TIDMSEMP
RNS Number : 7842H
Semper Fortis Esports PLC
31 July 2023
31 July 2023
Semper Fortis eSports Plc
("Semper" or the "Company")
Annual Results for year to 31 January 2023
Chairman's Statement
In the prior year financial statements we advised that despite
growth in the sector, monetisation had remained a key challenge for
all esports organisations globally and that due to economic
uncertainty and difficult capital market conditions, the Company
intended to significantly reduce its overheads and conserve cash.
This is exactly what we have done.
We chose not to renew the contracts of our esports talent and
reduced other overheads where we could, whilst looking at various
different strategies for the Company.
Post year-end Jassem Osseiran stepped down from the board and I
would like to record my sincere thanks to Jassem for his valued
contribution during his tenure.
In April 2023 the Company raised GBP100,000 before expenses
through a subscription for an aggregate of 100m new ordinary
shares.
On 16 May 2023 Semper agreed to subscribe for GBP250,000 of
Convertible Loan Notes ("CLNs") of GBP1 each in GL Membership
Limited (trading as Good Life+ "Good Life+"). Should the CLNs
convert, they are expected to do so following the acquisition of
the entire issued share capital of Good Life+ by Semper by way of a
reverse takeover transaction.
Good Life+ was founded in September 2021 offering a monthly
membership that gives members access to daily, luxury prize draws
whilst simultaneously providing access to thousands of discounts
and deals. The membership base has seen significant growth over the
last 12 months to 14,500 active members and the Convertible Loan
Note, along with further planned fundraising, will allow for rapid
customer acquisition and expansion, with the immediate aim of
obtaining 50,000 active members within 12 months.
The founders of Good Life+ have built an impressive management
team and the calibre of existing investors lends weight to our view
that there is considerable upside potential in this early-stage
investment.
We have commenced a sustained period of due diligence and look
forward to informing our shareholders of progress.
Keith Harris
Chairman
31 July 2023
Enquiries :
Semper Fortis Esports plc
Max Deeley, Finance Director
https://semperfortisesports.com
Novum Securities Limited + 44 20 7399 9400
AQSE Corporate Adviser and Broker
David Coffman / George Duxberry - Corporate Finance
Colin Rowbury - Corporate Broking
STRATEGIC REPORT
The Directors present their Strategic Report on Semper Fortis
Esports PLC ("Semper") for the year ended 31 January 2023.
Principal Activity
The Company's principal activity at the start of the financial
year was that of a professional esports organisation and lifestyle
brand. However during the course of the year a decision was made to
end all contracts with esports talent and reduce overheads; whilst
considering various different strategies for the Company.
The Company currently has no active operating business.
Post year end the Company agreed to subscribe for GBP250,000 of
Convertible Loan Notes of GBP1 each in GL Membership Limited and it
has now commenced due diligence as the Company looks to explore the
opportunity to acquire GL Membership Limited by way of a reverse
takeover.
Review of the business and developments during the year
Esports Teams
During the year the Company made the decision to stop running
esports teams. This was due to the high costs of contracting
esports professional players together with no visibility of any
material earnings in the near future. As part of this process the
Company managed to sell one of its Rocket League players for a
transfer fee of $35,000.
Play-to-Earn
In February 2022, the Company launched a new play-to-earn gaming
division, believing it would bring the Company material
revenues.
However the play-to-earn industry revolves around the
Cryptocurrency market which suffered a significant crash in May
2022 with some stable coins losing 97% of their value. This
dramatically reduced the value of the in-game items and the earning
potential of players.
The Company therefore prudently raised an impairment of
GBP32,649 against the value of the NFTs it owns reducing the values
to zero.
Establishment of Employee Benefit Trust
During the year, the Company established an Employee Benefit
Trust ("EBT") for the benefit of current and future employees.
In March 2022, the EBT acquired all the Ordinary Shares
(41,000,000 Ordinary Shares) and all the Redeemable Preference
Shares (12,587 Redeemable Preference Shares) held by GIMA Group Inc
for a total consideration of GBP56,747. This concluded all matters
relating to the departure of Mr Soltani (the former CEO) who held
his share interests in the Company through GIMA Group Inc.
Board changes
On 20 July 2022 Nolan Bushnell stepped down as non-executive
director and on 22 March 2023 Jassem Osseiran stepped down as a
director of the Company. The Board would like to thank both Nolan
and Jassem for their hard work and valued contribution during their
time with the Company.
Outlook
The Company has significantly reduced its overheads to a minimum
in order to conserve its cash position.
Post year end the Company raised GBP100,000 before expenses
through a subscription for an aggregate of 100,000,000 new ordinary
shares of 0.01 pence par value each at a price of 0.1 pence per
share.
In May 2023 the Company agreed to subscribe for GBP250,000 of
Convertible Loan Notes ("CLNs") of GBP1 each in GL Membership
Limited (trading as Good Life+ "Good Life+").
Good Life+ offers a monthly membership that gives members access
to daily, luxury prize draws whilst simultaneously providing access
to thousands of discounts and deals.
The Convertible Loan Notes have been secured against the assets
of Good Life+ and the funding will assist Good Life's rapid
expansion and growth in the subscription model space. It will also
allow it to continue to develop its product offering.
Should the CLNs convert, they are expected to do so following
the acquisition of the entire issued share capital of Good Life+ by
Semper by way of a reverse takeover transaction under the AQSE
Access Growth Market Rules ("Reverse Takeover"). The subscription
price at conversion is expected to be at a discount to the price
per ordinary share expected to be paid for Good Life+ on completion
of a Reverse Takeover.
Section 172(1) Statement - Promotion of the Company for the
benefit of members as a whole:
The Directors believe they have acted in the way they considered
in good faith, that would most likely to promote the success of the
Company for the benefit of its members as a whole, as required by
s172 of the Companies Act 2006, and in doing so have had regard
to:
-- the likely consequences of any decision in the long term;
-- The need to act fairly between the members of the Company;
-- The desirability of maintaining the Company's reputation for
high standards of business conduct;
-- Consider the interests of the Company's employees;
-- The need to foster the Company's relationships with suppliers, customers and others; and
-- the impact of the Company's operations on the community and the environment.
In order to fulfil their duties under section 172 and promote
the success of the Company for the benefit of all its stakeholders,
the directors need to ensure that they not only act in accordance
with the legal duties but also engage with, and have regard for,
all its stakeholders when taking decisions. The Company has a
number of key stakeholders that it is committed to maintaining a
strong relationship with. Understanding the Company's stakeholders
and how they and their interests will impact on the strategy and
success of the Company over the long term is a key factor in the
decisions that the Board make.
Shareholders The promotion of the success of the Company is
ultimately for the benefit of the Company's shareholders who
provide the Company's permanent capital. As a company listed on the
Access segment of the AQSE Growth Market, the Company is
responsible for ensuring that it is aware of shareholder needs and
expectations. The Directors attach great importance to maintaining
good relationships with all of its shareholders and interested
parties and seeks to ensure that they have access to correct and
adequate information in a timely fashion. The Directors are aware
that as stakeholders, its shareholders play a vital role in the
fabric of the Company and therefore regularly engages in dialogue
with the Company's shareholders and is available for meetings with
institutional and major shareholders following the release of the
Company's Annual and Interim Results. The Directors welcome all
shareholders to make contact with the Company and provide any
feedback or comments that they may have, and contact details are
available on the Company's website. The Company's Annual General
Meeting is also an important opportunity for shareholders to meet
and engage with Directors and ask questions on the Company and its
performance.
Employees Our employees are key to the success of the Company
and recruiting, retaining and developing our team is one of the
Company's most important priorities. The Directors expect a high
standard of integrity and accountability from the Company's
employees. Directors encourage an open communication forum, aided
by the Company's small size and relatively flat hierarchical
structure.
Regulatory Bodies Although the Company is not itself directly
regulated, it operates within a regulated environment (e.g. AQSE
rules) and therefore actively engages with various regulatory
bodies and advisory firms to ensure that compliance standards are
maintained and that the Company continues to act with the high
standards of business conduct that have established its reputation
thus far.
Suppliers and Advisors The Company's suppliers and advisors are
integral to the day to day operation of the Company. Relationships
with suppliers are carefully managed to ensure that the Company is
always obtaining value for money. The Company seeks to ensure that
good relationships are maintained with its suppliers and advisors
through regular contact and the prompt payment of invoices. The
Company has appointed Shakespeare Martineau's company secretarial
services to ensure that high standards and timeliness are key to
the Board's delivery of its objectives to shareholders.
Other stakeholders and the wider community The Directors are
committed to ensuring that none of its activities have a
detrimental impact on the wider community and the environment.
Events after the reporting date
On 28 April 2023 the Company raised GBP100,000 before expenses
through a subscription for an aggregate of 100,000,000 new ordinary
shares of 0.01 pence par value each at a price of 0.1 pence per
share.
These new Ordinary Shares were admitted to trading on the Access
segment of the AQSE Growth Market on 4 May 2023.
Following Admission of the New Ordinary Shares, the Company's
issued ordinary share capital consisted of 515,499,800 ordinary
shares of 0.01 pence each.
On 16 May 2023 the Company agreed to subscribe for GBP250,000 of
Convertible Loan Notes of GBP1 each in GL Membership Limited which
are secured on the assets of the company.
Principal Risks and Uncertainties
Reliance on key personnel
The Company is dependent on the Directors, its management and
employees. The future success of the Company depends on the ability
of the Company to attract and retain its management and
employees.
The unexpected departure or loss of members of the Board could
have an adverse impact on the financial condition and results of
operations of the Company, and there can be no assurance that the
Company will be able to attract or retain suitable replacements for
those members of the Board who depart.
Transaction Risk
The Company is currently conducting due diligence on a potential
acquisition of the entire issued share capital of GL Membership
Limited by way of a reverse takeover transaction under the AQSE
Access Growth Market Rules. There is no guarantee that the terms of
an SPA will be agreed or that a Reverse Takeover will conclude.
Liquidity risk
The Company is at an early stage of its development and is
reliant upon access to sufficient funding to continue its
operations. The Directors continually monitor the cash flows of the
business and identify at an early stage whether further funding is
required to support its activities and future development plans.
There is no guarantee such funding will be available at terms which
are acceptable to the Directors or the company's shareholders.
Assessment of business risk
The Board regularly reviews operating and strategic risks. The
Company's operating procedures include a system for reporting
financial and non-financial information to the Board including:
-- reports from management with a review of the business at each
Board meeting, focusing on any new decisions/risks arising; and
-- consideration of reports prepared by third parties.
Financial risk management
Details of the Company's financial instruments and its policies
with regard to financial risk management are contained in note 15
to the financial statements.
Results for the year and dividends
The loss for the year after tax was GBP578,309 (2022: loss of
GBP1,221,367). Since the Company does not have any distributable
reserves, the Directors are unable to recommend the payment of a
dividend.
INCOME STATEMENT AND STATEMENT OF COMPRENSIVE INCOME
For the year ended 31 January 2023
Y ear Period
ended ended
Note 31 January 2023 31 January 2022
GBP GBP
Revenue 4 100,977 31,629
Operating and administrative expenses 5 (679,286) (1,252,996)
Loss before income tax (578,309) (1,221,367)
Income tax 7 - -
Loss for the year / period and total comprehensive loss (578,309) (1,221,367)
=============== ================
Earnings per share attributable to equity owners
Basic and diluted earnings per share 12 (0.001) (0.003)
--------------- ----------------
The income statement has been prepared on the basis that
operations are discontinued.
The accounting policies and notes form an integral part of these
financial statements.
STATEMENT OF FINANCIAL POSITION
As at 31 January 2023
As at As at
31 January 31 January 2022
2023
Note GBP GBP
ASSETS
Current assets
Trade and other receivables 8 46,086 107,622
Cash and cash equivalents 9 527 ,879 1,328,418
Other assets 10 1,432 -
----------- -----------------
Total c urrent assets 575,397 1,436,040
----------- -----------------
Total assets 575,397 1,436,040
=========== =================
EQUITY AND LIABILITIES
Equity attributable to owners
Share capital 13 76,550 76,550
Share premium 2,487,410 2,487,410
Own shares 14 (56,747) -
Share based payments reserve 157,598 155,077
Retained earnings (2,152,482) (1,574,173)
512,329 1,144,864
Current liabilities
Trade and other payables 11 63,068 291,176
Total equity and liabilities 575,397 1,436,040
=========== =================
STATEMENT OF CHANGES IN EQUITY
As at 31 January 2023
Share Share Share based Retained
capital premium Own shares payments reserve earnings Total
GBP GBP GBP GBP GBP GBP
At 01 February 2021 50,500 - - - (356,674) (306,174)
Issue of ordinary
shares 2 6,050 2,562,410 - - - 2,588,460
Total comprehensive
loss for the period - - - - (1,221,367) (1,221,367)
S hare issue cost - (75,000) - - - (75,000)
Share based payment - - - 158,945 - 158,945
F orfeiture of share
options - - - (3,868) 3,868 -
At 31 January 2022 76,550 2,487,410 - 155,077 (1,574,173) 1,144,864
Total comprehensive
loss for the year - - - - (578,309) (578,309)
Share based payment - - - 2,521 - 2,521
Acquired in the year - - ( 56,747) - - (56,747)
At 31 January 2023 76,550 2,487,410 (56,747) 157,598 (2,152,482) 512,329
Share Capital
Share capital represents the nominal value of shares that have
been issued.
Share premium
Share premium represents the aggregate amount of premiums
received on issuing shares after deduction of attributable
expenses.
Own shares
The own shares reserve represents the cost of shares in Semper
Fortis Esports Plc purchased and held by the employee benefit
trust.
Share based payments reserve
Share based payments reserve is a reserve used to recognise the
cost and equity associated with the fair value of share options and
warrants that have been issued by the Company.
Retained earnings
Retained earnings is the balance of profit or loss retained by
the Company net of any distributions made.
The accounting policies and notes form an integral part of these
financial statements.
STATEMENT OF CASH FLOWS
For the year ended 31 January 2023
Y ear Period
ended ended
31 January 2023 31 January 2022
GBP GBP
Cash flows from operating activities
Loss before income tax (578,309) (1,221,367)
Adjustments:
Share based payments 2,521 83,945
Fair value loss on other assets 10 32,649 -
Movement in working capital
Decrease/(increase) in receivables 8 61,536 (50,277)
(Decrease)/increase in payables 11 (228,108) (145,501)
--------------- ----------------
Net cash flow from operating activities (709,711) (1,333,200)
--------------- ----------------
Cash flows from investing activities
Purchase of other assets 10 (34,081)
Purchase of own shares 14 (56,747) -
Net cash flows from investing activities ( 90,828) -
----------------
Cash flows from financing activities
Issue of ordinary shares 13 - 2,588,460
Net cash flows from financing activities - 2,588,460
--------------- ----------------
Net (decrease) /increase in cash and cash equivalents ( 800,539) 1,255,260
Cash and cash equivalents at beginning of y ear / period 1,328,418 73,158
Cash and cash equivalents at end of year / period 527,879 1,328,418
=============== ================
The accounting policies and notes form an integral part of these
financial statements.
NOTES TO THE FINANCIAL INFORMATION
For the year ended 31 January 2023
1. General information
Semper Fortis Esports PLC (the "Company") was incorporated on 14
January 2020 in England and Wales, with registered number 12403380
under the Companies Act 2006. The registered office of the Company
is 6(th) Floor 60 Gracechurch Street, London, United Kingdom, EC3V
0HR.
During part of the year the principal activity of the Company
was that of an esports organisation and lifestyle brand . As at the
year end the Company had no active operating business.
2. Basis of preparation
The financial information and accompanying notes are based on
the following policies which have been consistently applied:
The financial information of the Company has been prepared in
accordance with UK-adopted International Accounting Standard and in
conformity with the requirements of the Companies Act 2006.
The financial statements are presented in Sterling, which is the
Company's functional and presentational currency and has been
prepared under the historical cost convention.
The preparation of financial information requires the use of
certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Company's
Accounting Policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates
are significant to the Financial Information are disclosed in Note
3.
Going Concern
The financial statements have been prepared on a going concern
basis notwithstanding operating losses and net current
liabilities.
The directors have prepared a liquidity forecast for a period of
at least 12 months from the date of approval of these financial
statements which indicate that the Company will have sufficient
funds to meet its liabilities as they fall due for that period.
These forecasts are dependent on the ability of the Company to
reduce its costs during the going concern period to meet its
working capital needs as they fall due and raise funds, if
required, to fund new business opportunities. This indicates that a
material uncertainty exists that may cast significant doubt on the
Company's ability to continue as a going concern and the auditors
have included a material uncertainty in respect of going concern in
the auditor's report.
The directors are confident that the Company will continue to
meet its liabilities as they fall due for at least 12 months from
the date of approval of the financial statements. Accordingly, they
continue to adopt the going concern basis in preparing the
financial statements.
Adoption of new and revised standards
New standards, amendments and interpretations
The Company has adopted all of the new and amended standards and
interpretations issued by the International Accounting Standards
Board that are relevant to its operations and effective for
accounting periods commencing on or after 1 February 2022.
New standards, amendments and Interpretations in issue but not
yet effective or not yet endorsed and not early adopted
Standard Key requirements Effective date for annual periods beginning on or
after:
IAS 1 Amendments to IAS 1, 'Presentation of Financial Not yet adopted
Statements' regarding the classification of
liabilities
---------------------------------------------------- -----------------------------------------------------
IAS 12 Amendments to IAS 12, 'Income Taxes' regarding 1 January 2023
deferred tax related to assets and liabilities
arising from a single transaction
---------------------------------------------------- -----------------------------------------------------
IAS 1 Amendments to IAS 1, 'Presentation of Financial Not yet adopted
Statements' regarding the amendments of disclosure
of accounting policies
---------------------------------------------------- -----------------------------------------------------
IAS 8 Amendments to IAS 8 'Accounting Policies, Changes 1 January 2023
in Accounting Estimates and Errors' to distinguish
between accounting policies and accounting
estimates.
--------- ---------------------------------------------------- -----------------------------------------------------
These standards are not considered to have a material impact on
the financial statements.
3. Accounting policies
The accounting policies set out below have, unless otherwise
stated, been applied consistently.
There have been no judgements made by the Directors, in the
application of these accounting policies that have significant
effect on the financial information and estimates with a
significant risk of material adjustment in the next year.
Other assets
Digital assets and tokens
These are assets which do not qualify as cash and cash
equivalents or financial assets and have an active market which
provides pricing information on an ongoing basis. Digital assets
and tokens are measured at fair value to profit and loss.
Digital assets are included in current assets as management
intends to dispose of them within 12 months of the reporting
period.
Digital assets comprise of crypto coins and non-fungible tokens
(NFTs). The price of crypto coin are directly observable and are
therefore level 1 as per the fair value hierarchy under IFRS 13 -
fair value measurement and NFTs are denominated in crypto
currencies and their fair value is determined based on the value of
the crypto currency and therefore their prices are not directly
observable and based on the input used for fair valuation it is
classified as a level 2 as per the fair value hierarchy under IFRS
13 - fair value measurement.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short-term
deposits with an original maturity of three months or less.
Equity
An equity instrument is any contract that evidences a residual
interest in the assets of the Company after deducting all of its
liabilities. Equity instruments issued by the Company are recorded
at the proceeds received, net of direct issue costs, or at fair
value where no proceeds are received.
Financial instruments
Financial assets - Trade and other receivables
Financial assets are recognised in the statement of financial
position when the Company becomes party to the contractual
provisions of the instrument.
Financial assets are classified into specified categories, such
as trade and other receivables. The classification depends on the
nature and purpose of the financial assets and is determined at the
time of recognition.
Financial assets are subsequently measured at amortised cost,
fair value through OCI, or FVPL.
The classification of financial assets at initial recognition
that are debt instruments depends on the financial asset's
contractual cash flow characteristics and the Company's business
model for managing them. The Company initially measures a financial
asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs.
In order for a financial asset to be classified and measured at
amortised cost or fair value through OCI, it needs to give rise to
cash flows that are solely payments of principal and interest
("SPPI")' on the principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an instrument
level.
The Company's business model for managing financial assets
refers to how it manages its financial assets in order to generate
cash flows. The business model determines whether cash flows will
result from collecting contractual cash flows, selling the
financial assets, or both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are
classified in four categories:
financial assets at amortised cost;
financial assets at fair value through OCI with recycling of
cumulative gains and losses (debt instruments);
financial assets designated at fair value through OCI with no
recycling of cumulative gains and losses upon derecognition (equity
instruments); and
financial assets at FVPL.
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Company. The Company
measures financial assets at amortised cost if both of the
following conditions are met:
-- the financial asset is held within a business model with the
objective to hold financial assets in order to collect contractual
cash flows; and
-- the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured
using the effective interest rate ("EIR") method and are subject to
impairment. Interest received is recognised as part of finance
income in the statement of profit or loss and other comprehensive
income. Gains and losses are recognised in profit or loss when the
asset is derecognised, modified or impaired. IFRS 9.5.4 The
Company's financial assets at amortised cost include other
receivables and cash and cash equivalents.
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a Company of similar financial assets) is
primarily derecognised when:
-- the rights to receive cash flows from the asset have expired; or
-- the Company has transferred its rights to receive cash flows
from the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party under a
'pass-through' arrangement; and either: (a) the Company has
transferred substantially all the risks and rewards of the asset,
or (b) the Company has neither transferred nor retained
substantially all the risks and rewards of the asset, but has
transferred control of the asset.
When the Company has transferred its rights to receive cash
flows from an asset or has entered into a pass-through arrangement,
it evaluates if, and to what extent, it has retained the risks and
rewards of ownership. When it has neither transferred nor retained
substantially all of the risks and rewards of the asset, nor
transferred control of the asset, the Company continues to
recognise the transferred asset to the extent of its continuing
involvement. In that case, the Company also recognises an
associated liability.
The transferred asset and the associated liability are measured
on a basis that reflects the rights and obligations that the
Company has retained.
Impairment of financial assets
The Company recognises an allowance for expected credit losses
("ECLs") for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the
contractual cash flows due in accordance with the contract and all
the cash flows that the Company expects to receive, discounted at
an approximation of the original EIR. The expected cash flows will
include cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms.
The Company recognises an allowance for ECLs for all debt
instruments not held at fair value through profit or loss. ECLs are
based on the difference between the contractual cash flows due in
accordance with the contract and all the cash flows that the
Company expects to receive, discounted at an approximation of the
original EIR. For credit exposures for which there has not been a
significant increase in credit risk since initial recognition, ECLs
are provided for credit losses that result from default events that
are possible within the next 12 months (a 12-month ECL). For those
credit exposures for which there has been a significant increase in
credit risk since initial recognition, a loss allowance is required
for credit losses expected over the remaining life of the exposure,
irrespective of the timing of the default (a lifetime ECL).
For other receivables due in less than 12 months, the Company
applies the simplified approach in calculating ECLs, as permitted
by IFRS 9. Therefore, the Company does not track changes in credit
risk, but instead, recognises a loss allowance based on the
financial asset's lifetime ECL at each reporting date.
The Company considers a financial asset in default when
contractual payments are 90 days past due. However, in certain
cases, the Company may also consider a financial asset to be in
default when internal or external information indicates that the
Company is unlikely to receive the outstanding contractual amounts
in full before taking into account any credit enhancements held by
the Company. A financial asset is written off when there is no
reasonable expectation of recovering the contractual cash flows and
usually occurs when past due for more than one year and not subject
to enforcement activity.
At each reporting date, the Company assesses whether financial
assets carried at amortised cost are credit impaired. A financial
asset is credit-impaired when one or more events that have a
detrimental impact on the estimated future cash flows of the
financial asset have occurred.
Financial liabilities - Trade and other payables
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans
and borrowings, or payables, as appropriate. All financial
liabilities are recognised initially at fair value and, in the case
of loans and borrowings and payables, net of directly attributable
transaction costs. The Company's financial liabilities include
trade and other payables.
Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below:
-- loans and borrowings and trade and other payables;
-- after initial recognition, interest-bearing loans and
borrowings and trade and other payables are subsequently measured
at amortised cost using the EIR method. Gains and losses are
recognised in the statement of profit or loss and other
comprehensive income when the liabilities are derecognised, as well
as through the EIR amortisation process;
-- amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included as
finance costs in the statement of profit or loss and other
comprehensive income.
This category generally applies to trade and other payables.
Derecognition
A financial liability is derecognised when the associated
obligation is discharged or cancelled or expires.
When an existing financial liability is replaced by another from
the same lender on substantially different terms, or the terms of
an existing liability are substantially modified, such an exchange
or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in profit or loss and
other comprehensive income.
Financial risk management
Equity instruments issued by the Company are recorded at the
proceeds received, net of transaction costs. Dividends payable on
equity instruments are recognised as liabilities once they are no
longer at the discretion of the Company. Incremental costs directly
attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
Financial Risk Factors
The Company's cash holdings are all held with major financial
institutions whose financial status is regularly reviewed.
Credit Risk
Credit risk arises from outstanding receivables. Management does
not expect any losses from non-performance of these receivables.
The amount of exposure to any individual counter party is subject
to a limit, which is assessed by the Board.
The Company considers the credit ratings of banks in which it
holds funds in order to reduce exposure to credit risk, which is
stated under the cash and cash equivalents accounting policy.
Liquidity risk
The Company's continued future operations depend on its ability
to raise sufficient working capital through the issue of share
capital and generate revenue.
Capital risk management
The Company manages its capital to ensure that it will be able
to continue as a going concern while maximising the return to
stakeholders. The Company's capital structure primarily consists of
equity attributable to the owners, comprising issued capital,
reserves and retained losses.
Current and deferred tax
Current tax
The tax currently payable is based on taxable profit or loss for
the year. Taxable profit or loss differs from the profit or loss
for the financial year as reported in the statement of total
comprehensive income because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Company's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the reporting date.
Deferred tax
Deferred tax is 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 or loss.
Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that future taxable
profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from the initial
recognition of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to
apply in the year 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 reporting date. Deferred tax is
charged or credited in the income statement, except when it relates
to items charged or credited in other comprehensive income, in
which case the deferred tax is also dealt with in other
comprehensive income.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the subsidiary intends to settle
its current tax assets and liabilities on a net basis.
Deferred tax will be recognised on the losses incurred when the
Company has sufficient visibility over the usage of these loses and
is forecasting future profits in the short term.
Critical accounting estimates and judgements
The Company makes estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual results may differ from these
estimates and assumptions. There are no estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year.
Revenue
Revenue relates to prize winnings, online in-game sales,
sponsorship and ad hoc revenue. It is recognised to the extent that
economic benefits will flow to the Company and the revenue can be
reliably measured. Revenue is measured as the fair value of the
consideration received or receivable, excluding discounts, rebates
and taxes. Prize winnings, online in-game sales and adhoc revenue
are recognised at a point in time.
Sponsorship and similar commercial income is recognised over the
duration of the respective contracts.
Provisions and contingencies
Provisions are recognised when the Company has an obligation at
the reporting date as a result of a past event, it is probable that
the Company will be required to transfer economic benefits in
settlement and the amount of the obligation can be estimated
reliably. Provisions are recognised as a liability in the statement
of financial position and the amount of provision as an
expense.
Provisions are initially measured at the best estimate of the
amount required to settle the obligation at the reporting date and
subsequently reviewed at each reporting date and adjusted to
reflect the current best estimate of the amount that would be
required to settle the obligation.
Expenses
Expenses on goods and services are recognised when, and to the
extent that they have been received, and is measured at the fair
value of those goods and services. Expenses are recognised in
operating expenses except where it results in the creation of
non-current assets or is related to issue of shares.
Share-based payments
For grants of share options and warrants, the fair value as at
the date of grant is calculated using the Black-Scholes option
pricing model, taking into account the terms and conditions upon
which the options are granted. The amount recognised as an expense
is adjusted to reflect the actual number of share options that are
likely to vest.
4. Revenue
2023 2022
GBP GBP
Prize winnings and online in-game sales 60,821 31,629
Sponsorship 10,000 -
Ad hoc revenue- player transfer fee 30,156 -
-------- -------
100,977 31,629
======== =======
In the opinion of the directors, during the year the Company had
one class of business, the operation of a professional esports
organisation and lifestyle brand. All the Company's revenue was
generated in the United Kingdom.
5. Operating expenses by nature
2023 2022
GBP GBP
Directors' remuneration 191,066 240,313
Salaries 8,000 -
Professional fees 234,696 575,502
Esports team costs 179,488 297,757
Share based payments 2,521 83,945
Fair value adjustment 32,649 -
Sundry expenses 30,866 55,479
-------- ----------
679,286 1,252,996
-------- ----------
Auditors' remuneration included in the above amounted to
GBP25,000 (2022: GBP18,000) for audit services and GBPNil (2022:
GBPnil) for non-audit services.
6. Staff costs
The average monthly number of employees, including Directors,
during the year was four (2022: 4). Their aggregate remuneration
comprised:
2023 2022
GBP GBP
W ages and salaries 183,252 214,506
Social security costs 15,814 25,807
S hare based payments 2,521 5 ,801
201,587 2 46,114
-------- ---------
Directors' remuneration for the year was GBP175,252 (2022:
GBP214,506).
Remuneration disclosed above includes GBP70,000 paid to the
highest paid director (2022: GBP70,000).
No pension contributions were paid.
7. Taxation
2023 2022
GBP GBP
Current tax - -
Deferred tax - -
Tax charge/ (credit) for the y ear / period - -
----- -----
The Company has a potential deferred tax asset arising from
unutilised management expenses available for carry forward and
relief against future taxable profits. The deferred tax asset has
not been recognised in the financial statements in accordance with
the Company's accounting policy for deferred tax.
The Company's unutilised tax losses carried forward at 31
January 2023 amounted to GBP1,710,487 (2022: GBP1,167,896).
The standard rate of tax for the current year, based on the UK
effective rate of corporation tax is 19% (2022: 19%). The actual
tax for the current and previous year varies from the standard rate
for the reasons set out in the following reconciliation:
2023 2022
GBP GBP
Loss for the y ear / period (578,309) (1,221,367)
Tax on ordinary activities at standard rate (109,879) (232,060)
Effects of:
Expenses not deductible for tax purposes 6,786 51,891
Tax losses available for carry forward against future profits 103,093 180,169
----------
Tax for the y ear / period - -
---------- ------------
From 1 April 2023 the corporation tax rate increased to 25% for
companies with profits of over GBP250,000. A small profits rate has
also been introduced for companies with profits of GBP50,000 or
less so that they will continue to pay corporation tax at 19%. From
this date companies with profits between GBP50,000 and GBP250,000
will pay tax at the main rate reduced by a marginal relief
providing a gradual increase in the effective corporation tax
rate.
The Company is loss making at present and an assessment of the
impact of the change in future tax rates is not possible at this
stage.
8. Trade and other receivables
2023 2022
GBP GBP
Trade receivables - 25,817
Other receivables 46,086 81,805
------- --------
46,086 107,622
======= ========
9. Cash and cash equivalents
2023 2022
GBP GBP
Cash at bank 527,879 1,328,418
-------- ----------
527,879 1,328,418
======== ==========
10. Other assets
2023 2022
GBP GBP
Additions at cost 3 4,081 -
Fair value adjustments (32,649) -
--------- -----
As at 31 January 2023 1,432 -
========= =====
The closing balance relates to crypto coins which are level 1 as
per the fair value hierarchy under IFRS 13 - fair value
measurement.
11. Trade and other payables
Amounts falling due within one year:
2023 2022
GBP GBP
Trade payables 17,958 125,413
Other payables 45,110 165,763
------- --------
63,068 291,176
======= ========
12. Earnings per share
The basic earnings per share is calculated by dividing the loss
attributable to equity shareholders by the weighted average number
of shares in issue.
The Company had in issue 415,499,800 ordinary shares at 31
January 2023. The loss attributable to equity holders and weighted
average number of ordinary shares for the purposes of calculating
diluted earnings per ordinary share are identical to those used for
basic earnings per ordinary share.
2023 2022
Loss for the y ear / period attributable to equity holders (GBP) 578,309 1,221,367
Weighted average number of shares in issue (number) 415,499,800 355,287,471
Basic and diluted earnings per share (GBP) (0.001) (0.003)
============ ============
13. Share capital and premium
Number of Number of Deferred shares Share Share
O rdinary shares capital premium Total
GBP GBP GBP
At 1 February 2022 415,499,800 35,000 4 1 ,550 2,487,410 2,563,960
Issue of ordinary shares - - - - -
------------------ ------------------------- --------- ----------- -----------
At 31 January 2023 4 15,499,800 3 5,000 41,550 2 ,487,410 2 ,563,960
================== ========================= ========= =========== ===========
The ordinary shares have full voting, dividend and capital
distribution (including on winding up) rights. The nominal value of
the ordinary shares is GBP0.0001.
The redeemable deferred shares hold no voting rights or rights
to receive dividends and are not fully paid.
14. Own shares
On 17 February 2022 the Company established an Employee Benefit
Trust ("EBT") for the benefit of current and future employees.
On 30 March 2022 the EBT completed the acquisition of all the
Ordinary Shares (41,000,000 Ordinary Shares representing 9.87% of
the issued capital) and all the Redeemable Preference Shares
(12,587 Redeemable Preference Shares) held by GIMA Group Inc for a
total consideration of GBP56,747. The Company provided the EBT with
a loan of GBP56,747 to fund this share acquisition. This
transaction had been agreed between Mr Soltani (the former CEO) and
the Company in December 2021 at the time of his departure. Mr
Soltani held his share interests in Semper Fortis Esports within
GIMA Group Inc.
15. Financial instruments
The Company's financial instruments comprise cash, trade and
other receivables and trade and other payables that arise from its
operations. The main purpose of these financial instruments is to
provide finance for the Company's future activities and day to day
operational needs.
The main risks faced by the Company are limited to interest rate
risk on surplus cash deposits and liquidity risk associated with
raising sufficient funding to meet the operational needs of the
business.
The Board reviews and agrees policies for managing these risks
and they are summarised below.
Financial assets by category
The categories of financial assets included in the statement of
financial position and the headings in which they are included are
as follows:
2023 2022
At amortised cost GBP GBP
Trade and other receivables 46,086 107,622
Cash and cash equivalents 527,879 1,328,418
573,965 1,436,040
======== ==========
Financial liabilities by category
The categories of financial liabilities included in the
statement of financial position and the headings in which they are
included are as follows:
2023 2022
At amortised cost GBP GBP
Trade and other payables 63,068 291,176
======= ========
The above trade and other payables are due within six months and
represent the undiscounted contractual payments.
Interest rate risk
The Company manages the interest rate risk associated with the
Company's cash assets by ensuring that interest rates are as
favourable as possible, whilst managing the access the Company
requires to the funds for working capital purposes.
The Company's cash and cash equivalents are subject to interest
rate exposure due to changes in interest rates. Short-term
receivables and payables are not exposed to interest rate risk.
Capital risk management
The Company manages its capital to ensure that it will be able
to continue as going concern while maximising the return to
stakeholders through optimisation of the debt and equity balance.
The capital structure of the Company currently consists cash and
cash equivalents, and equity attributable to equity holders of the
Company, comprising issued capital, reserves and retained earnings,
all as disclosed in the Statement of Financial Position.
Significant accounting policies
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised, in respect of each class of financial asset, financial
liability and equity instrument are disclosed in Note 3 to the
financial statements.
16. Share based payments
Share options
On 26 April 2021, 12,464,994 share options were granted with an
exercise price of GBP0.031 and a vesting period of 2 to 4 years.
One third of the shares subject to options vest on each of the
2(nd) , 3(rd) and 4(th) anniversaries of admission to AQSE.
The fair value has been calculated using the Black-Scholes
valuation model. Volatility was in the range of 74% to 86%, with a
dividend yield of 0% and a risk-free interest rate in the range of
0.05% to 0.22%. This resulted in a charge of GBP2,521 (2022:
GBP5,802).
One of the directors left the Company in December 2021,
resulting in 8,309,996 options lapsing.
4,154,998 options were outstanding at 31 January 2023 (2022:
4,154,998), with an average exercise price of GBP0.031 per share
and a weighted average remaining life of 2 years 3 months. These
options lapsed in March 2023 when the director left the
Company.
Warrants
On 4 September 2020, 50,000,000 warrants were granted to
investors with an exercise price of GBP0.005 exercisable in whole
or in part within a period of five years from Admission on 26 April
2021. There was no charge to the Income Statement in the year in
respect of these warrants. 18,000,000 of these warrants have been
forfeited.
On or around 26 April 2021, 26,000,000 warrants were granted
with an exercise price of GBP0.01 exercisable in whole or in part
within a period of five years from Admission. Of these 7,500,000
warrants were issued to the Company's broker which if fully
exercised would represent a total aggregate price of GBP75,000.
18,500,000 warrants were granted in exchange for services provided.
The fair value has been calculated using the Black-Scholes
valuation model. Volatility was 86%, with a dividend yield of 0%
and a risk-free interest rate in the range of 0.05%. This resulted
in a charge of GBPnil in the year ended 31 January 2023 as the
warrants were fully vested (2022: GBP78,143).
58,000,000 warrants were outstanding at 31 January 2023 (2022:
58,000,000) with a weighted average exercise price of GBP0.007 per
share and a weighted average remaining life of 3.24 years.
17. Related party transactions
Directors' remuneration is disclosed in note 6. There were no
other related party transactions during the year.
18. Controlling party
The Directors do not consider there to be an ultimate
controlling party.
19. Subsequent events
On 28 April 2023 the Company raised GBP100,000 before expenses
through a subscription for an aggregate of 100,000,000 new ordinary
shares of 0.01 pence par value each at a price of 0.1 pence per
share.
On 22 March 2023 Jassem Osseiran resigned from the board,
resulting in 4,154,998 options lapsing.
On 16 May 2023 the Company agreed to subscribe for GBP250,000 of
Convertible Loan Notes of GBP1 each in GL Membership Limited.
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END
NEXNKDBQQBKDBON
(END) Dow Jones Newswires
July 31, 2023 10:47 ET (14:47 GMT)
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