2020
Annual Report & Accounts
© Copyright Tekcapital Plc 2021
R I S K F A C T O R S A N D F O R W A R D- L O O K I N G S T A T E M E N T S
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.
taxation,
the legal,
rely on their own examination of
financial and other
Investors must
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information has been extracted from unpublished sources prepared by other parties which have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.
limited to,
In addition,
this Report,
this Report.
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
this Report contains certain “forward-looking statements”,
date of
the statements regarding the Company’s overall objectives and
including but not
strategic plans, timetables and capital expenditures. Forward-looking statements express, as at
the date of
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 macroeconomic. Changes in net asset values can have a significant impact on revenue and
earnings of the Company and its future prospects.
the Company’s plans, estimates, valuations,
© Copyright Tekcapital Plc 2021
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R I S K F A C T O R S A N D F O R W A R D- L O O K I N G S T A T E M E N T S
Additionally, the current Coronavirus pandemic may produce negative economic activities
its
which could reduce the company’s economic performance and the performance of
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
the information contained in this Report or for any of the
accuracy or completeness of
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,
the Company. This Report should not be considered a
analysis or
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.
investigation of
Intellectual Property Risk Factors
Tekcapital’s mission is to create valuable products from university intellectual property that
can improve people’s lives. Therefore, our ability to compete in the market may be negatively
affected if our portfolio companies lose some or all of their intellectual property rights, if
patent rights that they rely on are invalidated, or if they are unable to obtain other intellectual
property rights. Our success will depend on the ability of our portfolio companies to obtain
and protect patents on their technology and products, to protect their trade secrets, and for
them to maintain their rights to licensed intellectual property or technologies. Their patent
applications or those of our licensors may not result in the issue of patents in the United
States or other countries. Their patents or those of their licensors may not afford meaningful
protection for our technology and products. Others may challenge their patents or those of
their licensors by proceedings such as interference, oppositions and re-examinations or in
litigation seeking to establish the invalidity of their patents. In the event that one or more of
their patents are challenged, a court may invalidate the patent(s) or determine that the
patent(s) is not enforceable, which could harm their competitive position and ours. If one or
more of our portfolio company patents are invalidated or found to be unenforceable, or if the
scope of the claims in any of these patents is limited by a court decision, our portfolio
companies could lose certain market exclusivity afforded by patents owned or in-licensed by
us, and potential competitors could more easily bring products to the market that directly
compete with our own.
© Copyright Tekcapital Plc 2021
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R I S K F A C T O R S A N D F O R W A R D- L O O K I N G S T A T E M E N T S
The uncertainties and costs surrounding the prosecution of their patent applications and the
cost of enforcement or defence 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
time and divert
against others. However,
in these
management’s attention from other business concerns. They may not prevail
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.
these activities are expensive,
they are not successful
in these activities,
take significant
If
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.
their
A negative outcome in any such litigation could also severely disrupt
marketed products to their customers which in turn could harm their relationships with their
their market share and their product revenues. Even if
customers,
they are ultimately
in defending any intellectual property litigation, such litigation is expensive and
successful
time-consuming to address, will divert our management’s attention from their business and
may harm their reputation and ours.
the sales of
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 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.
© Copyright Tekcapital Plc 2021
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C ONT ENT S
PAGE
BUSINESS OVERVIEW
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Overview
Investment Case
Key Highlights
Q&A with Executive Chairman
Tekcapital at a Glance
Portfolio Review
Corporate Governance
STRATEGIC REPORT
Chairman’s Summary
Financial Review & Key Performance Indicators
Board of Directors
DIRECTORS' REPORT
Directors’ Report
Directors’ Remuneration Report
OUR FINANCIALS
Independent auditor’s report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
© Copyright Tekcapital Plc 2021
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T E K C A P I T A L TRANSFORMS UNIVERSITY DISCOVERIES
INTO VALUABLE PRODUCTS
We find and invest in exciting new
discoveries from our global university
network that can enhance people’s
lives.
We also provide services to universities
and companies to help them
commercialise their innovations. Using
these services, we have built a
compelling group of portfolio
companies to commercialise high
value properties we have uncovered.
We believe that when you
couple commercialisation ready,
compelling university IP with
strong senior management,
vibrant companies will emerge.
When we realise exits, the Group’s
goal is to distribute a portion of the
proceeds as a special dividend to our
shareholders.
© Copyright Tekcapital Plc 2021
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INVESTMENT C A S E & F I N A N C I A L P E R F O R M A N C E
W O R L D ’ S L A R G E S T N E T W O R K
O F UNIVERSITY IP TO MITIGATE
SELECTION BIAS
4,500+ UNIVERSITIES
TECHNOLOGY REVIEW
CAPABILIT Y
60 SCIENCE ADVISORS
NUMBER O F INDUSTRY
L E A D E R S RECRUIT ED B Y
P O R T F O L I O C O M P ANIES
11 INDUSTRY LEADERS
NUMBER O F P O R T F O L I O
C O M P A I N I E S F A C I N G $1B+
MARKET S
4 PORTFOLIO COMPANIES
Net Assets
$32.7m
Compound Annual Growth
Rate (CAGR) of Net Assets
over the past five years
60%
Return on Assets (ROA)
27%
Return on invested capital
(ROIC)
23%
Total Revenue
including fair value gains
$9.9m
Profit after tax
$7.7m
© Copyright Tekcapital Plc 2021
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K E Y HIGHLIGHTS
FINANCIAL
Our investment objective is to achieve long-term growth of net assets and returns on invested capital
through the commercialisation of university discoveries. 2020 was the best year for value creation in the
Group’s history:
Net Assets increased 45% to US$32.7m, a record
level (2019: US$22.5m)
o NAV per share US$0.35 (2019: $0.35)
Portfolio valuation increased 50% to US$30.5m
(2019:US$20.3m)
Total revenue US$9.9m (2019: US$7.72m)
o Revenue from services US$1.19m
(2019: US$1.20m)
o Net increase of US$8.7m in fair value of
portfolio companies (2019: US$6.51m)
Profit before tax: $7.7m (2019: $5.52m)
Service revenues cover approximately 54% of
current cost base (cost of sales and operating
expenses)
Share placings totaling US$2.6m completed
during the period, plus an additional raise of
USS$5.3m completed post-period.
Net Assets (US$m)
2019
2018
$16.1
$22.5
2017
$10.7
2016
$3.1
2020
$32.7
INVESTMENT PORTFOLIO
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.
Salarius Ltd 97.2%
ownership
www.salarius.co
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 ("LATAM").
• Formed Microsalt Inc, a fully owned subsidiary of Salarius Ltd to expand its operations in the United
States.
© Copyright Tekcapital Plc 2021
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K E Y HIGHLIGHTS
Lucyd® Limited (“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.
Lucyd Ltd
100% ownership
www.lucyd.co
Investment Rationale:
In the U.S. pedestrian fatalities have increased by 60% from 2009 to 2018¹. 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
life while
speakers are open-ear, Lucyd e-glasses enable the wearer to stay connected to their digital
maintaining situational and social awareness.
Recent Developments:
• Announced it had filed patent and trademarks on its forthcoming Vyrb™ 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,
fully owned subsidiary of Lucyd Ltd, and commenced a
Regulation Crowdfunding program on StartEngine, where it sought to raise approximately US$400K 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 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.
Inc, a new,
• 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 Ltd
100% ownership
www.guident.co
Guident
is developing remote monitoring and control software to
improve safety of autonomous vehicles and land-based delivery
devices. Guident’s software will incorporate artificial intelligence and
advanced network technologies to minimize signal latency and 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’s remote monitoring and control
centre will monitor vehicles and if necessary to 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.
S O U R C E
¹https://www.ghsa.org/resources/news-releases/pedestrians20
© Copyright Tekcapital Plc 2021
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K E Y HIGHLIGHTS
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) start-up 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 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
include
focus on several areas of collaboration in Europe and North America. This will
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. Two listed OEM’s have signed NDA’s to evaluate the potential of incorporating these new
shock absorbers into their electric vehicles.
Belluscura plc is a respiratory medical device company that has developed an
improved portable oxygen concentrator
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.
(POC)
Belluscura plc
17.8% ownership
www.belluscura.com
Investment Rationale:
Worldwide, approximately 250m individuals suffer from 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, users will be able to 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 in March 2021.
Belluscura filed an additional patent application (a total of 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 Coronavirus pandemic.
Belluscura announced it is considering an IPO on the AIM Market of the London Stock Exchange (or
another recognized stock exchange) and expects investments should qualify for Enterprise Investment
Scheme relief.
•
•
C O R PO R A T E
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.
© Copyright Tekcapital Plc 2021
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K E Y HIGHLIGHTS
•
•
•
•
•
Universities worldwide purchased more than 400 Invention Evaluator reports in 2020 to assess their
innovations.
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 was invited to provide a presentation to Petrobras on new global opportunities and
collaborations for intellectual property licensing.
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.
Tekcapital delivered a webinar in Brazil titled “Agritech Startups”, which brought together more than 60
key players from the Brazilian technology and innovations ecosystem.
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 in 2021.”
POST PERIOD END PORTFOLIO COMPANY HIGHLIGHTS
On 2 December 2020, Salarius Ltd 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
clearance with the U.S. FDA.
for 510(k)
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 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,
marketplace.
Innovative Eyewear’s products were onboarded on Brookstone, an online B2B
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 has appointed Eduardo Souchon as V.P. of Business
Development and Jay Shah, M.D., a cardiologist at Mayo Clinic, as its 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 fully-
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%).
© Copyright Tekcapital Plc 2021
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“WE BELIEVE 2021 WILL BE AN A BREAKTHROUGH
YEAR FOR OUR PORTFOLIO COMPANIES”
DR CLIFFORD M. GROSS
EXECUTIVE CHAIRMAN
Q &A W I T H O U R E X E C U T I V E CHA I RMA N
What are the most important milestones reached by Tekcapital and its portfolio companies in 2020?
For Belluscura,
concentrator.
the filing with the FDA seeking clearance for their new, advanced portable oxygen
For Lucyd,
Bluetooth e-glasses, which subsequently have received a very positive consumer response.
the launch of a successful equity crowdfund and their development of new Lucyd Lyte™
For Salarius, the launch of their snack food brand SaltMe! coupled with the onboarding of UNFI, the
leading natural food distributor in the U.S., for retail placement of their new full flavour, low sodium potato
chips. SaltMe! Chips are available in stores throughput the U.S. and on Amazon. The consumer response
has been very positive to-date.
For Guident the appointment of Harald Braun as the Company's CEO. Mr. Braun previously served as
CEO of Siemens Networks USA (NYSE: SI) and Aviat Networks (NASDAQ: AVNW). He also served as a
Senior Executive at Nokia Siemens Networks, North America. Guident has also appointed Daniel
Grossman as the Company's Chief Revenue Officer. Daniel who currently serves on the board of Guident
has previously helped to create General Motors mobility division, "Maven", where he led operations as
COO, and was Vice President at Zipcar, where he helped pioneer the brand globally. Guident has
intellectual properties which enabled their development of their first
developed and acquired additional
MVP in 2020. Guident also won the Florida Atlantic University (FAU) Tech Runway® Annual Tech Launch
competition, and was voted one of the most promising startups in South Florida out of a field of 200
companies.
What are the main goals you are anticipating for each portfolio company and Tekcapital in 2021?
Following Belluscura’s receipt of clearance for their portable oxygen concentrator, the manufacture and
sales of
their advanced device (FDA clearance announced on 8 March 2021), coupled with a likely
significant financing or perhaps an IPO.
Lucyd should launch their Vyrb™ app which would, for the first time, enable hands free interaction with
Twitter on both Android and IOS platforms for eyeglass wearers. With Vyrb you will be able to listen to and
speak your social media posts without having to type or look at your smartphone. Vyrb is a software
upgrade for Lyte eyewear and other hearables.
Salarius should expand their retail distribution of their snack food line and hopefully engage with a leading
snack food company for the use of their proprietary and patented MicroSalt®. Additionally, we hope to see
them launch low sodium salt packets for supermarket and restaurant distribution.
Guident will hopefully launch their first remote monitoring and control center in the Florida for autonomous
vehicles, and announce a major customer for its new technology.
When do you anticipate the first special dividend distribution for TEK shareholders?
Concomitant with the monetization of a significant exit in one of our portfolio companies.
© Copyright Tekcapital Plc 2021
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T E K C APIT AL AT A GLANCE
Tekcapital has built one of the largest university IP networks in the world, to find and review
market-ready technologies. The Group provides universities and corporate clients with a
range of
technology transfer services while simultaneously identifying compelling
technologies for its own portfolio, for subsequent commercialization. We believe this unique
combination provides a competitive advantage in the sector, as we both use and sell our IP
investment services. This keeps us close to our technology suppliers and allows the
company to reduce its operating expenses compared with other IP investment firms.
TEKCAPITAL’S FORMULA OF COUPLING MARKET-READY IP WITH TALENTED
MANAGEMENT, POSITIONS THE GROUP FOR LONG-TERM GROWTH, AND
INCREASES THE PROBABILITY OF MEANINGFUL EXITS
Value of investment portfolio (US$m)
2018
2019
2020
$30.5
$13.7
$20.1
WE HAVE VISABILITY TO UNIVERSITY-DEVELOPED IP FROM 4,500+ RESEARCH
INSTITUTIONS ACROSS 160 COUNTRIES
© Copyright Tekcapital Plc 2021
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PORT FOL IO RE V IE W
PATENTED LOW-SODIUM SALT
The snack food industry is focused on developing and providing
taste great and reduce sodium intake.
better-for-you products that
The reason for this is that excess sodium consumption contributes to
cardiovascular disease, a leading cause of premature death globally.
To address this problem, Salarius has developed a patented process
for producing micron-sized salt crystals that provide all of the flavor of
salt with roughly half of the sodium for topical food applications.
Salarius has developed the world’s smallest salt crystals with its
patented MicroSalt®. With MicroSalt®, companies can make full
flavor snacks with the same saltiness as traditional snacks yet
with half of the sodium.
MicroSalt® uses nano-sized sodium chloride crystals that dissolve
faster, is all natural, non-GMO, Kosher and doesn’t contain any of the
additives found in other sodium reduction products.
The global Sodium Reduction Ingredients Market is expected to reach
US$1.62 billion by 2024 with a CAGR of 7.3% from 2019 to 2024¹.
Salty snack market was worth US$26b in 2019 alone. Recently,
Salarius has secured two food brokers and the leading U.S. natural
food distributor for its product in the United States and Mexico.
Cardiovascular disease is the world’s leading health problem causing
17.9 million deaths annually and is related to high sodium
consumption, especially in snack foods. According to the FDA,
reducing daily sodium intake from 3,400 mg to 2,300 mg/day will
reduce approximately 28,000–50,000 premature deaths per year in
the U.S.
During 2020, the company made significant progress in establishing
sales and distribution channels,
including onboarding of FXM
Ingredients, Inc. and Gehring Montgomery, Inc. to expand Microsalt®
sales in Mexico and the United States. The company also successfully
launched Amazon sales of its SaltMe® full flavor, low sodium chips
brand.
Note: In September 2020, Salarius Ltd incorporated Microsalt Inc to optimize
its go to market strategy in the United States. As part of the corporate
formation, previously existing equity position of directors and consultants in
Salarius Ltd were transferred to Microsalt Inc resulting in Tekcapital’s
shareholding % increasing from 91.70% to 97.15%. Salarius Ltd owns 87.1%
of Microsalt Inc.
S O U R C E
¹ https://www.futuremarketinsights.com/reports/sodium-reduction-ingredient-market
²https://www.marketdataforecast.com/market-reports/sodium-reduction-ingredients-
market
Tekcapital ownership of
Salarius Ltd
97.15%
TOTAL ADDRESSABLE
MARKET
$1.1B²
$1.1B
CAGR
11.15% ²
© Copyright Tekcapital Plc 2021
14
PORT FOL IO RE V IE W
LUCYD: TH E C L E A R C H OI C E
F O R T E C H E Y E W E A R
Lucyd is seeking to Upgrade Your Eyewear® by producing
designer 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.
With Lucyd frames, you can stay focused on the world while
listening to music and using voice assistants.
making calls,
Sitting at the intersection of Hearables, Digital Assistants and
Online Eyewear markets, Lucyd is positioned to potentially
in eyewear by offering the only
become a major player
designer smart frames with Rx lenses at an unbeatable price.
Tekcapital ownership
of Lucyd Ltd*
100%
*In
April
Lucyd
Ltd
2020,
incorporated Innovative Eyewear Inc
to optimize its go to market strategy
in the United States. Lucyd Ltd owns
appx 75% of Innovative Eyewear Inc.
as of April 1, 2021.
To provide a unique, new wearable experience, Lucyd is also
developing a voice-based social media app called Vyrb™.
Vyrb will enhance Lucyd frames with social features, such as
verbal posting and hashtagging. Lucyd has a pending patent
two utility patents regarding
on several
wearable tech, one of which has been granted a notice of
allowance and 21 design patents.
features of Vyrb,
Backed by brand ambassador and American football star,
Richard Sherman, Lucyd offers the best and most affordable
e-glasses in the market – in multiple fashion forward designs,
designed for all-day wear and available in any prescription.
Post period end,
the company successfully launched its
newest product, Lucyd Lyte e-glasses on Amazon, with 65%
5-star ratings, and a higher overall rating than other products
in the category.
Photo courtesy of Creative Agency: Zaki
Rose, Photographer: Carlos Cruz.
© Copyright Tekcapital Plc 2021
15
PORT FOL IO RE V IE W
DELI VERING I NNOVATIVE OXYGEN
TREATMENT DEVI CES
Unique medical device company that has developed an
improved portable oxygen concentrator to provide on-the-go
supplemental O² for COPD patients.
The company received FDA clearance for
PLO2R™ portable oxygen concentrator in March 2021.
their X-
We believe their innovative device will be helpful in addressing
COVID-related respiratory problems as well as COPD.
Belluscura recently filed a patent application covering devices
and systems for
treating people suffering from acute
respiratory distress (ARDS) caused by the Coronavirus.
Beyond their current POC, Belluscura is working to design and
develop an improved, portable ECMO technology to treat
ARDS patients.
Capable & highly experienced management: Bob Rauker,
CEO (previously Boston Scientific) & Dr Raymond Bray, VP
(previously St. Jude Medical).
Belluscura announced that they may plan to float on the AIM
or conduct an alternative financing, to finance and accelerate
the manufacture and sale of
their portable oxygen
concentrators to meet current market demand.
Belluscura has field or licensed 26 patents to-date, covering
devices and systems for treating people suffering from acute
respiratory distress caused by COPD or the Coronavirus.
E X P L O 2 R E P O R T A B L E
O X Y G E N C O N C E N T R A T O R
Light:
Efficient:
Quiet:
Reliable:
Modular:
Low Cost:
Only 1.25kg (2.8lbs)
32% more O2 per pound
Only 39 decibels
Long battery duration
First FDA cleared POC
with consumer replaceable filter cartridges
Projected 70% cost savings over
duration of the disease vs. existing
portable oxygen concentrators
Strong IP:
26 patents and applications
The medical portable O2 market is expected to
grow from U$1.4bn this year to US$2.4bn by
2024¹
$2.21bn $2.41bn
$1.83bn $2.01bn
$1.51bn
$1.66bn
$1.40bn
2018 2019 2020 2021 2022 2023 2024
¹ https://www.gminsights.com/industry-analysis/medical-oxygen-
concentrators-market-report
Tekcapital ownership
1 7 . 8%
© Copyright Tekcapital Plc 2021
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PORT FOL IO RE V IE W
SOFTWARE PLATFORM FOR REMOTE
MONI TORING AND CONTROL OF
AUTONOMOUS VEHI CLES AND DELI VERY
DEVI CES.
With its proprietary software, a world-class team, and portfolio
of seven patents, Guident will be able to deliver competitive
advantages for AV fleet operators by providing real-time
passenger & delivery vehicle monitoring and control, for public
and private mobility markets.
is to build and operate its first Remote
Guident’s initial goal
for ground-based delivery
Monitoring and Control Center
devices and AVs in the State of Florida. Recent state law
requires back-up, human remote monitoring for AVs when a
safety driver is not present in the vehicle. This is a critical path
introduction of driverless AVs in
to enable the commercial
Florida and is likely to be required in other jurisdictions.
Guident also offers an additional patented technology enabling
their electric vehicles with
OEM’s to increase the range of
electromagnetic regenerative 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.
In 2020 the company has made significant R&D progress and
plans to complete its first Remote Monitoring and Control
Centre in 2021. The company also signed strategic alliances
including Bestmile Inc and Cirrus Core Networks.
Tekcapital ownership of
Guident Ltd
100%
TOTAL
ADDRESSABLE
MARKET
CAGR
$11.9B¹
24%¹
Guident’s remote monitoring and control of
AV’s covered by multiple issued and
pending patents.
S O U R C E
¹ https://www.alliedmarketresearch.com/autonomous-last-mile-delivery-market
© Copyright Tekcapital Plc 2021
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PORT FOL IO RE V IE W
GUIDENT APPOINTED HARALD BRAUN AS ITS CHAIRMAN & CEO.
MR. BRAUN HAS SERVED AS CEO OF SIEMENES NETWORK USA
(NYSE: SI) AND AVIAT NETWORKS (NASDAQ: AVNW). HE SERVED
ALSO AS A SENIOR EXECUTE AT NOKIA SIEMENSE NETWORKS,
NORTH AMERICA.
ON 6TH DECEMBER 2018 GUIDENT LTD APPOINTED JOHAN
DE NYSSCHEN AS A DIRECTOR. JOHAN PREVIOUSLY
SERVED AS EXECUTIVE VICE PRESIDENT OF GENERAL
MOTORS AND
PRESIDENT OFTHE CADILLAC MOTOR
DIVISION, PRESIDENT OF INFINITI MOTOR COMPANY LTD,
PRESIDENT OF AUDI OF AMERICA INC., AND PRESIDENT
OF AUDI JAPAN.
ON 14TH JANUARY, 2019 GUIDENT LTD APPOINTED DANIEL
GROSSMAN AS A DIRECTOR & its CRO. HE MOST RECENTLY
SERVED AS CEO OF CHARIOT. PREVIOUSLY, DAN HELPED
CREATE GENERAL MOTORS’ MOBILITY DIVISION, “MAVEN”, AND
LED ALL OPERATIONS AS COO, AND WAS A VICE PRESIDENT
AT ZIPCAR, WHERE HE HELPED PIONEER THE BRAND
GLOBALLY. ZIPCAR WAS SUBSEQUENTLY SOLD TO AVIS-
BUDGET FOR ~ $500M.
© Copyright Tekcapital Plc 2021
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C ORPORAT E GOV E RNANC E
CORPORATE GOVERNANCE REPORT
The Directors are responsible for, and committed to the principles underpinning, the corporate governance of the
Company and monitor the business affairs of the Company on behalf of its shareholders. The Company has
adopted and complies with the provisions of the QCA Code. Since our listing we have supported the QCA Code’s
principle to review regularly the effectiveness of the board’s performance as a unit, as well as that of
its
list of the 10 principles of the QCA code and our compliance
committees and individual directors. For a full
website:
to
approach
https://www.tekcapital.com/corporate-governance/
governance
corporate
please
each,
refer
our
the
tab
for
on
THE BOARD
The Board sets the Group’s strategic aims and ensures that necessary resources are in place for the Group to
meet its objectives. All members of the Board take collective responsibility for the performance of the Group, the
Group’s Corporate Governance and all decisions are taken in the interests of the Group. Whilst the Board has
delegated the normal operational management of
the Group to the Executive Directors and other senior
management, there are detailed specific matters subject to decision by the Board of Directors. These include
acquisitions and disposals, joint ventures and investments, projects of a capital nature and all significant contracts.
The Non-Executive Directors have a responsibility to challenge constructively the strategy proposed by the
Executive Directors which includes to scrutinise and challenge performance to ensure appropriate remuneration
and succession planning arrangements are in place in relation to Executive Directors and other senior members
of
team as appropriate. The senior executives enjoy open access to the Non-Executive
Directors. The Chairman is responsible for leadership of the Board and ensuring its effectiveness on all aspects of
its role including Corporate Governance. The Chairman sets the Board’s agenda and ensures that adequate time
is available for discussion of all agenda items, especially strategic issues. The Chairman promotes a culture of
openness and debate by facilitating the effective contribution of Non-Executive Directors and ensuring
constructive relations between Executive and Non-Executive Directors. The Chairman is also responsible for
ensuring that the Directors receive accurate, timely and clear information. The Chairman also ensures effective
communication with shareholders. All Directors allocate sufficient time to the Group to discharge their duties.
the management
There is a formal, rigorous and transparent procedure for the appointment of new Directors to the Board. The
search for Board candidates is conducted, and appointments made, on merit, against objective criteria and with
due regard for the benefits of diversity on the Board. The Board is responsible for ensuring that a sound system of
internal control exists to safeguard shareholders’ interests and the Group’s assets. It is responsible for the regular
review of the effectiveness of the systems of internal control. Internal controls are designed to manage rather than
eliminate risk and therefore even the most effective system cannot provide assurance that every risk, present and
future, has been addressed. The key features of the system that operated during the year are described below.
ORGANISATIONAL STRUCTURE AND CONTROL ENVIRONMENT
The Board of Directors meets at least six times per year to review the performance of the Group and to address
important matters. It seeks to foster a strong ethical culture across the Group. There are clearly defined lines of
responsibility and delegation of authority from the Board to the operating subsidiaries and our portfolio companies.
The Directors of each subsidiary meet on a regular basis with members of the Group Board in attendance.
BOARD STRUCTURE
Group’s Board contains a balance of Executive and Non-Executive Directors, including an Executive Chairman
who is responsible for dealing with the strategic direction and long-term success of the Group. The Board will
meet every three months or at any other time deemed necessary for the good management of the business and at
a location agreed between the Board members. The Non-Executive Directors, are all considered independent
directors. The Board considers that it departs from the principles of the QCA Code in respect to the fact that the
Chairman and CEO role is combined which is a due to the current size of Tekcapital which dictates that this is the
most efficient and cost-effective mode of operation at
this time. The board will continue to monitor the
appropriateness of a combined chair and CEO and will continue to consider a separation of these roles in the
future when the opportunity arises and when Tekcapital is of a size when it can justify adding an additional non-
executive director to the board.
© Copyright Tekcapital Plc 2021
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C ORPORAT E GOV E RNANC E
The Board has established an audit committee, remuneration committee and nominations committee, with
formally delegated duties and responsibilities and written terms of reference. From time to time, separate
committees may be set up by the Board to consider specific issues when the need arises.
that
in order to deal effectively with the challenges of
BOARD COMPOSITION, EXPERIENCE AND DYNAMICS
The Company operates in complex and challenging technological and geographical areas and the Board is
the business and to maximise its growth
mindful
opportunities it has to incorporate a broad range of skills and diversity. The Board maintains a skills, diversity and
experience matrix which will be periodically reviewed at Board meetings to evaluate current and future
requirements. The Board and its committees will also seek external expertise and advice where required. Board
members undertake continuing professional development as an when appropriate.
BOARD EVALUATION
The Board considers evaluation of its performance and that of its committees and individual directors to be an
integral part of corporate governance to ensure it has the necessary skills, experience and abilities to fulfil its
responsibilities. The goal of the Board evaluation process is to identify and address opportunities for improving the
performance of the board and to solicit honest, genuine and constructive feedback. The Board considers the
evaluation process is best carried out internally at the Group’s current size, However the Board will keep this
under review and may consider independent external evaluation reviews in due course as the Company grows.
The Board will, as a whole or in part as appropriate, undertake the evaluation process aided by the Executive
Chairman, and independent Non-Executive Directors or external advisors as necessary. The Chairman is
responsible in ensuring the evaluation process is ‘fit for purpose’, as well as dealing with matters raised during the
process. The Chairman will keep under review the frequency, scope and mechanisms for the evaluation process
and amend the process as required.
Where deficiencies are identified these will be addressed in a constructive manner. Where necessary individual
Directors will be offered mentoring and training. If deficiencies are identified within the Board as a whole, then
changes or additions to the Board will be considered in conjunction with the Remuneration Committee. The
evaluation process will be focused on the improvement of Board performance, through open and constructive
dialogue and the development and implementation of action plans. The Board will report on its evaluation and
actions in its Annual Report. Succession planning is a vital task for boards and the management of succession
planning represents a key measure of the effectiveness of the Board and a key responsibility of both the
Nominations Committee and wider Board.
INTERNAL CONTROL
The key procedures which the Directors have established with a view to providing effective internal control are as
follows:
• Regular Board meetings to consider the schedule of matters reserved for Directors’ consideration;
• A risk management process;
• An established organisational structure with clearly defined lines of responsibility and delegation of authority;
• Appointment of staff of the necessary calibre to fulfil their allotted responsibilities; Comprehensive budgets, fore
casts and business plans approved by the Board, reviewed on a regular basis, with performance monitored
against them and explanations obtained for material variances; and
• An Audit Committee of the Board, comprising Non-Executive Directors, which considers significant financial
control matters as appropriate.
BUSINESS MODEL AND STRATEGY
Tekcapital Group’s goal is to improve the quality of life of it customers and create value from its ability to identify,
acquire and commercialise promising new university IP. We also deliver a wide range of technology transfer
services through a number of operating divisions. These services are designed to assist universities and
corporates with the commercialisation of new IP. Over the years we have built up an extensive international
network of universities and research institutions that develop licensable IP for potential acquisition, by ourselves
or to meet client needs.
© Copyright Tekcapital Plc 2021
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C ORPORAT E GOV E RNANC E
CORPORATE CULTURE
The Board recognises that a corporate culture based on sound ethical values and behaviours is an asset and
provides competitive advantages. The Company operates in international markets and is mindful that respect
of individual cultures is critical to corporate success, as an example our Invention Evaluator website is
available in English, Spanish and Portuguese. In accordance with the Company’s stated mission it endeavours
to conduct its business in an ethical, professional and socially responsible manner, treating our employees,
customers, suppliers and partners with equal courtesy and respect at all times.
The Board is committed to maintaining good communication and having constructive dialogue with all of its
stakeholders, including shareholders, providing them with access to information to enable them to come to
informed decisions about the Company. The Investor Relations section of the Company’s website provides all
including:
required regulatory information as well as additional
information on Board Members, Advisors and Significant Shareholdings, a historical
list of the Company’s
Announcements since inception,
its Financial Calendar, Corporate Governance information and Media
Interviews and information designated as “News.”
Results of shareholder meetings and details of votes cast will be publicly announced through the regulatory
system and displayed on the Company’s website under “Announcements,” with suitable explanations of any
actions undertaken as a result of any significant votes against resolutions. Information on the work of the
various Board Committees and other relevant information are included in the Company’s Annual Report.
information shareholders may find helpful
RISK MANAGEMENT
As an entrepreneurial business focused on emerging technologies, operating in both established and
emerging markets, there is clearly an elevated risk which we believe is balanced by potentially greater
rewards. The Board is mindful of and monitors both its corporate risks and individual project risks. Risks are
categorised by both probability and impact and appropriate measures identified to monitor and mitigate any
potential impact when possible. Technology and portfolio company risks are dealt with on a case by case
basis and monitored through the life cycle of the investment as risks change and new risks appear. Portfolio
company risks and mitigation will be part of regular management meetings. In some cases if we cannot
manage or mitigate a specific portfolio company risk we may seek to close the portfolio company to better
deploy our resources to higher value opportunities. We have done this on a few occasions. The Company’s
corporate risks, risk monitoring, and risk management procedures are regularly reviewed by the Board and
when appropriate incorporated in RNS releases. The Company discloses portfolio company risks in its Annual
Report each year.
financial statements, reviewing and monitoring the extent of
AUDIT COMMITTEE
The Audit Committee assists the Board in discharging its responsibilities with regard to corporate governance,
financial reporting and external and internal audits and controls, including, amongst other things, reviewing the
Company’s annual
the non audit services
undertaken by external auditors, advising on the appointment of external auditors and reviewing the
effectiveness of the Company’s internal controls and risk management systems. The ultimate responsibility for
reviewing and approving the annual report and accounts and the half yearly reports remains with the Board.
Membership of the Audit Committee comprises Dr Robert Miller and Louis Castro (as chairman), who is
considered by the Directors to have recent and relevant financial experience. The Audit Committee will meet
formally not less than three times every year and otherwise as required.
NOMINATION COMMITTEE
The Nominations Committee is responsible for leading the process for board appointments and making
recommendations to the Board to implement a formal and transparent procedure for the appointment of new
directors to the Board. The Nominations Committee comprises Dr Clifford Gross (as chairman), Louis Castro,
Lord David Willetts and Dr Robert Miller. The Nominations Committee will meet not less than twice a year and
at such other times as the chairman of the committee shall require.
© Copyright Tekcapital Plc 2021
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C ORPORAT E GOV E RNANC E
REMUNERATION COMMITTEE
The Remuneration Committee is responsible for establishing a formal and transparent procedure for
developing policy on executive remuneration and to set the remuneration packages of individual Directors.
This includes agreeing with the Board the framework for remuneration of the Chief Executive Officer, all other
executive directors, the company secretary and such other members of the executive management of the
Group as it
individual
remuneration packages of each Director including, where appropriate, bonuses, incentive payments and share
options. No Director may be involved in any decision as to their own remuneration. The membership of the
Remuneration Committee comprises Dr Robert Miller (as chairman) and Louis Castro. The Remuneration
Committee will meet not less than three times a year and at such other times as the chairman of the
committee shall require.
is furthermore responsible for determining the total
is designated to consider.
It
CORPORATE RESPONSIBILITY
The Board is very aware of the importance of its corporate responsibilities, particularly in terms of ensuring
that high standards of behaviour are maintained wherever the Group is operating. The following principles and
processes have been established for that purpose:
• Only commercialise technologies that improve the safety, health and well being of the customers we serve;
• Protecting the health and safety of all employees is paramount;
• Comply with relevant International Export Controls for technology transfer;
• The Group maintains a an anti-bribery policy and complies with both UK and local statutes.
FINANCIAL PLANNING, BUDGETING AND MONITORING
The Group operates a planning and budgeting system with an annual budget approved by the Board. There is
a financial reporting system which compares results with the budget and the previous year each month to
identify any variances from approved.
Plans in addition to Y-O-Y comparisons of relevant KPI’s. Monthly rolling cash flow forecasts form part of the
reporting system. The Group remains alert to react to new business opportunities as they arise. With a keen
focus on strengthening our portfolio companies.
Capital Management policies and procedures
The Group’s capital management objectives are:
• To ensure the Group’s ability to continue as a going concern; and
• To provide an adequate return on invested capital (ROIC) and increase in net assets.
• The Group monitors capital on the basis of the carrying amount of equity plus its cash and cash equivalents
as presented on the face of the statement of financial position.
• The Group manages the capital structure and seeks to adjust it in the light of changes in economic
conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital
structure, the Group may review any dividends paid to shareholders and potentially issue new shares.
•There is no requirement for the Group to maintain a strong capital base for each of its portfolio companies
although it seeks to support them when appropriate and feasible. These policies have not changed in the year.
The Directors believe that they have been able to meet their objectives in managing the capital of the Group
even in the face of a challenging global pandemic.
NON-EXECUTIVE DIRECTORS
The Non-Executive Directors are considered by the Board to be independent in character and judgement and
there are not considered to be any circumstances that are likely to affect their judgement as Directors of the
Group. Their interests in the share capital of the Company are not considered to be likely to affect their
judgement as Directors of the Group.
ANNUAL REPORT
The Directors consider the annual report and financial statements, taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Company’s
performance, business model, strategy and risks.
© Copyright Tekcapital Plc 2021
22
S T RAT E GIC R E P O R T
Chairman’s S u m m a ry
Tekcapital brings new scientific innovations from
to enhance safety and health and
lab to market
improve the quality of
the customers we
serve. Achieving our mission has never been more
than right now, as the COVID 19
important
and
in
pandemic
unprecedented global health and financial distress.
significant
resulted
life of
has
Key Portfolio companies
their
them commercialize
Using our proprietary global university network, we
provide services to universities and companies to
help
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
faster. When we
exits,
the
realise exits through trade sales or
IPO’s,
Group’s goal
the
is to distribute a portion of
proceeds as a special dividend to our shareholders.
they occur, will occur
if
smart
vehicles,
Our current portfolio companies were all started by
Tekcapital. Whilst few in number, they are diverse
and span multiple sectors including food tech,
autonomous
and
respiratory medical devices. All of our portfolio
companies have compelling intellectual properties,
capable and inspired management and address
$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 potentially significant.
eyewear
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 number one killer. In
addition to its focus on B2B sales of MicroSalt® to
snack food companies, Salarius has launched its
own snack food brand called SaltMe!™. 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.
combines
technology with
Lucyd has built a new, online eyeglass business
traditional
that
eyewear. Recently they launched Lucyd Lyte™, 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 and in a recent product comparison was
the recently
rated overall better
introduced Bose e-glasses. Lucyd is focused on
expanding its sales online and leveraging retail
distribution after
through
existing specialty and large format stores in 2021.
Lucyd has developed and filed 24 U.S. utility and
design patents covering their products. According to
Statista,
for eyewear is
US$3.8bn² per year. Tekcapital owns 100% of Lucyd
and approximately 90% of
its U.S. subsidiary
Innovative Eyewear Inc as of 30 November 2020.
the current online market
the pandemic subsides,
than one of
FINANCI AL P E R F O R M AN C E
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 $9.9m with unrealised profit on the revaluation of investments
driving that increase by $8.7m. Our after-tax profit increased by 39% to $7.7m.
S O U R C E
¹ https://www.futuremarketinsights.com/reports/sodium-reduction-ingredient-market
² https://www.statista.com/outlook/12000000/109/eyewear/united-states#market-onlineRevenueShare
© Copyright Tekcapital Plc 2021
23
S T RAT E GIC R E P O R T
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. 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 and seeks to develop partnerships smart city operators,
vehicle OEM’s and fleet operators to provide remote tele-monitoring and control centres for autonomous
vehicles and fleet operators. Such monitoring has recently been required by law in the State of Florida and is
being reviewed in other jurisdictions. According to Allied Market Research¹, the global market for autonomous
last mile delivery is projected to reach US$11.9 billion in 2021. Additionally, Guident has a acquired an
exciting, new regenerative shock absorber technology, to help extend the range of electric vehicles. Guident
has executed NDA’s with two listed OEM’s to test these new shocks for potential use in their electric vehicles
and is currently fabricating prototypes for testing. Tekcapital owns 100% of Guident and 96% of its U.S.
subsidiary Guident Corporation as of 30 November 2021.
Belluscura has developed an improved portable oxygen concentrator
to provide on-the-go
supplemental O², with user replaceable filter cartridges. When a patient’s disease progresses, they now
can upgrade the filter cartridge to provide more liters of O² per minute, like memory on a laptop, rather than
having to replace an expensive medical device. This 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 2020 and received clearance in March
2021.
Belluscura have announced that they may plan to float on the 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 $1.4bn² a year and growing
by more than $100m/year². Belluscura has 18 patents filed or licensed to-date covering devices and systems
for treating people suffering from acute respiratory distress caused by COPD or the Coronavirus. Tekcapital
owns approximately 23% of Belluscura as of the date of this report.
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, the Company completed the following fundraising:
On March 18, 2021, the Company announced that it had raised US$5.28m (before expenses) through placing
of new Ordinary Shares with existing and new investors at a price of 10 pence per new Ordinary Share.
Principal Risks and Uncertainties
The specific financial risks are discussed in the notes to the financial statements. Other risks are as follows:
We believe the principal financial risks and benefits of the business relate to the value and performance of
the Group’s portfolio companies. We believe that
the fair value of each portfolio company is a time
dependent valuation that may become impaired if the business does not achieve it milestones, growth
trajectory, product development goals, market acceptance, capital raises or other key performance metrics.
Individually and as a group our portfolio companies have a material impact on our financial performance.
S O U R C E
¹ https://www.alliedmarketresearch.com/autonomous-last-mile-delivery-market
²Global Market Insights: Oxygen Cylinders Market Size and Competitive Market Share & Forecast, 2017 –2024
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S T RAT E GIC R E P O R T
-
-
-
-
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 future.
The COVID-19 epidemic 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.
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 provide additional growth and runway 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 Coronavirus pandemic, and that
changes in the value of our portfolio companies can have a significant impact on our NAV, revenue, income
and future prospects.
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:
The likely consequences of any decision in the long term
a)
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.
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S T RAT E GIC RE PORT
The interests of the Company’s employees
b)
The Board strives to maintain and develop a culture where everyone feels valued and included. The Board
also considers
in every days’
decisions. Feedback from employees is actively encouraged and is considered a key driver in developing our
business activities, processes and workplace environment.
Initiatives to encourage wellbeing are well
established and continue to evolve and are strongly influenced by the workforce. Professional and personal
development of employees is viewed as fundamental to the continued success of the Company.
safety and wellbeing of all Tekcapital employees
the health,
The need to foster the Company's business relationships with suppliers, customers and others
c)
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.
The impact of the company’s operations on the community and the environment
d)
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.
The desirability of the Company maintaining a reputation for high standards of business conduct
e)
The Board recognises that culture, values and standards are key contributors to how a company creates and
sustains value over the longer term, and to enable it to maintain a reputation for high standards of business
conduct. High standards of business conduct guide and assist in the Board’s decision making, and in doing so,
help promote the Company’s success, recognising, amongst other things, the likely consequences of any
decision in the long-term and wider stakeholder considerations. The standards set by the Board mandate
certain requirements and behavior with regards to the activities of the Directors, the Group’s employees and
others associated with the Group.
The need to act fairly as between members of the Company
f)
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.
Clifford M. Gross
Chairman and CEO
29 April 2021
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S TR A TEG IC R EPO R T: F IN A N C IA L R E V IE W & K EY PER F O R M A N CE
T H E K E Y P E R F O R M A N C E INDICATORS (KPIs) F O R T H E G RO UP
The Key Performance Indicators (KPIs) listed below represent those that are typically applied to companies
that seek to commercialise university technologies and serve as a starting point for evaluating the Group’s
performance:
KPI
DESCRIPTION
2020 PERFORMANCE
2019 PEFORMANCE
FAIR VALUE OF
THE PORTFOLIO
Updated value of portfolio
companies using costs,
independent valuations or
observed third party investments
TOTAL REVENUE
Service revenue plus change in fair
value of portfolio
PROFIT
After tax profit
NET ASSETS PER
SHARE
Total assets minus total liabilities
per share
ROIC
Returns on invested capital
$30.5m
$20.3m
$9.9m
$7.7m
$0.35
23%
$7.7m
$5.5m
$0.35
24%
Net Assets (US$m)
2020
$32.7
2019
$22.3
2018
$16.1
2017
$10.7
Three of our five Key Performance Indicators showed
improvement in 2020. The Group has now demonstrated
four consecutive years of growth in Net Assets.
The Group’s cash position at the end of the period is
US$0.5m with modest liabilities as costs have been
settled without delay using available funds. The Group
had no debt as of 30 November 2020 and completed a
post period placement raising gross proceeds of
US$5.28m.
Profit after tax ($m)
The Group has also demonstrated consistent growth in
revenue from services. The Group was able to achieve
this growth while simultaneously reducing its
administrative expenses for the third straight year.
Directors do not believe there are any material
environmental issues that need to be reflected in our
KPIs for 2020.
2020
$7.7
2019
$5.5
2018
$4.6
The Group has received a R&D Tax Relief Credit for the total of US$58,000 in connection to the following
R&D activities:
- The design and development of a unique and first of a kind Innovation Discovery Network solution,
developed to facilitate an improved university technology search engine
- The Report Builder to develop and test new invention report templates and revamp the invention
evaluator bespoke software
- The Invention Evaluator migration and integration with bespoke customer portal.
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BOARD OF D IRE C T ORS
Cliff is a successful executive with more than 25 years of leadership
experience in academia and business. He is passionate about
commercialisation of university discoveries to improve the quality of
life. He founded three companies (Biomechanics Corp., UTEK &
Tekcapital) which subsequently listed, where he served as CEO and
Chairman and co-founded numerous private companies including
HumanCAD, Salarius, Belluscura, Lucyd and Guident. Previously he
was President and CEO of Innovacorp, the provincial venture capital
fund of Nova Scotia. Cliff was Acting Director of
the graduate
program in Biomechanics and Ergonomics at New York University,
Chairman of the Nelson Rockefeller Department of Biomechanics at
the New York Institute of Technology and Research Professor at the
University of South Florida. He has authored several books
including Too Good to Fail: Creating Marketplace Value from the
World’s Brightest Minds and is a named inventor on more than 30
issued patents. A number of
the ergonomic products he has
developed became significant commercial successes including the
DeWalt Cordless Drill for Black & Decker, The Parachute Chair for
Knoll, the ergonomic mouse for Logitech, HumanCAD, the first PC
based human CAD software and the flexible back belt, which is used
to reduce back stress for individuals worldwide. Several of his
products were included in a Smithsonian exhibit on ergonomic
design. Cliff is a Fellow of the National Academy of Inventors and
serves on the board of the State University of New York at Empire
State College. He received his Ph.D. from New York University and
an MBA from Oxford University.
Robert practiced at the Mayo Clinic for twenty years, serving as a
Physician-Executive before retiring as an Emeritus Professor in
2019. He served as Vice Chair of the national Mayo Clinic Cancer
Center Practice Committee, overseeing cancer care delivery at all of
Mayo’s national sites, and was Medical Director Particle Therapy at
Mayo Clinic Florida where America’s first carbon ion radiotherapy
facility is being built. He also previously served as Vice Chairman of
the Board of Trustees of the Mayo Clinic Health System – Albert Lea
and Austin. He is the author of over 190 peer-reviewed papers.
Robert has successfully led a series of national, NIH funded Phase
III clinical trials searching for new pharmaceutical solutions to reduce
symptoms of cancer therapy. He is currently Director of Radiation
Oncology at the University of Tennessee in Knoxville, Tennessee.
the
Robert began his scientific career as a medical physicist at
University of Kentucky, before going on to graduate from medical
school at the University of Kentucky. Robert also received an MBA
from Oxford University. He is currently Director of Radiation
Oncology at the University of Tennessee in Knoxville, Tennessee.
The Rt Hon Lord Willetts FRS is President of
the Resolution
Foundation and former Minister for Universities and Science. He
served as the Member of Parliament for Havant (1992-2015), and
previously worked at HM Treasury and the No. 10 Policy Unit. Lord
Willetts is a visiting Professor at King’s College London, Governor of
the British Science
the Ditchley
Association and a member of the Council of the Institute for Fiscal
Studies. He is also an Honorary Fellow of Nuffield College, Oxford.
Lord Willetts has written widely on economic and social policy. His
book ‘The Pinch’, which focused on intergenerational equity, was
published in 2010,
and he recently published ‘A University
Education’. Lord Willetts is a graduate of Oxford university and has
been awarded numerous honorary doctorates.
former Chair of
Foundation,
Registered
Office
12 New Fetter
Lane London
EC4A 1JP
Auditor
HW Fisher L L P
11 – 15 William
Road London
NW1 3ER
Banks
HSBC plc
Canada
Place
Canary
Wharf
London
E14 5AH
The Toronto-Dominion
Bank
12620 Biscayne Blvd
North
Miami FL
33181
USA
Solicitors
Bird & Bird LLP
12 New Fetter
Lane London
EC4A 1JP
Nominated Adviser and
Broker
SP Angel Corporate
Finance LLP
Price Frederick
House
35-39 Maddox
Street London
W1S 2PP
Investor Relations
Flagstaff Strategic and
Investor
Communications 1 King
Street
London EC2V 8AU
Louis Castro has over 30 years’ experience in investment banking
and broking both in the UK and overseas. Most recently he was the
Chief Financial Officer at Eland Oil & Gas, a mid –cap quoted
company. Previously he was Chief Executive of Northland Capital
Partners in London and before this was Head of Corporate Finance
at Matrix Corporate Capital and at Insinger de Beaufort. He started
his career by qualifying as a Chartered Accountant with Coopers &
Lybrand (now PWC). Louis chairs the Audit Committee and is a
member of the Remuneration Committee. He is a Fellow of the
Institute of Chartered Accountants In England and Wales and has a
Double Degree in
Engineering Production & Economics from
Birmingham University.
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D IRE C T ORS ’ REPORT FOR THE YEAR-ENDED 30 NOVEMBER 2020
Directors
The following Directors held office during the period:
Clifford M Gross, Ph.D.
Robert Miller, M.D.
R W “Bill” Payne (resigned 31 December 2019)
Louis Castro (appointed on 2 December 2019)
The following officers no longer hold office with the Company:
The RT Hon Lord David Willets FRS (appointed on 6 January 2020)
Malcolm Groat (held office from April 2014 through completion of term in July 2020)
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
year. Under that
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
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:
•
• make judgements and accounting estimates that are reasonable and prudent;
•
select suitable accounting policies and then apply them consistently;
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 this page of the financial
statements confirm that, to the best of each person’s knowledge and belief:
•
the financial statements, prepared in accordance with 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
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.
financial statements includes a fair review of
•
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, bank facilities
and monies raised in follow-on offerings. The Group’s forecasts and projections indicate that the Group has
sufficient cash reserves to operate within the level of its current facilities. Whilst it is the Group’s intention to
rely on the available cash reserves,
future income generated from its growing service offerings and
reductions in its cost base, a negative variance in the forecasts and projections would make the Group’s
ability to continue as going concern dependent on an additional fund raise.
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D IRE C T ORS ’ REPORT FOR THE YEAR-ENDED 30 NOVEMBER 2020
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
the Group has adequate resources to continue in operational
existence for the foreseeable future.
that
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.
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
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
Please note the above figure for Clifford M Gross does not include 100,000 shares held by both of Dr. Gross’s
adult children who are not considered a PCA as defined in the Article 3(1)(26) of the UK Market Abuse Regulation.
The details of the options held by each director at 30 November 2020 are as follows:
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D IRE C T ORS ’ REPORT FOR THE YEAR-ENDED 30 NOVEMBER
2020
* 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, family member of Dr. Clifford Gross.
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 accounts. Information has been
included in the strategic report under S414C(11).
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
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IND E PE ND E NT AUD IT OR’S RE PORT T O T HE ME MBE RS OF
T E K C APIT AL PL C
Opinion
We have audited the financial statements of Tekcapital Plc (the ‘parent company’) and its subsidiaries (the
‘Group’) for the year ended 30 November 2020 which comprise:
•
•
•
•
•
the consolidated Statement of Comprehensive Income;
the consolidated and parent company Statements of Financial Position,
the consolidated and parent company Statements of Changes in Equity;
the consolidated Statement of cash flows;
the related notes to the consolidated and parent company financial statements including a summary of
significant accounting policies
The financial reporting framework that has been applied in the preparation of the Group financial statements is
applicable law and International Financial Reporting Standards (‘IFRSs’) as adopted by the European Union.
The financial reporting framework that has been applied in the preparation of the parent company financial
including FRS101 “Reduced
statements is applicable law and United Kingdom Accounting Standards,
Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the parent company’s
affairs as at 30 November 2020 and of the Group’s profit for the year then ended;
the Group’s financial statements have been properly prepared in accordance with International Financial
Reporting Standards (‘IFRSs’) as adopted by the European Union;
the parent company financial statements have been prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit
applicable law. Our
responsibilities for the audit of the financial statements section of our report.
in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
those standards are further described in the Auditor’s
responsibilities under
We are independent of the Group and parent company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to
listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to
report to you where:
•
the going concern basis of accounting in the preparation of
the directors’ use of
statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that
may cast significant doubt about the group’s or the parent company’s ability to continue to adopt the
going concern basis of accounting for a period of at least twelve months from the date when the
financial statements are authorised for issue.
the financial
•
Summary of our audit approach
Context
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IND E PE ND E NT AUD IT OR’S RE PORT T O T HE ME MBE RS OF
T E K C APIT AL PL C
The parent company continued to recognise Tekcapital Europe Limited and Tekcapital LLC as subsidiaries
and has continued to consolidate both entities in preparing the consolidated financial statements. The other
subsidiaries continue to be treated as portfolio investments under IFRS 10, investment entities.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
The key audit matters that we identified in the current year were:
•
•
•
•
•
Going Concern, based on the Group’s ability to raise funds.
Valuation of unquoted equity investments.
Revenue recognition and accuracy of cut off in the period;
Management override of controls;
Reliance on Expert
Our application of materiality
The materiality that we used for the consolidated financial statements was US$227,000. We determined
materiality using 1% of gross assets calculated prior to any proposed uplift in fair value of assets in the current
year.
The materiality that we used for the parent company’s financial statements was US$86,000. We determined
materiality using 1% of gross assets.
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I ND EP END E NT AUDITOR’S R E P O R T T O T H E MEMBERS O F
T E K C A P I T A L P L C
Area of focus
How our audit addressed the area of focus
Our audit work included, but was not restricted to the following:
Valuation of unquoted
equity investments
the Group’s total
92% of
assets (by value) is held in
investments where
no
quoted market price is
Unquoted
available.
Investments are measured
at fair value.
The valuation techniques
used fall under level 2 and
level 3 of
the fair value
hierarchy.
and
This is a key area of
estimation
we
therefore considered this
to be an area of significant
audit risk and focus.
the
purpose
The Group engages an
independent expert valuer
for
of
determining the fair value
of
the assets held within
the investments to help
mitigate this risk.
Going concern
are
The parent company and
subsidiaries
not
currently profit generating
and are reliant upon their
ability to raise funds.
is a
The operating profit
the fair value
result of
gains on the investments
which is unrealised.
• We reviewed the appropriateness of the Group’s disclosures within the
financial statements in relation to valuation methodology, key valuation
inputs and valuation uncertainty.
• We addressed the competency, qualifications, independence and
objectivity of the valuer as documented in the key area of focus below.
• We re-performed the calculations to ensure numerical accuracy and
assessed the reasonableness of inputs used in the valuation and
performed benchmarking.
• We performed a review of the valuations sensitivity to the discount rates
and other key areas of estimation and reviewed the sensitivity disclosure
calculations.
• We agreed the inputs in the discounted cash flows used valuations to
the independent reports.
• We reviewed documentation related to the crowdfunding activities of the
relevant newly formed subsidiary entities of the investment entities to
ascertain any observable transactions and their relevance to the
valuations.
• We considered the impact of deferred tax on the fair value gains
recognised on the IP held in the investments and considered these
amounts within the valuations.
• For items which were material but were not fair valued on the investment
company’s balance sheet we vouched to appropriate audit evidence.
• We reconciled of the fair value movements to the financial statements.
• We reviewed the underlying licence agreements on the patents to
ensure the ownership / exclusivity.
• We assessed the critical accounting judgement disclosure at note 4 to
the financial statements in respect of the directors’ determination of the
Group as an investment entity.
• The investments have been fair valued as at 30 November 2020.
Based on our audit work detailed above, we confirm that we have nothing
material to report, and or draw attention to in respect of these matters..
Our audit work included, but was not restricted to the following:
• We have reviewed the directors’ statement regarding the
appropriateness of the going concern basis of accounting contained
within note 2.1.1 to the financial statements.
• We have reviewed the available consolidated financial forecasts of the
Group in line with the assertions provided throughout the audit to
assess their reasonableness.
• We have applied sensitivities to the consolidated financial forecasts to
review the impact in line with the wording included within the going
concern policy and agreed that should there be a significant negative
variance in the forecasts projected the Group would be reliant upon a
future fundraise
• We have reviewed the post year end management accounts.
• We have reviewed Company’s announcements and considered if any
items will have a financial impact affecting the going concern
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IND E PE ND E NT AUD IT OR’S RE PORT T O T HE ME MBE RS OF
T E K C APIT AL PL C
Area of focus
How our audit addressed the area of focus
• We have reviewed the disclosures at note 3 that describe the financial
risks and explain how they are being managed or mitigated.
• We have reviewed the US$5.28m gross fundraise completed 18
March 2021 and have considered this when reviewing the sensitised
forecasts.
Based on our audit work detailed above, we confirm that we have nothing
material to report, and or draw attention to in respect of these matters. We
agreed the director’s disclosure of the going concern as disclosed within
note 2.1.1 of the financial statements. We did not identify any such
material uncertainties. However, because not all future events or
conditions can be predicted, this statement is not a guarantee as to the
Group and Company’s ability to continue as a going concern.
Our audit work included, but was not restricted to the following:
• We evaluated the sales controls system in place to determine the
controls surrounding the income.
• We checked a sample of the sales agreements and contracts through
to the income recognised in the accounts and invoices.
• We also completed checks on deferred and accrued income, no
material misstatements were identified in respect of the deferred
income not recognised.
• We reviewed the revenue recognition accounting policy at note 2.20 of
the financial statements to ensure the application was consistent.
• We assessed the accounting policy for the fair value gains / losses on
the investments measured at fair value to check that the movements
had been accounted for in accordance with the stated accounting
policy.
Based on our audit work detailed above, we confirm that we have nothing
material to report, and or draw attention to in respect of these matters.
Our audit work included but was not restricted to the following:
• We undertook testing on the companies controls, we extended our audit
testing to perform enhanced management override procedures.
• We undertook a review to gain an understanding of the overall
governance and oversight process surrounding management’s review of
the financial statements.
• We examined the significant accounting estimates and judgements
relevant to the financial statements for evidence of bias by the directors.
• We reviewed the financial statements and considered whether the
accounting policies are appropriate and have been applied consistently.
• We undertook a review of the journals posted through the nominal ledger
for significant and unusual transactions and investigated them, reviewing
and confirming the company valuation of journal entry postings.
• We undertook a review of the consolidation journals to ensure they were
reasonable.
Based on our audit work detailed above, we confirm that we have
nothing material to report, and or draw attention to in respect of these
matters.
Assessment of revenue
recognition
There is a presumed risk of
misstatement arising from
lack of completeness or
inaccurate cut-off relating to
revenues.
Revenue also includes a
significant amount of
unrealised income from
investments held at fair value
through profit and loss which
is material to the financial
statements
Management override of
controls
Management is in a unique
position to override controls
that otherwise appear to be
operating effectively.
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IND E PE ND E NT AUD IT OR’S RE PORT T O T HE M E MBE RS OF
T E K C APIT AL PL C
Area of focus
How our audit addressed the area of focus
Our audit work included but was not restricted to the following:
• We reviewed the reports prepared by the expert valuer and considered
the appropriateness of assumptions used in determining the fair value of
the investments.
• The senior members of our team communicated directly with the expert
valuer to discuss and challenge the valuation methodologies, key
assumptions and to consider if there were any indicators of undue
management influence on the valuations.
• We ensured the expert valuer was independent from the Company
through direct confirmation.
• We reviewed the expert valuers methodologies in line with guidance
issued for valuing intangibles and reviewed the approaches with our
internal valuations team.
• We re-performed the calculations and present value workings to ensure
the effect of the discounting was correctly applied.
• We undertook a review of the expert in line with ISA 500.
Based on our audit work detailed above, we confirm that we have nothing
material to report, and or draw attention to in respect of these matters.
Reliance on experts
The Group engaged with
an independent expert
valuer to value the IP held
within the portfolio
companies.
The IP within the portfolio
companies is the main
driver for the fair values
and these are material to
the financial statements
and reliance on expert is
therefore considered a risk
area.
The independent expert
valuer produced reports on
the IP held within Lucyd
Limited, Salarius Limited
and Guident Limited.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
•
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent company and its environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or the
directors’ report.
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IND E PE ND E NT AUD IT OR’S RE PORT T O T HE ME MBE RS OF
T E K C APIT AL PL C
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
•
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
the Directors are responsible for the
As explained more fully in the Directors’ responsibilities statement,
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the parent
company’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the
parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report
Use of our audit report
This report is made solely to the parent company’s members, as a body, in accordance with chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent
company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we
have formed.
Carolyn Hazard (Senior Statutory Auditor)
For and on behalf of HW Fisher LLP
Chartered Accountants
Statutory Auditor
Acre House
11/15 William Road
London
NW1 3ER
United Kingdom
Date: 29 April 2021
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CONSOLI DATED STA TEMENT O F COMPREHENSI VE INCOME
F O R T H E Y E A R END ED 3 0 NOVEMBER 2020
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 44 to 76 are an integral part of these consolidated financial statements.
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CONSOLI DA TE D ST A TE ME NT O F FI NANCIAL P OSI TI ON AT
3 0 NOVEMBER 2020
The notes on pages 44 to 76 are an integral part of these financial statements.
The financial statements on pages 38 to 76 were authorised for issue by the Board of Directors on 29
April 2021 and were signed on its behalf.
Louis Castro
Director
Tekcapital PLC
registered number
08873361
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Dr Clifford M Gross
Chairman and CEO
39
COMP A NY ST A TE ME NT O F FI NANCIAL P OSI TI ON AT 3 0
NOVEMBER 2020
The Company’s loss before tax for the year ended 30 November 2020 was $316,239.
The notes on pages 44 to 76 are an integral part of these financial statements.
The financial statements on pages 38 to 76 were authorised for issue by the Board of Directors on 29
April 2021 and were signed on its behalf.
Dr Clifford M Gross
Chairman and CEO
Louis Castro
Director
Tekcapital PLC
registered number
08873361
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CONSOLI DA TED STA TEMENT O F C H A N G E S IN T H E EQUI TY
F O R T H E Y E A R E ND E D 3 0 NOVEMBER 2020
Share premium - amount subscribed for share capital
attributable costs.
in excess of nominal value, net of directly
Translation reserve - amount subscribed for
Comprehensive Income
foreign exchange differences recognized in Other
Merger reserve - amount subscribed for share capital
qualifying acquisition of subsidiary undertakings.
in excess of nominal value in relation to the
Profit and loss account - cumulative net gains and losses recognised in the consolidated statement of
comprehensive income
The notes on pages 44 to 76 are an integral part of these financial statements.
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COMPA NY STA TEMENT O F C H A N G E S IN T H E EQUI TY F O R
T H E Y E A R E ND E D 3 0 NOVEMBER 2020
Share premium – amount subscribed for share capital in excess of nominal value, net of directly attributable
issue costs.
Translation reserve – amount subscribed for foreign exchange differences recognized in Other
Comprehensive income.
Profit and loss account – cumulative net gains and losses recognized in the consolidated financial
statements of comprehensive income
The notes on pages 44 to 76 are an integral part of these financial statements.
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CONSOLI DA TE D ST A T EME NT O F C A S H F L O W S F O R T H E
Y E A R E N D E D 3 0 N O V E M B E R 2 0 2 0
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N O TE S T O T H E FI NA NCI A L S TA TE M E N TS
1.
General Information
Tekcapital PLC (Companies House registration number: 08873361) is a company incorporated in England
and Wales and domiciled in the UK. The address of the registered office is detailed on page 28 of these
financial statements. The Company is a public limited company limited by shares, which listed on the AIM
market of the London Stock Exchange in 2014. The principal activity of the 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
subsequent
can positively
commercialisation.
impact people’s
technologies
it believes
lives,
that
for
The principal accounting policies applied in the preparation of these consolidated financial statements
statements are set out below. These policies have been consistently
and parent company financial
applied to all the years presented, unless otherwise stated.
Amounts presented in this report are rounded to nearest US$1.
2.
2.1
Accounting policies
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 financial statements of the parent company have been prepared in accordance with Financial
Reporting Standard 101 “Reduced disclosure framework” (‘FRS 101’). The company will continue to
prepare its financial statements in accordance with FRS101 on an ongoing basis until such time as it
notifies shareholders of any change to its chosen accounting framework.
The Company financial statements have been prepared using the historical cost convention except where
other measurement basis are required to be applied and in accordance with IFRS under FRS 101. In
accordance with FRS101, the company has taken advantage of
the following exemptions:
•
IAS 7, ‘Statement of Cash Flows’
2.1.1 Going concern
The Group and the Company meets its day to day working capital requirements through its service
offerings and monies raised through the issues of equity. The Group’s forecasts and projections indicate
that the Group and the Company have sufficient cash reserves to operate within the level of its current
facilities. Whilst it is the Group’s and the Company’s intention to rely on the available cash reserves,
future income generated from its growing service offerings and 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 epidemic is contributing to
uncertainty in the markets and the full
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.
to measure, at
is difficult
impact
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N O TE S T O T H E FI NA NCI A L S TA TE M E N TS
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
for the accounting period beginning 1
December 2023. Directors do not expect any material impact on the consolidated financial statements.
this standard and will adopt
it
No other issued but not endorsed amendments to IFRS will have a material
statements once they become endorsed and effective.
impact on the Group’s financial
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.
Intercompany 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:
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N O T E S T O T H E FINANCIAL S T A T E M E N T S
(i)
(ii)
(iii)
assets and liabilities for each balance sheet presented are translated at the closing exchange rates at
the date of that balance sheet.
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)
all resulting exchange differences are recognised in other comprehensive income.
2.4 Investment in subsidiaries
Investments in subsidiaries including Tekcapital Europe Ltd and Tekcapital LLC are recognised initially at cost.
The cost of the investment includes transactions costs. The carrying amounts are reviewed at each reporting
dated to determine whether there is any indication of impairment. Investments in portfolio companies are held at
fair value through the profit and loss. Directors’ judgment was exercised in determination that the Group meets
the following criteria and should be recognized as an investment entity under IFRS 10 par. 27. Directors re-
evaluated the below criteria and concluded they were met as at 30 November 2020:
• Obtains funds from one or more investors for
the purpose of providing clients with investment
management services
• Commits to its investors that
its business purpose is to invest funds solely for return from capital
appreciation, investment income or both
• Measures and evaluate the performance of substantially all of its investments on a fair value basis.
Tekcapital’s IP search and technology transfer investment services represent investment advisory services,
and therefore Tekcapital Europe Limited and Tekcapital LLC continue to be treated as subsidiaries and are
consolidated in the Group financial statements. These services may be provided to investors, clients and
third parties. The Board considers that the criteria are met in the group’s current circumstances.
The Board envisages that Tekcapital’s shareholder returns will derive primarily from mid to long-term
capital appreciation of a portion
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.
of
2.5
Non-controlling interests
Losses applicable to non-controlling interests in a subsidiary are allocated to the non-controlling interests,
the non-controlling interests to have a deficit balance. Adjustments to non-
even if doing so causes
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
de-recognised. Any resulting gain or loss is recognised in the profit and loss.
2.6
Property, plant and equipment
is
is stated at historical cost
directly attributable to the acquisition of
less accumulated depreciation. Historical cost
Property, plant and equipment
includes expenditure that
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
Computer equipment
Leasehold improvements
3 years
3 years
5 years
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N O T E S T O T H E FINANCIAL S T A T E M E N T S
The assets’ residual values and useful
lives are reviewed, and adjusted if appropriate, at the end of each
reporting period. The 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 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 asset is unique in that no competitor offering currently exists, the service
The Directors believe that
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)
(ii)
(iii)
(iv)
(v)
it is technically feasible to complete the software product so that it will be
available for use; management intends to complete the software product and
use or sell it;
there is an ability to use or sell the software product;
it can be demonstrated how the software product will generate probable future economic benefits;
adequate technical, financial and other resources to complete the development and to use or sell the
software product are available; and
the expenditure attributable to the software product during its development can be reliably measured.
(vi)
Computer software development costs recognised as assets are amortised over their estimated useful
which do not exceed four years.
lives,
(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 licensed technology and recognised as an intangible asset when
the following criteria are met:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
it is technically feasible to complete the technology for commercialisation so that it will be
available for use; management intends to complete the technology and use or sell
there is an ability to use or sell the technology;
it can be demonstrated how the technology will generate probable future economic benefits;
adequate technical, financial and other resources to complete the development and to use or sell the
technology are available; and
the expenditure attributable to the technology during its development can be reliably measured.
it;
Licences and their associated development costs are amortised over the life of
underlying patents, whichever is shorter.
the licence or the
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N O T E S T O T H E FINANCIAL S T A T E M E N T S
(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 has 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 circum- stances 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 Company classifies its financial assets depending on the purpose for which the asset was acquired.
Management determines the classification of its financial assets at initial recognition.
During the financial year
the Group held investments 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.
their fair value (which
Loans and receivables are recognised on the trade date in which the transaction took place and are
recognised at
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
instruments are measured at fair value including investments in portfolio companies, cash and
Financial
cash equivalents,
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.
receivables,
trade and
other
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NOT E S T O T H E FI NANCIAL S T A T E ME N T S
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 newly adopted fair value valuation policy is as follows:
The fair value of new portfolio companies is estimated at the cost of the acquired IP or equity plus associated
expenses to facilitate the acquisition.
Existing portfolio companies are valued as follows:
If a market transaction such as third-party funding has occurred during the past 18 months we will value our
ownership in the portfolio company at this observed valuation, taking account of any observed material changes
during the period.
In the absence of a recent market transaction, fair value will be estimated by alternative methods and where
appropriate
by an external, qualified valuation expert. The valuation technique used fall under Level 2 –
Observable techniques other quoted prices and Level 3 - other techniques as defined by IFRS 13.
Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, and
trade and other payables approximate their fair value. The fair value of borrowings equals their carrying amounts,
as the impact of discounts is not significant.
2.10
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a
legally enforceable right to offset the recognised amounts and there is the intention to settle on a net basis or
realise the asset and settle the liability simultaneously.
2.11
Impairment of financial assets
The Group assesses at the end of each reporting year whether there is objective evidence that a financial asset
or group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment
losses are incurred only if there is objective evidence of impairment as a result of one or more events that have
occurred after the initial recognition of the asset (a ‘loss event’) and the loss event (or events) has an impact on
the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
impairment may include indications that
Evidence of
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
the Group accepts convertible loan notes
one year they are presented as non-current assets. In some instances,
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.
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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
company.
2.15
Trade payables
is the portion of equity ownership in a subsidiary not attributable to the parent
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 Group 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 Group. The fair value
of the employee services received in exchange for the grant of options is recognised as an expense. The total
amount to be expensed is determined by reference to the fair value of the options granted:
•
•
•
including any market performance conditions;
excluding the impact of any service and non-market performance vesting conditions (for example,
profitability, sales growth targets and remaining an employee of the entity over a specified time period);
and
excluding the impact of any non-vesting conditions (for example the requirement of
save).
the employees to
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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
in the income statement, with a
corresponding adjustment to equity.
the revision to the original estimates,
if any,
When the options are exercised, the Group 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 yeasr 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
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 liability where the timing of
the reversal of
for
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.
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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.
the likelihood of an outflow with respect
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
to any one item included in the same class of
even if
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.
is
The right-of-use asset
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
is periodically reduced by impairment
of other property, plant and equipment. The right-of-use asset
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.
future lease payments arising from a change in an index or rate;
The lease liability is measured at amortised cost using the effective interest method. It is remeasured
when there is a change in:
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.
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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
transaction price is
determined and allocated to performance obligation in accordance with IFRS 15.
is identified, performance
obligation is determined,
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 upon placement of an executive
• Training services: custom solutions for new tech transfer offices, spin out companies and accelerators
delivered via in person trainings. Revenue is recognised upon completion/delivery of a training.
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective
interest rate applicable.
3.
3.1
(a)
Financial Risk Management
Financial risk factors
Portfolio Risk/Investment 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.
Credit Risk management
(b)
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.
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(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 management
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
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 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.
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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.
Potential
impact within
the next
financial
year
Potential
impact in
the longer
term
Note
reference
for
sensitivity
analysis
Yes
Yes
Note
12
Key estimate/
judgment area
Key assumption
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,
transaction, by
alternative methods and where appropriate by an external,
qualified valuation expert.
The fair value of Guident Limited reflects the fair value of
the Guident’s net assets. This value is primarily based on its
IP portfolio detailed in Note 12, valued using the royalty
relief method.
in the absence of a recent market
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Key
estimate /
judgment
area
Key assumption
Potential
impact within
the next
financial year
Potential
impact in
the longer
term
Note
reference
for
sensitivity
analysis
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.
Valuation of
unquoted
equity
investments
The fair value of Lucyd Limited reflects:
- Lucyd’s ecommerce platform valued by estimating the net
present value of future cashflows associated with the e-shop.
Key assumptions used in estimating future cash flows are
projected profits including eyewear unit sales for company’s e-
commerce channels as well as number of
retail stores to
determine projected sales, and a discount factor applied for the
net present value of future cashflows from the platform.
- Lucyd’s trademark value based on the Net book value stated
at cost.
The Group corroborated this
valuation with secondary
observable input in the form of value of Lucyd Ltd’s shares in its
US subsidiary (Innovative Eyewear Inc) as determined by recent
market transactions of these shares.
Yes
Yes
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.
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.
Deferred
Tax
Deferred tax is the tax expected to be payable or recoverable
on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit, 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.
Yes
Yes
Note 13
Yes
Yes
Note 13
Yes
Yes
Note 22
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Key
estimate/
judgment
area
Key assumption
Potential
impact in
the longer
term
Note reference
for sensitivity
analysis
Potential
impact
within the
next
financial
year
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.
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
Deferred Tax
Share based
payment
Yes
Yes
Note 22
Yes
Yes
Note 26
5.
Segmental reporting
The Directors consider the business to have two segments for reporting purposes under IFRS 8 which are:
•
professional services, including the provision of recruitment services via Vortechs Group, provision of
reports and services provided to locate and transfer technologies to customers, as well as R&D tax relief
credits and provision of management services to its portfolio companies. The activities grouped under this
segment share similar economic characteristics of provision of intellectual property services to third party
services;
licensing and investment activities,
technologies, portfolio company
investment, development and commercialisation. The activities share the goal of increasing the fair value
of investments made into portfolio companies by the Group.
including acquiring licences for
•
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6. Revenue from Services
The below table discloses disaggregated Revenue from Services by their nature/categories as well as
timing of the revenue. Please refer to Note 12 for disaggregation of Group’s Unrealised profit on the
revaluation of investments.
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* The Group received an R&T tax relief, the directors consider this to be income.
** Includes PPP grant totalling US$77,837 received by Tekcapital LLC which has been forgiven in full.
All of the Group’s major service lines are sold directly to consumers and not through intermediaries. All
revenue recognised in the reporting period represent performance obligations satisified in the current period.
7. Expenses
7.1 Expenses by nature
Included in the Other administration expenses is the amount of US$70,766 related to payments under
operating lease for the office rental agreement.
7.2 Auditor remuneration
8. Employees
8.1 Director’s emoluments
The highest paid Director received a salary of US$191,865 (2019: $187,760) and benefits of US$22,745 (2019:
US$21,050). The highest paid Director received a bonus of US$154,375 (2019: US$0). The highest paid Director
did not exercise any share options; he received 3,000,000 share options in August 2020. The share-based
payments associated with the highest paid Director amounted to US$9,275. No termination benefits, post-
employment benefits were provided to Directors. Total of short-term benefits in kind of US$22,745 were provided
during the year. The amounts in the table above do not include Employers NI in the amount of US$22,500.
Key management personnel (including Directors and Group Financial Controller) received salary of US$574,995,
excluding Stock Base Compensation disclosed in Directors Remuneration Report. Please also refer to Director’s
Report.
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8.2 Employee benefit expenses
8.3 Average number of people employed
Average number of employees with the Company in 2020 and 2019 was two (Management).
To enhance flexibility and improve cost control, the Group utilizes consultants for scientific review, administrative and
operations support, software development and other knowledge-intensive services.
9.
Income tax expense
The weighted average applicable tax rate was 19% (2019: 19%).
Unused tax losses for which no deferred tax assets have been recognised is attributable to the uncertainty
over the recoverability of those losses through future profits.
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10. Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the
weighted average number of Ordinary Shares outstanding during the period.
Diluted earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the
sum of weighted average number of (1) Ordinary Shares outstanding during the period and (2) any dilutive
potential Ordinary Shares outstanding at 30 November 2020:
The Group completed placements of total of 28,800,000 new ordinary shares during the financial year and
issued 300,000 shares due to share option exercise by an employee.
11. Investments in subsidiaries
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* As at the year end, the Company has no interest in the ownership of any other entities or exerts any
significant influence over or provides funding which constitutes an “unconsolidated structured entity”.
All UK subsidiaries are exempt from the requirement to file audited accounts by virtue of section 479A of the
Companies Act 2006.
Tekcapital Europe Ltd (registered address 12 New Fetter Lane, London, United Kingdom, EC4A 1JP) and
Tekcapital LLC (registered address 66 West Flagler Street, Suite 900, Miami, Florida, 33130, United States)
are consolidated by Tekcapital plc because they continue to provide advisory services in IP search and
technology transfer.
All other entities are measured at fair value through profit and loss based in IFRS 10 as referenced in Note
2.4. The Group provides management service support
to Lucyd Limited, Salarius Limited and Guident
Limited, as well as has provided working capital assistance to Salarius Limited and Guident Limited through
convertible loan note financing (see also Note 15). The Group also assists the entities with their fundraising
activities.
Registered office of all four subsidiaries owned by Tekcapital Europe Limited: Acre House, 11-15 William
Road, London, England, NW1 3ER.
During the year Salarius Limited incorporated Microsalt Inc, a U.S subsidiary to advance sales of its product
in the United States. Salarius Limited owns 87.13% of Microsalt Inc.
During the year Lucyd Limited incorporated Innovative Eyewear Inc, a U.S. subsidiary to advance sales of its
product in the United States. Lucyd Limited owns 100% shares of Innovative Eyewear Inc.
During the year Guident Limited incorporated Guident CORP, a U.S. subsidiary to advance sales of
product in the United States. Guident Limited owns 100% of Guident CORP.
its
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12. Financial Assets at Fair Value through Profit and Loss
Group’s investments in portfolio companies in the years ended 30 November 2020 and 30 November 2019 are
listed below and classified as equity instruments. The principal place of business for portfolio companies
listed below is England and Wales.
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Total fair value gain of US $8.7m for the year reflects uplift in value of shares of Guident, Lucyd and Salarius,
with no changes Belluscura. Considering early stage of commercialisation, fair value of Smart Food Tek was
recorded based on the cost of acquired IP, as their carrying amounts represent a reasonable approximation of
fair value.
The valuation techniques used fall under, Level 2 – Observable techniques, other than quoted prices, and Level
3- Other techniques as defined by IFRS 13. These techniques were deemed to be the best evidence of fair
values considering early stage of portfolio companies.
Fair value measurement hierarchy for financial assets as at 30 November 2020 with comparative amounts as of
30 November 2019:
International Patent Filing WO2019/147569: Visual Sensor Fusion and Data Sharing Across Connected
Guident (US$6.5m gain)
An external valuation by an independent patent valuation expert was prepared for Guident’ s IP portfolio including:
1. US patent 9,429, 943 (“FAMU 943”)
2.
Vehicles (MSU 569)
3. US Patent No. 9,964,948 (“FIU 948”)
4. US Patent No. 8,941,251 (“SUNY 251”) – new intellectual property licensed during the period
The total fair value of $19.1m reflects the fair value of Guident’ s net assets as determined by:
•
Valuation of SUNY 251 of US$4.8m conducted by an external, qualified valuation expert using the Income
Approach, Royalty Relief Method. Following valuation inputs were applied by the valuation expert:
Total market of electronic vehicles (“EVs”) sold of 21,952,420 sold in the U.S. between 2023 (start of
projections) and 2031 (patent life end). 1% market penetration of Guident’s patent starting in 2023 leading
to 6% market penetration by 2028 through 2031, resulting in projected 1,137,000 vehicles subject to the
licensing revenue. This market penetration assumption is based on a number of factors:
Broad protection and claims included in the IP
The protection given to the product by its US patent, which effectively gives Guident a barrier to entry
in the US through 2031
The strength and experience of the management team, whose proven expertise is in the exact areas
required to bring the product to market and build the brand;
Well documented “range anxiety” issue within the EV market as one of the largest barriers for new EV
purchasers. The EV manufacturers are aggressively competing for the increase in their vehicles’
operational range and the technology described by SUNY 251 provides the competitive advantage
sought.
Ongoing discussions with major auto makers regarding this technology.
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•
Valuation of FAMU 943 of US$19.2m (2019:US$16.2m) conducted by an external, qualified valuation
expert using the Income Approach, Royalty Relief Method. Following valuation inputs were applied by
the valuation expert:
Total US market size of US$35b for autonomous vehicles and drones (as the patent applies to
both) for the 11 years period ended 30 December 2033. 1% market penetration of Guident’ s
patent starting in 2022 with annual increase of 1% leading to a 12% market penetration by
2033, resulting in projected US$3b in sales of drones/vehicles underlying licensing revenue
between 2022 and 2033. This market penetration assumption is based on a number of factors:
Broad protection and claims included in the IP
The protection given to the product by its US patent, which effectively gives Guident a
barrier to entry in the US through 2033
The strength and experience of the management team, whose proven expertise is in
the exact areas required to bring the product to market and build the brand;
There are no foreseeable software development barriers in the commercialisation
process
Other foreseeable challenges for directors to deliver successful commercialisation
appear to be well within the abilities of directors to handle.
Innovative nature of Guident’s IP and the fact that the AV market is dependent on
innovators.
Improving regulatory environment with more states in the United States legalizing
autonomous vehicles operation in 2019 including large states such as Florida and
California, and more states in 2020.
While management’s projection remained unchanged compared to 30 November 2019 valuation, the
valuation increased due to discounting of underlying cash flows to 30 November 2020.
•
Valuation of MSU 569 of US$3.4m (2019: US$2.8m) conducted by an external, qualified valuation
expert using the Income Approach, Royalty Relief Method. Following valuation inputs were applied by
the valuation expert:
In January 2024, Guident also expects to introduce an additional, complementary component
featuring the MSU 569 technology (Sensory Fusion Component). This component would
enable sensory data sharing between the vehicles, providing for new safety standard. Guident
the Standard Initial
expects the Sensor Fusion Component
Component when 5G is available so as to further generate an additional $500 of revenue for
each sale of the Sensor Fusion.
to be sold to customers of
For the estimate of the US market derived revenue, using the units of underlying Autonomous
Vehicles from FAMU 943, the management assumed 10% of FAMU customers would choose
to pay for this additional safety improving capability, starting with 10% of them in 2024 with the
share growing to 40% in 2027.
the estimate of
For
comparative share of countries included in the international
literature from the Allied Market Research report.
the international market derived revenue,
the management applied
filing based on authoritative
These market penetration assumptions are based on assumptions similar to those considered for
the patent FAMU 943.
In their review of assumptions used in the 30 November 2019 valuation, the management noted
only positive developments related to commercialisation of this IP. While management’s projection
remained unchanged compared to 30 November 2019 valuation, the valuation increased due to
discounting of underlying cash flows to 30 November 2020.
•
Valuation of FIU 948 of US$0.4m (2019: US$0.3m) conducted by an external, qualified valuation
expert using the Income Approach, Royalty Relief Method. Following valuation inputs were applied by
the valuation expert:
US sidewalk delivery drone market size of US$1.27b between 2022 and 2036. 1% market
penetration starting in 2022 with annual increase leading to 25% in 2027. This market penetration
rate assumptions is based on factors analogous to those listed for FAMU 943, with additional
legislative/regulatory requirements included as well.
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Recent regulatory developments in United States make it mandatory to have back-up human control
operators taking control of an AV in the event of an accident or mishap.
In their review of assumptions used in the 30 November 2019 valuation, the management noted only positive
developments related to commercialisation of
the management noted only positive
developments related to commercialisation of this IP. While management’s projection remained unchanged
compared to 30 November 2019 valuation, the valuation increased due to discounting of underlying cash
flows to 30 November 2020.
this IP. valuation,
•
Assumptions applied to valuations of all patents above:
Total 6% license royalty rate, with 3% royalty attributable to the university and 3% comprising
Guident’s licencing revenue based on comparable market transactions, with the exception of 30%
for FIU 48 (whereby 2.5% is due to the university). The valuation of SUNY 251 used royalty rate of
4.66% based on comparable market transactions, with range of US$1.50 to US$2.00 per underlying
product utilizing the IP due to the university.
Corporate income tax rate of 19% applied to projected licensing costs saved 17% discount rate used
to discount proceeds as determined by opportunity cost (10%), inflation rate (2%) and technology
risk (5%)
The deferred tax liability of (US$ 5.3m) recorded by Guident based on UK corporate tax rate of 19%
applied to the fair value gain associated with the patent
Net book value of other assets and liabilities of <(US$0.45m).
Guident Ltd obtains sufficient funding to execute their strategy.
Salarius (US$ 0.7m gain)
The fair value of US$3.6m was recorded by the Group based on following considerations:
• Valuation of US patent 8,900,650 of US$5m (2019: US$3m) conducted by an external, qualified valuation
expert using the Income Approach, Royalty Relief Method. Following valuation inputs were applied by the
valuation expert:
Sales of low sodium salt to snack food manufacturers (“B2B”) of US$146m for the 10-year period
ended 2030. The sales assumption, increased compared to last year, is based on a number of
factors:
Microsalt is a unique product substantially in advance of alternative, developed, and tested in terms
of market acceptability and ready to market;
The protection given to the product by its US patent, which effectively gives Salarius a barrier to
entry in the US for 10 more years;
The strength and experience of the management team, whose proven expertise is in the exact
areas required to bring the product to market and build the brand;
The company has undertaken efforts to increase its funding needed to drive sales and marketing
efforts needed to meet the forecast.
The company effectuated its planned international expansion by entering into an agreement with
FXM Mexico, covering logistics, professional and technical consulting, R&D testing and sales
assistance including building a robust pipeline of potential customers
Engaged Gehring-Montgomery Inc, adding a distributor of food and raw materials for commercial
and industrial manufacturers to assist in the sales of MicroSalt in the US.
The company expanded its pipeline of customers testing the product during the year
Other foreseeable challenges for management to deliver successful commercialisation appear to be
well within the abilities of management to handle.
Sales of salty snacks (“B2C”) estimated at US$33m for the 10 year period ended in 2030. The
projections assume Salarius chips being sold in 348 individual stores by the end of 2021 growing
annually to 3,548 by the end of 2023, and by 5% annually thereafter. This assumption is based on
factors analogous to the B2B segment, with the addition of following factors:
Commencement of in-store sales for SaltMe potato chips via UNFI in the summer of 2020
Onboarding of Chef’s Warehouse in September 2020, bringing more high velocity stores
Successful completion of logistical, distribution and sales channels necessary to open e-commerce
sales of SaltMe chips on Amazon.
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Licence royalty rate of 8% with 3% royalty attributable to the university and 5% comprising Salarius’ licencing
revenue based on comparable market transactions
12% discount rate used to discount proceeds as determined by opportunity cost (10%) and inflation rate (2%).
Technology risk was determined at 0%, as the patent describes easily manufactured salt compositions,
maybe manufactured in many production facilities without extensive modifications. The end product has
already been manufactured and used to conduct consumer acceptance tests. Sales and distribution channels
have been established.
The deferred tax liability of (US$0.73m) recorded by Salarius based on UK corporate tax rate of 19%
applied to the fair value gain associated with the patent.
Salarius’ 87.13% ownership of Microsalt Inc was applied to resulting US$4.3m valuation, resulting in US$3.7m
valuation of shares held by Salarius Ltd in its US subsidiary. Subsequently, Group’s 97.15% ownership in
Salarius Ltd was applied to US$3.7m resulting in fair value of US$3.6m.
During the period, the Group converted US$1,121,516 in convertible note receivable into shares of Salarius Ltd
resulting in classification of the amount as addition to the Financial Assets Held at Fair Value.
Lucyd Ltd (US$1.6m gain)
The fair value of US$2.7m was recorded by the Group based on following considerations:
• Valuation of Lucyd’s significant assets performed by an external, qualified valuation expert:
Lucyd’s e-commerce platform selling advanced and fashionable eyewear valued at US$3.8m as
determined by applying an 15% discount rate on US$10.3m of adjusted net profit projected through 2025.
The 15% discount rate was calculated as a total of 10% opportunity cost, 2% inflation rate and 3%
technology risk. The projections of profit were increased compared to 30 November 2019 valuation
considering:
The company achieved significant R&D improvement related to its new product, making it easier to market
and advertise in management’s opinion, also expanding potential e-commerce channels from electronic to
also optical thanks to its better look and less weight compared to previous version of the product;
The company solidifying its plans to hybrid, having expanded from an online-only company to include brick-
and-mortar store sales. While the forecast used by management
in the 30 November 2019 valuation
assumed some level of in store sales, the improved quality of its new product better fitting optical sections
of retail stores, together with creating a plan of target retailers and distributors justified, in management’s
opinion, increasing the focus on these channels it its projections.
Extending projection period to 5 years due to developments in the product, Vyrb app development and
matching industry standards of forecast timelines.
•
Lucyd’s trademarks valued at US$ 0.2m, assessed using Cost Approach Reproduction Method. Through cost
analysis, the fair value approximates cost recognized in Lucyd’s balance sheet.
• The deferred tax liability of (US$0.68m) recorded by Lucyd based on UK corporate tax rate of 19%
applied to the fair value gain associated with the patent.
• Other assets and liabilities of (US0.45m).
At the same time, Lucyd’s wholly owned U.S. subsidiary, Innovative Eyewear Inc sold over 418,000 of its shares
through 30 November 2020 at pre-money valuation of US$3.75m (or US$1 per share) as part of the Regulation
Crowdfund fundraising undertaken by the company. The management believes this input corroborates the
valuation of Lucyd’s significant assets.
Belluscura (US $0.0m gain)
The fair value of the holding increased by US$0.6m due to the cost basis addition as the Company participated in
the most recent private placement held at 15 pence per share in May 2020. This price per share remained
unchanged from preceding placement at 15 pence per share in April 2019 used by the Company and the Group
to value its holding in Belluscura as of 30 November 2019. The Group contributed US$224,000 during this
placement.
Smart Food Tek (Nil Gain / Nil loss)
Considering early commercialisation stage, the Group records its investment in Smart Food Tek at cost. The
directors do not consider that any other available information would materially change or give a more reliable
representation of the value.
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The Group exercised judgment in determination of sufficiency of portfolio companies’ cash reserves, forecasts
and ability to raise money to achieve their fair values. Directors reviewed and questioned the forecasts used,
standing liquidity and working capital balances, as well as discussed capability and plans to raise money in the
future with directors or management of portfolio companies. Based on the review, the Group made a positive
determination as to portfolio companies’ likely ability to achieve fair values considering liquidity factors.
Description of significant unobservable inputs to valuation:
The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair
value hierarchy, together with a quantitative sensitivity analysis as at 30 November 2020 are shown as below. No
sensitivities have been included on the other investments not listed in the table below as their fair value equates
to cost.
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13. Intangible assets
The intangible assets presented above are included within Professional Services segment under Note 5 disclosure.
Costs of the Group’s website development have been fully amortized as of 30 November 2018.
Under IAS38, the Group’s Invention Evaluator is regarded by the Directors as being an intangible asset with an
indefinite useful life. The Directors believe that the asset is unique in that no competitor offering currently exists, the
service is already proven to have appealed globally to many types of clients including Fortune 100 companies, there is
no expectation of obsolescence in the foreseeable future, and the service from the use of the asset generates
sufficient ongoing revenue streams. The Directors have carried out an impairment review and believe that the value in
use is significantly greater than book value.
The Directors have considered the recoverable amount by assessing the value in use by considering the future cash
flow projections of the revenue generated by the Invention Evaluator intangible, cash flows were based on the past
revenue generation. The projections were assessed for a five year period in order to determine no impairment. The
projections are based off revenue generation at US$300k less cost of sales at 50% gross profit margin, no growth has
been applied forecasts. A discount factor at 10% (consistent with Group’s cost of capital) was used to determine no
impairment. The revenue projections are based on company’s historical performance and existing pipeline of sales
orders. The Invention Evaluator intangible’s recoverable amount exceeds its carrying amount by US$229,848.
.
Under IAS38, the Group’s Vortechs asset is regarded by the Directors as being an intangible asset with an indefinite
useful life. The Directors believe that this asset is unique as it operates in a niche market, it generates an ongoing
revenue stream, and there is no expectation of obsolescence. This asset meets the requirements of IAS38 as it is:
• Separately identifiable
• The Group controls this asset
• Future economic benefits flow to the Group in the form of service revenues from this asset
• The cost of this asset can be measured reliably
The Directors have carried out an impairment review and consider the value in use to be greater than the book value.
The Directors have considered the recoverable amount by assessing the value in use by considering the future cash
flow projections of the revenue generated by the Vortechs intangible, cash flows were based on the past revenue
generation plus expected growth. The projections were assessed over a period in excess of 5 years on the basis the
directors consider the projections can be reasonably forecast. The projections are based off revenue generation at
US$400,000 per annum for 2021 (approximating actual revenue from 2019), reducing to US$300,000 for 2022,
US$350,000 for 2023 and back to US$400,000 until 2028. The cost of sales element for 2021 was determined at 90%
in line with the agreement, thereafter it drops to US$120,000 p.a. plus inflation at 5%. The reduction in cost of sale is
due to the end of a term in the purchase agreement. A discount factor at 10% (consistent with Group’s cost of capital)
was used to determine no impairment. Vortech’s intangible’s recoverable amount exceeds its carrying amount by
US$678,113.
The tech-transfer recruiting is viewed by directors as permanent part of the Group’s business and its offering. This
together with the high turnover in this industry leading to continuous hiring needs leads Directors to apply projections of
over 5 years in the impairment determination.
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14. Fixed Assets
15. Trade and other receivables
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The fair value of trade and other receivables are not materially different to those disclosed above. The Group’s
exposure to credit risk related to trade receivables is detailed in Note 3 to the consolidated financial statements.
The Group and the Company held multiple convertible loans issued by its portfolio company, Salarius Ltd for the
total US$1,100,000, which was fully drawn by September 2020. In September 2020, at mutual agreement
between the Company and Salarius Ltd, the full amount of outstanding receivable was converted into 718 shares
of Salarius Ltd issued to the Company at $1,562 per share. Consequently, the Company presented the amount
of US$1,121,025 under additions to “Financial Assets Held at Fair Value” as at 30 November 2020 (see Note
12).
The Group and the Company also held:
-
-
-
Convertible note issued by its portfolio company, Guident Ltd, for the total of US$300,000, issued at 10%
coupon rate including option to convert the debt into shares at market price (no discount against future
equity placements offered). The note can be converted into Guident’s equity upon occurrence of certain
conversion events. The US$ 300,000 note originated in December 2018 is payable in December 2021 or
can be converted into Guident’s equity upon occurrence of certain conversion events. The note was fully
drawn as at 30 November 2020.
Convertible note issued by its portfolio company, Guident Ltd, for the total of US$500,000, issued at 10%
coupon rate including option to convert the debt into shares at market price (no discount against future
equity placements offered). The note can be converted into Guident’s equity upon occurrence of certain
conversion events. The US$ 500,000 note originated in March 2020 is payable in March 2023 or can be
converted into Guident’s equity upon occurrence of certain conversion events. US$227,803 was draw as at
30 November 2020.
Convertible note issued by its portfolio company, Microsalt Inc, for the total of US$250,000, issued at 10%
coupon rate including option to convert the debt into shares at market price (no discount against future
equity placements offered). The note can be converted into Microsalt’s equity upon occurrence of certain
conversion events. The US$ 250,000 note originated in September 2020 is payable in September 2023 or
can be converted into Microsalt’s equity upon occurrence of certain conversion events. US$60,000 was
drawn as of 30 November 2020.
The Group had outstanding receivables from its portfolio companies as at 30 November 2019 in the amount of:
- US$288,165 due from Lucyd Ltd
- US$103,092 due from Smart Food Tek
- US$184,376 due from Innovative Eyewear Inc
The Company recorded a historical US$2,500,000 provision against its receivable from one its subsidiaries,
Tekcapital LLC.
16. Cash and cash equivalents
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17. Categories of financial assets and financial liabilities
18. Share capital and premium
The shares have full voting, dividend and capital distribution (including on winding up) rights; they do not
confer any rights of redemption. The following shares were issued during the year:
•
February 2020: 14,800,000 shares were issued in the placing of new ordinary shares at £0.05p. Total
proceeds of US$881,174 were netted against cost of raising finance in the amount of US$105,228
• May 2020: 9,250,000 shares were issued in the placing of new ordinary shares at £0.10p. Total proceeds
of US$1,086,060 were netted against cost of raising finance in the amount of US$117,889
• September 2020: 300,000 shares were issued in exercise of share options held by Amy Shim at £0.085p.
Total proceeds of US$29,805 were received.
• November 2020: 4,750,000 shares were issued in the placing of new ordinary shares at £0.08p. Total
proceeds of US$483,011 were netted against cost of raising finance in the amount of US$39,136.
The Company has authorised share capital of 131,667,063, with a nominal value of £0.004. Of these shares,
92,828,042 were issued and fully paid up.
Share premium
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19. Reserves
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20. Trade and other payables
The fair values of trade and other payables are not materially different to those disclosed above.
The Group’s exposure to currency and liquidity risk related to trade and other payables is detailed in note 3 to
the accounts.
21. Deferred Revenue
The Group’s deferred revenue balance of US$118,595 as of 30 November 2019 was adjusted for:
•
receipt of Invention Evaluator payments in the amount of US$54,740 to be delivered after 30 November
2020, recognized as addition to the balance deferred revenue during the year ended 30 November 2020
recognition of US$18,614 of revenue deferred as of 30 November 2019 for reports delivered during the
financial year 2020 bringing the total outstanding balance of Deferred Revenue as at 30 November 2020
to US$154,721.
•
22. Deferred income tax
Unused tax losses for which no deferred tax assets have been recognised is attributable to the uncertainty
over the recoverability of those losses through future profits. A tax rate of 19% has been used to calculate
the potential deferred tax.
23. Dividends
No dividend has been recommended for the year ended 30 November 2020 (2019: Nil) and no dividend was
paid during the year (2019: Nil).
24. Cash used from operations
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25. Commitments
Capital commitments
The Group entered into multiple convertible loan note agreements with its portfolio companies. Please see note
15 for details regarding outstanding commitments.
Operating lease commitments
The Group did not have any material contracts withing the scope of IFRS 16. Consequently, the Group did not
recognise any right-of-use assets and lease liabilities during the period.
26. Share based payments
The Group operates an approved Enterprise management scheme and an unapproved share option scheme.
The fair value of the equity settled options granted is expensed over the vesting period and is arrived at
using the Black-Scholes model. The assumptions inherent in the use of this model are as follows:
The weighted average fair value of options outstanding was £0.03p. Volatility was calculated using Group’s
historical share price performance since 2017. The share-based payment expense for the year was $44,273
(2019: $20,876). Details of the number of share options and the weighted average exercise price outstanding
during the year as follows:
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*The weighted average exercise price for the options exercisable as at 30 November 2020 and 30 November
2019 was £0.19p and £0.34p respectively.
life is 4.2 years (2019: 2.7 years). The weighted average fair
The weighted average remaining contractual
value of options granted during the year was £0.03p (2019: £0.05p). The range of exercise prices for options
outstanding at the end of the year was £0.052p - £0.46p (2019: £0.065p - £0.46p).
27. Related party transactions
Details of Directors’ remuneration and grant of options are given in the Directors’ report.
Please also refer to Note 15 for detail of transactions with portfolio companies.
525,000 options were held by Harrison Gross, family member of Dr. Clifford Gross.
The company owed US$481 to Max Inglis, General Counsel as of 30 November 2020.
As of 30 November 2020, the Company and the Group was party to the following warrant and option
agreements with Belluscura plc for
• 1,273,078 ordinary shares of Belluscura at 16p per share
• 600,000 ordinary shares of Belluscura at 15p per share
• 4,761,905 ordinary shares of Belluscura at 21p per share.
28. Events after the reporting period
On 1 February 2021, Tekcapital Group announced that the Company's shares will cross trade publicly on the
US OTCQB Venture Market ("OTCQB"), under the ticker TEKCF, commencing 1st February 2021.
On 18 March 2021, Tekcapital Group completed a placing of 38,000,000 ordinary shares with existing and
new investors at 10 pence each to raise US$5.28m before expenses.
In April 2021, Tekcapital Group exercised following warrants and options into following shares of Belluscura:
•
•
•
1,273,078 ordinary shares at 16p per share
600,000 ordinary shares at 15 per share
4,761,905 ordinary shares at 21p per share
Post period end, following amounts were drawn for existing convertible notes:
• US$75,000 for Microsalt Inc
• US$125,758 for Guident Ltd
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E-mail: info@tekcapital.com
www.tekcapital.com
ST A Y I N T OU CH
U.K: +44 (0) 1865 338102
U.S: +1 (305) 200-3450
12 New Fetter Lane
London, EC4A 1JP
United Kingdom
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