 or can be converted into Guident's equity
upon occurrence of certain conversion events. US$227,803 was drawn
as at 30 November 2020.
- Convertible note issued by its portfolio company, Microsalt
Inc, for the total of US$250,000, issued at 10% coupon rate
including option to convert the debt into shares at market price
(no discount against future equity placements offered). The note
can be converted into Microsalt's equity upon occurrence of certain
conversion events. The US$250,000 note originated in September 2020
is payable in September 2023 or can be converted into Microsalt's
equity upon occurrence of certain conversion events. US$60,000 was
drawn as of 30 November 2020.
The Group had outstanding receivables from its portfolio
companies as at 30 November 2020 in the amount of:
- US$288,165 due from Lucyd Ltd
- US$103,092 due from Smart Food Tek
- US$184,376 due from Innovative Eyewear Inc
The Company recorded a historical US$2,500,000 provision against
its receivable from one its subsidiaries, Tekcapital LLC.
16. Cash and cash equivalents
Group 2020 2019
US $ US $
--------------------------------- -------- --------
Cash at bank and in hand 538,473 472,899
Total cash and cash equivalents 538,473 472,899
---------------------------------- -------- --------
Company 2020 2019
US $ US $
--------------------------------- -------- --------
Cash at bank and in hand 239,991 112,114
Total cash and cash equivalents 239,991 112,114
---------------------------------- -------- --------
17. Categories of financial assets and financial liabilities
Group 2020 2019
US $ US $
---------------------------------------- -------------------- ---------------
Financial assets
Financial assets at fair value through
profit and loss 30,491,657 20,335,925
Loans and receivables at amortised
cost 1,235,605 1,291,988
Cash and cash equivalents 538,473 472,899
32,265,735 22,100,812
---------------------------------------- -------------------- ---------------
Financial Liabilities
Trade and other payables at amortised
cost 239,228 303,847
----------------------------------------- -------------------- ---------------
Company 2020 2019
US $ US $
---------------------------------------- -------------------- ---------------
Financial assets
Financial assets at fair value through
profit and loss 2,081,027 1,804,120
Loans and receivables at amortised
cost 4,148,357 2,797,853
Cash and cash equivalents 239,991 112,114
Available for sale 1,955,214 1,959,003
8,424,589 6,673,090
---------------------------------------- -------------------- ---------------
Financial liabilities
Trade and other payables at amortised
cost 79,249 484,375
----------------------------------------- -------------------- ---------------
18. Share capital and premium
Share capital
Group and Company Number Ordinary Total
of shares Shares US US $
$
------------------------------------ ----------- ----------- --------
Issued and fully paid up
At 30 November 2018 54,353,042 326,036 326,036
------------------------------------ ----------- ----------- --------
Shares issued in further public
offering 9,375,000 46,948 46,948
At 30 November 2019 63,728,042 372,984 372,984
Shares issued in further public
offering 28,800,000 147,298 147,298
Shares issued through share option
exercise 300,000 1,548 1,548
At 30 November 2020 92,828,042 521,830 521,830
------------------------------------ ----------- ----------- --------
The shares have full voting, dividend and capital distribution
(including on winding up) rights; they do not confer any rights of
redemption. The following shares were issued during the year:
- February 2020: 14,800,000 shares were issued in the placing of
new ordinary shares at GBP0.05p. Total proceeds of US$881,174 were
netted against cost of raising finance in the amount of
US$105,228
- May 2020: 9,250,000 shares were issued in the placing of new
ordinary shares at GBP0.10p. Total proceeds of US$1,086,060 were
netted against cost of raising finance in the amount of
US$117,889
- September 2020: 300,000 shares were issued in exercise of
share options held by Amy Shim at GBP0.085p. Total proceeds of
US$29,805 were received.
- November 2020: 4,750,000 shares were issued in the placing of
new ordinary shares at GBP0.08p. Total proceeds of US$483,011 were
netted against cost of raising finance in the amount of
US$39,136.
The Company has authorised share capital of 131,667,063, with a
nominal value of GBP0.004. Of these shares, 92,828,042 were issued
and fully paid up as at 30 November 2020.
Share premium
Group and Company Share premium Total
US $ US $
---------------------------------------- ---------------- ----------------
As at 30 November 2018 10,218,805 10,218,805
----------------------------------------- ---------------- ----------------
Shares issued in further public
offering 892,018 892,018
Cost of shares issued (117,277) (117,277)
----------------------------------------- ---------------- ----------------
As at 30 November 2019 10,993,546 10,993,546
----------------------------------------- ---------------- ----------------
Shares issued in further public
offering 2,450,245 2,450,245
Cost of shares issued (262,352) (262,352)
Shares issued in share option exercise 29,805 29,805
----------------------------------------- ---------------- ----------------
As at 30 November 2020 13,211,244 13,211,244
----------------------------------------- ---------------- ----------------
19. Reserves
Profit and Loss Account
Group Company
Profit and Profit and
Loss Account Loss Account
US $ US $
---------------------------- -------------- ----------------
At 30 November 2018 5,516,655 (5,131,273)
----------------------------- -------------- ----------------
Profit/(loss) for the year 5,518,290 30,668
Share based payments 20,876 20,876
At 30 November 2019 11,055,821 (5,079,729)
----------------------------- -------------- ----------------
Profit/(loss) for the year 7,679,918 (316,239)
Share based payments 44,273 44,273
At 30 November 2020 18,780,012 (5,351,695)
----------------------------- -------------- ----------------
Merger reserve
Group Merger reserve
US $
--------------------- ---------------
At 30 November 2019 (72,169)
----------------------- ---------------
At 30 November 2020 (72,169)
----------------------- ---------------
Translation reserve
Group Company
Translation Translation
reserve reserve
US $ US $
----------------------- ------------- -------------
At 30 November 2018 145,643 (101,969)
Foreign exchange loss 31,855 3,883
------------------------ ------------- -------------
At 30 November 2019 177,498 (98,086)
------------------------ ------------- -------------
Foreign exchange gain 92,949 61,948
At 30 November 2020 270,447 (36,138)
------------------------ ------------- -------------
20. Trade and other payables
Group 2020 2019
US $ US $
--------------------------------- -------- --------
Trade creditors 103,882 116,936
Social security and other taxes 8,215 6,089
Accruals and other creditors 135,345 187,135
--------------------------------- -------- --------
247,442 310,160
--------------------------------- -------- --------
Company 2020 2019
US $ US $
------------------------------------- ------- ----------------
Amounts due to group companies - 362,863
Accruals, deferred income and other
creditors 79,249 121,512
------------------------------------- ------- ----------------
79,249 484,375
------------------------------------- ------- ----------------
The fair values of trade and other payables are not materially
different to those disclosed above.
The Group's exposure to currency and liquidity risk related to
trade and other payables is detailed in note 3 to the accounts.
21. Deferred Revenue
The Group's deferred revenue balance of US$118,595 as of 30
November 2019 was adjusted for:
- receipt of Invention Evaluator payments in the amount of
US$54,740 to be delivered after 30 November 2020, recognized as
addition to the balance deferred revenue during the year ended 30
November 2020
- Recognition of US$18,614 of revenue deferred as of 30 November
2019 for reports delivered during the financial year 2020 bringing
the total outstanding balance of Deferred Revenue as at 30 November
2020 to US$154,721.
22. Deferred income tax
Unused tax losses for which no deferred tax assets have been
recognised is attributable to the uncertainty over the
recoverability of those losses through future profits. A tax rate
of 19% has been used to calculate the potential deferred tax.
Group Group Company Company
2020 2019 2020 2019
Deferred tax US $ US $ US $ US $
-------------------------------- ------------ ------------ ---------- ----------
Accelerated capital allowances (1,793) (3,230) - -
Short term timing difference - - - -
Tax losses (1,958,070) (1,791,410) (563,069) (525,230)
Unprovided deferred tax asset 1,959,863 1,794,639 563,069 525,230
-------------------------------- ------------ ------------ ---------- ----------
- - - -
-------------------------------- ------------ ------------ ---------- ----------
23. Dividends
No dividend has been recommended for the year ended 30 November
2020 (2019: Nil) and no dividend was paid during the year (2019:
Nil).
24. Cash used from operations
Group 2020 2019
US $ US $
------------------------------------------------------------- ---- --------------- ----------------
Profit before income tax 7,681,994 5,520,635
Adjustments for
* Depreciation 9,437 16,998
* Share based payment expense 44,273 20,876
* Movement in foreign exchange 96,392 33,776
56,383 (612,615)
* Movement in trade and other receivables (8,810,053) (6,519,761)
* Financial assets at fair value through the profit or
loss
* Deferred revenue movement 36,126 118,595
* Trade and other payables (62,718) 24,202
------------------------------------------------------------------- --------------- ----------------
Cash used (948,166) (1,397,294)
------------------------------------------------------------------- --------------- ----------------
25. Commitments
Capital commitments
The Group entered into multiple convertible loan note agreements
with its portfolio companies. Please see note 15 for details
regarding outstanding commitments.
Operating lease commitments
The Group did have any material contracts within the scope of
IFRS 16. Consequently, the Group did not recognise any right-of-use
assets and lease liabilities during the period.
26. Share based payments
The Group operates an approved Enterprise management scheme and
an unapproved share option scheme.
The fair value of the options granted is expensed over the
vesting period and is arrived at using the Black-Scholes model. The
assumptions inherent in the use of this model are as follows:
Attribute Input
No. of options
granted 7,450,000
Share price at
date of grant GBP0.05-GBP0.46
Exercise price GBP0.05-GBP0.46
Options life in
years 5
Risk free rate 0.10%
Expected volatility 41%-86%
Expected dividend
yield 0
Fair value of options GBP0.03-GBP0.09
The weighted average fair value of options outstanding was
GBP0.03p. Volatility was calculated using Group's historical share
price performance since 2017. The share-based payment expense for
the year was US$44,273 (2019: US$20,876). Details of the number of
share options and the weighted average exercise price outstanding
during the year as follows: s
2020 2019
------------------------------- ------------- ----------- ------------- -------------
Av. Exercise Options Av. Exercise Options
price per (Number) price per (Number)
Group and Company share GBP share GBP
------------------------------- ------------- ----------- ------------- -------------
As at 1 December 0.2110 5,785,000 0.3164 3,585,000
Granted 0.1193 4,450,000 0.0781 2,900,000
Exercised 0.0810 300,000 - -
Forfeited 0.3551 2,485,000 0.2500 700,000
------------------------------- ------------- ----------- ------------- -------------
As at 30 November 0.2351 7,450,000 0.2110 5,785,000
------------------------------- ------------- ----------- ------------- -------------
Exercisable as at 30 November 1,575,000* 2,610,000*
------------------------------- ------------- ----------- ------------- -------------
*The weighted average exercise price for the options exercisable
as at 30 November 2020 and 30 November 2019 was GBP0.19p and
GBP0.34p respectively.
The weighted average remaining contractual life is 4.2 years
(2019: 2.7 years). The weighted average fair value of options
granted during the year was GBP0.03p (2019: GBP0.05p). The range of
exercise prices for options outstanding at the end of the year was
GBP0.052p - GBP0.46p (2019: GBP0.065p - GBP0.46p).
27. Related party transactions
Details of Directors' remuneration and grant of options are
given in the Directors' report.
Please also refer to Note 15 for detail of transactions with
portfolio companies.
525,000 options were held by Harrison Gross, family member of
Dr. Clifford Gross.
The company owed US$481 to Max Inglis, General Counsel as of 30
November 2020.
As of 30 November 2020, the Company and the Group was party to
the following warrant and option agreements with Belluscura plc
for
-- 1,273,078 ordinary shares of Belluscura at 16p per share
-- 600,000 ordinary shares of Belluscura at 15p per share
-- 4,761,905 ordinary shares of Belluscura at 21p per share.
28. Events after the reporting period
On 1 February 2021, Tekcapital Group announced that the
Company's shares will cross trade publicly on the US OTCQB Venture
Market ("OTCQB"), under the ticker TEKCF, commencing 1st February
2021.
On 18 March 2021, Tekcapital Group completed a placing of
38,000,000 ordinary shares at 10 pence each to raise US$5.28m
before expenses.
In April 2021, Tekcapital Group exercised following warrants and
options into following shares of Belluscura:
-- 1,273,078 ordinary shares at 16p per share
-- 600,000 ordinary shares at 15p per share
-- 4,761,905 ordinary shares at 21p per share
Post period end, following amounts were drawn for existing
convertible notes:
-- US$75,000 for Microsalt Inc
-- US$125,758 for Guident Ltd
[1]
https://www.futuremarketinsights.com/reports/sodium-reduction-ingredient-market
[2]
https://www.statista.com/outlook/12000000/109/eyewear/united-states#market-onlineRevenueShare
[3]
https://www.alliedmarketresearch.com/autonomous-last-mile-delivery-market
[4] Global Market Insights: Oxygen Cylinders Market Size and
Competitive Market Share & Forecast, 2017 -2024
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