TIDMTEK
RNS Number : 0796O
Tekcapital plc
29 September 2023
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
29 September 2023
Tekcapital plc
("Tekcapital", the "Company" or the "Group")
Unaudited Half-yearly Report for the period ending 30 June
2023
Tekcapital Plc (AIM: TEK), the UK intellectual property
investment group focused on transforming university technologies
into valuable products that can improve people's lives, is pleased
to announce its results for the six-month period ended 30 June
2023.
Operational highlights: Portfolio Companies
Microsalt(R) Ltd ("Microsalt") www.microsalt.co
-- Announced partnership with a Fortune 500 national retailer
for the development and execution of low-sodium solutions across
the retailer's extensive line of private branded snack offerings.
This will lead to placement of several of their snacks using
MicroSalt(R) in lieu of traditional salt, beginning with 800 stores
in Q4 2023 and likely expanding across more than 7,000 store
locations thereafter.
-- Executed agreement with supermarket chain, Giant Food of
Maryland LLC, ("Giant") one of the most respected food retailers in
the mid-Atlantic United States, to carry MicroSalt's new
saltshakers in its 160 stores.
-- Continued its successful sales expansion of both its SaltMe!
crisps and MicroSalt saltshakers with new placements in over 400
additional U.S. retail stores including Brookshire Brothers ,
Pete's Fresh Market , Heinen's , Dick's Fresh Market , Zerbos ,
Better Health Market , Associated Supermarkets and a number of
other natural independent retailers across the country.
-- Executed successful launch of its new Microsalt(R) shakers,
placing the product in over 500 stores since Q4 2022.
-- Executed an agreement with US Salt LLC ("US Salt") for the
distribution and delivery of MicroSalt's low-sodium solutions.
-- Partnered with Hanahreum Group ("H Mart"), one of the fastest
growing retailers in United States to sell MicroSalt's SaltMe(R)
branded crisps.
-- Onboarded U.K. Celebrity Chef Jack Stein as brand ambassador for MicroSalt.
Tekcapital owns 97.2% ownership of Microsalt Ltd, valued at
US$17.1m as of 30 June 2023. Microsalt owns approximately 79% of
shares in Microsalt Inc, its US operating subsidiary.
Belluscura(R) Plc ("Belluscura") www.belluscura.com
-- Announced that Robert ("Bob") Fary has joined the Company as
Senior Vice President of Global Sales. Bob has thirty years of
experience in the respiratory industry where he has held leadership
roles at major oxygen concentrator manufacturers and durable
medical equipment companies. During the past two decades, Bob's
industry leading team was directly responsible for or contributed
to the sale of over one million portable oxygen concentrators
("POCs"), generating revenues in excess of US$1 billion.
-- Announced its X-PLOR portable oxygen concentrator ("POC") is
now marketed in the US through GoodRx, Inc. www.goodrx.com
-- Raised total of GBP 7.1m through combination of convertible loan notes and new placings
-- Commenced the premarket launch of its DISCOV-R portable
oxygen concentrator (POC), including a patient usability study. The
Company's patented technology allows the DISCOV-R to produce nearly
three times as much oxygen by weight as comparative dual flow
concentrators.
-- Signed a distribution agreement with McKesson
Medical-Surgical, a division of McKesson. McKesson delivers a third
of all pharmaceuticals used in North America and operates the
fourth-largest pharmacy chain in North America.
Tekcapital owns 11.2% of shares of Belluscura plc, valued at
US$6.4m as of 30 June 2023.
Innovative Eyewear Inc ("Lucyd") www.lucyd.co (NASDAQ: LUCY)
-- Licensed sports culture brand, Reebok(R) for smart eyewear
through an agreement with Authentic Brands Group.
-- Released Lucyd App, an iOS/Android app that enables voice
interface for ChatGPT on their smart eyewear.
-- Launched Lucyd Lyte 2.0, a major upgrade to its flagship
Lucyd Lyte audio eyewear platform that brings several advances to
the company's core product, including a (a) four speaker array (b)
improved audio input (c) improved battery life with 12 hours of
playback (d) introduction of Bluetooth 5.2 amongst other
innovations introduced by the company.
-- Continued preparation for launches of its licensed brand
products: Nautica, Eddie Bauer and Reebok.
-- Released "On Air" a new feature for its Vyrb app that enables
users to create real-time audio chatrooms.
-- Filed patent application for software system that focuses on
one or more smart devices, which may include smart glasses that
operate with chatbots such as ChatGPT. The invention accomplishes
this by using an innovative technique for choosing from and
prioritizing data that may be drawn simultaneously from several
different chatbots or AI language models.
-- Partnered with PRIVATO Duty Free, a provider of travel luxury
goods to sell Lucyd products in their Duty-Free stores.
-- Raised approximately US$4.7m at US$1.05/share, in a follow-on
offering, to accelerate the launch of its licensed branded
products.
Tekcapital owns 100% of the shares of Lucyd Ltd, valued at
US$4.6m as of 30 June 2023. Lucyd Ltd owns approximately 40% of
shares in Innovative Eyewear, Inc.
Guident Ltd ("Guident") www.guident.co
-- Secured and fulfilled its first purchase order from
Jacksonville Transportation Authority (JTA) for JTA project to
provide remote monitoring and control services.
-- Received Space Florida grant for a groundbreaking project
under the Florida-Israel Innovation Partnership program, together
with its valued Israeli partner, NOVELSAT. This integration of
NOVELSAT's satellite-based space connectivity technologies and
Guident's human-in-the-loop AI technologies will provide the first
LEO satellite back-up monitoring and control of an autonomous
vehicle with reliable and high-speed bi-directional connectivity.
This connectivity enables continuous, high-quality video streaming
to remotely monitor autonomous systems and, when necessary, to
enable remote control of the vehicles and devices to help resolve
navigation edge cases. Additionally, the connectivity will provide
real-time audio and video communication with passengers,
pedestrians, or first responders, ensuring the highest level of
safety for autonomous systems, which is a crucial factor in the
deployment and management of autonomous vehicle fleets.
-- Executed letter of intent with Auve Tech OÜ ("Auve Tech") to
provide remote monitoring and control services for Auve Tech's
autonomous vehicles. By combining Auve Tech's advanced Level 4
autonomous vehicles with Guident's RMCC software, the two companies
will bring an enhanced level of safety to self-driving technology.
Guident's patented software provides human-in-the-loop supervision,
adding an extra layer of security to Auve Tech's new autonomous
shuttle.
-- Received Notice of Allowance from USPTO for patent for
"Systems and Methods for Remote Monitoring of a Vehicle, Robot or
Drone", which reinforces its DNA of innovation, it also
significantly expands its patent portfolio in the secure and safe
operation of autonomous vehicles with the human-in-the-loop
concept.
Tekcapital owns 100% of the shares of Guident Ltd, valued at
US$18.1m as of 30 June 2023. Guident owns approximately 91% of
shares in Guident Corp, its US operating subsidiary.
Operational highlights: Corporate
-- Tekcapital successfully delivered over 170 Invention
Evaluator (IE) reports to universities, research centers, and
companies across the globe in H1 2023 (90 IE reports in H1 2022).
The reports assisted organizations in evaluating the market
potential of their technologies. Notably, Tekcapital expanded its
client base to include industry giants such as Vale S.A., the
world's largest producer of iron ore and nickel.
-- The Vortechs Group, Tekcapital's executive search firm,
secured 10 executive search assignments in H1 2023 (6 search
assignments in H1 2022) and has expanded its list of academic
clients to include additional prestigious institutions such as
Massachusetts Institute of Technology (MIT), known worldwide for
its contributions to technology development and innovation.
-- Tekcapital played a pivotal role in sponsoring the
'Innovation for Sustainable Water USA-MEX' open innovation hub in
collaboration with Grupo Rotoplas, the Tijuana Development Council,
and the United States-Mexico Foundation for Science. This
initiative aimed to foster sustainable water solutions.
-- Tekcapital hosted an informative webinar series titled 'The
Challenges for the Commercialization of University Technology.'
This series provided valuable insights to the innovation
communities in both the United States and Mexico.
-- To underscore its commitment to technology transfer,
Tekcapital co-sponsored and exhibited at the 2023 U.S. Eastern
Region Meeting organized by the Association of University
Technology Managers (AUTM).
Financial highlights
-- Net Assets at US$53.1m (31 December 2022: US$57.8m).
-- NAV per share at US$0.32 (31 December 2022: US$0.38).
-- Portfolio valuation at US$46.2m (31 December 2022: US$56.2m).
-- H1 2023 professional services revenue increased 33% to US$0.4m (H1 2022: $0.3m).
-- H1 2023 Loss after tax US$ 10.1m (H1 2022 Profit: US$6.18m),
primarily due to unrealised decrease of US$ 9.3m in the fair value
of our portfolio companies.
-- H1 2023 share placements US$ 5.2m (H1 2022 share placements:
US$ 2.5m). Proceeds were used to accelerate the commercial progress
and IPO readiness of MicroSalt and fuel the further fabrication and
testing of Guident's regenerative shock absorbers coupled with
building Guident's new remote monitoring and control centre in Boca
Raton, Florida. This contributed to a corresponding increase in the
Group's portfolio company investments during the period.
-- We ended the period with a solid balance sheet of US$ 53m in
net assets, US$2.2m in cash, US$2.4m in receivables, modest current
payables and zero debt.
Post period end highlights:
-- Microsalt Ltd announced a partnership with Weijohn Farms
Group, a multi-faceted organization that includes Sorbatto Fresh
and Washington Organic Hazelnuts. Weijohn Farms Group will be using
MicroSalt on its Sorbatto Fresh line of hazelnuts. The North
American hazelnut market was US$ 1.8 billion in 2022 and is
projected to grow to US$ 3.2 billion by 2030 with a CAGR of 7.6%.
This serves as a practical example of the multitude of vertical
applications for MicroSalt(R).
-- Microsalt Ltd filed a new patent application (# 63/580,590)
entitled "Compositions and methods for reduced leavening time and
sodium content in doughs comprising micron-sized salt particles
adhered to a carrier," to improve baked goods. MicroSalt is very
excited about its invention which they believe enables the
production of baked goods quicker, less expensively, and with
reduced sodium. The bread market is extremely compelling, with
global volumes expected to reach 216.7bn kg by 2028.
-- Belluscura announced it received orders for 6,500 of its
next-generation DISCOV-R portable oxygen concentrator. This
represents approximately US$15 million of potential revenue to the
Company, with initial production of the DISCOV-R expected to begin
by the end of this quarter.
-- Belluscura announced it has entered into an Exclusive
License, Marketing and Distribution Agreement ("Agreement") with
its global manufacturing partner InnoMax Medical Technology Ltd.
Minimum cumulative royalties over the term of the Agreement will
therefore range from US$27.5m if the license is converted to
non-exclusive from year 6 and up to US$55m in cumulative royalties
if the license remains exclusive for the entire term.
-- In a significant step forward, Guident secured a paid proof
of concept agreement with a tier-1 tyre manufacturer for their
regenerative shock absorber. This collaboration resulted in
successful tests and detailed reports regarding the performance of
the regenerative shock absorber. Subsequently, Guident incorporated
a new subsidiary, Revive Energy Solutions Ltd, to commercialise its
regenerative shock absorber technology. Guident believes that in
the next few years all electric vehicles will have both
regenerative braking and regenerative shock absorbers to enhance
range and comfort.
-- Guident's partnership with the JTA, the largest
transportation authority in the U.S. has resulted in monthly
recurring purchases of its teleoperation software solution. Guident
is executing a successful integration for JTA with one of their AVs
at JTA's Armsdale Test and Learn Center.
-- Innovative Eyewear announced the launch of a new transitional
blue light blocking lens designed to maximize utility, eye
protection and user satisfaction of Lucyd eyewear, an important
enhancement for all-day wearability, allowing the user to
seamlessly shift from blocking harmful blue light during computer
and phone use, to enjoying driving and outdoor activities
comfortably in high sunlight.
-- Innovative Eyewear has filed a patent on a key product
innovation, flexible spring hinges for smart eyewear, with the
Company's belief that it will enable each style to be worn by a
wider array of users and will also increase the durability of the
frames by reducing stress points on the temples caused by extended
wear.
-- Innovative Eyewear launched an important upgrade to its Lucyd
ChatGPT app. The 2.0 update delivers several new features and
usability improvements to the app's iOS version, with the same
updates planned for the Android version later in 2023.
-- In subsequent periods, Tekcapital intends to invest in
Generative AI startups spun-out of universities that have the
near-term potential to increase the productivity of existing
specific businesses. To assist us with technical insight in this
rapidly evolving area, we have expanded our science advisory board
with two leading AI scientists:
o Dr. Russ Salakhutdinov, the former director of AI at Apple .
Russ is a Professor of Computer Science in the Department of
Machine Learning at Carnegie Mellon University (CMU). He received
his PhD in computer science from the University of Toronto. After
spending two post-doctoral years at MIT, he joined the University
of Toronto and later moved to CMU. He has authored/co-authored over
150 research papers and he is an Alfred P. Sloan Research Fellow,
Microsoft Research Faculty Fellow, a recipient of the Early
Researcher Award, Google Faculty Award, and Nvidia's Pioneers of AI
award and,
o Alexander Mordvintsev who currently serves as a Senior
research scientist at Google and inventor of Deep Dream . Alexander
is one of the world's leading scientists in AI and computer
graphics.
Dr. Clifford M. Gross, Chairman said : "We are glad to report
continued significant development of the Group's portfolio
companies, all of which were built in-house. Whilst capital markets
have been choppy in 2023 and this has resulted in unrealised
depreciations in our portfolio, the view from the bridge is
bullish, as we clearly see the potential for significant growth and
performance of our unique and rapidly developing portfolio
companies."
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 .
LEI: 213800GOJTOV19FIFZ85
General Risk Factors and Forward-Looking Statements
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accepted by the Company or any of its directors, officers,
em-ployees or agents for the accuracy or completeness of such
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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
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accurate. No assurance is given that such forward looking
statements or views are correct or that the objectives of the
Company will be achieved. Further, valuations of Company's
portfolio investments and net asset value can and will fluctuate
over time due to a wide
variety of factors both company specific and macro-economic.
Changes in net asset values can have a significant impact on
revenue and earnings of the Company and its future prospects. 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
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Neither the issue of this Report nor any part of its contents is to
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and no responsibility or liability is accepted for any such errors
or omissions.
Intellectual Property Risk Factors
Tekcapital's 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 be 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
commercialise 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 , w hich 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 that could 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 have invested in.
Chairman's statem ent
Tekcapital brings innovations from laboratory to market. In the
first half of 2023, our key portfolio companies continued to make
significant progress. We commercialise university intellectual
property, a process known as technology transfer, both for our own
portfolio and as a service for client companies and
universities.
We believe that when you couple commercialisation ready,
compelling university IP with strong senior management, you
increase the probability that vibrant companies will emerge, net
assets will grow, returns on invested capital are likely to
increase over time and exits, if they occur, should happen faster.
When we realise material exits, the Group's goal is to distribute a
portion of the proceeds as a special dividend to our
shareholders.
The Company believes that there is considerable value to be
realised from its current portfolio companies and is continuing to
further assist and when appropriate invest in these operations. A
common theme across our portfolio companies is that they have
proprietary intellectual property, capable management, and if
successful, can improve the quality of life for the customers they
serve. The Company's key investments include:
Microsalt ltd ( www.microsalt.co )
MicroSalt(R) manufactures a new patented salt that tastes great,
can be used just about everywhere traditional salt is used, yet
delivers full flavour with approximately half the sodium of regular
salt.
Investment Rationale
The food industry is focused on developing and providing bett
er- for - you products that taste good but enable reduced sodium
consumption. The reason for this is that excess sodium consumption
contributes to cardiovascular disease, a leading cause of premature
death globally. According to the WHO, "Almost all populations are
consuming too much sodium. The global mean intake of adults is 4310
mg/day sodium (equivalent to 10.78 g/day salt). This is more than
double the World Health Organization recommendation for adults of
less than 2000 mg/day sodium (equivalent to < 5 g/day salt). The
primary health effect associated with diets high in sodium is
raised blood pressure, increasing the risk of cardiovascular
diseases, gastric cancer, obesity, osteoporosis, Meniere's disease,
and kidney disease. An estimated 1.89 million deaths each year are
associated with consuming too much sodium. Reducing sodium intake
is one of the most cost-effective measures to improve health and
reduce the burden of non-communicable diseases: for every US$ 1
invested in scaling up sodium reduction interventions, there will
be a return of at least US$ 12." [1]
Lucyd Ltd ( www.lucyd.co )
LUCYD and its U.S. subsidiary Innovative Eyewear Inc. is seeking
to UPGRADE YOUR EYEWEAR(R) by producing designer eyewear with smart
features at affordable prices. Their frames help you stay connected
safely, ergonomically and with designer styling.
Investment Rationale
Pedestrian fatalities are at a 40 year high [2] . This is due
primarily because drivers and pedestrians alike are distracted with
their smartphones. Approximately 2/3 of the population wear
corrective lenses. Bluetooth technology has evolved, enabling it to
be incorporated into traditionally sized designer eyewear. This
enables eyeglass wearers to remain connected to their digital lives
such as when taking calls and listening to music while maintaining
situational awareness. Individuals can keep their phones in their
pocket and no ear buds are required, as the eyeglass frames contain
miniature speakers and microphones. Much as the smart watch
business has begun to eclipse the traditional watch business, we
believe smart eyewear will follow suit.
Guident Ltd ( www.guident.co )
Guident Ltd seeks to improve the safety and efficiency of
autonomous vehicles and land-based delivery drones with a software
platform that enables the remote monitoring and control of these
vehicles and in case of a mishap to rapidly help resolve the
situation.
Investment Rationale
Vehicles of all types are rapidly becoming electric and
autonomous. While AV's 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. Guident's remote monitoring and control centre will
monitor vehicles and if necessary, provide additional support such
as call a first responder, take over control of the vehicle to move
it out of harm's way and provide real-time communication with
passengers or pedestrians.
Additionally, Guident seeks to commercialize its regenerative
shock absorber technology to extend the range of electric vehicles
between charges. The Edison Electric Institute Projects 26.4
million electric vehicles will be on U.S. roads in 2030. According
to the International Energy Agency, worldwide, 350 million electric
vehicles are projected to be on the road by 2030. All these
electric vehicles will have regenerative braking. We believe in the
near future, most commercial electric vehicles will also have
regenerative shock absorbers. This will extend the driving range
between charges and provide power to active suspension to improve
ride characteristics and comfort.
Belluscura plc ( www.belluscura.com )
Respiratory medical device company that has developed an
improved portable oxygen concentrator (POC) to provide on-the-go
supplemental O(2) . The company's products are the first FDA
cleared devices that enable the user to upgrade the filter
cartridge to provide a greater flow of oxygen as a patient's
disease progresses, thereby obviating the need to purchase a new
POC.
Investment Rationale
Approximately 300m individuals suffer from COPD. Many of these
patients require supplemental oxygen to perform activities of daily
living. According to the WHO, COPD is the third leading cause of
death in the world causing 3.23 million premature deaths per year.
[3] As there is no cure for COPD, over time patients require
greater amounts of oxygen, and if they use a portable oxygen
concentrator, this means they must replace their devices with
devices with greater capacity as their disease progresses. With
Belluscura's new patented device, users can exchange the filter
cartridges to enable higher capacity oxygen flow without having to
change the device they are using. Like upgrading memory on a
laptop. The result is the potential to reduce the cost and increase
the availability of oxygen therapy for patients that need
POC's.
Financial performance
In the first half of 2023 we reported unrealized depreciations
in our portfolio totaling $9.2m due to the reduction in the
publicly quoted values of Belluscura and Innovative Eyewear at the
end of the period. In our view these reductions are overdone and
primarily the result of choppy, risk off capital markets in both
the UK and US. We believe firmly in the future potential of both
companies. MicroSalt has increased in value and Guident has
remained relatively constant in value since the last reporting
period. Our professional service revenue, whilst still modest,
increased 30% compared to the prior period, demonstrating the
continued need and value of our services. We ended the period with
a healthy balance sheet of about US$ 53m in net assets, $2.2m in
cash, $2.4m in receivables, modest current payables and zero
debt.
Fundraisings
In H1 2023 we closed share placements totaling US$ 5.2m.
Proceeds were used primarily to accelerate the commercial progress
and IPO readiness of Microsalt and fuel the further fabrication and
testing of Guident's regenerative shock absorbers coupled with
building Guident's new remote monitoring and control centre in Boca
Raton, Florida. This contributed to a corresponding increase in the
Group's portfolio company investments during the period and was
helpful in enabling both MicroSalt and Guident to maintain their
growth and accelerate their market traction.
Current Trading and Outlook
Having continued to develop and expand Tekcapital's existing
business, the Board is confident that continued investment in
select portfolio companies remains the right approach for long-term
value creation. We believe that we are executing on our strategy,
and this should result in increases in returns on invested capital
as our portfolio companies continue to mature and achieve
meaningful milestones, which we hope to see in the next year.
Whilst the Company is progressing very well, please note that our
net asset values and revenues will fluctuate from period to period
due to individual portfolio company performance, valuations and
changes in market conditions and macro-economic financial
conditions including the recent Coronavirus pandemic and the
Russian invasion of Ukraine. Certainly, we have seen this in H1
2023. We are grateful for the patience and support of our
shareholders through these challenging events. We are also
sincerely appreciative of our dedicated, and incredibly hardworking
team without which none of the results reported herein would be
possible.
Additionally, going forward, the Company is seeking to make one
or more select investments in Generative AI startups that have the
near-term potential to increase the productivity of existing
businesses in specific verticals. The Company will inform the
market in due course when it closes its first investment in this
area. To assist us with technical insight into this rapidly
evolving area, we have expanded our science advisory board with two
additional scientists:
Dr. Russ Salakhutdinov, the former director of AI at Apple. Russ
is a Professor of Computer Science in the Department of Machine
Learning at Carnegie Mellon University (CMU). He received his PhD
in computer science from the University of Toronto. After spending
two post-doctoral years at MIT, he joined the University of Toronto
and later moved to CMU. He has authored/co-authored over 150
research papers and he is an Alfred P. Sloan Research Fellow,
Microsoft Research Faculty Fellow, a recipient of the Early
Researcher Award, Google Faculty Award, and Nvidia's Pioneers of AI
award and Alexander Mordvintsev who currently serves as a Senior
research scientist at Google and inventor of Deep Dream . Alexander
is one of the world's leading scientists in AI and computer
graphics.
Dr Clifford M Gross
Chairman and CEO
29 September 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2023
Notes Six months Six months Year ended
ended ended 31 December
30 June 30 June 2022
2023 2022
Unaudited Unaudited Audited
US$ US$ US$
Continuing operations
Revenue from services 349,515 263,328 615,214
Cost of sales (81,777) (93,692) (222,361)
Changes in fair value
on financial assets
at fair value though
profit or loss 7 (9,253,282) 7,051,816 (10,978,372)
Interest from financial
assets at fair value
through profit or
loss 209,197 166,988 286,583
Operating expenses (1,361,471) (1,210,166) (2,524,496)
Other income 37,382 481 79,638
Operating (loss)/profit
and (loss)/profit
before tax (10,100,436) 6,178,755 (12,743,794)
--------------------------- ------ ------------- ------------ ----------------------
Income tax expense 5 (1,675) (1,089) (1,714)
--------------------------- ------ ------------- ------------ ----------------------
( Loss)/profit after
tax for the period/year (10,102,111) 6,177,666 (12,745,508)
--------------------------- ------ ------------- ------------ ----------------------
Other comprehensive
income/(loss)*
Translation of foreign
operations 556,760 511,734 (212,803)
--------------------------- ------ ------------- ------------ ----------------------
Total other comprehensive
income/(loss) 556,760 511,734 (212,803)
--------------------------- ------ ------------- ------------ ----------------------
Total comprehensive
income/(loss) for
the period/year (9,545,351) 6,689,400 (12,958,311)
--------------------------- ------ ------------- ------------ ----------------------
Earnings per share 6
Basic earnings per
share (0.06) 0.05 (0.09)
Diluted earnings per
share (0.06) 0.05 (0.08)
*May be reclassified to profit or loss in future years.
All comprehensive income as presented above belongs to the
owners of the Group.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2023
Notes As at 30 As at 30 As at 31 December 2022
June 2023 June 2022
Unaudited Unaudited Audited
US$ US$ US$
Assets
Non-current assets
Intangible assets 242,940 322,463 242,940
Financial assets at fair value
through profit and loss 7 48,649,780 74,062,299 56,184,146
Property, plant and equipment 15,965 16,523 9,969
------------- ----------------------------- -------------------------
49,908,685 74,401,285 56,437,055
------------- ----------------------------- -------------------------
Current assets
Trade and other receivables 2,442,368 577,017 1,088,043
Cash and cash equivalents 2,249,058 1,520,085 628,640
------------- ----------------------------- -------------------------
4,691,426 2,097,102 1,716,683
Total a ssets 53,600,611 76,498,387 58,153,738
============= ============================= =========================
Liabilities
Current liabilities
Trade and other payables 338,538 248,904 215,998
Deferred revenue 173,109 169,284 172,609
------------- ----------------------------- -------------------------
Total liabilities 511,647 418,188 388,607
============= ============================= =========================
Net assets 53,088,964 76,080,199 57,765,131
============= ============================= =========================
Equity attributable to owners of
the parent
Ordinary shares 973,329 834,277 839,724
Share premium 28,937,011 24,140,683 24,240,930
Retained earnings 22,619,663 50,937,139 32,682,276
Translation reserve 631,130 240,269 74,370
Other reserve (72,169) (72,169) (72,169)
Total equity 53,088,964 76,080,199 57,765,131
============= ============================= =========================
Net Asset Per Share 0.30 0.41 0.38
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2023
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 31
December
2021 793,792 21,793,644 (291,054) (72,169) 44,708,254 66,932,467
----------------------- --------- ----------- -------------------- --------- -------------------------- -------------
Income for the period - - - - 6,177,666 6,177,666
Other comprehensive
income - - 531,323 - - 531,323
Total comprehensive
loss
for the period - - 531,323 - 6,177,666 6,708,989
Transactions
with owners,
recorded
directly in
equity
Share issue 40,485 2,489,878 - - - 2,530,363
Cost of share issue - (142,839) - - - (142,839)
Share based payments - - - - 51,219 51,219
Total transactions
with owners 40,485 2,347,039 - - 51,219 2,438,743
----------------------- --------- ----------- -------------------- --------- -------------------------- -------------
At 30 June 2022
(unaudited) 834,277 24,140,683 240,269 (72,169) 50,937,139 76,080,199
----------------------- --------- ----------- -------------------- --------- -------------------------- -------------
Balance as at 31
December
2022 839,724 24,240,930 74,370 (72,169) 32,682,276 57,765,131
Loss for the period - - - - (10,102,111) (10,102,111)
Other comprehensive
income - - 556,760 - - 790,903
Total comprehensive
income/(loss)
for the period - - 556,760 - (10,102,111) (9,545,351)
Transactions
with owners,
recorded
directly in
equity
Share issue 133,606 5,045,893 - - - 5,179,499
Cost of share issue - (349,812) - - - (349,812)
Share based payments - - - - 39,498 39,498
Total transactions
with owners 133,606 4,696,081 - - 39,498 4,869,185
----------------------- --------- ----------- -------------------- --------- -------------------------- -------------
At 30 June 2023
(unaudited) 973,329 28,937,011 631,130 (72,169) 22,619,663 53,088,964
----------------------- --------- ----------- -------------------- --------- -------------------------- -------------
Share capital represents the amount subscribed for share capital
at nominal value.
Share premium represents the amount subscribed for share capital
in excess of nominal value and net of any directly attributable
issue costs.
Translation reserve - foreign exchange differences recognised in
other comprehensive income.
Other reserve - historic other reserve outside of share premium
and translation reserve.
Retained earnings - cumulative net gains and losses recognised
in the consolidated statement of comprehensive income, net of
dividends paid.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2023
Six months Six months For the year
ended ended ended
Group 30 June 30 June 31 December
2023 2022 2022
US $ US $ US $
Unaudited Unaudited
---------------------------------- ------------ ------------ -------------
Net cash outflows from operating
activities
Cash outflows from operations (1,484,929) (2,130,374) (2,776,941)
Taxation paid (1,675) (1,089) (1,714)
Net cash outflows from operating
activities (1,486,604) (2,131,463) (2,778,655)
----------------------------------- ------------ ------------ -------------
Cash flows from investing
activities
Purchase of financial assets
at fair value through profit
and loss (1,764,274) (1,058,317) (3,970,900)
Proceeds from disposals of
financial assets - - 1,073,792
Purchases of property, plant
and equipment (6,087) (5,873) (9,919)
Net cash outflows from investing
activities (1,770,361) (1,064,190) (2,907,027)
Cash flows from financing
activities
Proceeds from issuance of
ordinary shares 5,179,499 2,530,363 2,636,056
Costs of raising finance (349,812) (142,839) (142,839)
Net cash inflows from financing
activities 4,829,687 2,387,524 2,493,217
----------------------------------- ------------ ------------ -------------
Net (decrease)/increase
in cash and cash equivalents 1,572,721 (808,130) (3,192,465)
Cash and cash equivalents
at beginning of period/year 628,640 2,092,292 3,543,762
Exchange gain/(loss) on cash
and cash equivalents 47,697 235,923 277,343
Cash and cash equivalents
at end of the period/year 2,249,058 1,520,085 628,640
----------------------------------- ------------ ------------ -------------
Notes to the financial information
1. General information
Tekcapital PLC is a company incorporated in England and Wales
and domiciled in the UK. The address of the registered office is 12
New Fetter Lane, London, United Kingdom, EC4A 1JP. The Company is a
public limited company, which has been quoted on the AIM market of
the London Stock Exchange since 2014.
The principal accounting policies applied in the preparation of
this consolidated financial information are set out below. These
policies have been consistently applied to all the periods
presented, unless otherwise stated.
2. Basis of preparation
The financial information for the six months ended 30 June 2023
set out in this interim financial information is unaudited and does
not constitute statutory financial statements. The interim
condensed financial information has been presented in US Dollars
("$") and is rounded to the nearest dollar.
3. Accounting policies
3.1 Statement of compliance
The accounting policies applied by the Group and its
subsidiaries in these unaudited half year results are consistent
with those applied in the annual financial statements for the year
ended 31 December 2022.
The financial statements of Tekcapital PLC Group have been
prepared in accordance with International Financial Reporting
Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) as
adopted by the United Kingdom and the Companies Act 2006. The
financial statements have been prepared under the historical cost
convention.
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 of the FY 2022 accounts. The
estimates that changed since then are disclosed in Note 7.
4. Going concern
The 2023 interim financial information has been prepared on a
going concern basis.
The Group and Company meet its day to day working capital
requirements through its service offerings, monetisation of quoted
equity stakes and monies raised through issues of equity.
The Group's forecasts and projections indicate that the Group
and Company have sufficient cash reserves to operate within the
level of its current funds. The Group has no third party debt
facilities.
The Directors have prepared detailed cash flow projections for
the period to 30 September 2024 ("going concern assessment
period"). The cash flow projections have been subjected to
sensitivity analysis which demonstrates that the Group and Company
will maintain a positive cash balance through the going concern
assessment period.
The Directors have also considered the geo-political
environment, including rising inflation, and whilst the impact on
the Group is currently deemed minimal, the Directors remain
vigilant.
On this basis, the Directors have therefore concluded that it is
appropriate to prepare this financial information on a going
concern basis.
5. Taxation
Immaterial charge of US$1,675 has arisen in the six-month period
ended 30 June 2023 (30 June 2022: US$1,089).
6. 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) Ordinary Shares to be issued assuming exercise
of outstanding stock options with intrinsic value above $0 at 30
June 2023:
Six months ended 30 June 2023 Six months ended 30 June 2022 Year ended 31 December
2022
US$ US$ US$
Profit/(Loss)
attributable
to equity
holders of
the Company (10,102,111) 6,177,666 (12,745,794)
Weighted
average number
of Ordinary
Shares in
issue:
Basic 166,243,663 141,542,328 146,043,720
Diluted 170,660,330 144,775,661 150,483,172
Basic profit
per share ($) (0.06) 0.05 (0.09)
Diluted profit
per share ($) (0.06) 0.05 (0.08)
7. Financial Assets at Fair Value through Profit or Loss
The Group's financial assets at fair value through profit and
loss consist of equity investments (2023: US$ 46,212,012, 31
December 2022: US$54,878,609) and convertible loan notes (2023:
US$2,437,768, 31 December 2022: US$1,305,537) totaling
US$48,649,780 (31 December 2022: US$56,184,146).
Equity investments
30 June 31 December Additions Other Fair value 30 June
2022 2022 gain/(loss) 2023
US $ US $ US $ US $ US $ US $
Guident Limited 18,083,264 18,083,264 - - 18,083,264
Lucyd Limited 27,071,633 8,175,403 - - (3,531,172) 4,644,231
Belluscura
Limited 18,877,197 12,072,826 - - (5,722,110) 6,350,716
Microsalt Limited 6,985,138 16,508,694 586,685 - - 17,095,379
Smart Food
Tek Limited 43,161 38,422 - - - 38,422
Total Balance 71,060,393 54,878,609 586,685 - (9,253,282) 46,212,012
----------------------------------------------- ----------- -------------- ------------ -------- -------------- -----------
The valuation techniques used fall under, Level 1 - Observable
inputs that reflect quoted prices (unadjusted) for identical assets
or liabilities in active markets, and Level 3- Other techniques as
defined by IFRS 13. These techniques were deemed to be the best
evidence of fair values considering the early stage of portfolio
companies.
Lucyd Ltd's Innovative Eyewear Inc commenced trading on the
NASDAQ market in H2 2022. Due to Innovative's secondary offering in
June 2023, Lucyd Ltd became a minority shareholder and thus the
control premium applied in the Group's valuation of the investment
in Lucyd as at 31 December 2022 has been removed. As such, the
Group's investment in Lucyd Ltd has been re-classified under Level
2 as of 30 June 2023. Fair value measurement hierarchy for
financial assets as at 30 June 2023 with comparative amounts as of
31 December 2022:
Level
Total Level 1 Level 2 3
30 June 2023 US$ US$ US$ US$
Belluscura 6,350,716 6,350,716 - -
Lucyd Limited 4,644,231 - 4,644,231 -
Guident Limited 18,321,027 - - 18,321,027
Microsalt Limited 17,095,378 - - 17,095,378
Smart Food Tek Limited 38,422 - - 38,422
Total Balance 46,449,775 6,350,716 4,644,231 35,454,828
------------------------ ----------------- -------------- ------------------------ -----------------
31 December 2022 US$ US$ US$ US$
Belluscura 12,072,826 12,072,826 - -
Lucyd Limited 8,175,403 - - 8,175,403
Guident Limited 18,083,264 - - 18,083,264
Microsalt Limited 16,508,694 - - 16,508,694
Smart Food Tek Limited 38,422 - - 38,422
Total Balance 54,878,609 12,072,826 - 42,805,783
------------------------ ----------------- -------------- ------------------------ -----------------
Guident (Nil Gain / Nil loss)
The total fair value remains unchanged from 31 December 2022 and
is based on a Private Placement Memorandum outlining offering of
securities at $1 per unit, with 18,115,942 shares held. Upon review
of business updates in H1 2023, management noted no material events
necessitating revisions.
Microsalt (Nil Gain / Nil loss)
The total fair value of US$17,095,378 is based on valuation of
6,216,501 shares held in Microsalt Inc, as determined by the price
range agreed upon between Company's bankers and the Company as part
of its IPO process. Upon review of business updates in H1 2023,
management noted no material events necessitating revisions.
Addition of $586,685 was recorded due to conversion of part of the
existing convertible loan note in April 2023.
Lucyd Ltd ($3.5m loss)
The fair value of the holding decreased by US$3.5m during the
period due to the movement in the Company's share price at NASDAQ
market and the observed closing price of US$0.9 as of 30 June 2023.
With 5,189,085 shares held by Tekcapital plc, a fair value of
US$4,644,231 was arrived at as of 30 June 2023.
Belluscura ($5.7m loss)
The fair value of the holding decreased by US$5.7m during the
period due to the movement in Company's share price at AIM market
of London Stock Exchange and closing price of 33p as of 30 June
2023. With 15,138,767 shares held by Tekcapital plc, a fair value
of US$6,350,717 was arrived at as of 30 June 2023.
Other investments (Nil Gain / Nil loss)
Given early stage of commercialisation, the fair value of Smart
Food TEK was recorded based on the cost of acquired IP, as the
carrying amounts represent a reasonable approximation of fair
value.
Under level 3 unobservable inputs. In the absence of observable
inputs, the directors have considered the entities own data to
determine the fair value, which equates to the original funds
invested. They do not consider that any other available information
would materially change or give a more reliable representation of
the value.
This is the only category of financial instruments measured and
re-measured at fair value.
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 including future share placements. As of 30 June 2023, no
balance was outstanding.
-- 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
including future share placements. The US$1,000,000 note originated
in March 2020 and can be converted into Guident's equity upon
occurrence of certain conversion events. No conversions occurred
during the period. As of 30 June 2023, US$1,000,000 was
outstanding.
-- Convertible note issued by its portfolio Company, Microsalt
Inc, for the total of US$2,000,000, 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 Microsalt's equity upon occurrence of certain
conversion events. The US$2,000,000 note originated in September
2020 is payable in September 2023 or can be converted into
Microsalt's equity upon occurrence of certain conversion events
including future share placements. In April 2023, Microsalt Inc
converted related party borrowings totaling US$500,000 into 181,819
shares of common stock at US$2.75each. As of 30 June 2023,
US$1,437,768 was outstanding.
8. Related party transactions
The Group has taken advantage of the exemption in IAS 24
"related parties" not to disclose transactions with other Group
companies. During the period the Group did not employ any services
of non-Group companies meeting the definition of related
parties.
9. Interim results
The interim results for the six months ended 30 June 2023 will
not be sent to shareholders but will be available from the
Company's website at http://tekcapital.com/investors/.
- Ends -
[1]
https://www.who.int/news-room/fact-sheets/detail/salt-reduction
[2]
https://www.npr.org/2023/06/26/1184034017/us-pedestrian-deaths-high-traffic-car
[3]
https://www.who.int/news-room/fact-sheets/detail/chronic-obstructive-pulmonary-disease-(copd)
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IR SEMFUAEDSEFU
(END) Dow Jones Newswires
September 29, 2023 03:00 ET (07:00 GMT)
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