TIDMTEK
RNS Number : 5405K
Tekcapital plc
06 May 2022
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 2021
Record Results
Tekcapital plc (AIM: TEK), the UK intellectual property (IP)
investment group focused on creating valuable companies from
investing in university technologies that can improve people's
lives, announces its audited results for the year ended 30 November
2021.
Financial highlights
Our investment objective is to achieve long-term growth of net
assets and returns on invested capital through the
commercialisation of university discoveries that can make a
positive impact on people's lives. In 2021 we met this objective.
It was the most productive year for value creation in the Group's
history:
-- Net Assets increased 108% to US$68.1m, a record level (2020: US$32.7m)
-- NAV per share increased 37% to US$0.48 (2020: $0.35)
-- Portfolio valuation increased 105% to US$62.5m (2020:US$30.4m)
-- Total income US$29.2m (2020: US$9.9m)
o Revenue from services US$0.8m (2020: US$0.9m)
o Net increase of US$28.1m in the fair value of portfolio
companies (2020: US$8.7m)
-- Profit after tax: $26.4m (2020: $7.7m)
-- Share placings totalling US$9.4m completed during the period (2020: $2.6m)
Investment Portfolio
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
approximately 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:
-- Expanded sales of its SaltMe(R) full flavour, low sodium
chips in 2,200 Kroger stores. Kroger is the largest supermarket
chain in the U.S. We believe this is the first national roll-out of
full-flavour, low-sodium potato chips in the U.S. In addition to
Kroger, SaltMe! crisps are now available at approximately 200 other
retail purchase points.
-- Awarded the most innovative sodium reduction food technology
provider in 2021 by GHP Magazine.
-- Winner of the Star Entrepreneur Award as the #1 start-up led by a P&G Alumni.
-- Completed a successful REG CF crowdfund raising US$750,000 in December 2021.
Lucyd(R) Limited ("Lucyd") (100% ownership) www.lucyd.co
Lucyd(R) is seeking to Upgrade Your Eyewear(R) by developing and
selling designer smart eyewear at affordable prices. Innovative
Eyewear, Inc., its 80% owned U.S. operating subsidiary, 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 by 60% from
2009 to 2019(1). We believe that drivers and pedestrians alike are
distracted with their smartphones, and this is contributing to the
death and injury of pedestrians. Open ear audio found in Lucyd
smart glasses can help pedestrians maintain situational awareness
whist walking running and cycling. Approximately 2/3rds of the
adult population need corrective lenses, and advancements in
Bluetooth technology have enabled it to be incorporated into
traditional eyeglass form factors. This combination created a new
type of eyewear with built-in speakers, microphones and touch
controls. Lucyd smart eyewear allows the wearer to forego
headphones and use their glasses to listen to audio content and
talk to others and digital assistant. Since the speakers are
open-ear, Lucyd e-glasses enables the wearer to stay connected to
their digital life whilst maintaining situational and social
awareness.
Recent Developments:
-- Innovative Eyewear Launched Lucyd(R) Lyte(R) in January 2021.
Their smart sunglass and prescription eyewear is the perfect
complement for active lifestyles. As of the date of this report
Lucyd Lytes have received more than 600 5-star ratings on Amazon
and Lucyd.co websites.
-- Announced multiple new hires, including Frank Rescigna, Head
of Global Sales, Ken Strominger, Director of Sports &
Electronics Sales and Alex Rivera, Manager of Graphics and
Photography.
-- Signed a distribution agreement with D. Landstrom Associates,
to build distribution of Lucyd Lyte(TM) Bluetooth(R) smart-glasses
in big box retail stores in the U.S.
-- Expanded its ecommerce sales channels with retail sales.
Starting with no stores in June 2021, it has onboarded more than
200 retail stores to sell its products as of the date of this
report.
-- Appointed Olivia "Dibby" Bartlett as a non-executive
director. Dibby has served more than 30 years in the optical
industry and is currently president of the Opticians Association of
America. Appointed Kristen McLaughlin to its board as a
non-executive director. Kristen has a distinguished career in the
optical industry where she has served as director of marketing for
Silhouette International and brand manager for Daniel Swarovski
Crystal Eyewear.
-- In December 2021 Innovative Eyewear, Inc. launched the Vyrb
app, a voice social medial program designed for Lucyd Lyte smart
glasses and other hearables, for IOS and Android.
-- Submitted a draft registration statement with the U.S.
Securities and Exchange Commission (the "SEC"), for a proposed
initial public offering ("IPO") of shares of its common stock in
the United States.
Guident Limited ("Guident") (100% ownership) www.guident.co
Guident is developing remote monitoring and control software to
improve 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 help improve the safety of autonomous vehicles.
Investment Rationale:
Vehicles of all types are rapidly becoming electric and
autonomous. Whilst 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's
remote monitoring and control centre 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
and pedestrians. Over time, we believe remote monitoring centres
will be required in most jurisdictions where AV's operate.
Recent Developments:
-- Demonstrated its low-latency ( 38msec), vehicle control
software to power its Remote Monitoring and Control Centre (RMCC).
This is expected to be used in their first RMCC for AVs, to be
launched later this year in Boca Raton, Florida. The RMCC will be
able to monitor multiple vehicles from a remote, secure monitoring
centre, akin to air traffic control for ground-based vehicles.
-- During 2021, the company defined its go to market strategy,
engaged advisors with relevant industry experience and entered
discussions with numerous prospective customers.
-- Announced the successful demonstration of its remote
monitoring and control technology in Boca Raton, Florida.
-- During 2021, the company has also progressed the engineering
development of its prototype regenerative shock absorbers and
completed their fabrication. Testing of the shocks are
on-going.
-- Multiple large OEM's have expressed an interest in evaluating
Guident's regenerative shock absorbers as a tool for potential EV
range extension.
Belluscura(R) Plc ( 15% ownership) www.belluscura.com
Belluscura plc ("Belluscura") is a respiratory medical device
company that has developed and launched an improved portable oxygen
concentrator (POC) to provide on-the-go supplemental O(2) . 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 300m individuals suffer from COPD
(chronic obstructive pulmonary disease). 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 often replace
their devices with greater capacity models as their disease
progresses. With Belluscura's new patented device, 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 more affordable oxygen therapy which
increases the number of people who can avail themselves of these
life-extending and life-saving devices.
Recent Developments:
-- Belluscura received FDA clearance in March 2021.
-- In April 2021, Tekcapital converted its warrants and options
held in Belluscura at an average exercise price of 21 pence for new
ordinary shares in Belluscura, bringing total shares held to 17.1
million.
-- On May 28, 2021, Belluscura consummated its IPO at 45 pence
per share and commenced trading on the AIM Market of the London
Stock Exchange.
-- Post IPO, the Company continued to rapidly expand its sales
and distribution capabilities in the US and development of its new
products.
-- On Nov 4, 2021 Belluscura announced that demand for its
X-PLO(2) R(TM) portable oxygen concentrators significantly exceeded
expectations.
-- On Nov 29, 2021 Belluscura announced it has received
reimbursement approval from U.S. Centers for Medicare &
Medicaid Services, further expanding the potential market for these
devices.
-- As of 30 November 2021 Belluscura shares traded at 99 pence
per share, valuing Tekcapital's holding at US$22.7m compared to
US$2m as of 30 November 2020.
Operational highlights: Corporate
-- As part of our continuing efforts to develop our team and expand our services:
Tekcapital developed and delivered a successful webinar series
"The Impact of Nanotechnology" to participants from the technology
and innovation ecosystem in Latin America.
-- Tekcapital was invited to participate at the 2021 Red TTO
(Technology Transfer Offices) Mexico Event. The annual congress is
where the innovation ecosystem of Mexico converges.
-- Tekcapital participated as a sponsor and exhibitor at the
2021 Eastern, Central and Canadian Region Meetings hosted by the
Association of University Technology Managers.
-- In 2021, Tekcapital delivered more than 250 Invention
Evaluator reports to universities worldwide, to help them assess
the market potential of their new technologies and has added
corporate clients including Hewlett Packard Enterprises, to its
client roster. Additionally, the Vortechs Group, Tekcapital's
executive search firm won 15 executive search assignments in
2021.
Dr. Clifford Gross, Executive Chairman said:
" We are glad to report very strong full-year performance for
the Group, with net assets increasing by 108% to US$68.0m, a record
level. Our key portfolio companies are progressing well and should
reach significant additional milestones by the end of 2022. We are
also pleased to highlight Belluscura's successful IPO during the
period, Lucyd's subsidiary Innovative Eyewear, Inc.'s filing of its
registration statement for a potential IPO with a listing on the
NASDAQ, the roll-out of MicroSalt's SaltMe! Crisps in Kroger
supermarkets throughout the U.S., and Guident's demonstration of
their remote monitoring and control center with industry leading,
low glass-to-glass latency. We are excited about what our portfolio
companies have achieved in 2021 and their prospects for 2022."
Post period end portfolio company highlights
Belluscura
-- Executed an agreement with InnoMax Medical Technology to
manufacture its X-PLO2R(R) portable oxygen concentrator in China,
which is expected to more than double its manufacturing capacity
whilst accelerating its international expansion. Nearly 100 million
people in China have chronic obstructive pulmonary disease
("COPD"). This cohort is 4X larger than the U.S. COPD
population.
-- Awarded a Distribution and Pricing Agreement ("DAPA") from
the United States Defence Logistics Agency ("DLA") for the X-PLO(2)
R. The United States government is the largest buyer in the
world.
-- Announced that its sales in January and February of 2022
exceeded forecasts and surpassed their 2021 total sales.
Salarius & Microsalt Inc, its US subsidiary:
-- In Q1 2022 SaltMe!(R) Chips have seen a 40-fold increase in sales compared to Q1 2021.
-- Completed an oversubscribed Reg CF Crowdfund, having achieved its goal of US$750,000.
-- Appointed Dan Emery as a non-executive member of its board of
directors. Dan has more than 25 years of experience in the food
industry, including 15 years as vice president of sales and
marketing at Pilgrim's Pride, during which time sales grew from
US$970 million to US$8.5 billion, with a balance between retail and
food service.
-- Appointed Rick Guiney as CEO. Rick has more than 35 years of
experience in the food industry, including 30+ years as President
& CEO of Classic Snacks, Inc., where he pioneered the ground-up
development of the business and transformed it into a
market-leading direct distribution company in the food industry.
Classic Snacks was included on the Inc. 500 Fastest Growing Company
List, and quickly became a nationwide snack food packager and
distributor to airlines, restaurants, hotels, country clubs, bars,
taverns, and retail private label customers.
Lucyd & Innovative Eyewear Inc, its US subsidiary:
-- Innovative Eyewear has filed an S1 registration statement
with the SEC and is seeking to raise US$10m in an IPO to be traded
on the NASDAQ under the ticker: LUCY, which it seeks to consummate
as soon as practicable given current market conditions.
-- Announced it has been approved by DICK's Sporting Goods(R) to
provide its Lucyd Lyte(R) smart eyewear on dickssportinggoods.com
and by BestBuy.ca to place its products on Best Buy's Canadian
ecommerce site.
Guident & Guident Corp, its US subsidiary:
-- Has been selected as a vendor by JTA's Procurement Review
Committee for JTA Proposal No. P-22-010 entitled "JTA Test
Environment" to provide remote monitoring and control services for
three years.
-- Announced it is working with Airspan Networks (NYSE American:
MIMO) to provide customers with connectivity and software solutions
for autonomous vehicles for smart city applications, using CBRS
(Citizens Broadband Radio Service) spectrum.
-- Announced that it filed their 8th patent application covering
improvements to its remote monitoring and control centre for AVs.
The U.S. patent application #17/579,203 is entitled: "Near
Real-Time Data and Video Streaming System for a Vehicle, Robot or
Drone".
-- Announced that their Regenerative Shock Absorber prototypes
have been fabricated and are being evaluated by independent test
facilities to confirm their performance and capabilities. Guident
is currently in discussions with potential customers and strategic
partners to potentially manufacture and use their RSA's.
Posting of Annual Report and Accounts
The Company's annual report and accounts for the year ended 30
November 2021 will be available on the Company's website
www.tekcapital.com shortly and will be posted to shareholders on 06
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
on or relied upon by persons who are not Relevant Persons. Any
other person who receives this Report should not rely or act upon
it. By accepting this Report the recipient is deemed to represent
and warrant that: (i) they are a person who falls within the above
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
registered under the Securities Act or pursuant to an exemption
from or in a transaction not subject to the registration
requirements of the Securities Act. This Report is not being made
available to persons in Australia, Canada, Japan, the Republic of
Ireland, the Republic of South Africa or any other jurisdiction in
which it may be unlawful to do so and it should not be delivered or
distributed, directly or indirectly, into or within any such
jurisdictions.
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 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 the 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. In the past year, thankfully, all of our
portfolio companies have made significant advancements and our
strong returns on invested capital continue and net asset growth
has followed in lock step.
Key portfolio companies
Leveraging our proprietary global university network, we provide
services to universities and companies to help them assess and
commercialise their innovations. Utilising these services, we have
built a valuable group of portfolio companies to commercialise
select intellectual properties that if successfully commercialised
could make a positive impact on people's lives. Our model is
simple, we seek to couple commercialisation ready, compelling
university IP with visionary management. We then invest our own
capital and introduce exogenous sources of capital to help these
companies grow. When we realise exits through trade sales or IPOs,
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.
Whilst few in number, they are diverse and span multiple sectors
including food tech, autonomous vehicles, smart eyewear and
respiratory medical devices. All of our portfolio companies have in
our view, compelling intellectual properties, capable and inspired
management and address $Billion+, fast growing markets. The entire
team at Tekcapital is committed to helping these companies grow to
achieve their full potential and value.
Salarius is a food tech business that owns a patented process to
produce micron 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 number one cause
of premature death.
In addition to its focus on B2B sales of MicroSalt(R) to snack
food companies, Salarius has launched its own snack food brand
called SaltMe!(TM). Beginning in August 2020 they started shipping
their first product, SaltMe!(TM) potato chips. The product is now
in more than 2,400 stores throughout the U.S.. The low sodium
ingredient market is estimated to reach US$2b(1) by 2027.
Tekcapital owns 97.15% of Salarius and 80% 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. In January 2021, Lucyd's US
subsidiary Innovative Eyewear Inc 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) or Google Voice. The product has
initially been very well received and is available on multiple
ecommerce sites and in 200 retail optical stores. Lucyd has
developed and filed 41 U.S. utility and design patents covering
their products. Innovative Eyewear Inc., a U.S. subsidiary of its
portfolio company Lucyd Ltd, filed a registration statement on Form
S-1 with the U.S. Securities and Exchange Commission for a proposed
initial public offering of shares of its common stock in the United
States. Tekcapital currently owns 100% of the share capital of
Lucyd Ltd and approximately 80% of the share capital of Innovative
Eyewear, Inc.
Innovative Eyewear intends to commence the sale of its
securities in the IPO following completion of the SEC review
process, subject to market and other conditions. A copy of the
registration statement is available on www.sec.gov. The Company
intends the shares to be listed on the NASDAQ under ticker:
LUCY.
Guident owns or holds the exclusive licence to eight patents and
applications that we believe can improve the safety and efficiency
of autonomous vehicles and land-based delivery devices .
Guident has demonstrated its beta remote monitoring and control
system (RMCC) with a 38 msec latency, which is believed to be
amongst the lowest in the industry.
Guident has progressed with its B2B marketing program and seeks
to develop partnerships smart city operators, vehicle OEM's and
fleet operators to provide remote tele-monitoring and control
centres for autonomous vehicles and fleet operators. Additionally,
Guident has fabricated its regenerative shock absorbers and
commenced testing.
According to Allied Market Research(1), 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 has fabricted prototypes for testing. Tekcapital owns
100% of Guident and 96% of its U.S. subsidiary Guident Corporation
as of 30 November 2021.
Belluscura has developed and sells an improved portable oxygen
concentrator to provide on-the-go supplemental oxygen, with user
replaceable filter cartridges.
When a patient's disease progresses, they now can upgrade the
filter cartridge to provide more liters of O(2) per minute, like
adding memory on a laptop, rather than having to replace an
expensive medical device. These cost savings will be beneficial to
patients and insurance companies and should help make portable
respiratory devices more affordable, which is core to Belluscura's
mission. Belluscura filed for and received 510(K) clearance from
the U.S. FDA in March 2021.
On 28th May 2021 Belluscura successfully floated on the AIM to
finance and accelerate the manufacture and distribution of their
portable oxygen concentrators. They are performing well and are
manufacturing and delivering units in excess of their anticipation.
According to Global Market Insights, the medical portable O(2)
market is currently US$1.4bn(2) a year and growing by more than
US$100m/year(2). 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.
Tekcapital owns approximately 15% of Belluscura as of the date of
this report.
Financial Performance
In 2021, 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 105%.
This increase was driven primarily by:
-- Increase in the fair value of our Group's holding in
Belluscura (increase of US$19.4m), as a result of their successful
LSE AIM flotation on 28 May 2021 coupled with their commercial
progress.
-- Increase in the fair value of our Group's shares in Lucyd Ltd
(increase of US$12.5m) driven by commercial progress and a REG CF
crowdfund conducted at a $20m pre-money valuation.
-- increase in the fair value of our Group's shares in Salarius
Ltd (increase of US$0.7m) driven by commercial progress and an
oversubscribed REG CF crowdfund conducted at a US$5m pre-money
valuation.
The Group also recorded a US$3.9m fair value loss from its
investment in Guident Ltd, after updating the valuation methodology
to the price agreed between Guident CORP and by investors in the
most recent Private Placement offering at $1 a share.
As a result, for 2021, our net assets increased by approximately
108% to US$68.1m, a record level for our Group. Total income
increased 195% to US$29.2m with unrealised profit on the
revaluation of investments driving that increase by US$28.1m (2020:
US$8.7m). Our after-tax profit increased by 243% to US$26.4m (2020:
US$7.7m).
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 2021.
On 18 March 2021, the Group announced it had completed a
fundraising of GBP3.8m (US $5.28m) before expenses, through the
issue of, in aggregate 38,000,000 Placing Shares at 10 pence per
New Ordinary Share. On 3 November 2021 the Group announced it had
completed a fundraising of GBP3.0m (US$4.1m) before expenses,
through the issue of, in aggregate 10,714,286 placing shares at 28
pence per New Ordinary Share.
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. Management's strategy
of early detection and remediation includes continuous monitoring
of sales performance, expenses and capital requirements as well as
ongoing assistance in strategic planning and fundraising
activities, amongst others.
-- 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. Management's
strategy of early detection and remediation includes continuous
monitoring of sales performance and expenses, intellectual property
position and strategic direction, as well as ongoing assistance in
executive and board recruitment, IP acquisition and fundraising
activities, amongst others.
-- 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 future. Management's strategy includes regular
review of performance and compensation strategy to help improve
retention of talent along with executive requirement to expand the
depth of our management bench.
-- The COVID-19 epidemic may produce negative economic
activities which could reduce the Group's economic performance as a
result of supply chain disruptions. 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. The weighted average cost of capital may increase as a
result of geo-political disruptions and knock-on effects of the
COVID pandemic in the equity markets. Management's strategy of
early detection and remediation includes continuous monitoring of
supply chain needs, establishment of alternative sources of
production for key components and ingredients as well as ongoing
fundraising activities when necessary, amongst others.
-- The current barbaric and senseless Russian invasion of
Ukraine has not had a material impact on our business to-date, as
far as we can discern at this early juncture, as we do not have
direct business exposure to either Russia or the Ukraine. However,
over time the conflict may contribute to inflation of energy costs
and supply chain disruption which could increase the cost and
complexity of sourcing components for some of our portfolio
companies. Additionally, due to the conflict and the uncertainty it
has introduced to the capital markets, we delayed our proposed IPO,
as we are seeking to effectuate the transaction in a somewhat more
stable market environment as soon as practiceable.
-- Management's mitigation measures include regular evaluation
of potential supply chain bottlenecks and the identification of
potential redundant suppliers or substitute suppliers for each
portfolio company. We will seek to estimate the potential impact on
costs and margins, monitoring distributor and customer pricing as
well as continuous assistance in fundraising, including need for
diversification of funding strategies to include private as well as
public sources of capital.
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 2022. 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 for a number of
our portfolio companies, to accelerate growth 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 recent Coronavirus pandemic, and that changes in the
value of our portfolio companies can have a significant impact on
our NAV, revenue, income and future prospects.
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 commercialisation 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.
(a) 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 every
days' 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.
(b) 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.
(c) 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.
(d) 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 behavior with regards to the
activities of the Directors, the Group's employees and others
associated with the Group.
(e) The need to act fairly between members of the Company
The Company has one class of ordinary shares, which have the
same rights as regards to voting, distributions and upon a
liquidation. Management as a whole are also significant
shareholders in the Company, holding approximately 6% 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.
(g) Belluscura plc listing
Consistent with the Board's policy to seek exits, when
practicable, for our portfolio companies either through trade sales
or public listings we supported Belluscura's listing and exercised
all our options and warrants pre-IPO.
h) Innovative Eyewear Inc. listing
We have initiated the process for listing of Lucyd's US
operating company, Innovative Eyewear Inc.'s shares to enhance its
ability to raise capital and compete effectively in the rapidly
developing smart eyewear market. The listing if successful will
also increase the company's ability to recruit experienced managers
by being able to offer associates stock options grants with a
near-term path towards monetisation.
i) Fundraising activities
During the course of the period, Tekcapital consummated two
fundraises for dual reason of continued investment in our portfolio
companies and to increase our available working capital. The former
reason is consistent with board policies mentioned in our 2020
report:
"Current Trading and Outlook" on Page 25 in our 2020 Annual
Report
We are enthusiastic about the development of Tekcapital's
portfolio companies, their performance to-date and their prospects
to significantly expand in 2022. 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 for a number of
our portfolio companies, to accelerate growth for these
companies.
j) COVID-19
For our US operations we required all associates to be
vaccinated to enable them to work in our corporate office. Further
we followed the CDC guidelines with regard to social distancing,
mask utilisation and quarantines for those that tested positive for
COVID 19 or have COVID 19 like symptoms. For our UK associates we
encouraged them to follow NHS guidelines. All UK associates work
remotely.
k) Ukraine crisis
The current Russian invasion of Ukraine has not had a material
impact on our business to-date, as far as we can discern at this
early juncture, as we do not have direct business exposure to
either Russia or the Ukraine. However, over time the conflict may
contribute to inflation of energy costs and supply chain disruption
which could increase the cost and complexity of sourcing components
or ingredients for some of our portfolio companies. Additionally,
due to the conflict and the uncertainty it has introduced to the
capital markets, we have delayed our proposed IPO of Innovative
Eyewear Inc and seek to effectuate the transaction in a slightly
more stable market environment as soon as practicable.
l) Brexit
United Kingdom's withdrawal from the EU and entering into the
Trade and Cooperative Agreement with the EU is not expected to have
a significant impact on our business, although in future periods it
may increase our costs to secure intellectual properties.
m) Greenhouse Gas Emissions
The 2018 Regulations introduced requirements under Part 15 of
the Companies Act 2006 for an enhanced group of companies, which
are defined as large by the Companies Act 2006, to disclose their
annual energy use and greenhouse gas emissions, and related
information. The group is not currently defined as large, but it
has chosen to apply the 2018 Regulations. Tekcapital plc itself
consumes less than 40MWh and therefore is a low energy user, which
negates the need to make detailed disclosures of its energy and
carbon information. Furthermore and taking account of this, it has
applied the option permitted by the 2018 Regulations to exclude any
energy and carbon information relating to its subsidiaries where
the subsidiary would not itself be obliged to include if reporting
on its own account; this applies to all subsidiaries within the
group.
n) The 2018 Regulations introduced requirements under Part 15 of
the Companies Act 2006 for an enhanced group of companies, which
are defined as large by the Companies Act 2006, to disclose their
annual energy use and greenhouse gas emissions, and related
information.
The group is not currently defined as large, but it has chosen
to apply the 2018 Regulations. Tekcapital plc itself consumes less
than 40MWh and therefore is a low energy user, which negates the
need to make detailed disclosures of its energy and carbon
information. Furthermore and taking account of this, it has applied
the option permitted by the 2018 Regulations to exclude any energy
and carbon information relating to its subsidiaries where the
subsidiary would not itself be obliged to include if reporting on
its own account; this applies to all subsidiaries within the
group.
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 2021.
Dr Clifford M Gross
Chairman and CEO
5 May 2022
Directors Report
Directors
The following Directors held office during the period:
Clifford M Gross, Ph.D.
Robert Miller, M.D.
Louis Castro
The RT Hon Lord David Willets FRS
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 financial
statements in accordance with applicable laws and regulations.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors have elected
to prepare the financial statements in accordance with
International Financial Reporting Standards adopted by the
Companies Act 2006 ("IFRS") and those parts of the Companies Act
2006 relevant to companies which apply IFRS. 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 Company and of the profit or loss of the Company for
that year. In preparing those financial statements, the Directors
are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and estimates that are reasonable;
-- state whether applicable accounting standards 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 Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that
the financial statements comply with the Companies Act 2006. The
Directors are also responsible for safeguarding the assets of the
Company 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 this page of the financial statements confirm
that, to the best of each person's knowledge and belief:
-- the financial statements, prepared in accordance with
UK-adopted international accounting standards, 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, cash at bank and monies raised in
follow-on offerings. 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 growing 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 or monetisation of certain assets.
The Group has access to equity markets if it seeks to the
additional funds. 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 2021 (2020: $nil).
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 .
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 2021 2020
&
fees in kind Total Total
US $ US $ US $ US $ US $
--------------- -------- --------- -------- -------- --------
Clifford M
Gross 191,825 24,098 189,000 404,923 368,985
M J Malcolm
Groat - - - - 10,247
R W "Bill"
Payne - - - - 3,802
Robert Miller 25,183 - - 25,183 21,600
Louis Castro 41,312 - - 41,312 37,146
Lord David
Willets 33,049 - - 33,049 28,218
291,369 24,098 189,000 504,467 469,998
--------------- -------- --------- -------- -------- --------
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 2021 (2020: Nil). Directors'
beneficial interests in shares
2021 2020 2021 2020
No of Shares No of Shares No of No of Options
Options
Clifford M Gross 8,657,500 8,657,500 3,000,000 3,000,000
Lord David Willets - - 200,000 100,000
Robert Miller 2,664 2,664 300,000 200,000
-------------------- ------------- ------------- ---------- --------------
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.
The details of the options held by each director at 30 November
2021 are as follows:
No of Options Exercise Grant Date Date from which exercisable Life
Price
------------------- -------------- ---------- ----------- ---------------------------- --------
Clifford M Gross 3,000,000 GBP0.12 28-Aug-20 Special Conditions* 5 Years
Robert Miller 100,000 GBP0.375 29-Jun-16 Special Conditions* 5 Years
100,000 GBP0.0783 30-Aug-19 Special Conditions** 5 Years
100,000 GBP0.19 16-Jun-21 Special Conditions** 5 Years
Lord David Willets 100,000 GBP0.0525 6-Jan-20 Special Conditions** 5 Years
100,000 GBP0.19 16-Jun-21 Special Conditions** 5 Years
* 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.
An additional 525,000 options were held by Harrison Gross,
family member of Dr. Clifford Gross (2020: 525,000).
Principal Risks and Uncertainties
Please refer to Strategic Report.
Post Balance Sheet Events
For further details, please refer to note 27 in the notes to the
accounts. Information has been included in the strategic report
under S414C(11).
For activities in field of research and development, please
refer to Strategic report.
For financial instruments risks, please refer to Note 3.1 of the
Notes to the Financial Statements.
Independent auditors
HW Fisher LLP resigned as auditors and MacIntyre Hudson LLP were
appointed as auditor to the Group and the Company and in accordance
with section 485 of the Companies Act 2006.
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
5 May 2022
Tekcapital Plc
Consolidated Statement of comprehensive income
For the year ended 30 November 2021
Year ended Year ended
Group Note 30 November 30 November
2021 2020
US $ US $
------------------------------------- ------ ------------------- -------------------
Continuing Operations
Revenue from services 6 815,989 942,566
Changes in fair value on financial
assets at fair value though profit
or loss 12 28,096,340 8,688,111
Interest from financial assets at
fair value through profit or loss* 142,399 95,946
Operating expenses 7 (2,845,339) (2,201,369)
Other income** 6.1 161,094 156,740
Operating profit and profit before
tax 26,370,483 7,681,994
Income tax expense 9 (1,813) (2,076)
Profit after tax for the year 26,368,670 7,679,918
------------------------------------- ------ ------------------- -------------------
Other comprehensive income***
Translation of foreign operations 16,726 92,949
Total other comprehensive income 16,726 92,949
--------------------------------------------- ------------------- -------------------
Total comprehensive income for the year 26,385,396 7,772,867
--------------------------------------------- ------------------- -------------------
Earnings per share
Basic earnings per share 10 0.22 0.10
Diluted earnings per share 10 0.21 0.09
Amounts relating to convertible loan note interest income
previously included within Revenue from services were reclassified
in 2021 to Interest from financial assets at fair value through
profit or loss (including presentation of prior year balances).
**Amounts related to R&D relief and government grants (see
note 6.1) previously included under Revenue from services, were
reclassified in 2021 to Other income (including presentation of
prior year balances).
*** May be reclassified to profit or loss in future years.
The notes on pages 23 to 55 are an integral part of these
consolidated financial statements.
Tekcapital Plc
Consolidated Statement of financial position
At 30 November 2021
As at 30 November As at 30 November
Group Note 2021 2020
US$ US$
-------------------------------- ----- ---------------------------- -------------------------
Assets
Non-current assets
Intangible assets 13 364,401 838,770
Financial assets at fair value
through profit and loss 12 63,865,432 31,079,826
Property, plant and equipment 14 6,603 9,622
64,236,436 31,928,218
-------------------------------- ----- ---------------------------- -------------------------
Current assets
Trade and other receivables 15 689,003 647,436
Cash and cash equivalents 16 3,543,762 538,473
4,232,765 1,185,909
-------------------------------- ----- ---------------------------- -------------------------
Total assets 68,469,201 33,114,127
-------------------------------- ----- ---------------------------- -------------------------
Current liabilities
Trade and other payables 19 237,151 247,442
Current income tax liabilities 500 500
Deferred revenue 20 169,283 154,721
406,934 402,663
-------------------------------- ----- ---------------------------- -------------------------
Total liabilities 406,934 402,663
-------------------------------- ----- ---------------------------- -------------------------
Net assets 68,062,267 32,711,464
-------------------------------- ----- ---------------------------- -------------------------
Equity attributable to owners
of the Parent
Ordinary shares 18 793,792 521,830
Share premium 18 21,793,644 13,211,344
Retained earnings 45,259,827 18,780,012
Translation reserve 287,173 270,447
Other Reserve (72,169) (72,169)
Total equity 68,062,267 32,711,464
-------------------------------- ----- ---------------------------- -------------------------
The notes on pages 23 to 55 are an integral part of these
financial statements.
The financial statements on pages 18 to 55 were authorised for
issue by the Board of Directors on 5 May 2022 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 2021
Attributable to equity holders of the parent company
----------------------------------------------------------------------------------------------------------------------------------
Ordinary Share Translation Other Retained Total
Group Note Shares Premium Reserve Reserve Earnings Equity
US $ US $ US $ US $ US $ US $
--------------- ----- ------------------- ------------------------ ------------------- ----------------- ------------------------ -----------------
Balance as at
30 November
2019 372,984 10,993,546 177,498 (72,169) 11,055,821 22,527,680
--------------- ----- ------------------- ------------------------ ------------------- ----------------- ------------------------ -----------------
Profit for the
year 7,679,918 7,679,918
Other
comprehensive
loss 92,949 92,949
Total comprehensive
income
for the year 372,984 10,993,546 270,447 (72,169) 18,735,739 30,300,547
Transactions
with owners,
recorded
directly in
equity
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)
Share based
payments 25 44,273 44,273
Total
transactions
with
owners 148,846 2,217,798 - - 44,273 2,410,917
--------------- ----- ------------------- ------------------------ ------------------- ----------------- ------------------------ -----------------
At 30 November
2020 521,830 13,211,344 270,447 (72,169) 18,780,012 32,711,464
--------------- ----- ------------------- ------------------------ ------------------- ----------------- ------------------------ -----------------
Profit for the
year 26,368,670 26,368,670
Other
comprehensive
income 16,726 16,726
Total comprehensive
income
for the year - - 16,726 - 26,368,670 26,385,396
Transactions
with owners,
recorded
directly in
equity
Share issue 18 271,962 9,144,593 9,416,555
Cost of share
issue 18 (562,293) (562,293)
Share based
payments 25 111,145 111,145
Total
transactions
with
owners 271,962 8,582,300 - - 111,145 8,965,407
--------------- ----- ------------------- ------------------------ ------------------- ----------------- ------------------------ -----------------
At 30 November
2021 793,792 21,793,644 287,173 (72,169) 45,259,827 68,062,267
--------------- ----- ------------------- ------------------------ ------------------- ----------------- ------------------------ -----------------
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 55 are an integral part of these
financial statements.
Tekcapital Plc
Consolidated Statement of cash flows
For the year ended 30 November 2021
For the year For the year
Group ended ended
30 November 30 November
Note 2021 2020
US $ US $
---------------------------------------- ----- --------------------- -----------------------
Cash flows from operating activities
Cash outflows from operations 23 (1,812,288) (948,166)
Tax paid (1,813) (2,076)
Net cash outflows from operating
activities (1,814,101) (950,242)
----------------------------------------- ----- --------------------- -----------------------
Cash flows from investing activities
Additions to financial assets
at fair value through profit
and loss 12 (3,968,339) (1,345,679)
Purchases of property, plant
and equipment 14 (2,389) (950)
Net cash outflows investing
activities (3,970,728) (1,346,629)
----------------------------------------- ----- --------------------- -----------------------
Cash flows from financing activities
Proceeds from issuance of ordinary
shares 18 9,416,593 2,628,896
Costs of raising finance 18 (562,293) (262,252)
Net cash infllows from financing
activities 8,854,300 2,366,644
----------------------------------------- ----- --------------------- -----------------------
Net increase in cash and cash
equivalents 3,069,471 69,773
Cash and cash equivalents at beginning
of year 16 538,473 472,899
Exchange (losses) on cash and cash
equivalents (64,183) (4,199)
Cash and cash equivalents at
end of year 16 3,543,762 538,473
----------------------------------------- ----- --------------------- -----------------------
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 27 of
the financial statements. The Company is a public limited company
limited by shares, which listed on the AIM market of the London
Stock Exchange in 2014. The principal activity of the Group is to
provide universities and corporate clients with valuable technology
transfer services. The Group also acquires 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 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 adopted by the Companies Act 2006 ("IFRS") and
those parts of the Companies Act 2006 relevant to companies which
apply 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.
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 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 monetisation of
quoted equity stakes or an additional fund raise. If the Group's
forecasts are not achieved, the Directors would seek to raise the
additional funds through monetisations of the portfolio or equity
issues. Whilst the COVID-19 epidemic is contributing to uncertainty
in the markets, at the time of approving the accounts after making
enquiries, the Directors are satisfied 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, interpretations and amendments not yet
adopted
The Group adopt early the following amendments to standards
which are not yet mandatory.
Amendments to IAS 16 Property, Plant and Equipment (issued in
May 2020)
The amendments require any proceeds from selling items produced
(and related production costs) in the course of bringing an item
property, plant and equipment into operation to be recognised in
profit or loss clarifying that such items are not reflected in the
cost of the asset.
The amendment is effective for financial years beginning on or
after 1 January 2022 and is not yet endorsed for use under in UK
adopted IFRS under the Companies Act 2006.
The Group does not expect a material impact on its consolidated
financial statements from these amendments.
Amendments to IAS 37 Provisions, Contingent Liabilities and
Contingent Assets (issued in May 2020)
The amendments clarify that the cost of fulfilling a contract
are costs that relate directly to that contract. Such costs can be
the incremental costs of fulfilling that contract or an allocation
of other costs directly related to fulfilling that contract.
The amendment is effective for financial years beginning on or
after 1 January 2022 and is not yet endorsed for use in UK adopted
IFRS under the Companies Act 2006.
The Group does not expect a material impact on its consolidated
financial statements from these amendments.
Amendments to IAS 1 Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current (issued
January 2020)
The amendments clarify that the classification of a liability as
current or non-current is based only on rights existing at the end
of the reporting period and the classification is not affected by
expectations about whether rights to settle or defer a liability
will be exercised. Further, the amendments clarify that the
settlement of a liability refers to the transfer of cash, equity
instruments, other assets, or services to the counterparty. This
amendment only affects presentation.
The amendment is effective for financial years beginning on or
after 1 January 2023 and is not yet endorsed for use in UK adopted
IFRS under the Companies Act 2006.
The Group does not expect a material impact on its consolidated
financial statements from these amendments.
Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of
Accounting Policies (issued in February 2021)
The amendments enhance the disclosure requirements relating to
an entity's accounting policies and clarify that the notes to a
complete set of financial statements are required to include
material accounting policy information. Material accounting policy
information, when considered with other information included in the
financial statements, can reasonably be expected to influence
decisions that the primary users of financial statements make on
the basis of the financial statements. The amendments help
preparers determine what constitutes material accounting policy
information and notes that accounting policy information which
focuses on how IFRS has been applied to its own circumstances is
more useful for users of financial statements than standardised
information or information duplicating the requirements of
IFRS.
The amendment also states that immaterial accounting policy
information need not be disclosed but when it is disclosed it shall
not obscure material accounting policy information. Further, if
accounting policy information is not deemed material this does not
affect the materiality of related disclosure requirements of
IFRS.
The disclosure of judgements made in applying accounting
policies should reflect those that have had the most significant
effect on items recognised in the financial statements.
The amendment is effective for financial years beginning on or
after 1 January 2023 and is not yet endorsed for use under in UK
adopted IFRS under the Companies Act 2006.
Amendments to IAS 8 Definition of Accounting Estimates (issued
in February 2021)
The amendments define accounting estimates as monetary amounts
in financial statements that are subject to measurement
uncertainty. An accounting policy may require an item in financial
statements to be measured at a monetary amount that cannot be
observed directly so that in order to achieve the objective of an
accounting policy, an estimation is required.
The amendments state that the development of an accounting
estimate requires the use of judgement or assumptions based on the
latest available reliable information and involve the use of
measurement techniques and inputs. Accounting estimates might then
need to change as a result of new information, new developments or
more experience.
A change in input or measurement technique is a change in
accounting estimate which is applied prospectively unless the
change results from the correction of prior period errors.
The amendment is effective for financial years beginning on or
after 1 January 2023 and is not yet endorsed for use in UK adopted
IFRS under the Companies Act 2006.
Amendments to IAS 12 Deferred Tax related to Assets and
Liabilities arising from a Single Transaction (issued 7 May
2021)
The amendments specify how companies should account for deferred
tax on transactions such as leases and decommissioning
obligations.
In specified circumstances, companies are exempt from
recognising deferred tax when they recognise assets or liabilities
for the first time. Previously, there had been some uncertainty
about whether the exemption applied to transactions such as leases
and decommissioning obligations-transactions for which companies
recognise both an asset and a liability.
The amendments clarify that the exemption does not apply and
that companies are required to recognise deferred tax on such
transactions. The aim of the amendments is to reduce diversity in
the reporting of deferred tax on leases and decommissioning
obligations.
The amendments are effective for annual reporting periods
beginning on or after 1 January 2023, with early application
permitted and is not yet endorsed for use in UK adopted IFRS under
the Companies Act 2006
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. The
Directors consider this to be the most appropriate presentational.
Each subsidiary within the Group has its own functional currency
which is dependent on the primary economic environment in which
that subsidiary operates. The functional currency of Tekcapital Plc
is UK sterling as this is the currency the entity undertakes its
primary economic activity.
(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 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) Monetary 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 date to determine whether there is any
indication of impairment.
2.5 Investment in portfolio companies
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 2021:
-- 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 2.9.3.
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
Intangible assets that are acquired by the Group are stated at
cost less accumulated amortisation and accumulated impairment
losses. Amortisation is charged to the administrative expenses in
the Statement of Comprehensive Income on a straight-line basis over
the estimated useful lives of intangible assets unless such lives
are indefinite.
(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.
The estimated useful life of the Invention Evaluator intangible
asset is 10 years. The useful life is estimated based upon
management's best estimate of the expected life of the asset. The
useful life is reconsidered if circumstances relating to the asset
change or if there is an indication that the initial estimate
requires revision.
The directors had previously assessed that the Invention
Evaluator intangible asset had an indefinite useful economic life.
The directors have reconsidered this assessment during the year
under audit and determined the intangible asset has a finite life
of 10 years over which amortisation is to be charged on a straight
line basis. The amortisation charge for the year includes
accumulated amortisation charges for prior periods. The directors
are satisfied the adjustment is not material.
(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. The estimated useful life of the
Vortechs Group intangible asset is 10 years. The useful life is
estimated based upon management's best estimate of the expected
life of the asset. The useful life is reconsidered if circumstances
relating to the asset change or if there is an indication that the
initial estimate requires revision.
The directors had previously assessed that the Vortechs Group
intangible asset had an indefinite useful economic life. The
directors have reconsidered this assessment during the year under
audit and determined the intangible asset has a finite life of 10
years over which amortisation is to be charged on a straight line
basis. The amortisation charge for the year includes accumulated
amortisation charges for prior periods. The directors are satisfied
the adjustment is not material.
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 classifies its 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 held investments in
portfolio companies classified as equity investments. They are
included in non-current assets and are measured at fair value
through profit and loss in accordance with IFRS 9.
The Group has convertible loan note receivables. These financial
assets are classified and measured at fair value through profit and
loss in accordance with IFRS 9.
The directors had previously assessed the convertible loan notes
as measured at amortised cost. The directors have reconsidered this
assessment during the year under audit and determined that based
upon the contractual terms the financial asset should be
reclassified as fair value through profit and loss. The convertible
loan note includes a conversion feature allowing the holder to
convert the note into equity on a financing event, sale or listing
at market price at the date of the event. The directors have
assessed the conversion feature and are satisfied the fair value of
this feature is not material. These financial assets have therefore
been reclassified. The directors are satisfied that the resulting
change in valuation method does not result in a material
adjustment. These financial assets continue to be classified as
non-current assets.
The Group also has receivables carried at amortized cost. They
are included in current assets. The Group's service income
receivables comprise 'trade and other receivables' in the balance
sheet, also held at amortised cost. 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
IFRS 13 defines fair value as the price that would be received
to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement
date.
Loans and receivables are recognised and carried at amortised
cost. 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
convertible loan note receivables. 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 12 months we will value our ownership in
the portfolio company at this observed valuation, taking account of
any observed material changes during the period, including quoted
prices in active markets (Level 1 input).
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 techniques 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.
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
Impairment provisions for current and non-current trade
receivables are recognized based on the simplified approach within
IFRS 9 using the lifetime expected credit losses. During this
process the probability of the non-payment of the trade receivables
is assessed. This probability is then multiplied by the amount of
the expected loss arising from default to determine the lifetime
expected credit loss for the trade receivables. For trade
receivables, which are reported net, such provisions are recorded
in a separate provision account with the loss being recognized
within cost of sales in the consolidated statement of comprehensive
income. On confirmation that the trade receivable will not be
collectable, the gross carrying value of the asset is written off
against the associated provision.
Financial assets held at amortised cost comprise trade and other
receivables, and cash and cash equivalents in the consolidated
statements of financial position.
2.12 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 from inception.
2.13 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.
2.14 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.
2.15 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.
2.16 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.
2.17 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.
2.18 Leases
At inception, the Group 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.
2.19 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.
Provision of services
The Group provides following lines of services:
-- Invention Evaluator services: provision of reports assessing
potential of any new technology. Revenue is recognised upon
delivery of a complete report, when the report is made available to
each customer. Upon access to the report delivered via online
portal, customers consume the benefits of the contractual
obligation, and the performance obligation is met. Directors
consider transaction price to be clearly determined upon payment of
fixed fee for each report prior to report's delivery. Directors
considered uncertainty of cash flows from sales to be limited,
considering prepayment is made for each report prior to report's
delivery.
-- Tech transfer recruitment services (Vortechs Group):
recruitment services specialising in technology transfer
executives. Revenue is recognised upon placement of an executive,
when hire is made by Tekcapital's customer and the performance
obligation is met. Directors consider transaction price to be
clearly determined when both parties agree to placement fee for
each successful hire. Directors considered uncertainty of cash
flows from sales to be limited, considering payments are made by
universities with excellent track record of payments and clear
definition of performance obligation upon which such payment is
made.
-- Management services: accounting, tax, legal and other
services provided to portfolio companies. Revenue is recognized
upon delivery of services to each portfolio company and performance
obligation is met as defined in the management service contract.
Directors considering transaction price to be clearly determined by
amounts specified in the management service agreements. Directors
considered uncertainty of cash flows from sales to be limited,
considering payments are made by companies with excellent track
record of payments and clear definition of performance obligation
upon which such payment is made.
For breakdown of revenue from services recognised over time and
at point of time, please refer to Note 6 to Financial
Statements.
2.20 Other income
Tekcapital LLC was granted a loan from TD Bank, in the aggregate
amount of US$70,166 pursuant to the Paycheck Protection Program
(the "PPP") under Division A, Title I of the CARES Act, which was
enacted March 27, 2020. The Group currently believes that its use
of the loan proceeds will meet the conditions for forgiveness of
the loan, given similar loan was forgiven in 2020. In accordance
with IAS 20, considering the forgiveness criteria being met, the
company recognised the grant in the income statement as
revenue.
The Group also recognized US$90,928 from R&D relief under
other income.
2.21 Interest income
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate applicable
(10%).
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 2021 and
2020 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
$3,550,917. 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 $28,620.
(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
decrease by US$2,523,579 and equity would decrease by
US$6,477,104.
(g) Impact of the COVID-19 pandemic
Recent 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.
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 Potential Potential Note
estimate/judgment assumption impact impact reference
area within in the for
the next longer sensitivity
financial term analysis
year
Valuation of This input was ü ü Note 12
unquoted equity corroborated
investments by Guident's enterprise
valuation
by estimating the net
present
value of future
cashflows
associated with its
business.
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.
The fair value of
Salarius
Limited reflects input
in
the form of value of
Salarius
Ltd's shares in its US
subsidiary
(Microsalt Inc) as
determined
by recent market
transactions
of these shares. This
input
was corroborated by
Microsalt's
enterprise valuation by
estimating
the net present value
of
future cashflows
associated
with its business. 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.
The fair value of Lucyd
Limited
reflects 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. This
input
was corroborated by
Innovative
Eyewear's enterprise
valuation
by estimating the net
present
value of future
cashflows
associated with its
business.
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.
In applying valuation
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 input
in
the form of value of
Guident
Ltd's shares in its US
subsidiary
(Guident CORP ) as
determined
by recent market
transactions
of these shares.
------------------------- --------------------- --------------------- -----------------------
Deferred Taxes Deferred tax ü ü Note 22
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, 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 ü ü Note 25
payment of 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 invention evaluator
services, 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
2021 Licensing
Professional and TOTAL
Consolidated income statement Services Investment
US $ US $ US $
Net Revenue 815,989 28,096,230 28,912,329
Cost of Sales (263,923) (263,923)
Interest Income 142,399 142,399
Administrative Expenses (1,069,355) (1,503,217) (2,572,572)
Depreciation and Amortization (2,211) (6,633) (8,844)
Other Income 161,094 161,094
Group operating profit (358,406) 26,728,889 26,370,483
------------------------------- ----------------------- ---------------------- ------------------
Profit on ordinary activities
before income tax (358,406) 26,728,889 26,370,483
Income tax expense (453) (1,360) (1,813)
Profit after tax (358,859) 26,727,529 26,368,670
------------------------------- ----------------------- ---------------------- ------------------
2020 Licensing
Professional and TOTAL
Consolidated income statement Services Investment
US $ US $ US $
Net Revenue 942,566 8,688,111 9,630,677
Cost of Sales (458,728) (458,728)
Interest Income 95,946 95,946
Administrative Expenses (528,722) (1,204,482) (1,733,204)
Depreciation and Amortization (2,359) (7,078) (9,437)
Other Income 156,740 156,740
Group operating profit/(loss) 109,497 7,572,497 7,681,994
------------------------------- ----------------------- ---------------------- ------------------
Profit on ordinary activities
before income tax 109,497 7,572,497 7,681,994
Income tax expense (519) (1,557) (2,076)
Profit/(Loss) after tax 108,978 7,570,940 7,679,918
------------------------------- ----------------------- ---------------------- ------------------
Segment assets and liabilities
2021 Licensing
Professional and TOTAL
Consolidated statement
of Services Investment
financial position US $ US $ US $
Assets 4,603,769 63,865,432 68,469,201
Liabilities (406,934) (406,934)
Net Assets 4,196,835 63,865,432 68,062,267
------------------------ -------------------- ----------------- ----------------
2020 Licensing
Professional and TOTAL
Consolidated statement
of Services Investment
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
------------------------ -------------------- ----------------- ----------------
Geographical information
2021 2020
US $ US $
United Kingdom 28,329,667 8,873,107
United States 815,989 942,566
Total revenue 29,215,822 9,883,363
------------------------- ----------------------- -----------------------
2021 2020
US $ US $
United Kingdom
Assets 63,865,432 31,079,825
Liabilities - -
United States
Assets 4,603,769 2,034,302
Liabilities (406,934) (402,663)
Total Net Assets 68,062,267 32,711,464
------------------------- ----------------------- -----------------------
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.
Transferred Transferred Transferred Transferred
at a point over time Total at a point over time Total
Group in time 2021 in time 2020
------------ ------------ ------------ ------------
US $ US $
------------------------ ------------ ------------ ---------- ------------ ------------ ----------
Major service lines:
- Sales of Invention
Evaluator Reports (78,196) (78,196) (174,904) (174,904)
- Tech transfer
recruitment services (365,114) (365,114) (261,311) (261,311)
- Management services (372,679) (372,679) (506,351) (506,351)
Total Revenue from
Services (457,872) (372,679) (815,989) (436,215) (506,351) (942,566)
------------------------ ------------ ------------ ---------- ------------ ------------ ----------
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.
6.1 Other Income
Total
Total 2021 2020
R&D relief 90,928 89,050
Government grants 70,166 67,690
161,094 156,740
7. Operating expenses
7.1 Expenses by nature
Group 2021 2020
US $ US $
----------------------------------- -------------- ------------------
Cost of goods related to services 263,923 458,728
Depreciation of property plant
and equipment 8,843 9,437
Research and development
expenses 388,691 417,569
Amortisation of intangible
assets 437,140 -
Other administration expenses 1,283,733 1,319,202
Foreign exchange movements 463,009 (3,567)
Total expenses 2,845,339 2,201,369
------------------------------------------ -------------- ------------------
7.2 Auditor remuneration
Group 2021 2020
US $ US $
------------- --------------
Fees payable to the group's auditor and its
associates for the audit of the Group and Company
financial statements 97,212 90,919
Fees payable to the Company's auditor and
its associates for other services
- The audit of company's
subsidiaries 13,082 10,247
110,294 101,166
---------------------------------------------------- ------------- --------------
8. Employees
8.1 Directors' emoluments
Group 2021 2020
US $ US $
----------------------- ---------- -----------
Directors emoluments 519,660 469,998
Directors portion of
Share Based Payments 31,493 10,465
-------------------------
Total 551,153 480,463
-------------------------- ---------- -----------
The highest paid Director received a salary of US$191,825 (2020:
$191,865) and benefits of US$24,098 (2020: US$22,745). The highest
paid Director received a bonus of US$191,825 (2020: US$154,375).
The highest paid Director did not exercise any share options. The
share-based payments associated with the highest paid Director
amounted to US$28,117. 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$669,660, excluding
Stock Base Compensation disclosed in Directors Remuneration Report.
Please also refer to Director's Report.
8.2 Employee benefit expense
Group 2021 2020
US $ US $
---------- -----------
Wages and salaries including
restructuring costs and other
termination benefits 440,694 281,248
Social security costs 62,907 48,032
Share options granted to directors
and employees 111,145 44,273
614,746 373,553
------------------------------------ ---------- -----------
8.3 Average number of people employed
Group 2021 2020
------------------------------------- ----- -----
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 Group in 2021 and 2020 was
six, of which two were Management.
To enhance flexibility and improve cost control, the Group
utilises consultants for scientific review, administrative and
operations support, software development and other
knowledge-intensive services.
9. Income tax expense
Group 2021 2020
US $ US $
--------------- ----------------
Current tax
Current tax on profits for the year 1,813 2,076
Total current tax 1,813 2,076
------------------------------------------ --------------- ----------------
Income tax expense 1,813 2,076
------------------------------------------ --------------- ----------------
Group 2021 2020
US $ US $
--------------- ----------------
Profit before tax 26,370,483 7,681,994
------------------------------------------ --------------- ----------------
Tax calculated at domestic tax rates
applicable to profits 5,010,392 1,459,579
Tax effects of:
- Expenses not deductible for tax
purposes 32,864 22,712
- Income not taxable (5,338,305) (1,650,744)
- capital allowances in excess of
depreciation 1,680 1,793
- Unrelieved tax losses and other
deductions 295,192 168,736
Total income tax expense 1,813 2,076
------------------------------------------ --------------- ----------------
The weighted average applicable tax rate was 19% (2020:
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.
Future UK corporate income tax rate of 25% will be applicable
for the financial year beginning 1 December 2023.
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 2021.
2021 2020
US $ US $
Earnings attributable to equity holders
of the Group (US$) 26,368,670 7,679,918
Weighted average number of ordinary shares
in issue:
Basic 120,128,629 80,713,247
Diluted 127,169,725 81,335,979
Basic earning per share 0.220 0.095
Diluted earning per share 0.207 0.094
The Group completed placements of total of 48,714,286 new
ordinary shares during the financial year.
11. Investments in subsidiaries
Company Total
------------------------------ --------------
Loans to
Share capital Subsidiaries US $
------------------------------ -------------- -------------- ------------
Cost and net book value
As at 1 December 2020 79,426 1,875,789 1,955,215
Additions during the - -
period -
Impairments during
the period - (1,103,550) (1,103,550)
Foreign currency translation - -
differences -
Balance at 30 November
2021 79,426 772,239 851,665
------------------------------ -------------- -------------- ------------
During the year the directors determined a provision for
impairment was required for Company's investments in Tekcapital
LLC.
Capital
and reserves Net Profit/(Loss)
Proportion
of ordinary
Subsidiaries shares directly Nature of
name (consolidated) held business $ $
---------------------- ------------ ------------------ --- ----------------- -------------- ------------------
Direct
Provision
of Intellectual
property
Tekcapital Europe England research
Limited and Wales 100% services 345,066,544 8,899,574
Provision
of Intellectual
property
research
Tekcapital LLC USA 100% services (3,326,707) (883,775)
-------------- ------------------
Indirect (not consolidated)
Indirect (not Capital
consolidated) and reserves Net Profit/(Loss)
Proportion
of ordinary
shares
directly Nature
held of business $ $
--------------- ------------ ---- ------------- --- -------------- ---- --- -------------- ------------------
The following are under ownership
of Tekcapital Europe Limited
England Provider of high-tech
Lucyd Limited and Wales 100% eyewear 17,342,195 12,643,625
Innovative
Eyewear United States Provider of high-tech
Inc(1) of America 81% eyewear 207,516 (3,244,506)
Developer of low
Salarius England sodium salt and
Limited and Wales 98% snack foods 5,074,703 718,217
Developer of low
Microsalt United States sodium salt and
Inc(2) of America 80% snack foods (369,561) (971,576)
Developer of autonomous
Guident England vehicle software
Limited and Wales 100% safety solutions 17,387,274 (3,913,892)
Developer of autonomous
Guident United States vehicle software
CORP(3) of America 91% safety solutions (721,168) (285,832)
Developer for baked
Smart Food England food coating to
Tek Limited and Wales 100% reduce fat (116,114) 0
(1) owned by Lucyd Ltd
(2) owned by Salarius Ltd
(3) owned by Guident Ltd
As at the year end, the Group 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 11900 Biscayne Blvd, Suite 630, Miami, Florida, 33181,
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 based in 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 has provided working capital assistance
to Salarius Limited and Guident Limited through convertible loan
note financing (see also Note 15). The Group also assists the
entities with their fundraising activities.
Registered office of all four subsidiaries owned by Tekcapital
Europe Limited: Acre House, 11-15 William Road, London, England,
NW1 3ER.
12. Financial Assets at Fair Value through Profit and Loss
The Group's financial assets at fair value through profit and
loss consist of equity investments (2021:US $62,523,638, 2020:US $
30,491,657) and convertible loan notes (2021:US$1,341,774, 2020:US
$588,169) totalling US $63,865,432 (2020:US $31,079,826).
12.1 Equity Investments
Group's investments in portfolio companies in the years ended 30
November 2021 and 30 November 2020 are listed below. The principal
place of business for portfolio companies listed below is the UK
and in the U.S..
Proportion 1 Dec Additions Disposal FX reval Fair Value 30 Nov
of ordinary 2020 change 2021
Group shares
US $ US $ US $ US $ US $ US $
Guident Limited 100.00% 22,029,834 - - (32,678) (3,913,892) 18,083,264
Lucyd Limited 100.00% 2,699,331 2,179,773 - - 12,466,091 17,345,195
Salarius Limited 97.50% 3,638,303 - - - 718,217 4,356,520
Belluscura Limited 15.13% 2,081,028 1,788,566 - - 18,825,924 22,695,518
Smart Food Tek
Limited 100.00% 43,161 - - - - 43,161
Total Balance 30,491,657 3,968,339 - (32,678) 28,096,340 62,523,658
-------------------- ------------- ----------- ---------- --------- --------- ------------ -----------
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
------------------ ------------- ----------- ----------- --------- -------------- -------------- -----------
Total fair value gain of US$28.1m for the year reflects uplift
in value of shares of Belluscura, Lucyd and Salarius, offset
partially by reduction in fair value of Guident. Considering early
stage of commercialisation, fair value of Smart Food Tek was
recorded based on the cost of acquired IP, as their carrying
amounts represent a reasonable approximation of fair value.
The valuation techniques used fall under, Level 2 - Observable
inputs, such as quoted prices, and Level 3- Other techniques as
defined by IFRS 13. These techniques were deemed to be the best
evidence of fair values considering early stage of portfolio
companies.
Fair value measurement hierarchy for financial assets as at 30
November 2021 with comparative amounts as of 30 November 2020:
Total Level 1 Level 2 Level 3
30 November 2021 US$ US$ US$ US$
Belluscura 22,695,518 22,695,518 - -
Lucyd Limited 17,345,195 - - 17,345,195
Guident Limited 18,083,264 - - 18,083,264
Salarius Limited 4,356,520 - - 4,356,520
Smart Food Tek Limited 43,161 - - 43,161
Total Balance 62,523,658 22,695,518 - 39,828,140
------------------------ ------------------ ------------------------- ------------------------ -----------------
30 November 2020
Belluscura 2,081,028 - 2,081,028 -
Lucyd Limited 2,699,331 - - 2,699,331
Guident Limited 22,029,834 - - 22,029,834
Salarius Limited 3,638,303 - - 3,638,303
Smart Food Tek Limited 43,161 - - 43,161
Total Balance 30,491,657 - 2,081,028 28,410,629
------------------------ ------------------ ------------------------- ------------------------ -----------------
Transfer of investment in Belluscura from Level 2 to Level 1
occurred during the period as the company's shares commenced
trading on AIM market of London Stock Exchange, providing quoted
prices (unadjusted) in active markets for identical assets or
liabilities that the reporting entity has the ability to access at
the measurement date
Belluscura (US $18.8m gain)
The fair value of the holding increased by US$18.8m during the
year due to Company's listing at AIM market of London Stock
Exchange, and closing price of 94p as of 30 November 2021. With
17,138,767 shares held by Tekcapital plc, a fair value of
US$22,695,518 was arrived at as of 30 November 2021.
Lucyd (US $12.5m gain)
The fair value of the holding increased by US$12.5m during the
year as a result of:
-- Valuation of 4,922,115 shares held in Innovative Eyewear, as
determined by the price paid by investors in the most recent
Regulation Crowdfund offering ($3.56 per share, or $20m pre money
valuation), at US$17,522,729
-- Net book value of other assets and liabilities of (US$177,534).
In July 2021, the Company launched its second Crowdfunded
offering of common stock in which it raised US$149,480, amounting
to 45,355 shares. Innovative Eyewear received funding using REG CF
crowdfunding that allows the companies to sell stock to
third-party, arms-length, independent investors. As such, valuing
Lucyd Ltd's ownership in Innovative Eyewear based on the share
price paid by REG CF investors appears to fall within company's
policy of valuing its investments based on recent third-party
funding.
This input was corroborated by Innovative Eyewear's enterprise
valuation by estimating the net present value of future cashflows
associated with its business. Key assumptions used in estimating
future cash flows are:
- projected profits of US$46.7m through 2026 including eyewear
unit sales for company's e-commerce channels
- Corporate income tax rate of 21% applied to net profit of
US$46.7m
- 13% discount rate used to discount proceeds as determined by
opportunity cost (6%), inflation rate (5%) and technology risk
(2%).
The management believes the valuation using discounted cash flow
method as of 30 November 2021 of US$23.1m approximates the REG CF
observed valuation of US$20m, therefore $3.56 per shares is
reasonable fair value estimate of its shares in Innovative Eyewear
Inc.
Adjusted for Net Book Value of ($177,534) of other assets and
liabilities held by Lucyd Ltd as of 30 November 2021, the fair
value of Lucyd Ltd shares held by Tekcapital Europe was estimated
at US$17,345,195, compared to US$2,699,331 as of 30 November
2020.
Salarius (US $0.7m gain)
The fair value of the holding increased by US$0.7m during the
year as a result of:
-- Valuation of 4,356,521 shares held in Microsalt Inc, as
determined by the price paid by investors in the most recent
Regulation Crowdfund offering ($1 per share, or $5m pre money
valuation), at US$4,356,521.
In December 2020, the Company launched its second Crowdfunded
offering of common stock in which it raised US$749,978, amounting
to 749,978 shares. Microsalt Inc received funding using REG CF
crowdfunding that allows the companies to sell stock to
third-party, arms-length, independent investors. As such, valuing
Salarius Ltd's ownership in Innovative Eyewear based on the share
price paid by REG CF investors appears to fall within company's
policy of valuing its investments based on recent third-party
funding.
This input was corroborated by Microsalt's enterprise valuation
by estimating the net present value of future cashflows associated
with its business. Key assumptions used in estimating future cash
flows are:
- projected profits of US$12.9m through 2026 including sales of
Microsalt(R) and SaltMe(R) crisps.
- Corporate income tax rate of 21% applied to net profit of
$12.9m
- 13% discount rate used to discount proceeds as determined by
opportunity cost (6%), inflation rate (5%) and technology risk (2%)
.
The management of Salarius Ltd believes the valuation using
discounted cash flow method as of 30 November 2021 of US$6.1m
approximates the REG CF observed valuation of US$5m, therefore $1
per shares is reasonable fair value estimate of its shares in
Microsalt Inc.
Adjusted for Net Book Value of ($0) of other assets and
liabilities held by Salarius Ltd as of 30 November 2021, the fair
value of Salarius Ltd shares held by Tekcapital Europe was
estimated at US$4,356,521, compared to US$3,638,304 as of 30
November 2020.
Guident Ltd (US $3.9m loss)
The fair value of the holding decreased by US$3.9m during the
year as a result of:
-- Net Book Value of Guident Ltd of US$18,083,264 as of 30
November 2021 consists of Valuation of 18,115,942 shares held in
Guident CORP, as determined by the price agreed between Guident
CORP and by investors in the most recent Private Placement
Memorandum offering at $1 per share.
In August 2021, Guident CORP entered into Private Placement
Memorandum outlining offering of securities at $1 per unit, with
each unit consisting of one share of Class A Convertible Preferred
Stock and a Warrant to acquire a share of common stock (also at $1
per unit). While Guident has not received funding from the offering
until after the reporting date, the management considers the exit
price (of securities offered in the private placement) negotiated
with the investment bank as "privately negotiated acquisition of
the equity instruments" as defined under IFRS 13. The Offering has
facilitated by Dawson James Securities Inc. Dawson James is a
broker-dealer registered with the SEC as a broker dealer and is a
member of FINRA. FINRA is currently the only such registered
national securities association in the U.S.
This input was corroborated by Guident CORP's enterprise
valuation by estimating the net present value of future cashflows
associated with its business. Key assumptions used in estimating
future cash flows are:
- projected profits of US$41m through 2026 including
teleoperation software sales across ground delivery devices,
transportation services and commercial fleets
- Corporate income tax rate of 21% applied to net profit of
US$41m
- 13% discount rate used to discount proceeds as determined by
opportunity cost (5%), inflation rate (5%) and technology risk
(3%).
The enterprise valuation calculated using Discounted Cash Flow
method as of 30 November 2021 was $20m.
The management believes the valuation using discounted cash flow
method as of 30 November 2021 of US$20m approximates the negotiated
valuation of US$24m, therefore $1 per shares is reasonable fair
value estimate of its shares in Guident CORP.
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.
Sensitivity of
Investment Valuation Significant Estimate the input
Technique unobservable applied to fair value
input
Lucyd Income Discount 13% 2% increase in the discount
Approach to Future factor would decrease the
Cash Flows Lucyd valuation by $1.5m,
a 2% decrease in the discount
factor would increase the
value by $1.6m
Net profit US$26.9m A 20% increase in net profit
would increase the Lucyd
valuation by $4.6m. A 20%
decrease in net profit
would decrease the Lucyd
valuation by $4.6m.
Guident Income Discount 13% 2% increase in the discount
Approach to Future factor would decrease the
Royalty Cash Flows Guident valuation by $1.3m,
Relief a 2% decrease in the discount
Method factor would increase the
value by $1.4m
Net profit US$32.3m A 20% increase in net profit
would increase the Guident
valuation by $3m. A 20%
decrease would decrease
the Guident valuation by
$3m
Salarius Income Discount 13% 2% increase in the discount
Approach to Future factor would decrease the
Royalty Cash Flows Salarius valuation by $0.6m,
Relief a 2% decrease in the discount
Method factor would increase the
value by $0.6m
Net profit US$12.9m A 20% increase in the net
profit would increase the
Salarius valuation by $1.6m.
A 20% decrease in the net
profit would decrease the
Salarius valuation by $1.6m
12.2 Convertible loan notes
The Group also held multiple convertible loans issued by its
portfolio companies, including:
Convertible note issued by Innovative Eyewear Inc, for the total
of US$2,000,000 that bears interest at 10% per annum, which
includes the option to convert the debt into the Company's common
stock at market price. The note can be converted into shares of
common stock of the Company upon occurrence of certain conversion
events, as defined.
-- On June 1, 2021, Innovative Eyewear converted related party
borrowings totaling US$778,500 into
778,500 shares of common stock at $1 each.
-- On September 5, 2021, Innovative Eyewear converted related
party borrowings totaling US$500,002 into 140,449 shares of common
stock at $3.56 each.
-- On November 1, 2021, Innovative Eyewear executed an addendum
for its December 1, 2020, convertible note agreement with Parent
and Affiliates, increasing the amount of available financing from
$2,000,000 to $3,000,000.
-- On November 16, 2021, Innovative Eyewear converted related
party borrowings totaling US$901,271 into 253,166 shares of common
stock at $3.56 per share.
Consequently, the Company presented the amount of US$2,179,773
under additions to "Financial Assets Held at Fair Value" as at 30
November 2021 (see Note 12). As of 30 November 2021, US$3,643 was
outstanding as the convertible note receivable.
Convertible note issued by Guident Ltd for the total of
US$1,000,000, 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$1,000,000 note originated in March 2020 or can be converted into
Guident's equity upon occurrence of certain conversion events.
US$1,088,131 was drawn as at 30 November 2021. No conversions
occurred during the period. As of 30 November 2021, US$660,413 was
outstanding as the convertible note receivable.
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$677,718 was drawn and outstanding as of 30 November 2021. No
conversions occurred during the period.
The Group has previously recognised convertible note loan
balances at cost under non-current assets. The accounting policy
has been updated from the prior year to measure the balances at
fair value. The resulting adjustment was not material to Group's
financial statements.
13. Intangible assets
Website Invention
Group Vortechs development Evaluator Total
US $ US $ US $ US $
------------------------ ------------------- ---------------------- ------------------ ------------
As at 30 November 2020
and 30 November 2021 500,000 28,121 338,770 866,891
-------------------------- ------------------- ---------------------- ------------------ ------------
Accumulated amortisation and impairment
As at 30 November 2020 - (28,121) - (28,121)
-------------------------- ------------------- ---------------------- ------------------ ------------
Amortisation (200,000) - (237,140) (437,140)
-------------------------- ------------------- ---------------------- ------------------ ------------
Impairment loss (37,229) - - (37,229)
-------------------------- ------------------- ---------------------- ------------------ ------------
As at 30 November 2021 (237,229) (28,121) (237,140) (502,490)
-------------------------- ------------------- ---------------------- ------------------ ------------
Net Book Value
As at 30 November 2020 500,000 - 338,770 838,770
-------------------------- ------------------- ---------------------- ------------------ ------------
As at 30 November 2021 262,771 - 101,630 364,401
-------------------------- ------------------- ---------------------- ------------------ ------------
The Directors have undertaken an impairment review based on the
future cash flow projections of the Vortechs Group intangible asset
and consider the recoverable amount to be US$37,229 lower than the
carrying value and have therefore recorded an impairment.
14. Property, plan and equipment
Leasehold Office Computer
GROUP Improvements equipment Equipment Total
US $ US $ US $ US $
--------------------------- ----------------------- ----------------- ----------------- -----------------
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
------------------------------ ----------------------- ----------------- ----------------- -----------------
Exchange differences -
Additions 1,694 695 2,389
Closing cost 30 November
2021 13,775 25,980 29,377 69,132
------------------------------ ----------------------- ----------------- ----------------- -----------------
Accumulated depreciation and impairment
Accumulated depreciation at
30
November 2019 (13,775) (10,981) (23,683) (48,439)
------------------------------ ----------------------- ----------------- ----------------- -----------------
Depreciation charge (4,526) (4,232) (8,758)
Exchange differences 76 76
Accumulated depreciation at
30
November 2020 (13,775) (15,431) (27,915) (57,121)
------------------------------ ----------------------- ----------------- ----------------- -----------------
Depreciation charge (4,744) (4,099) (8,843)
Exchange differences 3,435 3,435
Accumulated depreciation at
30
November 2021 (13,775) (20,175) (28,579) (62,529)
------------------------------ ----------------------- ----------------- ----------------- -----------------
Closing net book value 30
November
2020 - 8,855 767 9,622
----------------------------- ----------------------- ----------------- ----------------- -----------------
Closing net book value 30
November
2021 - 5,804 798 6,603
----------------------------- ----------------------- ----------------- ----------------- -----------------
15. Trade and other receivables
GROUP 2021 2020
US $ US $
---------------------------------- ------------------------ ----------------------
Trade receivables 39,976 54,014
Less provision for impairment of
trade receivables - -
Trade receivables -
net 39,976 54,014
Vat recoverable 19,228 (934)
Prepayments and other
debtors 43,787 15,267
Receivables from related
parties 586,012 579,089
------------------------
Total trade and other
receivables 689,003 647,436
----------------------------------- ------------------------ ----------------------
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 Group had outstanding receivables from its portfolio
companies as at 30 November 2021 in the amount of:
- US$85,391 due from Lucyd Ltd
- US$104,912 due from Smart Food Tek Ltd
- US$ 392,252 due from Guident Ltd.
16. Cash and cash equivalents
GROUP 2021 2020
US $ US $
--------------------------------- ------------ ------------
Cash at bank and in hand 3,543,762 538,473
Total cash and cash equivalents 3,543,762 538,473
----------------------------------- ------------ ------------
17. Categories of financial assets and financial liabilities
GROUP 2021 2020
US $ US $
---------------------------------------- --------------- ---------------
Financial assets at fair value through
profit and loss 63,865,432 31,079,826
Financial asets at amorised
cost 689,003 647,436
Cash and equivalents at amortised
cost 3,543,762 538,473
68,098,197 32,265,735
---------------------------------------- --------------- ---------------
Financial liabilities
Trade and other payables at amortised
cost 237,151 239,228
------------------------------------------ --------------- ---------------
18. Share capital
Number Ordinary Total
Group and Company of shares Share US$ US $
----------------------------- ---------------- ---------------- -------------------
Issued and fully paid
up
----------------------------- ---------------- ---------------- -------------------
As 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
As at 30 November 2020 92,828,042 521,830 521,830
------------------------------ ---------------- ---------------- -------------------
Shares issued in further
public offering 48,714,286 271,962 271,962
As at 30 November 2021 141,542,328 793,792 793,792
------------------------------ ---------------- ---------------- -------------------
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:
-- March 2021: 38,000,000 shares were issued in the placing of
new ordinary shares at GBP0.10p. Total proceeds of US$5,432,322
were netted against cost of raising finance in the amount of
US$301,253
-- November 2021: 10,714,286 shares were issued in the placing
of new ordinary shares at GBP0.28p. Total proceeds of US$4,274,564
were netted against cost of raising finance in the amount of
US$261,040
The Company has authorised share capital of 141,592,328, with a
nominal value of GBP0.004. Of these shares, 141,592,328 were issued
and fully paid up.
19. Trade and other payables
2021 2020
Group US $ US $
------------------------------ ---------------------- ----------------
Trade creditors 45,473 103,882
Social security and other
taxes 8,554 8,015
Accruals and other creditors 183,124 135,545
237,151 247,442
------------------------------ ---------------------- ----------------
20. Deferred Revenue
The Group's deferred revenue balance of US$154,721 as of 30
November 2020 was adjusted for:
- receipt of Invention Evaluator payments in the amount of
US$37,854 to be delivered after 30 November 2021, recognized as
addition to the balance deferred revenue during the year ended 30
November 2021
- recognition of US$23,292 of revenue deferred as of 30 November
2020 for reports delivered during the financial year 2021 bringing
the total outstanding balance of Deferred Revenue as at 30 November
2021 to US$169,287.
21. 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.
2021 2020
Deferred tax US $ US $
---------------------- ----------------- -------------------
Accelerated capital
allowances (1,680) (1,793)
Short term timing
difference -
Tax losses (2,084,779) (1,958,070)
Unprovided deferred
tax asset 2,086,459 1,959,863
----------------------- ----------------- -------------------
- -
---------------------- ----------------- -------------------
22. Dividends
No dividend has been recommended for the year ended 30 November
2021 (2020: Nil) and no dividend was paid during the year (2020:
Nil).
23. Cash used from operations
2021 2020
Group US $ US $
------------------------------------------- --------------------- ---------------------
Profit before income tax 26,370,483 7,681,994
Adjustments for
- Impairment Loss 37,229 -
- Depreciation 8,843 9,437
- Amortisation 437,139
- Share based payment expense 111,145 44,273
- Movement in foreign exchange 77,435 96,392
- Movement in trade and other
receivables (41,565) 56,383
- Financial assets at fair value through
the profit or loss (28,817,268) (8,810,053)
- Deferred revenue movement 14,562 36,126
- Trade and other payables (10,291) (62,718)
Cash used in operations (1,812,288) (948,166)
--------------------------------------------- --------------------- ---------------------
23. 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.
Lease commitments
The Group did not have any material contracts withing the scope
of IFRS 16. Consequently, the Group did not recognise any
right-of-use assets and lease liabilities during the period.
25. 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 8,700,000
Share price at date of
grant GBP0.052-GBP0.31
Exercise price GBP0.052-GBP0.31
Options life in years 3-5
Risk free rate 0.1%-0.75%
Expected volatility 48%-94%
Expected dividend yield 0
Fair value of options GBP0.02-GBP0.03
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$111,145 (2020: $44,273). Details of the number of
share options and the weighted average exercise price outstanding
during the year as follows:
2021 2020
Av. Exercise Options Av. Exercise Options
price per (Number) price per (Number)
Group and Company share GBP share GBP
------------------- -------------------------- --------------------------- --------------------- ------------------
As at 1 December 0.2351 7,450,000 0.2110 5,785,000
Granted 0.0781 1,000,000 0.1193 4,450,000
Exercised - - 0.0810 300,000
Forfeited/expired 0.0783 250,000 0.3551 2,485,000
As at 30 November 0.2110 8,200,000 0.2351 7,450,000
------------------- -------------------------- --------------------------- --------------------- ------------------
Exercisable as at
30
November 3,441,667* 1,575,000*
*The weighted average exercise price for the options exercisable
as at 30 November 2021 and 30 November 2020 was GBP0.19p and
GBP0.19p respectively.
The weighted average remaining contractual life is 2.9 years
(2020: 4.2 years). The weighted average fair value of options
granted during the year was GBP0.03p (2020: GBP0.03p). The range of
exercise prices for options outstanding at the end of the year was
GBP0.052p - GBP0.31p (2020: GBP0.065p - GBP0.46p).
26. 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.
Please refer to tables below for detail of relationships and
transactions between The Group and its subsidiaries.
Convertible note receivable
2021 2020
Group US $ US $
----------------------------- -------------- ------------------
Guident Corp 660,413 528,169
Microsalt Inc 677,718 60,000
Innovative Eyewear Inc 3,643 -
1,341,774 588,169
----------------------------- -------------- ------------------
Intercompany receivable
2021 2020
Group US $ US $
------------------------- ------------------ ------------------
Guident Corp 392,252 -
Smart Food TEK 104,912 103,092
Lucyd Ltd 85,402 288,176
Innovative Eyewear
Inc - 184,376
Other 3,446 3,446
586,012 579,090
------------------------- ------------------ ------------------
Management fees
2021 2020
Group US $ US $
Guident Ltd 139,560 138,441
Salarius Ltd - 140,282
Microsalt Inc 99,685 -
Lucyd Ltd 30,135 128,743
Innovative Eyewear
Inc 103,299 -
Smart Food TEK - 98,886
372,679 506,352
Interest Income
2021 2020
Group US $ US $
Guident Ltd - 27,717
Guident Corp 62,385 -
Salarius Ltd - 68,229
Microsalt Inc 35,267 -
Lucyd Ltd - -
Innovative Eyewear
Inc 44,748 -
142,400 95,946
27. Events after the reporting period
Post period end, following amounts were drawn for existing
convertible notes:
US$628,405for Microsalt Inc
US$262,546 for Guident CORP
US1,431,068 for Innovative Eyewear Inc
The senseless Russian invasion of Ukraine has not had a material
impact on our business to-date, as far as we can discern at this
early juncture, as we do not have direct business exposure to
either Russia or the Ukraine. However, over time the conflict may
contribute to inflation of energy costs and supply chain disruption
which could increase the cost and complexity of sourcing components
for some of our portfolio companies.
Tekcapital Plc
Company Statement of financial position
At 30 November 2021
Company 30 November 30 November
2021 2020
Note US$ US$
Assets
Non-current assets
Investment in subsidaries C.4 851,665 1,955,215
Financial assets at fair value through
profit and loss C.5 22,653,494 2,669,196
23,505,159 4,624,411
Current assets
Trade and other receivables C.6 7,454,773 3,560,188
Cash and cash equivalents C.7 3,011,916 239,991
10,466,689 3,800,179
Total assets 33,971,848 8,424,590
Current liabilities
Trade and other payables C.10 197,827 79,249
197,827 79,249
Total liabilities 197,827 79,249
Net Assets 33,774,021 8,345,341
Equity attributable to the owners of
the parent
Ordinary shares C.9 793,792 521,830
Share premium 21,793,644 13,211,344
Retained earnings 11,364,445 (5,351,695)
Translation reserve (177,860) (36,138)
Total equity 35,521,897 8,345,341
The Company's gain before tax for the year ended 30 November
2021 was $16,604,995
The notes on pages 58 to 61 are an integral part of these
financial statements.
The financial statements on pages 56 to 61 were authorised for
issue by the Board of Directors on 5 May 2022 and were signed on
its behalf.
Louis Castro Dr Clifford Gross
Director Chairman and CEO
Company Statement of changes in equity
For the year ended 30 November 2021
Attributable to owners of the parent company
Ordinary Share Translation Retained Total
Shares Premium Reserve (Deficit)/Earnings Equity
Company Note US $ US $ US $ US $ US $
Balance as at
30 November
2019 372,984 10,993,546 (98,086) (5,079,729) 6,188,715
Loss for the
year (316,239) (316,239)
Other
comprehensive
income 61,948 61,948
Total
comprehensive
income
for the year 372,984 10,993,546 (36,138) (5,395,968) 5,934,424
Transactions
with owners,
recorded
directly in
equity
Share issue 18 147,298 2,450,245 2,597,543
Cost of share
issue 18 (262,252) (262,252)
Share options
exercised 18 1,548 29,805 31,353
Share based
payments 25 44,273 44,273
Total
transactions
with
owners 148,846 2,217,798 - 44,273 2,410,917
Balance as at
30 November
2020 521,830 13,211,344 (36,138) (5,351,695) 8,345,341
Profit for the
year 16,604,995 16,604,995
Other
comprehensive
income (141,722) (141,722)
Total
comprehensive
income
for the year - - (141,722) 16,604,995 18,211,149
Transactions
with owners,
recorded
directly in
equity
Share issue 18 271,962 9,144,593 9,416,555
Cost of share
issue 18 (562,293) (562,293)
Share based
payments 25 111,145 111,145
Total
transactions
with
owners 271,962 8,582,300 - 111,145 8,965,407
Balance as at
30 November
2021 793,792 21,793,644 (177,860) 11,364,445 33,774,021
Share premium - amount subscribed for share capital in excess of
nominal value, net of directly attributable issue costs.
Translation reserve - foreign exchange differences recognized in
other comprehensive income.
Retained earnings - cumulative net gains and losses recognized
in the consolidated financial statements of comprehensive
income
The notes on pages 58 to 61 are an integral part of these
financial statements.
C.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 28 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 in 2014. The principal activity of the company is
that of investment in portfolio companies. The Company also
acquires exclusive licences to university technologies that it
believes can positively impact people's lives, for subsequent
commercialisation.
The Company had no employees during the period.
C.2 Statement of Compliance
The 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 principal accounting policies applied in the preparation of
these financial statements are set out in Note 2 of the
consolidated financial statements.
Exemptions
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:
-- Statement of Cash Flows
-- Financial instrument disclosures.
-- Capital management disclosures.
-- Additional comparative information.
-- A reconciliation of share options in the year
-- Related party disclosures with wholly owned subsidiaries
-- Changes in accounting policy and disclosures
All changes to accounting standards are explained in note 2 to
the consolidated financial statements.
C.3 Profit/(loss) for the year
As permitted by section 408 of the Companies Act 2006, the
Company has elected not to present its own profit and loss account
for the year. The auditor's remuneration for audit and other
services is disclosed in note 7 to the consolidated financial
statements.
C.4 Investment in subsidiaries.
Company Total
Loans to Subsidiaries US $
Cost and net book value
As at 1 December 2020 79,426 1,875,789 1,955,215
Additions during the - - -
period
Impairments during the
period - (1,103,550) (1,103,550)
Foreign currency translation - - -
differences
Balance at 30 November
2021 79,426 772,239 851,665
Investments in subsidiaries are stated at cost less any
adjustment for impairment. The Company recorded US$1,103,550 in
impairment charge related to its investment in Tekcapital LLC.
Capital
and reserves Net Profit/(Loss)
Proportion
of ordinary
shares
Subsidiaries directly Nature of
name (consolidated) held business $ $
Direct
Provision
of Intellectual
Tekcapital Europe England and property research
Limited Wales 100% services 35,066,544 8,899,574
Provision
of Intellectual
property research
Tekcapital LLC USA 100% services (3,326,707) (883,774)
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 11900 Biscayne Blvd, Suite 630, Miami, Florida, 33181,
United States) are consolidated by Tekcapital plc because they
continue to provide advisory services in IP search and technology
transfer.
C.5 Financial Assets at Fair Value through Profit and Loss
Company's investment in Belluscura plc in the years ended 30
November 2021 and 30 November 2020 is listed below and classified
as equity instruments. The principal place of business for
Belluscura plc is England and Wales.
Proportion 1 Dec Additions Disposal FX reval Fair Value 30 Nov
of ordinary 2020 change 2021
Company shares
Belluscura
Limited 15.13% 2,081,028 1,788,566 - - 18,825,924 22,695,518
Total Balance 2,081,028 1,788,566 - - 18,825,924 22,695,518
The valuation technique used falls under, Level 2 - Observable
techniques, other than quoted prices.
The fair value of the holding increased by US$19.4m during the
year due to Company's listing at AIM market of London Stock
Exchange, and closing price of 94p as of 30 November 2021. With
17,138,767 shares held by Tekcapital plc, a fair value of
$22,695,519 was arrived at as of 30 November 2021.
C.6 Trade and other receivables
2021 2020
Company US $ US $
Receivables from Group companies 7,415,412 3,544,286
VAT 24,165 2,300
Prepayments 15,196 13,602
Total trade and other receivables 7,454,773 3,560,188
The Company recorded a historical US$2,500,000 provision against
its receivable from one its subsidiaries, Tekcapital LLC. The
remaining receivable due from Tekcapital LLC will be recovered in
greater than one year.
C.7 Cash and cash equivalents
Company 2021 2020
US $ US $
Cash at bank and in hand 3,011,916 239,991
Total cash and cash equivalents 3,011,916 239,991
C.8 Categories of financial assets and financial liabilities
Company 2021 2020
US $ US $
Financial assets at fair value through
profit and loss 22,653,494 2,081,027
Financial asets at amorised
cost 7,454,773 4,148,357
Cash and equivalents at amortised
cost 3,011,916 239,991
Investment in subsidaries at amortised
cost 1,955,215 1,955,214
35,075,398 8,424,589
Financial liabilities
Trade and other payables at amortised
cost 197,827 79,249
C.9 Share capital
Number Ordinary Total
Group and Company of shares Share US$ US $
Issued and fully paid
up
As 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
As at 30 November 2020 92,828,042 521,830 521,830
Shares issued in further public
offering 48,714,286 271,962 271,962
As at 30 November 2021 141,542,328 793,792 793,792
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:
-- March 2021: 38,000,000 shares were issued in the placing of
new ordinary shares at GBP0.10p. Total proceeds of US$5,432,322
were netted against cost of raising finance in the amount of
US$301,253.
-- November 2021: 10,714,286 shares were issued in the placing
of new ordinary shares at GBP0.28p. Total proceeds of US$4,274,564
were netted against cost of raising finance in the amount of
US$261,040.
The Company has authorised share capital of 141,592,328, with a
nominal value of GBP0.004. Of these shares, 141,592,328 were issued
and fully paid up.
C.10 Trade and other payables
2021 2020
Company US $ US $
Accruals and other creditors 184,518 -
Accounts payable 13,309 79,249
197,827 79,249
C.11 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.
2021 2020
Deferred tax US $ US $
Accelerated capital
allowances - -
Short term timing difference - -
Tax losses (620,182) (563,069)
Unprovided deferred
tax asset 620,182 563,069
- -
C.12 Dividends
No dividend has been recommended for the year ended 30 November
2021 (2020: Nil) and no dividend was paid during the year (2020:
Nil).
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END
FR FFFLFETIEIIF
(END) Dow Jones Newswires
May 06, 2022 02:01 ET (06:01 GMT)
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