Tekcapital plc Announces Full Fiscal Year 2020 Financial Results for the Year-Ended November 30, 2020

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Achieves Record Results for the Period

LONDON, April 30, 2021 (GLOBE NEWSWIRE) -- Tekcapital Plc (AIM: TEK),(OTCQB: TEKCF), the UK intellectual property (IP) investment group focused on creating valuable products from investing in university technologies that can improve the quality of life, announces its audited results for the year ended 30 November 2020.

Financial highlights

  • Net Assets increased 45% to US$32.7m, a record level (2019: US$22.5m)
    - NAV per share US$0.35 (2019: US$0.35)

  • Portfolio valuation increased 50% to US$30.5m (2019: US$20.3m)

  • Total revenue US$9.9m (2019: US$7.7m)
    - Revenue from services US$1.19m (2019: US$1.20m)
    - Net increase of US$8.7m in fair value of portfolio companies (2019: US$6.5m)

  • Profit after tax: US$7.7m (2019: US$5.5m)

  • Service revenues cover approximately 54% of cost base (cost of sales and operating expenses)

  • Share placings totalling US$2.6m completed during the period, plus an additional raise of US$5.3m completed post-period end.

Operational highlights: Material Portfolio Companies

Salarius® Limited (“Salarius”) (97.2% ownership) www.salarius.co

Salarius Ltd manufactures MicroSalt®, a new, patented, all natural, non-GMO, Kosher, low-sodium salt that tastes great and has half of the sodium of regular table salt.

Investment Rationale:

The snack food industry is focused on developing and providing “better for you” products that both taste good and help reduce sodium intake. The reason for this is that excess sodium consumption contributes to cardiovascular disease, a leading cause of premature death globally. To help address this problem, Salarius has developed a patented process for producing micron sized salt crystals. MicroSalt® has all the flavour of salt with roughly half the sodium for topical applications such as crisps, pretzels, nuts, popcorn and other salty snacks.

Recent developments:

  • Signed a distribution agreement with Gehring-Montgomery Inc., a leading national ingredient distributor to expand B2B sales of MicroSalt® across the United States.

  • Signed a partnership agreement with FXM Ingredients, Inc. to lead B2B sales and marketing of MicroSalt® in Mexico and Latin America.

  • Formed MicroSalt Inc, a fully owned subsidiary of Salarius Ltd to expand its operations in the United States.

Lucyd® Limited (“Lucyd”) (100% ownership) www.lucyd.co

Lucyd is seeking to Upgrade Your Eyewear® by developing and selling designer prescription eyewear with smart features at affordable prices. Lucyd was the first company to deliver prescription glasses with Bluetooth® technology in 2019. Their frames help you stay connected safely and conveniently, by enabling many common smartphone tasks to be performed handsfree via voice assistants.

Investment Rationale:

In the U.S. pedestrian fatalities have increased more than 50% from 2009 to 2018. This is primarily because drivers and pedestrians alike are distracted with their smartphones. Approximately 2/3rds of the population wear corrective lenses, and the advancements in Bluetooth technology have enabled it to be incorporated into traditional eyeglass form factors. This combination created a new type of glasses with built-in speakers, microphone and touch controls, Lucyd e-glasses, which allow the wearer to forego headphones and headsets and use their glasses to listen to audio content and talk to others. Since the speakers are open-ear, Lucyd e-glasses enable the wearer to stay connected to their digital life while maintaining situational and social awareness.

Recent Developments:

  • Announced it had filed patent and trademarks on its forthcoming VyrbTM app. Vyrb users will be able to listen and produce social media posts on select platforms with their voice, without having to look at their smartphones or type messages. The app is designed to improve utility of Lucyd’s Bluetooth® glasses and other wireless hearables like AirPods®. The beta version of the app is slated to be launched in August 2021.

  • Formed Innovative Eyewear, Inc, a new, fully owned subsidiary of Lucyd Ltd, and commenced a Regulation Crowdfunding program on StartEngine, where it sought to raise approximately US$400,000 at a $3.75m pre-money valuation. The funding target was achieved and subsequently extended to US$1,070,000. More than 4,000 investors participated in the fundraise. The purpose of the fundraise was to provide additional capital for the further development and launch of its new Lucyd Lyte™ e-glasses and its Vyrb™ voice-focused social media app. As of 30 November 2020, Lucyd Ltd held 90% ownership in Innovative Eyewear Inc with crowdfund investors holding remaining 10%. At the completion of the crowdfund (April 2021), Lucyd Ltd held 75% ownership of Innovative Eyewear, Inc., the U.S. subsidiary that owns the exclusive license to Lucyd’s technology.

  • Filed two design patents on their Lucyd Lyte™ e-glasses, which were launched in December 2020.

  • Lucyd’s in-house developed utility patent, for a software system to control wearables and IOT devices, was granted by the USPTO.

Guident Limited (“Guident”) (100% ownership) www.guident.co

Guident is developing remote monitoring and control software to improve the safety of autonomous vehicles and land-based delivery devices. Guident’s software will incorporate artificial intelligence and advanced network technologies to minimize signal latency and improve reliability.

Investment Rationale:

Vehicles of all types are rapidly becoming electric and autonomous. While Autonomous Vehicles (“AVs”) are projected to be significantly safer than traditional vehicles, there will still be mishaps and in many instances there will be no vehicle operator present to help resolve these problems. We believe remote human interaction will be needed to address these mishaps. Guident is seeking to build a remote monitoring and control centre that will monitor vehicles and if necessary provide additional support such as calling first responders, taking over control of the vehicle to move it out of harm’s way and providing real-time communication with passengers or pedestrians. Over time we believe remote monitoring centres will be required in many jurisdictions.

Recent Developments:

  • Announced key management appointments of Harald Braun as Company’s CEO and Daniel Grossman as the company’s Chief Revenue Officer. The company also appointed Michael Trank as VP Software Development and Dr. Gabriel Castaneda as Lead Architect, Artificial Intelligence Software.

  • Won the Florida Atlantic University (FAU) competition as one of the most promising start-ups in South Florida, from a field of over 200 contestants. The judges were convinced that Guident’s creation of the first Remote Monitoring and Control Centre in Florida for autonomous vehicles, applying artificial intelligence, and their first use-case for ‘zero-touch’ ground-based delivery of groceries and medicines, would be the right choice to create significant value in South Florida and subsequently nationwide.

  • Entered into a Strategic Alliance with Bestmile USA, Inc. This strategic alliance with Bestmile will focus on several areas of collaboration in Europe and North America. This will include providing Guident's patented, advanced teleoperation system for autonomous and human-driven vehicles, to enhance customer safety and security, incorporating a reliable, low latency connection to any advanced mobile network solution.

  • Guident announced it had acquired the exclusive license to U.S. patent # 8,941,251 from the Research Foundation of the State of New York. The patent enables the manufacture of electromagnetic regenerative shock absorbers with high energy densities that are able to recover a vehicle's vibration energy which is otherwise lost due to road irregularities, vehicle accelerations and braking. In addition, this unique design utilizing rotary mechanical motion rectifiers can be tuned to achieve better damping characteristics than existing shock absorbers. This technology received the R&D 100 Award by R&D Magazine, for one of the 100 most significant technology innovations of the year from around the world. Two listed original equipment manufacturers (OEM’s) have signed NDA’s to evaluate the potential of incorporating these new shock absorbers into their electric vehicles.

Belluscura® Plc (17.8% ownership) www.belluscura.com

Respiratory medical device company that has developed an improved portable oxygen concentrator (POC) to provide on-the-go supplemental O2. The company believes its product is the first FDA cleared, modular POC with a user-replaceable filter cartridge. Belluscura aims to make POC’s more affordable to those who need them.

Investment Rationale:

Worldwide, approximately 250m individuals suffer from Chronic Obstructive Pulmonary Disease (COPD). Many of these patients require supplemental oxygen. As there is no cure for COPD, over time patients require greater amounts of oxygen, and if they use a portable oxygen concentrator, this means they must replace their devices with greater capacity models as their disease progresses. With Belluscura’s new patented device, recently cleared by the FDA, users can swap out the filter cartridges to enable higher capacity oxygen flow without having to buy a new device; like upgrading memory on a laptop. The result is significantly more affordable oxygen therapy for the life of the patient.

Recent Developments:

  • Belluscura received FDA clearance for their POC in March 2021

  • Belluscura filed an additional patent application (26 patents filed or licensed to-date) entitled “Improved Extracorporeal Membrane Oxygenation Device, System and Related Methods,” covering devices and systems for treating people suffering from acute respiratory distress caused by the Coronavirus.

  • The need for oxygen concentrators has been exacerbated by the COVID-19 pandemic.

  • Belluscura announced it is considering an IPO on the AIM Market of the London Stock Exchange (or other recognized stock exchange) and expects investments should qualify for Enterprise Investment Scheme relief.

Operational highlights: Corporate

As part of our continuing efforts to develop our team and expand our services:

  • Konrad Dabrowski, CPA, who for the past three years has served as the Group’s Financial Controller, has been promoted to non-board CFO, replacing Mr. Malcolm Groat who provided five years of good service to the Company. Concomitant with this change, Malcolm stepped down from the Board of Directors at the conclusion of his term.

  • Universities worldwide purchased more than 400 Invention Evaluator reports to assess the market potential of new technologies in 2020.

  • Tekcapital delivered a webinar on commercialising university IP with the Creativity and Innovation Center 4.0 of the Universidad Tecnológica de Querétaro. This resulted in the formation of a strategic alliance with Universidad Tecnológica de Querétaro for providing Tekcapital’s services in Mexico.

  • Tekcapital delivered a webinar in Brazil titled “Agritech Startups”, which gathered more than 60 key players from the Brazilian technology and innovations ecosystem.

  • Tekcapital was invited to Petróleo Brasileiro S.A (Petrobras) to deliver a presentation on global opportunities in intellectual property licensing.

  • Tekcapital executed a strategic alliance agreement with LicenciArte Colombia, a consultancy firm that offers services to strengthen, protect and commercialise technologies from universities and research laboratories.

Dr. Clifford Gross, Executive Chairman said: “Through the collective efforts of our dedicated and capable team we have achieved record results in 2020. Our portfolio companies have demonstrated significant growth and we believe they are well positioned to further expand and achieve meaningful milestones in 2021.”

Post period end portfolio company highlights

  • On 2 December 2020, Salarius Ltd has successfully launched its innovative SaltMe!® snack line on Amazon in North America. The company commenced sales of all four flavours on the e-commerce platform, offering six-count boxes of five-ounce packages. To date, the product received more than 70% 5-star ratings on Amazon.

  • On 3 December 2020 Belluscura submitted the X-PLO2R™ portable oxygen concentrator for 510(k) clearance with the U.S. FDA.

  • On 6 January 2021, Lucyd announced the launch of Lucyd® Lyte™ its tech-enhanced, prescription eyewear for active lifestyles. Lyte looks and feels just like designer fashion frames, are available in any prescription, yet are priced similar to ordinary prescription glasses. To date, the product received more than 65% 5-star ratings on Amazon, and a near-perfect rating on Lucyd.co where customers are able to customize the pairs with any prescription lens.

  • On 5 February 2021, MicroSalt, Inc, a U.S. subsidiary of Salarius Ltd, commenced its Regulation Crowdfunding program on the MicroVentures platform, where it is seeking to raise approximately US$750K at a US$5m pre-money valuation.

  • On 2 March 2021, Innovative Eyewear products were onboarded on Brookstone, an online B2B marketplace.

  • On 8 March 2021, Belluscura plc announced the receipt of 510(k) Clearance from the US Food and Drug Administration (the "FDA") for its X-PLO2R™ portable oxygen concentrator.

  • On 10 March 2021, Salarius Ltd announced it has appointed Eduardo Souchon as V.P. of Business Development and Jay Shah, M.D., a Mayo Clinic cardiologist as a medical advisor.

  • On 22 March 2021, Lucyd Ltd announced it has signed a distribution agreement with D. Landstrom Associates, to build distribution of Lucyd Lyte™ bluetooth e-glasses in big box retail stores in the U.S.

  • On 1 April 2021, Lucyd Ltd announced that its US subsidiary Innovative Eyewear Inc has closed its over-subscribed Regulation Crowdfund, raising US$1.07m. Following completion of the crowdfund, Lucyd Ltd owned 75% of shares of Innovative Eyewear Inc.

  • In April 2021, the Company converted its warrants and options for shares of Belluscura plc, bringing total shares held to 17.1 million (~23%).

Posting of Annual Report and Accounts
The Company's annual report and accounts for the year ended 30 November 2020 will be available on the Company's website www.tekcapital.com shortly and will be posted to shareholder on 04 May 2021.

For further information, please contact:

Tekcapital Plc

Via Flagstaff

Clifford M. Gross, Ph.D.

SP Angel Corporate Finance LLP
(Nominated Adviser and Broker)

+44 (0) 20 3470 0470

Richard Morrison/Charlie Bouverat (Corporate Finance)
Abigail Wayne / Rob Rees (Corporate Broking)

Flagstaff Strategic and Investor Communications
Tim Thompson/Andrea Seymour/Fergus Mellon

+44 (0) 20 7129 1474


Skyline Corporate Communications Group, LLC (U.S.)
Matthew Abenante/Scott Powell


+1 646 893 5835

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

This press release is for informational purposes only. The information herein does not constitute investment advice nor an offer to invest and may contain statements related to our future business and financial performance and future events or developments involving Tekcapital that may constitute forward-looking statements. These statements may be identified by words such as "expect," "look forward to," "anticipate" "intend," "plan," "believe," "seek," "estimate," "will," "project" or words of similar meaning. We may also make forward-looking statements in other reports, in presentations, on social media, in material delivered to customers, stakeholders and in press releases. In addition, our representatives may from time to time make oral forward-looking statements. Such statements may be based on the current expectations and certain assumptions of Tekcapital’s management. Please note that these are subject to a number of risks, uncertainties and factors, including, but not limited to those described in various disclosures. Should one or more of these risks or uncertainties materialize, or should underlying expectations not occur or assumptions prove incorrect, actual results, performance or achievements of Tekcapital may vary materially from those described explicitly or implicitly in the relevant forward-looking statement. Forward-looking statements express, as at the date of this release, 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, including those associated with COVID-19, and there can be no assurance that such statements will prove to be accurate. No assurance is given that such forward looking statements or views are correct or that the objectives of the Company will be achieved. Further, valuations of Company’s portfolio investments and net asset value can and will fluctuate over time due to a variety of factors and this could have a material impact on the Company’s financial performance. Tekcapital neither intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which may differ from those anticipated.

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 description 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 Company, including the merits of investing and the risks involved. Prospective investors should not treat the contents of this Report as advice relating to legal, taxation or investment matters and are advised to consult their own professional advisers concerning any acquisition of shares in the Company. Certain of the information contained in this Report has been obtained from published sources prepared by other parties. Certain other information has been extracted from unpublished sources prepared by other parties which have been made available to the Company. The Company has not carried out an independent investigation to verify the accuracy and completeness of such third party information. No responsibility is accepted by the Company or any of its directors, officers, employees 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 assessment and interpretation of information available to them as at the date of this Report. In addition, this Report contains certain “forward-looking statements”, including but not limited to, the statements regarding the Company’s overall objectives and strategic plans, timetables and capital expenditures. Forward-looking statements express, as at the date of this Report, the Company’s plans, estimates, valuations, forecasts, projections, opinions, expectations or beliefs as to future events, results or performance. Forward-looking statements involve a number of risks and uncertainties, many of which are beyond the Company’s control, and there can be no assurance that such statements will prove to be accurate. No assurance is given that such forward looking statements or views are correct or that the objectives of the Company will be achieved. Further, valuations of Company’s portfolio investments and net asset value can and will fluctuate over time due to a wide variety of factors both company specific and macro-economic. Changes in net asset values can have a significant impact on revenue and earnings of the Company and its future prospects. Additionally, the current Coronavirus pandemic may produce negative economic activities which could reduce the company’s economic performance and the performance of its portfolio companies in ways that are difficult to quantify at this juncture. It may cause a downturn in the markets in which the Company operates, reduce the Company’s net asset values, revenue, cash flow, access to investment capital and other factors which could negatively impact the Company. As a result, the reader is cautioned not to place reliance on these statements or views and no responsibility is accepted by the Company or any of its directors, officers, employees or agents in respect thereof. The Company does not undertake to update any forward-looking statement or other information that is contained in this Report. Neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in respect of, the accuracy or completeness of the information contained in this Report or for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss, howsoever arising, from the use of this Report. Neither the issue of this Report nor any part of its contents is to be taken as any form of contract, commitment or recommendation on the part of the Company or the directors of the Company. In no circumstances will the Company be responsible for any costs, losses or expenses incurred in connection with any appraisal, analysis or investigation of the Company. This Report should not be considered a recommendation by the Company or any of its affiliates in relation to any prospective acquisition or disposition of shares in the Company. No undertaking, Report, warranty or other assurance, express or implied, is made or given by or on behalf of the Company or any of its affiliates, any of its directors, officers 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 statement

Tekcapital brings new scientific innovations from lab to market to enhance safety and health and improve the quality of life of the customers we serve. Achieving our mission has never been more important than right now, as the COVID-19 pandemic has resulted in significant and unprecedented global health and financial distress.

In 2020, despite these events, all of our active portfolio companies made significant progress and the value of our portfolio holdings increased by 50%. As a result, for the year, our net assets increased by approximately 45% to US$32.7m, a record level for our Company. Total revenues increased 28% to US$9.9m while our after-tax profit increased by 39% to US$7.7m.

Key portfolio companies

Using our proprietary global university network, we provide services to universities and companies to help them commercialize their innovations. Additionally, over the past four years, using these services, we have built a valuable group of portfolio companies to commercialize select intellectual properties we or our portfolio companies have uncovered. We believe that when you couple commercialization ready, compelling university IP with visionary management, vibrant companies will likely emerge, net assets are likely to grow, returns on invested capital will outperform the sector and exits, if they occur, will occur faster. When we realise exits through trade sales or IPO’s, the Group’s goal is to distribute a portion of the proceeds as a special dividend to our shareholders.

Our current portfolio companies were all started by Tekcapital from a clean sheet of paper. Whilst few in number, they are diverse and span multiple sectors including food tech, autonomous vehicles, smart eyewear and respiratory medical devices. In our view, all of our portfolio companies have compelling intellectual properties, capable and inspired management and address US$B+, fast growing markets. The entire team at Tekcapital is committed to helping these companies grow to achieve their full potential and value, which we view as significant.

Salarius is a food tech business that owns a patented process to produce nanoparticle sized salt. These small crystals dissolve faster on the tongue, so you need to use less salt, whilst still having the same salty taste. Less salt means about 50% less sodium for most applications. Less sodium means a reduced likelihood of developing high blood pressure and heart disease, the world’s leading cause of death. In addition to its focus on B2B sales of MicroSalt® to snack food companies, as proof of concept, Salarius has launched its own snack food brand called SaltMe!TM. Beginning in August 2020 they started shipping their first product, SaltMe! potato chips, to stores throughout the U.S. According to Future Market Insights, the low sodium ingredient market is estimated to reach US$1.76bn1 by 2025. Tekcapital owns 97.15% of Salarius and 87.1% of its U.S. subsidiary MicroSalt Inc. as of the date of this report.

Lucyd has built a new, online eyeglass business that combines technology with traditional eyewear. Recently they launched Lucyd LyteTM, their most advanced and compelling Bluetooth® 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® or Alexa®. The product has initially been very well received. Lucyd is focused on expanding its sales online and leveraging retail distribution after the pandemic subsides, through existing specialty and large format stores in late 2021. Lucyd has developed and filed 24 U.S. utility and design patents covering its products. According to Statista2, the current U.S. online market for eyewear is $3.8b per year. Tekcapital owned 100% of Lucyd and 90% of its U.S. subsidiary Innovative Eyewear Inc as of 30 November 2020.

Guident owns or holds the exclusive licence to a group of patents that we believe can improve the safety of autonomous vehicles and land-based autonomous delivery devices once brought to market. Guident has significantly progressed its R&D efforts, increased its intellectual capital in 2020 with several additional patent acquisitions and in-house developed properties and software, along with key team additions. Guident has begun its B2B marketing program for its Remote Control and Monitoring Center and is seeking to consummate strategic alliances and partnerships in the last mile delivery, smart city and AV sectors. Such monitoring has recently been required by law in the State of Florida and is being reviewed in other jurisdictions. According to Allied Market Research3, the global market for autonomous last mile delivery is projected to reach US$11.9 billion in 2021. Additionally, Guident has acquired an exciting, new regenerative shock absorber technology, to help extend the range of electric vehicles. Guident has executed NDA’s with two listed OEM’s to test these new shocks for potential use in their electric vehicles and is currently fabricating prototypes for testing. Tekcapital owned 100% of Guident and approximately 96% of its U.S. subsidiary Guident Corporation as of 30 November 2020.

Belluscura has developed an improved portable oxygen concentrator to provide on-the-go supplemental O2, with user replaceable filter cartridges. When a patient’s respiratory disease progresses, they now can upgrade the filter cartridge to provide more liters of O2 per minute, similar to upgrading memory on a laptop, rather than having to replace an expensive medical device. We believe the cost-savings will be beneficial to patients and insurance companies, and should help make respiratory healthcare more affordable which is core to Belluscura’s mission. Belluscura filed for 510(K) clearance from the US FDA in December 2020 and received clearance in March 2021.

Belluscura have announced that they may plan to float on AIM or conduct an alternative financing, in the near-term, to finance and accelerate the manufacture and distribution of their portable oxygen concentrators. According to Global Market Insights, the medical portable O2 market is currently US$1.4bn4 a year and growing by more than US$100m/year4. Belluscura has 18 patents filed or licensed to-date covering devices and systems for treating people suffering from acute respiratory distress caused by COPD or the Coronavirus pandemic. Tekcapital owned 17.8% of Belluscura as of 30 November 2020 and ~23% as of the date of this report.

Financial Performance

In 2020, despite the global COVID-19 pandemic and the related social and economic hardship, we are fortunate that our team is healthy, all of our active portfolio companies made significant progress and the value of our portfolio holdings increased by 50%. This increase was driven primarily by:

  • increase in the fair value of Group’s holding in Guident Ltd (increase of US$6.5m), as a result of the addition of new intellectual property and discounting of management’s projections to 30 November 2020

  • increase in the fair value of Group’s shares in Lucyd Ltd (increase of US$1.6m) driven by commercial progress and extending management’s forecasts to 5 years

  • increase in the fair value of Group’s shares in Salarius Ltd (increase of US$0.7m) driven by commercial progress

As a result, for the year, our net assets increased by approximately 45% to US$32.7m, a record level for our Company. Total revenues increased 28% to US$9.9m with unrealised profit on the revaluation of investments driving that increase by US$8.7m. Our after-tax profit increased by 39% to US$7.7m.

Principal Risks and Uncertainties

The specific financial risks are discussed in the notes to the financial statements. Other risks are as follows:

  • We believe the principal financial risks and benefits of the business relate to the value and performance of the Group’s portfolio companies. We believe that the fair value of each portfolio company is a time dependent valuation that may become impaired if the business does not achieve it milestones, growth trajectory, product development goals, market acceptance, capital raises or other key performance metrics. Individually and as a group our portfolio companies have a material impact on our financial performance.

  • The risk of individual portfolio company negative performance, in the future, may be ameliorated, as our portfolio becomes more mature, and when our portfolio companies develop significant capital reserves, predictable revenues and have demonstrated significant increases in value.

  • The principal operational risk of the business is management’s ability to assist our portfolio companies in achieving their goals and ultimate exits whilst having a small team and an additional goal of increasing our service revenues.

  • The Group is dependent on its executive team and directors for its operations and ultimate success and there can be no assurance that it will be able to retain the services of these key personnel in the futures.

  • The COVID-19 pandemic may produce negative economic activities which could reduce the Group’s economic performance. Further, until the Group covers all of its operating costs from service revenue and or portfolio company exits, it will seek to raise additional capital to fund operations and provide follow-on investments in portfolio companies.

Fundraisings during the period

Early-stage businesses facing large market opportunities need talent, technology and capital to succeed. To help address this we completed the following fundraises in 2020:

On 6 February 2020, the Group announced it had completed a fundraising of US$0.96m (before expenses) through the placing of 14,800,000 new Ordinary Shares with new and existing investors at a price of 5 pence per new Ordinary Share.

On 1 May 2020, the Group announced it had completed a fundraising of US$1.15m through placing of 9,250,000 new Ordinary Shares with new and existing investors at a price of 10 pence per new Ordinary Share.

On 17 September 2020, the Group announced it completed a fundraise US$0.5m (before expenses) through placing of 4,750,000 new ordinary shares with existing investors at a price of 8 pence per new Ordinary Share.

Post end of period fundraising:

On March 18, 2021, the Company announced that it had raised US$5.28m (before expenses) through placing of 38,000,000 new Ordinary Shares with existing and new investors at a price of 10 pence per new Ordinary Share.

Current Trading and Outlook

We are enthusiastic about the development of Tekcapital’s portfolio companies, their performance to-date and their prospects to significantly expand in 2021. The Board is confident that continued investment in our portfolio companies remains the right approach for potential long-term value creation. Additionally, we are currently exploring early-stage venture funding and conducting equity crowdfunding for a number of our portfolio companies, to accelerate growth and brand awareness for these companies.

Whilst the Company is progressing very well, investors should note that net asset values will fluctuate from period to period due to individual portfolio company performance, valuations and changes in market conditions and macro-economic financial conditions, including the current COVID-19 pandemic, and that changes in the value of our portfolio companies can have a significant impact on our NAV, revenue, income and future prospects.

We are grateful for the patience and support of our shareholders. We are also sincerely appreciative of our dedicated, creative and incredibly hardworking team, without whom, none of the results reported herein would be possible.

Section 172 (1) statement

Our Board ensures that all decisions are taken for the long term, and collectively and individually aims to always uphold the highest standard of conduct. Similarly, our Board acknowledges that the business can only grow and prosper over the long-term if it understands and respects the views and needs of the Company’s investors, customers, employees, suppliers and other stakeholders to whom we are accountable, as well as the environment we operate within.

When making decisions, each director ensures that they act in the way that would most likely promote the Company’s success for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to the following matters:

(a) The likely consequences of any decision in the long term
In line with our strategy, Tekcapital’s purpose is to find and invest in exciting new discoveries from our global university network that can enhance people’s lives. We believe that when you couple commercialization ready, compelling university IP with strong senior management, vibrant companies will likely emerge. When we realise exits the Group’s goal is to distribute a portion of the proceeds as a special dividend to our shareholders.

With this in mind, we apply the same high standards of responsible stewardship to our businesses as if we were to own them forever, and it is this approach to decision making that requires the Directors to have regard to the likely consequences of decisions in the long-term.

(b) The interests of the Company’s employees
The Board strives to maintain and develop a culture where everyone feels valued and included. The Board also considers the health, safety and wellbeing of all Tekcapital employees in everyday decisions. Feedback from employees is actively encouraged and is considered a key driver in developing our business activities, processes and workplace environment. Initiatives to encourage wellbeing are well established and continue to evolve and are strongly influenced by the workforce. Professional and personal development of employees is viewed as fundamental to the continued success of the Company.

(c) The need to foster the Company's business relationships with suppliers, customers and others
The Board ensures that the Company’s mission is focused on improving the world with university discoveries, and focuses on innovations that, if successful, can improve the quality of life of customers we serve.

The Board recognises that it is crucial that we deliver a reliable service to our customers and maintain excellent relationships with suppliers. The Board also considered near-term demand and how customers’ priorities might change over a longer period of time, including effect of the COVID-19 pandemic.

(d) The impact of the company’s operations on the community and the environment
In their decision making, the Directors need to have regard to the impact of the Company’s operations on the community and environment. The Board plays a constructive role in tackling issues through engagement and making sure the Company’s investments focus on improving quality of life and attempt to solve significant health and safety problems facing communities.

(e) The desirability of the Company maintaining a reputation for high standards of business conduct
The Board recognises that culture, values and standards are key contributors to how a company creates and sustains value over the longer term, and to enable it to maintain a reputation for high standards of business conduct. High standards of business conduct guide and assist in the Board’s decision making, and in doing so, help promote the Company’s success, recognising, amongst other things, the likely consequences of any decision in the long-term and wider stakeholder considerations. The standards set by the Board mandate certain requirements and behaviours with regards to the activities of the Directors, the Group’s employees and others associated with the Group.

(f) The need to act fairly as between members of the Company
The Company has one class of ordinary shares, which have the same rights as regards voting, distributions and on a liquidation. Management are also significant shareholders in the Company, holding approximately 9.3% of the register, together putting them in the top 3 shareholders of the Company. On this basis the Board feels that the executive Directors are fully aligned with shareholders.

On the basis of the above, the members of the Board consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(1)(a-f) of the Companies Act 2006) in the decisions taken during the year ended 30 November 2020.

Dr Clifford M Gross

Chairman and CEO

29 April 2021

Directors Report

Directors

The following Directors held office during the period, or as of the date of this report.

Clifford M Gross, Ph. D.
Robert Miller, M. D.
Louis Castro (appointed on 2 December 2019)
The RT Hon Lord David Willets FRS (appointed on 6 January 2020)

The following officers no longer hold office with the Company:
M J Malcolm Groat (held office from April 2014 through completion of term in July 2020)
Robert Payne (resigned 31 December 2019)

The Group has chosen to set out in the groups strategic report information required to be contained in the directors’ report. It has done so in respect of future developments. The principal activity of the parent company is that of an investment entity.

Statement of Directors’ responsibilities

The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group and parent company financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:

  • select suitable accounting policies and then apply them consistently;

  • make judgements and accounting estimates that are reasonable and prudent;

  • state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements; and

  • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Each of the current Directors, whose names are listed in the Directors’ report on page 30 of the financial statements confirm that, to the best of each person’s knowledge and belief:

  • the financial statements, prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit (or Loss) of the Group and Company; and

  • the chairman’s statement contained in the annual financial statements includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that they face.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s website www.tekcapital.com. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Going Concern

The Group meets its day to day working capital requirements through its service offerings and monies raised through the issuances of equity. The Group’s forecasts and projections indicate that the Group has sufficient cash reserves to operate within the level of its current facilities. Whilst it is the Group’s intention to rely on the available cash reserves, future income generated from its service offerings and reductions in its cost base, a negative variance in the forecasts and projections would make the Group’s ability to continue as going concern dependent on an additional fund raise. If the Group’s forecasts are not achieved, the Directors would seek to raise the additional funds through equity issues. Whilst the COVID-19 epidemic is contributing to uncertainty in the markets and the full impact is difficult to measure, at the time of approving the accounts after making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.

Information has been included in the strategic report in relation to disclosures under S414C(11) of the Companies Act 2006.

Dividends

No dividend was paid or was proposed during the year ended 30 November 2020.

Audit Committee
The Board operates an Audit Committee, chaired by Louis Castro. This Committee carries out duties as set out in the AIM Admission Document, supervising the financial and reporting arrangements of the Group. During the period, no issues arose that the Directors consider appropriate to disclose in their Report.

Research and Development
The Group incurred expenses related to research and development activities. The activities were limited to improvement of the Innovation Discovery Network solution, developed to facilitate an improved technology search engine.

Remuneration Committee
The Board has delegated to its Remuneration Committee, chaired by Dr Robert Miller, certain responsibilities in respect of the remuneration of senior executives. During the period, no issues arose that the Directors consider appropriate to disclose in their Report.

Directors Emoluments

Salary &

Benefits

Bonus

2020

2019

fees

in kind

Total

Total

US $

US $

US $

US $

US $

Clifford M Gross

191,865

22,745

154,375

368,985

208,810

M J Malcolm Groat

10,247

-

-

10,247

15,284

R W “Bill” Payne

3,802

-

-

3,802

19,105

Robert Miller

21,600

-

-

21,600

21,600

Louis Castro

37,146

-

-

37,146

-

Lord David Willets

28,218

-

-

28,218

-

292,879

22,745

154,375

469,998

264,799

Director’s proportion of the stock option expense is below US$20,000.

The Group did not make any contributions to a pension scheme in the year ended 30 November 2020 (2019: Nil).

Directors’ beneficial interests in shares:

2020

2019

2020

2019

No of Shares

No of Shares

No of Options

No of Options

Clifford M Gross

8,657,500

8,657,500

3,000,000

450,000

Lord David Willets

-

-

100,000

-

Robert Miller

2,664

2,664

200,000

320,000

Please note the above figure for Clifford M Gross does not include 100,000 shares held by both of Dr. Gross’s adult children, who are not considered a PCA as defined in the Article 3(1)(26) of the UK Market Abuse Regulation.

No of Options

Exercise Price

Grant Date

Date from which exercisable

Life

Clifford M Gross

3,000,000

£0.12

28-Aug-20

Special Conditions*

5 Years

Robert Miller

100,000

£0.375

29-Jun-16

Special Conditions*

5 Years

100,000

£0.0783

30-Aug-19

Special Conditions**

5 Years

Lord David Willets

100,000

£0.0525

6-Jan-20

Special Conditions**

5 Years

The details of the options held by each director as of 30 November 2020 are as follows:

* The options vest in three equal annual instalments from the date of grant and there is a special condition which means the options will vest when the closing price for a share has been traded at more than 50 pence (sterling) for ten consecutive trading days.

** The options shall vest when the net asset value, as stated in the annual consolidated accounts, meets, or exceeds USD$20.53m during the 36 months after the grant date. The threshold shall be re-tested when each set of accounts published during the 36 months are finalised.

525,000 options were held by Harrison Gross, received as part of his employment compensation with the Company. Harrison is an adult family member of Dr. Clifford Gross and Dr. Gross disclaims any ownership or control of these options.

Principal Risks and Uncertainties

Please refer to Strategic Report.

Post Balance Sheet Events

For further details, please refer to note 28 in the notes to the financial statements.

Independent auditors

HW Fisher LLP were appointed as auditor to the Company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting. Statement of disclosure of information to auditors

Each of the persons who was a Director at the date of approval of this report confirms that:

  • so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and

  • the Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.

By order of the Board of Directors and signed on behalf of the Board

Louis Castro

Director

29 April 2021

Tekcapital Plc
Consolidated Statement of comprehensive income
For the year ended 30 November 2020


Group


Note

Year ended
30 November
2020

Year ended
30 November
2019

US $

US $

Continuing Operations

Revenue from services

6

1,195,252

1,200,551

Unrealised profit on the revaluation of investments

12

8,688,111

6,516,813

Total Revenue

9,883,363

7,717,364

Cost of sales

(458,728

)

(606,166

)

Gross Profit

9,424,635

7,111,198

Administrative expenses

7

(1,742,641

)

(1,590,563

)

Operating Profit

7,681,994

5,520,635

Profit on ordinary activities before income tax

7,681,994

5,520,635

Income tax expense

9

(2,076

)

(2,345

)

Profit after tax for the year

7,679,918

5,518,290

Other comprehensive income

Foreign exchange profit

92,949

31,855

Total other comprehensive income

92,949

31,855

Total comprehensive profit for the year

7,772,867

5,550,145



Profit per share

Basic earnings per share

10

0.095

0.095

Diluted earnings per share

10

0.094

0.095

The Group has used the exemption under S408 CA 2006 not to disclose the Company income statement.

Items in the statement above are disclosed net of tax.

The notes on pages 23 to 60 are an integral part of these consolidated financial statements.

Tekcapital Plc
Consolidated Statement of financial position
At 30 November 2020


Group


Note

As at
30 November
2020

As at
30 November
2019

US $

US $

Assets

Non-current assets

Intangible assets
Financial assets at fair value through profit and loss

13
12

838,770
30,491,657

838,770
20,335,925

Convertible loan notes

15

588,169

476,122

Property, plant and equipment

14

9,622

17,353

31,928,218

21,668,170

Current assets

Trade and other receivables

15

647,436

815,866

Cash and cash equivalents

16

538,473

472,899

1,185,909

1,288,765

Total assets

33,114,127

22,956,935

Current liabilities

Trade and other payables

20

247,442

310,160

Current income tax liabilities
Deferred Revenue


21

500
154,721

500
118,595

402,663

429,255

Total liabilities

402,663

429,255

Net assets

32,711,464

22,527,680

Equity attributable to the owners of the Parent

Ordinary shares

18

521,830

372,984

Share premium

18

13,211,344

10,993,546

Retained earnings

19

18,780,012

11,055,821

Translation Reserve

19

270,447

177,498

Merger Reserve

19

(72,169

)

(72,169

)

Total Equity

32,711,464

22,527,680

The notes on pages 23 to 60 are an integral part of these financial statements.
The financial statements on pages 17 to 60 were authorised for issue by the Board of Directors on 29 April 2021 and were signed on its behalf.

Louis Castro

Dr Clifford Gross

Director

Chairman and CEO

Tekcapital Plc
Company Statement of financial position
At 30 November 2020



Company



Note


As at
30 November
2020


As at
30 November
2019

US $

US $

Assets

Non-current assets

Investment in subsidiaries

11

1,955,215

1,959,003

Financial assets at fair value through profit and loss

12

2,081,027

1,804,120

Convertible Loan Notes

15

588,169

476,122

4,624,411

4,239,245

Current assets

Trade and other receivables

15

3,560,188

2,321,731

Cash and cash equivalents

16

239,991

112,114

3,800,179

2,433,845

Total assets

8,424,590

6,673,090

Current Liabilities

Trade and other payables

20

79,249

484,375

79,249

484,375

Total liabilities

79,249

484,375

Net assets

8,345,341

6,188,715

Equity attributable to the owners of the parent

Ordinary shares

18

521,830

372,984

Share Premium

18

13,211,344

10,993,546

Retained Earnings

19

(5,351,695

)

(5,079,729

)

Translation Reserve

19

(36,138

)

(98,086

)

Total Equity

8,345,341

6,188,715

The Company’s loss before tax for the year ended 30 November 2020 was $316,239.

The notes on pages 23 to 60 are an integral part of these financial statements.
The financial statements on pages 17 to 60 were authorised for issue by the Board of Directors on 28 April 2021 and were signed on its behalf.

Louis Castro

Dr Clifford Gross

Director

Chairman and CEO


Tekcapital Plc

Consolidated Statement of changes in equity
For the year ended 30 November 2020

Attributable to equity holders of the parent company



Group



Note


Ordinary
Shares

US $


Share
Premium

US $


Translation
Reserve

US $


Merger
reserve

US $


Profit and
loss
account

US $


Total Equity
US $

Balance at 30 November 2018

326,036

10,218,805

145,643

(72,169

)

5,516,655

16,134,970

Share issue

18

46,948

892,018

-

-

-

938,966

Cost of share issue

18

-

(117,277

)

-

-

-

(117,277

)

Profit for the year

19

-

-

-

-

5,518,290

5,518,290

Other comprehensive income

19

-

-

31,855

-

-

31,855

Share based payments

26

-

-

-

-

20,876

20,876

Balance at 30 November 2019

372,984

10,993,546

177,498

(72,169

)

11,055,821

22,527,680

Share issue

18

147,298

2,450,245

-

-

-

2,597,543

Share options exercised

18

1,548

29,805

-

-

-

31,353

Cost of share issue

18

-

(262,252

)

-

-

-

(262,252

)

Profit for the year

19

-

-

-

-

7,679,918

7,679,918

Other comprehensive income

19

-

-

92,949

-

-

92,949

Share based payments

26

-

-

-

-

44,273

44,273

Balance at 30 November 2020

521,830

13,211,344

270,447

(72,169

)

18,780,012

32,711,464

Share premium – amount subscribed for share capital in excess of nominal value, net of directly attributable costs.

Translation reserve – amount recognised for foreign exchange differences recognised in Other Comprehensive Income.

Merger reserve - amount subscribed for share capital in excess of nominal value in relation to the qualifying acquisition of subsidiary undertakings.

Profit and loss account – cumulative net gains and losses recognised in the consolidated statement of comprehensive income.

The notes on pages 23 to 60 are an integral part of these financial statements.

Tekcapital PLC
Company Statement of changes in equity
For the year ended 30 November 2020

Attributable to owners of the parent company




Company




Note


Ordinary
Shares

US $


Share
Premium

US $


Translation
Reserve

US $


Profit and
loss
account

US $


Total Equity
US $

Balance at 30 November 2018

326,036

10,218,805

(101,969

)

(5,131,273

)

5,311,599

Share issue

18

46,948

892,018

-

-

938,966

Cost of share issue

18

-

(117,277

)

-

-

(117,277

)

Profit for the year

19

-

-

-

30,668

30,668

Other comprehensive income

19

-

-

3,883

-

3,883

Share based payments

26

-

-

-

20,876

20,876

Balance at 30 November 2019

372,984

10,993,546

(98,086

)

(5,079,729

)

6,188,715

Share issue

18

147,298

2,450,245

-

-

2,597,543

Share options exercised

18

1,548

29,805

31,353

Cost of share issue

18

-

(262,252

)

-

-

(262,252

)

Profit for the year

19

-

-

-

(316,239

)

(316,239

)

Other comprehensive loss

19

-

-

61,948

-

61,948

Share based payments

26

-

-

-

44,273

44,273

Balance at 30 November 2020

521,830

13,211,344

(36,138

)

(5,351,695

)

8,345,341


Share premium – amount subscribed for share capital in excess of nominal value, net of directly attributable issue costs.

Translation reserve – amount recognised for foreign exchange differences recognised in Other Comprehensive Income.

Profit and loss account – cumulative net gains and losses recognised in the consolidated financial statements of comprehensive income.

The notes on pages 23 to 60 are an integral part of these financial statements.

Tekcapital Plc
Consolidated Statement of cash flows
For the year ended 30 November 2020



Group



Note

For the year
ended

30 November
2020

For the year
ended
30 November
2019

US $

US $

Cash flows from operating activities

Cash outflows from operations

24

(948,166

)

(1,397,294

)

Tax paid

(2,076

)

(2,345

)

Net cash outflows from operating activities

(950,242

)

(1,399,639

)

Cash flows from investing activities

Purchase of financial assets at fair value through profit and loss

12

(1,345,679

)

(111,810

)

Purchases of property, plant and equipment

14

(950

)

(862

)

Net cash outflows from investing activities

(1,346,629

)

(112,672

)

Cash flows from financing activities

Proceeds from issuance of ordinary shares

18

2,628,896

938,966

Costs of raising finance

18

(262,252

)

(117,277

)

Net cash inflows from financing activities

2,366,644

821,689

Net increase/(decrease) in cash and cash equivalents

69,773

(690,622

)

Cash and cash equivalents at beginning of year

16

472,899

1,165,442

Exchange (losses)/gains on cash and cash equivalents

(4,199

)

(1,921

)

Cash and cash equivalents at end of year

16

538,473

472,899

Notes

1.

General Information

Tekcapital PLC (Companies House registration number: 08873361) is a company incorporated in England and Wales and domiciled in the UK. The address of the registered office is detailed on page 1 of these financial statements. The Company is a public limited company limited by shares, which listed on the AIM market of the London Stock Exchange Group Plc in 2014. The principal activity of the parent company is that of an investment entity and that of the Group is to provide universities and corporate clients with valuable technology transfer services. The Group and the parent company also acquire exclusive licences to university technologies that it believes can positively impact people’s lives, for subsequent commercialisation.

The principal accounting policies applied in the preparation of these consolidated and parent company financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Amounts presented in this report are rounded to nearest US$1.

2.

Accounting policies

2.1

Statement of compliance

The consolidated financial statements of Tekcapital PLC Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention. The consolidated financial statements comprise the financial statements of Tekcapital plc and its subsidiaries, Tekcapital Europe Ltd and Tekcapital LLC.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 4.

The consolidated financial statements of the parent company have been prepared in accordance with Financial Reporting Standard 101 “Reduced disclosure framework” (‘FRS 101’). The company will continue to prepare its financial statements in accordance with FRS101 on an ongoing basis until such time as it notifies shareholders of any change to its chosen accounting framework.

The Company financial statements have been prepared using the historical cost convention except where other measurement basis are required to be applied and in accordance with IFRS under FRS 101. In accordance with FRS101, the Company has taken advantage of the following exemptions:

2.1.1

Going concern

The Group and the Company meets its day to day working capital requirements through its service offerings and monies raised through the issues of equity. The Group’s forecasts and projections indicate that the Group and the Company have sufficient cash reserves to operate within the level of its current facilities. Whilst it is the Group’s and the Company’s intention to rely on the available cash reserves, future income generated from its growing service offerings and continued reductions in its cost base, a negative variance in the forecasts and projections would make the Group’s ability to continue as a going concern dependent on an additional fund raise. If the Group’s forecasts are not achieved, the Directors would seek to raise the additional funds through equity issues. Whilst the COVID-19 pandemic is contributing to uncertainty in the markets and the full impact is difficult to measure, at the time of approving the accounts after making enquiries, the Directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. The Group and the Company therefore continue to adopt the going concern basis in preparing both its consolidated financial statements and for its own financial statements.

2.1.2

Changes in accounting policy and disclosures

New standards and interpretations not yet adopted by the Group

IFRS 17 Insurance Contracts

IFRS 17 was issued in May 2017 and is effective for accounting periods beginning on or after 1 January 2023. The Group has not chosen to early adopt this standard and will adopt it for the accounting period beginning 1 December 2023. Directors do not expect any material impact on the consolidated financial statements.

No other issued but not endorsed amendments to IFRS will have a material impact on the Group’s financial statements once they become endorsed and effective.

New standards and interpretations adopted by the Group:

IFRS 16 Leases

The Group adopted this standard for the accounting period beginning 1 December 2019. The adoption of this standard has not had an impact on the financial performance or position of the Group for the year or comparative period

2.2

Business combinations

Tekcapital PLC was incorporated on 3 February 2014 and on 18 February 2014 entered into an agreement to acquire the issued share capital of Tekcapital Europe Limited by way of share issue. On 19 February 2014 it acquired the issued share capital of Tekcapital LLC also by share issue. This has been accounted for as a common control transaction under IFRS 3 using the pooling of interest method by using the nominal value of shares exchanged in the business combination and no fair value adjustment. The consolidated financial statements comprise the financial statements of Tekcapital PLC and all subsidiaries controlled by it. Subsidiaries are entities that are controlled by the Group. Control is achieved when the Group has the power to govern the financial and operating policies of an entity so as to obtain economic benefit from its activities. Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated when necessary amounts reported by subsidiaries have been adjusted to conform to the Group’s accounting policies.

2.3

Foreign currencies

(a) Functional and presentation currency

These consolidated financial statements are presented in US Dollars which is the presentation currency of the Group. This is because the majority of the Group’s transactions are undertaken in US Dollars. Each subsidiary within the Group has its own functional currency which is dependent on the primary economic environment in which that subsidiary operates. Effective 1 December 2014 Tekcapital PLC and Tekcapital Europe Limited changed their functional currency to UK Sterling. This is because, the primary economic activity of these entities is undertaken in the UK.

(b) Transactions and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within ‘finance income or costs’.

(c) Group companies

The results and financial position of all Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each balance sheet presented are translated at the closing exchange rates at the date of that balance sheet.
(ii) income and expense for each income statement are translated at the average rates of exchange during the period (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions)
(iii) all resulting exchange differences are recognised in other comprehensive income.

2.4

Investment in subsidiaries

Investments in subsidiaries including Tekcapital Europe Ltd and Tekcapital LLC are recognised initially at cost. The cost of the investment includes transactions costs. The carrying amounts are reviewed at each reporting dated to determine whether there is any indication of impairment.

Investments in portfolio companies are held at fair value through the profit and loss. Directors’ judgment was exercised in determination that the Group meets the following criteria and should be recognized as an investment entity under IFRS 10 par. 27. Directors re-evaluated the below criteria and concluded they were met as at 30 November 2020:

Tekcapital’s IP search and technology transfer investment services represent investment advisory services, and therefore Tekcapital Europe Limited and Tekcapital LLC continue to be treated as subsidiaries and are consolidated in the Group financial statements. These services may be provided to investors, clients and third parties. The Board considers that the criteria are met in the Group’s current circumstances.

The Board envisages that Tekcapital’s shareholder returns will derive primarily from mid to long-term capital appreciation of a portion of its intellectual property investments, as well as from providing IP investment services to clients. Consequently, the Group’s portfolio companies are measured at fair value in accordance with IFRS 9 as disclosed in Note 2.9.

2.5

Non-controlling interests

Losses applicable to non-controlling interests in a subsidiary are allocated to the non-controlling interests, even if doing so causes the non-controlling interests to have a deficit balance. Adjustments to non-controlling interests arising from transactions that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary. Upon the loss of control the assets and liabilities of the subsidiary, any non-controlling interests and other components of equity related to the subsidiary are derecognised. Any resulting gain or loss is recognised in the profit and loss.

2.6

Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Depreciation of assets are calculated to write off the cost less the estimated residual value of tangible fixed assets by equal instalments over the estimated useful economic lives as follows:


Furniture

-

3 years

Computer equipment

-

3 years

Leasehold improvements

-

5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the assets carrying value is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are recognised within ‘Other gains / (losses) – net’ in the income statement. When re-valued assets are sold, the amounts are included in other reserves are transferred to retained earnings.

2.7

Intangible assets

(a) Invention Evaluator

This is an intangible asset and a piece of computer software acquired for use by one of the subsidiaries of the Group and is shown at original cost of purchase less impairment losses.

Under IAS38, this asset is regarded by the Directors as being an intangible asset with an indefinite useful life. The Directors believe that the asset is unique in that no competitor offering currently exists, the service appeals globally to many types of clients including Fortune 100 companies, there is no expectation of obsolescence in the foreseeable future, and the service provided by the asset generates sufficient ongoing revenue streams.

Consequently, no write down in the value of this asset either by way of amortisation or impairment has occurred in this financial year. In the Directors’ opinion this asset has an indefinite useful life.

(b) Computer software and website development

Costs associated with maintaining computer software programmes and the Company website are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met:

(i) it is technically feasible to complete the software product so that it will be available for use;

(ii) management intends to complete the software product and use or sell it;

(iii) there is an ability to use or sell the software product;

(iv) it can be demonstrated how the software product will generate probable future economic benefits;

(v) adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and

(vi) the expenditure attributable to the software product during its development can be reliably measured.

Computer software development costs recognised as assets are amortised over their estimated useful lives, which do not exceed four years.

(c) Licences

Costs associated with the acquisition of Licences for technologies with the express purpose of developing them further for a commercial market are recognised as an intangible asset when they meet the criteria for capitalisation. That is, they are separately identifiable and measurable and it is probable that economic benefit will flow to the entity.

Further development costs attributable to the Licenced technology and recognised as an intangible asset when the following criteria are met:

(i) it is technically feasible to complete the technology for commercialisation so that it will be available for use;

(ii) management intends to complete the technology and use or sell it;

(iii) there is an ability to use or sell the technology;

(iv) it can be demonstrated how the technology will generate probable future economic benefits;

(v) adequate technical, financial and other resources to complete the development and to use or sell the technology are available; and

(vi) the expenditure attributable to the technology during its development can be reliably measured.

Licences and their associated development costs are amortised over the life of the licence or the underlying patents, whichever is shorter.

(d) Vortechs Group

This is an intangible asset acquired for use by one of the subsidiaries of the Group and is valued at original cost of purchase.

Under IAS38, the Group’s Vortechs Group asset is regarded by the Directors as being an intangible asset with an indefinite useful life. The Directors believe that this asset is unique as it operates in a niche market, it generates an ongoing revenue stream, and there is no expectation of obsolescence. This asset meets the requirements of IAS38 as it is separately identifiable, controlled by the Group, the cost can be measured reliably, and as a result of owning this asset future economic benefits in the form of service revenue are generated for the Group.

In the opinion of the Directors this asset as an indefinite useful life and there has been no amortisation or impairment provided in the current year.

2.8

Impairment of non-financial assets

Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying value exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows, (CGUs). Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date.

2.9

Financial instruments

2.9.1

Classification

The Group and the Company classify their financial assets depending on the purpose for which the asset was acquired. Management determines the classification of its financial assets at initial recognition.

During the financial year the Group and the Company held investments into portfolio companies classified as equity investments. They are included in current assets and are measured at fair value through profit and loss in accordance with IFRS 9.

The Company also has loans, convertible loan notes and receivables that are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities that are greater than 12 months after the end of the reporting year. These are classified as non-current assets. The Group’s loans and receivables comprise ‘trade and other receivables’ in the balance sheet. The Group also has cash and cash equivalents.

All short-term liabilities are measured at cost, the Group does not hold any long-term financial liabilities.

2.9.2

Recognition and measurement

The Company’s investments into the portfolio companies are recognised on the acquisition or formation date and measured at fair value through profit or loss in accordance with IFRS 9.

Loans and receivables are recognised on the trade date in which the transaction took place and are recognised at their fair value (which equates to cost) with transaction costs expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the loans or receivables have been collected, expired or transferred and the Group has subsequently transferred substantially all risks and rewards of ownership. Short term financial liabilities are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate method.

2.9.3

Fair value

Financial instruments are measured at fair value including investments in portfolio companies, cash and cash equivalents, trade and other receivables, trade and other payables, and borrowings. This measurement policy does not apply to subsequent measurement at amortised cost of short-term financial liabilities and trade receivables.

The Group measures portfolio companies using valuation techniques appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Our fair value valuation policy is as follows:

Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, and trade and other payables approximate their fair value. The fair value of borrowings equals their carrying amounts, as the impact of discounts is not significant.

2.10

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is the intention to settle on a net basis or realise the asset and settle the liability simultaneously.

2.11

Impairment of financial assets

The Group assesses at the end of each reporting year whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (a ‘loss event’) and the loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For the loans and receivables category, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or held-to maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as the improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated income statement.

2.12

Trade receivables

Trade receivables are amounts due from customers for the provision of services performed in the ordinary course of business. Collection is normally expected within three months or less (in the normal operating cycle of the business) and is classified as current assets. In the rare circumstances that they exceed a period of greater than one year they are presented as non-current assets. In some instances, the Group accepts convertible loan notes for trade debts these are held separately on the statement of financial position until maturity or disposal on the open market. Any value received which is greater or less than the value of the original debt is taken to the consolidated statement of comprehensive income.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment.

2.13

Cash and cash equivalents

In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with other banks, other short term highly liquid investments with maturities of three months or less and bank overdrafts. In the consolidated statement of financial position, bank overdrafts are shown within borrowings in current liabilities.

2.14

Share capital

Ordinary Shares

Ordinary shares are classified as equity.

Share premium

The share premium account has been established to represent the excess of proceeds over the nominal value for all share issues, including the excess of the exercise share price over the nominal value of the shares on the exercise of share options as and when they occur. Incremental costs directly attributable to the issue of new ordinary shares and new shares options are shown in equity as a deduction, net of tax, from the proceeds.

Merger Reserve

The consolidated financial statements are accounted for using the ‘pooling of interests’ method’, which treats the Group as if it had been combined throughout the current and comparative accounting periods. Pooling of interests principles for this combination gave rise to a merger reserve in the consolidated statement of financial position, being the difference between the nominal value of new shares issued by the Company for the acquisition of the shares of the subsidiary and the subsidiary’s own share capital.

Non-controlling interest

Non-controlling interest is the portion of equity ownership in a subsidiary not attributable to the parent company.

2.15

Trade payables

Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of business if longer). If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method.

2.16

Share based payments

The Company operates a number of equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options) of the Company. The fair value of the employee services received in exchange for the grant of options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:

Assumptions about the number of options that are expected to vest include consideration of non-market vesting conditions. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to the originally estimates, if any, in the income statement, with a corresponding adjustment to equity.

When the options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transactions costs are credited to share capital (nominal value) and share premium when the options are exercised.

2.17

Current and deferred tax

The tax expense for the year comprises current and deferred tax. Tax is recognised in the consolidated income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognised on temporary timing differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in full in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle balances on a net basis.

2.18

Provisions

Provisions and any other anticipated foreseen liabilities are recognised: when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties, and employee termination payments. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering a class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as an interest expense.

2.19

Leases

At inception, the Company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the Company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the Company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the Company's estimate of the amount expected to be payable under a residual value guarantee; or the Company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

2.20

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for the services supplied, stated net of discounts, and value added taxes. The Group recognises revenue when the contract is identified, performance obligation is determined, transaction price is determined and allocated to performance obligation in accordance with IFRS 15.

The Group also recognises an unrealised profit/loss on the revaluation of investments in share of portfolio companies in accordance with the fair value policy outlined in Note 2.9.

Provision of services

The Group provides following lines of services:
- Invention Evaluator services: provision of reports assessing potential of any new technology. Revenue is recognized upon delivery of a complete report
- IP Acquisition Opportunities services: provision of reports identifying attractive university developed IP. Revenue is recognised upon delivery of a complete report
- Tech transfer recruitment services: recruitment services specialising in technology transfer executives. Revenue is recognised when the placement is successfully completed
- Training services: custom solutions for new tech transfer offices, spin out companies and accelerators delivered via in person trainings. Revenue is recognised over time based on completion stage of each session.

Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

3.

Financial Risk Management

3.1

Financial risk factors

(a) Portfolio Risk/Investments Risk Management

Investment into portfolio companies held by the Group requires long-term commitment with no certainty of return.

The fair value of each portfolio company represents the best estimate at a point in time and may be impaired if the business does not perform as well as expected, directly impacting the Group’s value and profitability. This risk is mitigated as the size of the portfolio increases. The Group performed sensitivity analysis with regards to assumptions used in determination of fair value of the portfolio in Note 12.

The Group also regularly monitors portfolio companies’ liquidity required for returns to occur.

(b) Credit Risk Management

Credit risk is managed on a Group basis. In order to minimise this risk, the Group endeavours to only deal with companies that are demonstrable creditworthy, and the Directors continuously monitor the exposure. The Group’s maximum exposure to credit risk for the components of financial position at 30 November 2020 and 2019 is the carrying amount of its current trade and other receivables as illustrated in Note 15.

The Group monitors credit risk related to performance of portfolio companies, including considerations related to recoverability of convertible loan notes issued. Progress is monitored and regular discussions are held with management of portfolio companies to assess commercial progress and financial information provided. The Group also monitors credit risk related to creditor amounts due from portfolio companies.

(c) Liquidity Risk Management

Cash flow forecasting is performed on a Group basis. The Directors monitor rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs. At the reporting date the Group held bank balances of US$538,473. Post period end, the Group completed a post period end placement for gross US$5.28m. All amounts shown in the consolidated statement of financial position under current assets and current liabilities mature for payment within one year, with Trade and Other Receivables exceeding Trade and Other Payables by US$399,994.

(d) Financial Risk Management

The Company’s Directors review the financial risk of the Group. Due to the early stage of its operations the Group has not entered into any form of financial instruments to assist in the management of risk during the period under review.

(e) Market Risk Management

Due to low value and number of financial transactions that involve foreign currency and the fact that the Group has no borrowings to manage, the Directors have not entered into any arrangements, adopted or approved the use of derivative financial instruments to assist in the management of the exposure of these risks. It is their view that any exchange risks on such transactions are negligible.

The Group also regularly monitors risk related to fair value of financial instruments held such as convertible loan notes held.

(f) Foreign exchange risk

Foreign exchange risk arises when individual Group entities enter into transactions denominated in a currency other than their functional currency. The Group’s policy is, where possible, to allow Group entities to settle liabilities denominated in their functional currency, with the cash generated from their own operations in that currency. Where Group entities have liabilities denominated in a currency other than their functional currency (and have insufficient reserves of that currency to settle them), cash already denominated in that currency will, where possible, be transferred from elsewhere within the Group.

A sensitivity analysis has been performed to assess the exposure of the Group to foreign exchange movements. If the exchange rate weakened by 10 percent then the effect on the gain before tax would increase by US$46,198 and equity would decrease by US$38,608.

(g) Impact of the COVID-19 pandemic

The current Coronavirus epidemic may produce negative economic activities which could reduce the Group’s economic performance and the performance of its portfolio companies in ways that are difficult to quantify at this juncture. It may cause a recession in the markets in which the Group operates, reduce the Group’s net asset values, revenue, cash flow, access to investment capital and other factors which could negatively impact the Group.

3.2

Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders, benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to adjust or maintain the capital structure, the Group may adjust the level of dividends paid to its shareholders, return capital to shareholders, issue new shares or sell assets to reduce borrowings. The Group has no external borrowings. This policy is periodically reviewed by the Directors, and the Group’s strategy remains unchanged for the foreseeable future.

The capital structure of the Group consists of cash and bank balances and equity consisting of issued share capital, reserves and retained losses of the Group. The Directors regularly review the capital structure of the Company and consider the cost of capital and the associated risks with each class of capital. The Company has no external borrowings and this has no impact on the gearing levels of the Group as at 30 November 2020.

The Company’s historic cost of capital has been the cost of securing equity financings, which have averaged around 10%. The company’s long-term financial goal is to optimise its returns on invested capital (ROIC) in excess of our weighted average cost of capital (WACC) and as such create value for our shareholders. The method the Company seeks to employ for achieving this is to utilise its structural intellectual capital developed through its Discovery Search Network, its Invention Evaluator service and its Vortechs Group Service to mitigate selection bias and improve returns on invested capital. Ultimately, management will seek to monetize these returns with exits from its investments in portfolio companies.

4.

Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Directors made the following judgements:
- determination as to the classification of the Group as an investment entity as discussed in Note 2.4
- determination of operating segments as disclosed in Note 5
- determination of reliance of the Group’s portfolio companies on funding to achieve their fair values discussed in Note 12.
The Directors also make estimates and assumptions concerning the future. The resulting accounting estimates will by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying value of the assets and liabilities within the next financial year are detailed below.


Key estimate/judgment area

Key assumption

Potential
impact
within the
next
financial
year

Potential
impact in
the
longer
term

Note reference
for sensitivity
analysis

Valuation of unquoted equity investments

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 the fair value of Guident’s net assets. This value is primarily based on its IP portfolio detailed in Note 12, valued using the royalty relief method. The estimates used in this valuation include market size market penetration used to determine projected sales, the royalty relief rate and the discount factor. These estimates are key to calculation of the net present value of future cashflows associated with the patent. The fair value calculation assumes Guident Limited obtains sufficient funding to execute their strategy.

The fair value of Salarius Limited reflects the fair value of Salarius Limited net assets. This value is primarily based on the independent patent valuation of US patent 8,900,650 portfolio detailed in Note 12, valued using the royalty relief method.

The estimates used in this valuation include market size market penetration used to determine projected sales, the royalty relief rate and the discount factor. These estimates are key to calculation of the net present value of future cashflows associated with the patent. The fair value calculation assumes Salarius Limited obtains sufficient funding to execute their strategy.

The fair value of Lucyd Limited reflects:

- Lucyd’s ecommerce platform valued by estimating the net present value of future cashflows associated with the e-shop. Key assumptions used in ...

Note 12

Useful life of Invention Evaluator website

The Directors have considered the useful life of the Invention Evaluator website to be indefinite because of the uniqueness of the service it provides and that there is no competitor in the market in which the Group operates who is able to provide a similar service. The Directors undertake an annual review that considers an appropriateness of the use of an indefinite useful life in addition to impairment review and if required make a provision in the financial statements.

Note 13

Useful life of Vortechs Group

The Directors have considered the useful life of Vortechs Group to be indefinite because of the ongoing service revenue that is being generated. The business operates in a specialised market, with few competitors. The Directors undertake an annual review that considers an appropriateness of the use of an indefinite useful life in addition to impairment review and if required make a provision in the financial statements.

Note 13

Deferred Taxes

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, 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.


Note 22

Share based payment

The estimate 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

Note 26


5.

Segmental reporting

The Directors consider the business to have two segments for reporting purposes under IFRS 8 which are:

Segmental revenues and results

2020
Consolidated income statement

Professional
Services
US $

Licensing &
Investment

US $

TOTAL

US $

Net Revenue

1,099,305

8,688,111

9,787,416

Interest Income

95,947

95,947

Cost of Sales

(458,728

)

(458,728

)

Administrative Expenses

(528,722

)

(1,204,482

)

(1,733,204

)

Depreciation and Amortisation

(2,359

)

(7,078

)

(9,437

)

Group operating profit

109,496

7,572,498

7,681,994

Profit tax expense

(519

)

(1,557

)

(2,076

)

Profit after tax

108,977

7,570,941

7,679,918


2019
Consolidated income statement

Professional
Services

US $

Licensing &
Investment

US $

TOTAL

US $

Net revenue

1,170,733