ANNUAL REPORT & ACCOUNTS 2023
Nothing is More Powerful than an Idea Whose Time has Come.
- Victor Hugo
CONTENTS
PAGE
STRATEGIC REPORT
3
5
17
21
26
27
Overview of Tekcapital plc and subsidiaries (‘Tekcapital’)
Highlights
Portfolio Review
Chairman’s Summary
Financial Review & Key Performance Indicators Board of Directors
Board of Directors
DIRECTORS' REPORT
29
33
Directors’ Report
Corporate Governance
OUR FINANCIALS
37
45
46
47
50
51
81
82
83
Independent auditor’s report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Company Statement of Financial Position
Company Statement of Changes in Equity
Notes to Company Financial Statements
2
OVERVIEW
TEKCAPITAL TRANSFORMS UNIVERSITY DISCOVERIES
INTO VALUABLE NEW PRODUCTS
• We find and invest in exciting new discoveries from our global university network that
we believe can enhance people’s lives.
• We also provide services to universities and companies to help them analyse and
commercialise their innovations. Using these services, we have built a compelling
group of portfolio companies to commercialise several of the high value properties we
have uncovered.
• We believe that when you couple commercial ready, strong university IP with star
power management, vibrant companies can emerge.
• When we realise exits, the Group’s goal is to distribute a portion of the proceeds as a
special dividend to our shareholders.
•
In 2023 we had a productive year for long-term value creation, setting the foundation
for meaningful growth in 2024 as evidenced by the successful floatation of Microsalt
plc post year end. Our portfolio companies achieved significant milestones, however
due to unrealized reductions in the end of period quoted valuations of Lucyd and
Belluscura, our profitability, net assets and net assets per share were commensurately
negatively impacted.
Net Assets US$47.9m (2022: US$57.8m)
NAV per share US$0.27 (2022: US$0.38)
Portfolio valuation US$41.1m (2022: US$54.9m)
Total loss after tax: US$15.7m, resulting primarily from unrealised fair value reduction
of portfolio valuation US$14.2m (2022: loss of US$12.7m)
Share placings totalling US$5m completed during the period (2022: US$2.5m)
However, post end of period on 20 May 2024 our estimated portfolio valuation was
approximately US$75m, recovering the entire fair value losses of 2023 and exceeding
the $55m valuation reported in 2022 by ~36%.
• Our portfolio companies reached many milestones during 2023, some of which
included:
Launch of Guident’s best in class Remote Monitor and Control Centre
(RMCC) and the securing, deployment, and invoicing of their first major
customer, Jacksonville Transportation Authority.
Guident signed re-seller agreements with both Auvetech a leading Estonia
autonomous minibus manufacturer and Adastec a leading AV software
provider and with Adastec a leading AV software provider. Guident’s RMCC
software will be included in all Auvetech MiCa vehicles and as part of
Adastec’s autonomous software stack for deployments.
Guident successfully tested its new regenerative shock absorbers (RSA) with
a leading tyre company, and that company has presented the RSAs to several
leading OEMs for their consideration.
3
Innovative Eyewear’s launch of the first smart eyewear with ChatGPT and
securing a multi-year, global licensing agreement with Authentic Brands
Group (ABG) to make and sell Reebok® Smart Eyewear, following-on
previously secured licenses with Eddie Bauer and Nautica brands from ABG.
Microsalt’s onboarding of two Fortune 500 customers for their proprietary
low-sodium, full-flavour salt, whilst preparing for its Initial Public Offering
which was finalized on 1st February 2024.
Belluscura’s receipt of orders for 6,500 of its next-generation DISCOV-R
portable oxygen concentrator.
The Hong Kong Department of Health has approved the distribution of the X-
PLOR® portable oxygen concentrators.
4
Microsalt’s patented, low-sodium salt delivers
natural salt with approximately 50% less
sodium.
HIGHLIGHTS
INVESTMENT PORTFOLIO
MicroSalt plc (“Microsalt”)
manufactures MicroSalt®, a new,
patented, all natural, non-GMO,
Kosher, low-sodium salt, that tastes
great and has approximately half of the
sodium of regular table salt.
MicroSalt plc
87% ownership at
31 December 2023
www.microsalt.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. Excess sodium consumption contributes to
cardiovascular disease, a leading cause of premature death globally. The World Health
Organization has indicated that reducing sodium consumption to 2,300 mg/day can save
upwards of 2m lives per year. To help address this problem, MicroSalt provides a patented,
low-sodium salt has all the flavour of salt with roughly half the sodium for topical applications
such as crisps, pretzels, nuts, popcorn and other salty snacks, bakery products and precooked
meals.
2023 DEVELOPMENTS:
• Announced partnership with a Fortune 500 national retailer for the development and
execution of low-sodium solutions across the retailer's extensive line of private branded
snack offerings. This will lead to placement of several of their snacks using MicroSalt®
in lieu of traditional salt, beginning with 800 stores in Q4 2023 and likely expanding
across more than 7,000 store locations thereafter.
• Executed agreement with supermarket chain, Giant Food of Maryland LLC, ("Giant")
one of the most respected food retailers in the mid-Atlantic United States, to carry
MicroSalt's new saltshakers in its 160 stores.
• Continued its successful sales expansion of both its SaltMe! crisps and MicroSalt
saltshakers with new placements in over 400 additional U.S. retail stores.
• Executed successful launch of its new Microsalt® shakers, placing the product in over
500 stores since Q4 2022.
• Executed an agreement with US Salt LLC ("US Salt") for the distribution and delivery
of MicroSalt's low-sodium solutions.
5
“OUR MICROSCOPIC SALT CRYSTAL TECHNOLOGY IS CREATING NEW
OPPORTUNITIES FOR CONSUMERS TO LOWER THEIR SODIUM INTAKE
WITHOUT SACRIFICING FLAVOR.”
Rick Guiney
CEO of MicroSalt Inc.
6
Lucyd’s vision is to Upgrade your eyewear® by
providing tech-enhanced eyewear that makes it
easier to stay connected to your digital life.
Lucyd
the world’s first smart
eyewear with ChatGPT.
introduced
As of 31 December 2023, Tekcapital owned
100% of Lucyd Ltd, and Lucyd Ltd owned
Innovative
~40% of NASDAQ quoted
Eyewear Inc.
Lucyd® Limited (“Lucyd”) is the developer of ChatGPT enabled smart eyewear under the
Lucyd®, Nautica®, Eddie Bauer® and Reebok® brands. Innovative Eyewear, Inc
(“Innovative Eyewear”), Lucyd’s ~40% owned U.S. operating subsidiary, was the first
Company to deliver prescription glasses with Bluetooth® technology in 2019. Their eyeglass
frames help you stay connected safely and conveniently, by enabling many common
smartphone tasks to be performed handsfree with Bluetooth® and voice assistants.
SOURCE: ¹https://www.ghsa.org/resources/news-releases/GHSA/Ped-Spotlight-Full-
Report22#:~:text=WASHINGTON%2C%20D.C.%20%E2%80%93%20Drivers%20struck%20and,Highway%20Safety%20Associatio
n%20(GHSA).
²https://www.essilorusa.com/newsroom/vision-impact-institute-releases-study-on-corrective-lens-wearers-in-the-u-s
7
INVESTMENT RATIONALE:
In 2022, the National Highway Traffic Safety Administration (NHTSA) estimates that 7,522
pedestrians died in traffic crashes on public roads, which is a historic high. Open ear audio found
in Lucyd smart glasses can help pedestrians maintain situational awareness whilst walking running
and cycling. According to the Vision Institute², approximately 75% of the adult population need
corrective lenses, and advancements in Bluetooth technology have enabled it to be incorporated
into traditional eyeglass form factors. This combination created a new type of eyewear with built-
in speakers, microphones and touch controls. Lucyd smart eyewear allows the wearer to forego
headphones and use their glasses to listen to audio content and talk to others and digital assistant.
Since the speakers are open-ear, Lucyd smart glasses enables the wearer to stay connected to their
digital life whilst maintaining situational and social awareness.
2023 DEVELOPMENTS:
Licensed sports culture brand, Reebok® for smart eyewear through an agreement
with Authentic Brands Group.
Launched Nautica Smart Eyewear Powered by Lucyd® and commenced go to market
efforts with assistance from ABG’s extensive distribution network.
Released Lucyd App, an iOS/Android app that enables voice interface for ChatGPT on their
smart eyewear.
Launched Lucyd Lyte 2.0, a major upgrade to its flagship Lucyd Lyte audio eyewear
platform that brings several advances to the company's core product, including:
- Four speaker array
-
-
- The introduction of Bluetooth 5.2 amongst other innovations introduced by the
Improved audio input
Improved battery life with 12 hours of playback
company.
Continued preparation for launches of its licensed brand products: Eddie Bauer and Reebok.
Filed a patent application for a software system that focuses on one or more smart devices,
which may include smart glasses that operate with chatbots such as ChatGPT. The invention
accomplishes this by using an innovative technique for choosing from and prioritizing data
that may be drawn simultaneously from several different chatbots or AI language models.
8
Innovative Eyewear has filed a patent on a key product innovation, flexible spring hinges
for smart eyewear, with the Company’s belief that it will enable each style to be worn by a
wider array of users and will also increase the durability of the frames by reducing stress
points on the temples caused by extended wear.
Continued its sales growth as exhibited by 77% increase in revenue in 2023 compared to
2022.
Guident Limited (“Guident”) has developed and deployed 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 the safety of autonomous vehicles.
Guident developed state of the art, first fully functional remote monitoring and control software to
improve the safety of autonomous vehicles and land-based delivery devices.
As at 31 December 2023, Tekcapital owned 100% of Guident Ltd, ~and 91% of Guident
Corp, its US operating subsidiary.
INVESTMENT RATIONALE:
Vehicles of all types are rapidly becoming electric and autonomous. Whilst Autonomous Vehicles
(“AVs”) are projected to be significantly safer than traditional vehicles, there will still be mishaps
and in many instances there will be no vehicle operator present to help resolve these problems.
Guident believes remote human interaction will be needed to address these mishaps. Guident’s
remote monitoring and control centre monitors vehicles and when necessary provide additional
support such as calling first responders, taking over control of the vehicle to move it out of harm’s
way and can provide real-time communication with passengers and pedestrians. Over time, Guident
believes remote monitoring centres will be required in most jurisdictions where AV’s operate.
9
In addition to safety, a key variable in affecting the adoption of electric vehicles is the travel range
between charges.
All commercial electric cars utilise regenerative braking to help extend the range by capturing the
heat energy from braking and utilising it to power the vehicle or help charge the battery.
Regenerative brakes work by reversing the electric motors that propel the vehicle. This works like
a generator and directs energy back into the electric system to help extend the range and over time
improve efficiency. Guident believes that in the next few years all electric vehicles will also have
regenerative shock absorbers as these are also “green” and will extend the range the vehicle can be
driven between charges. Guident’s regenerative shock absorbers have the potential to assist electric
vehicle manufacturers to improve the efficiency and range of their vehicles.
2023 DEVELOPMENTS:
Secured and fulfilled its first purchase order from Jacksonville Transportation Authority
(JTA) for JTA project to provide remote monitoring and control services.
Received Space Florida grant for a groundbreaking project under the Florida-Israel
Innovation Partnership program, together with its valued Israeli partner, NOVELSAT. This
integration of NOVELSAT's satellite-based space connectivity technologies and Guident's
human-in-the-loop AI technologies will provide the first LEO satellite back-up monitoring
and control of an autonomous vehicle with reliable and high-speed bi-directional
connectivity.
Executed letter of intent with Auve Tech OÜ ("Auve Tech") to provide remote monitoring
and control services for Auve Tech's autonomous vehicles. By combining Auve Tech's
advanced Level 4 autonomous vehicles with Guident's RMCC software, the two companies
will bring an enhanced level of safety to self-driving technology. Guident's patented
software provides human-in-the-loop supervision, adding an extra layer of security to Auve
Tech's new autonomous shuttle..
Received Notice of Allowance from USPTO for patent for "Systems and Methods for
Remote Monitoring of a Vehicle, Robot or Drone”, which reinforces its DNA of innovation,
it also significantly expands its patent portfolio in the secure and safe operation of
autonomous vehicles with the human-in-the-loop concept.
Additionally, Guident has announced progress with
their regenerative shock absorbers (RSA). Guident
has produced its first generation or prototype
regenerative shock absorbers and is currently testing
these new shocks with Tier-1 automotive companies.
This technology will enable EVs to increase their
range and have more available power for telemetric
connection with the RMCC. The goal of this
technology
to manufacture electromagnetic
regenerative shock absorbers with energy densities
that can recover a vehicle’s vibration energy which
is otherwise lost as heat, and in doing so extend their
range between charges. In addition, this unique
design utilising rotary mechanical motion rectifiers
to achieve better damping
can be
characteristics than existing shock absorbers. In a
significant step forward, Guident secured a paid
proof of concept agreement with a tier-1 tyre manufacturer for their regenerative shock
absorber. This collaboration resulted in successful tests and detailed reports regarding the
performance of the regenerative shock absorber. Subsequently, Guident incorporated a new
tuned
is
10
subsidiary, Revive Energy Solutions Ltd, to commercialise its regenerative shock absorber
technology. Guident believes that in the next few years all electric vehicles will have both
regenerative braking and regenerative shock absorbers to enhance range and comfort.
Belluscura plc (“Belluscura”) is a respiratory medical
Device company that has developed and launched
an improvedportable oxygen concentrator (POC)
to provide on-the-go supplemental O2. Belluscura 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.
Belluscura plc
10% ownership at
31 December 2023
www.belluscura.com
INVESTMENT RATIONALE:
Worldwide, approximately 300m individuals suffer from COPD (chronic obstructive pulmonary
disease). COPD is a progressive lung disease that includes emphysema and chronic bronchitis.
POC’s are also used to treat:
Interstitial lung disease (ILD): This is a group of lung diseases that cause scarring of the lungs.
Cystic fibrosis: This is a genetic disease that causes thick, sticky mucus to build up in the lungs,
making it hard to breathe.
Sleep Apnea: This is a sleep disorder that causes breathing to repeatedly stop and start.
Pulmonary hypertension: This is high blood pressure in the lungs.
Heart failure: This is a condition that makes it hard for the heart to pump blood effectively.
Many patients suffering from the above disorders 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, they must often replace their devices with greater capacity models as their disease
progresses. With Belluscura’s new patented device, users can swap out the filter cartridges to enable
higher capacity oxygen flow without having to buy a new device, like upgrading memory on a
laptop. The result is more affordable oxygen therapy which increases the number of people who
can avail themselves of these life-extending and life saving devices.
2023 DEVELOPMENTS:
Belluscura announced it received orders for 6,500 of its next-generation DISCOV-R
portable oxygen concentrator. This represents approximately US$15 million of potential
revenue to the Company, with initial production of the DISCOV-R expected to begin by the
end of this year.
Belluscura announced it has entered into an Exclusive License, Marketing and Distribution
Agreement ("Agreement") with its global manufacturing partner InnoMax Medical
Technology Ltd. Minimum cumulative royalties over the term of the Agreement will
therefore range from US$27.5m if the license is converted to non-exclusive from year 6 and
up to US$55m in cumulative royalties if the license remains exclusive for the entire term.
Signed a distribution agreement with McKesson Medical-Surgical, a division of McKesson.
McKesson delivers a third of all pharmaceuticals used in North America and operates the
fourth-largest pharmacy chain in North America.
Announced that Robert ("Bob") Fary has joined the Company as Senior Vice President of
Global Sales. Bob has thirty years of experience in the respiratory industry where he has
held leadership roles at major oxygen concentrator manufacturers and durable medical
equipment companies. During the past two decades, Bob's industry leading team was
11
directly responsible for or contributed to the sale of over one million portable oxygen
concentrators ("POCs"), generating revenues in excess of US$1 billion.
Announced its X-PLOR portable oxygen concentrator ("POC") is now marketed in the US
through GoodRx, Inc. www.goodrx.com
Raised total of GBP 7.1m through combination of convertible loan notes and new placings
CORPORATE FINANCIAL PERFORMANCE
Our investment objective is to achieve long-term growth of net assets and deliver returns on
invested capital through the commercialisation of university and other new discoveries that can
make a positive impact on people’s lives. In 2023 we had a productive year for long-term value
creation, setting the foundation for meaningful growth in 2024 as evidenced by the successful
floatation of Microsalt plc post year end. Our portfolio companies achieved significant milestones,
however due to unrealized reductions in the end of period quoted valuations of Lucyd and
Belluscura, our profitability, net assets and net assets per share were commensurately negatively
impacted.
• Net Assets US$47.9m (2022: US$57.8m)
• NAV per share US$0.27 (2022: US$0.38)
• Portfolio valuation US$41.1m (2022: US$54.9m)
• Total loss after tax: US$15.7m, resulting primarily from unrealised fair value reduction of
portfolio valuation US$14.2m (2022: loss of US$12.7m)
• Share placings totalling US$5m completed during the period (2022: US$2.5m)
Post end of period, using 20 May 2024 closing market prices, our estimated portfolio
valuation was approximately US$75m (appx. US$0.37 per share), recovering the entire fair
value losses of 2023 and exceeding the $55m valuation reported in 2022 by ~36%.
CORPORATE SERVICES ACTIVITY
In 2023 our corporate services revenue from Invention Evaluator and Vortechs Group
increased ~43%.
Tekcapital delivered over 290 Invention Evaluator (IE) reports, a significant increase from
the previous year. These reports help organizations worldwide evaluate the market potential
of their technologies, indicating the company's growing influence and expertise in this field.
12
Notably, Tekcapital expanded its client base to include industry giants such as Vale S.A.,
the world's largest producer of iron ore and nickel. Tekcapital also added well known
academic clients such as the University of Johannesburg, one of the largest, multi-campus,
residential universities in South Africa.
Vortechs, Tekcapital's executive search firm, secured more than 12 executive search
assignments in 2023, demonstrating substantial growth compared to the previous year.
Additionally, it expanded its list of academic clients to include prestigious institutions such
as the Massachusetts Institute of Technology (MIT), indicating the firm's increasing
reputation in talent acquisition within academia and beyond.
Tekcapital played a significant role in sponsoring the 'Innovation for Sustainable Water
USA-MEX' open innovation hub in collaboration with Grupo Rotoplas, the Tijuana
Development Council, and the United States-Mexico Foundation for Science. This initiative
aimed to promote sustainable water solutions, showcasing Tekcapital's commitment to
societal and environmental impact through innovation.
DR. CLIFFORD GROSS, EXECUTIVE CHAIRMAN SAID:
“The Group has made good progress during 2023. Our portfolio companies have demonstrated solid
business growth, and we believe they should achieve additional significant milestones by the end
of 2024.
Notably during the year, Innovative Eyewear Inc. launched the world’s first ChatGPT enabled
eyewear.
Key 2023 milestones included:
Guident signed re-seller agreements with both Auvetech a leading Estonia autonomous minibus
manufacturer and Adastec a leading AV software provider. Guident’s RMCC software will be
included in all Auvetech MiCa vehicles and as part of Adastec’s autonomous software stack for
future deployments.
Additionally, Guident has continued to improve and rigorously test its regenerative shock
absorbers. Numerous Tier-1 companies are evaluating the shocks for potential inclusion in their
electric vehicles.
We are also pleased to highlight Microsalt’s strong progress ending the year by growing its
revenues, signing up additional customers and launching its low sodium saltshakers in
approximately 400 supermarkets and engaging its advisory team for their AIM IPO which was
completed on 1 Feb 2024.
Our financial results were negatively impacted by the reduction in the observable, closing share
prices of both innovative Eyewear and Belluscura at the end of the period, which we believe were
in large measure the result of exogenous macro-economic and capital market factors.
We remain steadfast and excited about the commercial progress of our portfolio companies in 2023
and for their future prospects for the remainder of 2024. As per our mission and investment
objective, we believe that all of our key portfolio companies have the potential to make a positive
impact on the lives of the customers they serve, as well as produce meaningful returns on invested
capital for our shareholders over the long term.”
13
POST PERIOD END HIGHLIGHTS
Following Microsalt plc’s introduction of its low-sodium saltshakers in the United Kingdom, the
Company successfully completed its Initial Public Offering and commenced trading on the AIM
market of the London Stock Exchange on February 1st, 2024. Tekcapital holds a 77.24% interest
in MicroSalt after the IPO (at 1 February 2024), which at the listing price of 43p per ordinary share,
was valued at approximately £14.3m on Admission.
Also following our year end, Guident announced that it will integrate its industry-leading AV
remote monitoring, control, assistance, and passenger support services with the world's most
compact and flexible level 4 autonomous shuttle, MiCa from Auve Tech. By working together, the
groundbreaking MiCa shuttle will now incorporate Guident's teleoperation solution, further
enhancing its safety and Auve Tech's leading, self-driving technology. For each vehicle outfitted
with Guident's technology there will be a hardware fee and a recurring license fee.
On 15 May 2024 Microsalt has announced it has been granted an important patent protecting the IP
of its micron-sized salt. This particular patent, entitled Low Sodium Salt Composition, is focused
on how Microsalt’s low-sodium salt adheres to food particles in a different way than traditional
table salt. “We believe the grant of patent 11,992,034 is an important milestone for the Company
as it further strengthens our IP position in the global low sodium market,” said Rick Guiney, CEO
of Microsalt.
On 19 Feb 2024 Guident hosted a grand opening for the first U.S. commercial Remote Monitor and
Control Centre (depicted below) for enhancing AV safety.
14
Innovative Eyewear Inc announced a new partnership with Windsor Eyes, a leading eyewear
manufacturing and distribution firm. Over the last 50 years, Windsor has become a leading
manufacturer and supplier of fashion eyewear under the Bruno Magli, Sanctuary, Pier Martino,
Adolfo, Eyecroxx, as well as private label options. Windsor Eyes products are distributed
nationwide in leading optical chains and prominent optical shops. The partnership aims to forge a
robust collaboration between Innovative Eyewear's unique, cutting-edge smart eyewear products
and Windsor Eyes' well-established distribution network within the optical retail sector. Together,
Innovative and Windsor intend to work closely to ensure extensive distribution of smart eyewear
across the United States, targeting key large optical retail outlets.
Image courtesy of Innovative Eyewear, Inc.
15
Innovative Eyewear also announced a partnership with New Look Vision Group to distribute its
smart eyewear in Canada. New Look Vision Group is the largest optical group in the eye care
industry in Canada and has been rapidly expanding in the United States since its acquisition of
Edward Beiner in March 2020, its partnership with Black Optical in 2021, and the acquisition of
LOH in December 2021. New Look Vision Group has a network of 489 locations operating mainly
under the Iris, New Look Eyewear, Vogue Optical, Greiche & Scaff and Edward Beiner banners
and a laboratory facility using state-of-the-art technologies.
Innovative Eyewear Inc. also appointed Micah Richards as a brand ambassador. Micah is a former
England International footballer, turned successful broadcaster, currently working for Sky Sports,
CBS Sports and BBC Sport whilst he is also a co-host of "The Rest is Football" - a top ten UK
podcast.
16
PORTFOLIO REVIEW
PATENTED, FULL-FLAVORED, LOW-SODIUM SALT
The food industry is focused on developing and providing better-
for-you products that taste great and reduce sodium intake. The
reason for this is that excess sodium consumption contributes to
cardiovascular disease, a leading cause of premature death
globally. To address this problem, Microsalt has developed a
patented process for producing micron-sized salt crystals that
provide all of the flavour of salt with roughly half of the sodium
for topical food applications. Microsalt has developed what we
believe to be the world’s smallest edible salt crystals with its
patented Microsalt®. With Microsalt®, companies can make
full flavour snacks and prepared meals with the same saltiness as traditional foods yet with half of
the sodium. Microsalt® dissolve faster, is all natural, non-GMO, Kosher and doesn’t contain any
of the additives or salt substitutes found in other sodium reduction products.
The global Sodium Reduction Ingredients Market is estimated to be worth US$5.5 billion in 2022
with a CAGR of 5.8% between 2022 and 20321. Recently, Microsalt has secured two food brokers
and the leading U.S. natural food distributor for its product in the United States and Mexico.
During 2023, Microsalt made significant progress in expanding its sales newly launched Microsalt
shakers, which as of the date of this report have been on-boarded in several hundred supermarkets
in the U.S, while significant progress was also made on their B2B pipeline including onboarding of
two Fortunate 500 customers.
“I am absolutely delighted to be
working with Microsalt to show how
a true low-sodium salt can produce
the same taste while providing
significant benefits to health. As
a chef, salt is the most important
ingredient, and this product is game
changing.”
Jack Stein
Chef Director for Rick Stein
&Microsalt’s brand ambassador
1 https://www.futuremarketinsights.com/reports/sodium-reduction-ingredient-market
²https://resolvetosavelives.org/about/press/fda-4-year-delay-in-finalizing-sodium-reduction-targets-may-cause-265-
000-deaths-over-14-years-study-says
17
PORTFOLIO REVIEW
INNOVATIVE EYEWEAR INC.
THE CLEAR CHOICE FOR SMART EYEWEAR
Lucyd and its subsidiary, Innovative Eyewear Inc. 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
and ChatGPT.
making
to music,
assistants
listening
voice
using
calls,
and
Sitting at the intersection of Hearables, Digital Assistants and Online Eyewear markets, Lucyd is
positioned to potentially become a leading player in smart eyewear by offering ChatGPT enabled,
designer smart frames with Rx lenses at an unbeatable price.
Innovative Eyewear, Inc. owns the exclusive rights to the Lucyd® brand and has worldwide
multi-year licenses to the Nautica, Eddie Bauer and Reebok brands for smart eyewear, from
Authentic Brands Group.
Photos courtesy of Innovative Eyewear, Inc.
In January 2024, Innovative Eyewear launched the Nautica® Powered by Lucyd smart eyewear
collection in eight different styles, along with various branded accessories including a power brick,
cleaning cloth, and a slipcase adorned with the iconic Nautica sail logo.
Their current product offering consists of 29 different models, which offers a similar amount of
style variety as many traditional eyewear collections. All styles are each available with 80+ different
lens types, resulting in thousands of variations of products currently available. The Company
currently has over 100 licensed patents and applications.
All of Lucyd’s smart eyewear enables connection to the powerful ChatGPT, using a novel
ergonomic voice interface. The Company believes the inclusion of this powerful feature with our
eyewear will significantly enhance user adoption of Lucyd frames.
18
BELLUSCURA: DELIVERING INNOVATIVE OXYGEN TREATMENT DEVICES
The medical portable O2 market is expected to
grow from U$2.2bn to US$2.4bn by 2024¹
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
their X-PLO2R™ portable oxygen
concentrator in March 2021 and
completed its IPO on the AIM Market in
May 2021. In 2022 it ramped up
manufacturing and sales of its patented,
portable oxygen concentrator.
We believe their innovative device will be
helpful in addressing COVID-related respiratory
problems as well as COPD.
Tekcapital ownership
~10%
Belluscura has field or licensed 30 patents to-date, covering devices and systems for treating
people suffering from acute respiratory distress caused by COPD.
Belluscura announced it received orders for 6,500 of its next-generation DISCOV-R
portable oxygen concentrator. This would represent approximately US$15 million of
potential revenue for them.
Belluscura announced it has entered into an Exclusive License, Marketing and Distribution
Agreement ("Agreement") with its global manufacturing partner InnoMax Medical
Technology Ltd. Minimum cumulative royalties over the term of the Agreement will
therefore range from US$27.5m if the license is converted to non-exclusive from year 6 and
up to US$55m in cumulative royalties if the license remains exclusive for the entire term.
19
GUIDENT: SOFTWARE PLATFORM FOR REMOTE MONITORING AND CONTROL
OF AUTONOMOUS VEHICLES AND DELIVERY DEVICES
With its proprietary software, a world-class team, and portfolio of eight 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.
Guident has built and operates its first Remote Monitoring and Control Centre for ground-based
delivery devices and AVs in Boca Raton, 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
to enable the commercial introduction of driverless AVs in Florida and is likely to be required in
other jurisdictions.
Guident has progressed with its B2B marketing program and seeks to develop partnerships with
smart city operators, vehicle original equipment manufacturers and fleet operators to provide
remote tele-monitoring and control centres for autonomous vehicles and fleet operatorsIn 2023 they
successfully deployed their first contract to provide RMCC services to the Jacksonville
Transportation Authority and the Company expects more deployments in 2024 and beyond.
According to Research and Markets2, the global market for autonomous last mile delivery is
projected to reach US$5.9 billion by 2030 at CAGR of 23.5%.
Guident also offers an additional patented technology enabling OEMs to increase the range of their
electric vehicles with 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. Guident has designed and manufactured the first generation of
their regenerative shocks and is currently testing them with several Tier-1 automotive companies.
2 https://www.businesswire.com/news/home/20230329005522/en/Global-Autonomous-Last-Mile-Delivery-Market-Report-2023-Sector-to-
Reach-5.9-Billion-by-2030-at-a-CAGR-of-23.5---ResearchAndMarkets.com
20
STRATEGIC REPORT
CHAIRMAN’S SUMMARY
Tekcapital plc and subsidiaries (‘Tekcapital’) brings new scientific innovations from lab to market
to enhance safety and health and improve the quality of life of the customers we serve. In the past
year, thankfully, all of our portfolio companies have made significant advancements. Belluscura
expanded production, distribution and sales of its portable O2 concentrator, Innovative Eyewear
launched the first ChatGPT enabled smart eyewear, and had record annual sales growth MicroSalt
on-boarded two Fortune 500 B2B clients to use MicroSalt in their products and have expanded sales
of their saltshakers to >400 retail locations throughout the US. Additionally, Guident has begun
providing RMCC services to its first customer, the Jacksonville Transportation Authority, for its
remote monitoring and control service and has built and continues to test their regenerative shock
absorbers with Tier 1 companies for use with electric vehicles.
As a result, consistent with our mission, Tekcapital’s portfolio companies are making a positive
impact on the lives of the customers they serve.
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 2024. The Board is confident that continued
investment in our non-quoted portfolio companies remains the right approach for potential long-
term value creation. Additionally, we are currently exploring adding a fifth portfolio company
focused on the commercialisation of generative artificial intelligence.
Whilst Tekcapital Group is progressing 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, and that material changes
in the value of our portfolio companies can have a significant impact on our NAV, operating result
and future prospects.
KEY PORTFOLIO COMPANIES
Leveraging our proprietary global university network, we provide services to universities and
companies to help them assess and commercialise their innovations. Utilising these services, we
have built a valuable group of portfolio companies to commercialise select intellectual properties
that if successfully commercialised could make a positive impact on people’s lives. Our model is
simple, we seek to couple commercialisation ready, compelling university IP with visionary
management. We then invest our own capital and introduce exogenous sources of capital to help
these companies grow. When we realise exits through trade sales or IPOs, the Group’s goal is to
distribute a portion of the proceeds as a special dividend to our shareholders.
Our current portfolio companies were all started by Tekcapital. Whilst few in number, they are
diverse and span multiple sectors including food tech, autonomous vehicles, smart eyewear and
respiratory medical devices. All of our portfolio companies have in our view, compelling
intellectual properties, capable and inspired management and address $Billion+, fast growing
markets. The entire team at Tekcapital is committed to helping these companies grow to achieve
their full potential and value.
21
Microsalt is a food tech business that owns a patented process to produce micron sized salt.
Microsalt has made significant progress in 2023, including receipt of purchase orders from two
Fortune 500 customers for Mirosalt as an ingredient. In addition to its focus on B2B sales of
MicroSalt® to snack food companies where the Company has made substantial progress, Microsalt
has launched its own snack food brand called SaltMe!™. Additionally, MicroSalt has launched its
low sodium salt in saltshakers during 2023. Approximately 400 supermarkets now carry theses
better-for-you saltshakers.
Tekcapital owed approximately 87% of MicroSalt Ltd as of 31 December 2023.
Guident Ltd seeks to improve the safety and efficiency of autonomous vehicles and land-based
delivery drones with a SaaS software platform that enables the remote monitoring and
control of these vehicles to serve rapidly resolve the situation.
In 2023, Guident Secured and fulfilled its first purchase order from Jacksonville Transportation
Authority (JTA) for JTA a project to provide remote monitoring and control services. The company
also received Space Florida grant for a groundbreaking project under the Florida-Israel Innovation
Partnership program, together with its valued Israeli partner, NOVELSAT. This integration of
NOVELSAT's satellite-based space connectivity technologies and Guident's human-in-the-loop AI
technologies will provide the first satellite back-up monitoring and control of an autonomous
vehicle with reliable and high-speed bi-directional connectivity.
In a significant step forward, Guident secured a paid proof of concept agreement with a tier-1 tyre
manufacturer for their regenerative shock absorber. This collaboration resulted in successful tests
and detailed reports regarding the performance of the regenerative shock absorber. Subsequently,
Guident incorporated a new subsidiary, Revive Energy Solutions Ltd, to commercialise its
regenerative shock absorber technology. Guident believes that in the next few years all electric
vehicles will have both regenerative braking and regenerative shock absorbers to enhance range
and comfort.
Tekcapital owned 100% of Guident Ltd and 90% of its U.S. subsidiary Guident Corporation as of
31 December 2023.
Lucyd has built a smart eyewear business that combines technology with traditional eyewear.
In 2023, the Company licensed sports culture brand, Reebok® for smart eyewear through an
agreement with Authentic Brands Group. The Company demonstrated quarterly sales growth in
2023 while also continuing preparation for launch of its remaining branded products including
Nautica and Eddie Bauer. In another milestone achievement, the Company released Lucyd App, an
iOS/Android app that enables voice interface for ChatGPT on their smart eyewear.
As at 31 December 2023, Tekcapital owns, via it’s 100% interest in Lucyd Limited, 40% of the
share capital of Innovative Eyewear, Inc. Innovative Eyewear shares are listed on the NASDAQ
under ticker: LUCY.
Belluscura has developed and sells an improved portable oxygen concentrator to provide
on-the-go supplemental O2 (oxygen), 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 adding memory on a laptop, rather than having to replace an expensive
22
medical device. These cost savings will be beneficial to patients and insurance companies and
should help make portable respiratory devices more affordable which is core to Belluscura’s
mission. Belluscura filed for and received clearance from the Hong Kong Department of Health has
received approval for the distribution of the X-PLOR® portable oxygen concentrators. China has
almost 100 million people living with chronic obstructive pulmonary disease (COPD) and accounts
for almost 25% of all COPD cases globally3.
Financial performance
• Net Assets US$47.89m (2022: US$57.8m)
• NAV per share US$0.27 (2022: US$0.38)
• Portfolio valuation US$41.1m (2022: US$54.9m)
• Total loss after tax: US$15.7m, resulting primarily from net unrealised fair value reduction
of US$14.23m (2022: loss of US$12.7m).
Fundraisings during the period
In 2023 we closed share placements totaling US$ 5.2m. (2022: US$ 2.5m), excluding expenses.
Proceeds were used primarily to accelerate the commercial progress and IPO readiness of Microsalt
and fuel the further fabrication and testing of Guident’s regenerative shock absorbers coupled with
building Guident’s new remote monitoring and control centre in Boca Raton, Florida.
PRINCIPAL RISKS AND UNCERTAINTIES
The specific financial risks are discussed in the notes to the financial statements. Other risks
are as follows:
We believe the principal financial risks and benefits of the business relate to the value and
performance of the Group’s portfolio companies. We believe that the fair value of each portfolio
Company is a time dependent valuation that may become impaired if the business does not achieve
it milestones, growth trajectory, product development goals, market acceptance, capital raises or
other key performance metrics. Individually and as a group our portfolio companies have a material
impact on our financial performance.
• The risk of individual portfolio company negative performance, in the future, may be
ameliorated, as our portfolio becomes more mature, and when our portfolio companies
develop significant capital reserves, predictable revenues and have demonstrated significant
increases in value. Management’s strategy of early detection and remediation includes
continuous monitoring of sales performance, expenses and capital requirements as well as
ongoing assistance in strategic planning and fundraising activities, amongst others.
• The principal operational risk of the business is management’s ability to assist our portfolio
companies in achieving their goals and ultimate exits whilst having a small team and an
additional goal of increasing our service revenues. Management’s strategy of early detection
and remediation includes continuous monitoring of sales performance and expenses,
intellectual property position and strategic direction, as well as ongoing assistance in
executive and board recruitment, IP acquisition and fundraising activities, amongst others.
3 https://www.who.int/news-room/feature-stories/detail/advancing-copd-care-in-china-through-a-comprehensive-
approach#:~:text=China%20has%20almost%20100%20million,of%20all%20COPD%20cases%20globally.
23
• The current barbaric and senseless Russian invasion of Ukraine, as well as Israel/Gaza
conflict over time may contribute to inflation of energy costs and supply chain disruption
which could increase the cost and complexity of sourcing components for some of our
portfolio companies. Additionally, due to the conflict and the uncertainty it has introduced
to the capital markets, whilst large cap stocks have progressed well, small cap stocks
worldwide are still feeling the pinch, and this can be seen in Belluscura’s and Innovative
Eyewear’s share prices at the end of the period.
We are grateful for the patience and support of our shareholders. We are also sincerely appreciative
of our dedicated, creative and incredibly hardworking teams at portfolio companies and our
corporate team, without whom, none of the results reported herein would be possible.
SECTION 172 (1) STATEMENT
Our Board (please also see Board of Directors page for information on Directors) ensures that all
decisions are taken for the long term, and collectively and individually aims to always uphold the
highest standard of conduct. Similarly, our Board acknowledges that the business can only grow
and prosper over the long-term if it understands and respects the views and needs of the Company’s
investors, customers, employees, suppliers and other stakeholders to whom we are accountable, as
well as the environment we operate within. When making decisions, each director ensures that they
act in the way that would most likely promote the Company’s success for the benefit of its members
as a whole, and in doing so have regard (amongst other matters) to the following matters:
a) The likely consequences of any decision in the long term
In line with our strategy, Tekcapital plc’s purpose is to find and invest in exciting new discoveries
from our global university network that can enhance people’s lives. We believe that when you
couple commercialisation ready, compelling university IP with strong senior management, vibrant
companies will likely emerge. When we realise exits the Group’s goal is to distribute a portion of
the proceeds as a special dividend to our shareholders.
With this in mind, we apply the same high standards of responsible stewardship to our businesses
as if we were to own them forever, and it is this approach to decision making that requires the
Directors to have regard to the likely consequences of decisions in the long-term.
The long term decision making and strategy also considers consequences of climate change, such
as changes in extreme and unpredictable weather. The Board considers the potential impacts of the
climate change related disruptions on business operations of Tekcapital Group and its portfolio
companies as they relate to supply chain, customer demand and business operations as these risks
may affect future investment decisions.
b) The interests of the Group’s employees
The Board strives to maintain and develop a culture where everyone feels valued and included. The
Board also considers the health, safety and wellbeing of all Tekcapital employees in every day
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.
24
c) The need to foster the Group's business relationships with suppliers, customers and
others
The Board ensures that the Group’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.
d) The impact of the Group’s operations on the community and the environment
In their decision making, the Directors need to have regard 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 Group’s investments focus on improving quality of life and
attempt to solve significant health and safety problems facing communities. The Board also
considers impact of Group’s investment decisions on the environment as part of screening process.
e) The desirability of the Group maintaining a reputation for high standards of business
conduct
The Board recognises that culture, values, and standards are key contributors to how the Group
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 Group’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 behaviour with
regards to the activities of the Directors, the Group’s employees and others associated with the
Group.
f) The need to act fairly as between members of the Group
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 Group,
holding approximately 6% of the register, together putting them in the top 3 shareholders of the
Group. On this basis the Board feels that the executive Directors are fully aligned with shareholders.
g) MicroSalt Ltd (‘Microsalt’) listing
As at 31 December 2023, we had initiated the process for listing of Microsalt Ltd’s shares to
enhance its ability to raise capital and compete effectively in the sodium reduction market. The
listing, if successful, will enhance the Microsalt’s ability to recruit experienced managers by being
able to offer associates stock options grants with a near-term path towards monetisation.
h) Fundraising activities
During the course of the year, Tekcapital plc consummated two fundraises for dual reason of
continued investment in our portfolio companies and to increase our available working capital. The
former reason is consistent with board policies mentioned in our current report.
We are enthusiastic about the development of Tekcapital’s portfolio companies, their performance
to-date and their prospects to significantly expand in 2024. The Board is confident that continued
investment in our portfolio companies remains the right approach for potential long-term value
creation. Additionally, we are currently exploring early-stage venture funding for Guident to
accelerate growth further.
25
STRATEGIC REPORT: FINANCIAL REVIEW
& KEY PERFORMANCE INDICATORS
THE KEY PERFORMANCE INDICATORS (KPIs) FOR THE GROUP
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
FAIR VALUE OF
THE PORTFOLIO
DESCRIPTION
Updated value of portfolio companies using
costs, independent valuations or observed
third party investments
2023
$41.1m
2022
$54.9m
TOTAL INCOME Total income including revenue from
($13.0m) ($10.0m)
(LOSS)/PROFIT
NET ASSETS PER
SHARE
services, fair value gains, and other income
After tax (loss)/profit
Total assets minus total liabilities per share
($15.7m) ($12.7m)
$0.27
$0.38
Key Performance Indicators showed slight deterioration in 2023, with vast majority of the changes
attributable to capital market fluctuations in the price of Innovative Eyewear and Belluscura
publicly listed shares. The Group’s cash position at the end of the period is US$0.6m (2022:
US$0.6m) with modest liabilities as costs have been settled without delay using available funds and
post period fundraise of GBP 2m completed in February 2024. The Group had no debt as of 31
December 2023 (2022: US$nil).
Directors do not believe there are any material environmental issues that need to be reflected in
our KPIs for 2023.
The Strategic Report was approved by the Board of Directors on 21 May 2024.
Clifford M. Gross, Ph.D.
Chairman and CEO
21 May 2024
26
BOARD OF DIRECTORS
Cliff Gross is a successful executive with more than 25
years of leadership experience in academia and business. He
is passionate about commercialization 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, Microsalt, 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.
He received his Ph.D. from New York University and an executive MBA from Oxford University.
Robert Miller 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. Robert began his
scientific career as a medical physicist at the 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 recently served as Director of Radiation Oncology at the University of Tennessee
in Knoxville, Tennessee.
27
The Rt Hon Lord Willetts FRS is Chair of the UK Space
Agency's Board, 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 Ditchley
Foundation,
the British Science
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. One of his books ‘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
Louis Castro has over 30 years’ experience in investment
banking and broking both in the UK and overseas. He is
currently Executive Chairman of Orosur Mining Inc, an
AIM and TSXVlisted exploration 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.
28
DIRECTORS’ REPORT FOR THE YEAR ENDED 31
DECEMBER 2023
PRINCIPAL ACTIVITIES
The principal activity of the Group and the parent Company is that of an investment entity.
RESULTS AND DIVIDENDS
The results for the period are set out in the consolidated statement of comprehensive income on
page 45. No dividend was declared or paid during the period ended 31 December 2023 (2022: $nil).
DIRECTORS
The following Directors held office during the period:
Clifford M Gross, Ph.D.
Robert Miller, M.D.
Louis Castro, FCA
The RT Hon Lord David Willetts FRS
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the financial statements in accordance with applicable
laws and regulations.
Under that law the Directors are required to prepare the Group financial statements in accordance
with International Financial Reporting Standards as adopted in the United Kingdom (“UK adopted
IFRS”) and have also chosen to prepare the Company financial statements in accordance with the
United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 101 Reduced Disclosure Framework, and applicable law). 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 Parent Company and of
their profit or loss for that period.
.In preparing those financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgments and estimates that are reasonable;
state whether applicable accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show
and explain the Group’s and the Company’s transactions and disclose with reasonable accuracy at
any time the financial position of the Group and the Company and to enable them to ensure that the
financial statements comply with the Companies Act 2006. The Directors are also responsible for
safeguarding the assets of the Group and the Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
29
DIRECTORS’ REPORT FOR THE YEAR ENDED 31
DECEMBER 2023
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 Group financial statements, prepared in accordance with UK-adopted IFRS, give a true
and fair view of the assets, liabilities, financial position and profit (or loss) of the Group;
the Company financial statements, which have been prepared in accordance with United
Kingdom Accounting Standards, comprising FRS 101 Reduced Disclosure Framework,
give a true and fair view of the Company’s assets, liabilities and financial position of the
Company; and
the chairman’s statement contained in the annual financial statements includes a fair review
of the development and performance of the business and the position of the Group and
Company, together with a description of the principal risks and uncertainties that they face.
The Directors are responsible for the maintenance and integrity of the corporate and financial
information included on the Group’s website www.tekcapital.com. Legislation in the United
Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
GOING CONCERN
The Group meets its day-to-day working capital requirements through its service offerings, cash at
bank, monies raised in follow-on offerings and realisation of its investments. The Group’s forecasts
and projections indicate that the Group has sufficient cash reserves to operate within the level of its
current facilities.
The Group has access to equity markets if it seeks additional funds. At the time of approving the
accounts after making enquiries, the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable future.
See Note 2.1.1 for additional information on Going Concern.
FUTURE DEVELOPMENTS
No changes in the nature of the business is expected in the foreseeable future.
Information has been included in the strategic report in relation to disclosures under S414C(11) of
the Companies Act 2006.
AUDIT COMMITTEE REPORT
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. The audit committee met 3 times during the period.
30
DIRECTORS’ REPORT FOR THE YEAR ENDED
31 DECEMBER 2023
DIRECTORS’ EMOLUMENTS
Clifford M Gross
Robert Miller
Louis Castro
Lord David Willetts
Salary &
fees
US $
254,096
23,261
44,779
36,694
Benefits
in kind
US $
27,846
-
-
-
358,830
27,846
Bonus
US $
-
-
-
-
-
2023
Total
US $
281,942
23,261
44,779
36,694
2022
Total
US $
530,722
23,261
44,804
36,714
386,676
635,501
The Director’s proportion of the share option expense was US$1,362 (2022: US$62,747). The
Group did not make any contributions to a pension scheme in the year ended 31 December 2023
(2022: Nil). The Directors’ beneficial interests in shares is set out below:
2023
2022
2023
2022
Clifford M Gross
Lord David Willetts
Robert Miller
No of Shares
8,657,500
-
2,664
No of Shares No of Options No of Options
3,000,000
3,000,000
8,657,500
-
2,664
200,000
200,000
200,000
200,000
Please note the above figure for Clifford M Gross does not include 100,000 shares held by both of
Dr. Gross’s adult children who are not considered a PCA as defined in the Article 3(1)(26) of the
UK Market Abuse Regulation.
The details of the options held by each director at 31 December 2023 are as follows:
Clifford M Gross
Robert Miller
Lord David
Willetts
No of
Options
3,000,000
100,000
100,000
Grant
Exercise
Price
Date
£0.12 27-Aug-20
£0.081 30-Aug-19
16-Jun-21
£0.19
Date from which
Life
exercisable
Special Conditions* 5 Years
Special Conditions** 5 Years
Special Conditions** 5 Years
100,000
£0.0525
6-Jan-20
Special Conditions** 5 Years
100,000
0.19
16-Jun-21
Special Conditions** 5 Years
31
DIRECTORS’ REPORT FOR THE YEAR ENDED
31 DECEMBER 2023
DIRECTORS’ EMOLUMENTS (CONTINUED)
* The options vest in three equal annual instalments from the date of grant and there is a special
condition which means the options will vest when the closing price for a share has been traded at
more than 50 pence (sterling) for ten consecutive trading days.
** The options shall vest when the net asset value, as stated in the annual consolidated accounts,
meets, or exceeds USD$20.53m during the 36 months after the grant date. The threshold shall be
re-tested when each set of accounts published during the 36 months are finalised.
An additional 525,000 options were held by Harrison Gross, family member of Dr. Clifford Gross.
Total of key management personnel compensation including short term benefits and share based
payments is disclosed in Note 8 of the accounts below.
DIRECTORS’ INDEMNITY ARRANGEMENTS
The Group has made qualifying third-party indemnity provisions for the benefit of the Directors,
which were made during the period and remain in force at the date of this report.
The Group has purchased and maintained throughout the period Directors & Officers liability
insurance in respect of itself and its Directors.
PRINCIPAL RISKS & UNCERTAINTIES
Please refer to strategic report.
RESEARCH & DEVELOPMENT ACTIVITIES
The Group conducted research and development activities pertinent to incorporation of Generative
AI technology to Invention Evaluator and Vortechs services.
POST BALANCE SHEET EVENTS
For further details, please refer to note 26 in the notes to the accounts. Information has been included
in the strategic report under S414C(11).
For financial instruments risks, please refer to Note 3.1 of the Notes to the Financial Statements.
32
DIRECTORS’ REPORT FOR THE YEAR ENDED 31
DECEMBER 2023 ON CORPORATE
GOVERNANCE
The Tekcapital board is committed to maintaining high standards of corporate governance. In
accordance with AIM Rule 26, AIM quoted companies are required to adopt and give details of the
corporate governance code which they have adopted and to show how they are following it. The
board has adopted the Quoted Companies Alliance’s (QCA) Corporate Governance Code for small
and mid-size quoted companies (the “QCA Code”).
Of the recognized codes generally adhered to by AIM companies, the QCA Code has been drafted
with smaller businesses in mind, with a pragmatic and principles-based approach. It was therefore
deemed by the board to be the most suitable.
Solid corporate governance is the foundation on which the business is managed, and this is
supported by the range of talents of the directors. Biographies of the directors appear on page 27
and demonstrate a range of experience and caliber to bring the right level of independent judgment
to Tekcapital’s business. Ensuring financial strength alongside the growth of portfolio businesses
are key guiding principles, supported by an effort to ensure solid communication with shareholders.
The chairman is responsible for leading the board and for its overall effectiveness in directing the
group. They ensure that the board implements, maintains and communicates effective corporate
governance processes and promotes a culture of openness and debate designed to foster a positive
governance culture throughout the group.
The board is responsible for the group’s system of internal control and for reviewing its
effectiveness. Such a system can only provide reasonable, but not absolute, assurance against
material misstatement or loss. The board believes that the group has internal control systems in
place appropriate to the size and nature of its business. The board is satisfied that the scale of the
group’s activities does not warrant the establishment of an internal audit function.
The board is also responsible for identifying the major business risks faced by the group and for
determining the appropriate course of action to manage those risks. Formal meetings are held
quarterly to review strategy, management and performance of the group, with additional meetings
between those dates convened as necessary. During 2023, there were 6 Board meetings. The QCA
Code identifies ten principles that focus on the pursuit of medium- to long-term value for
shareholders without stifling entrepreneurial spirit. Tekcapital’s adoption of the QCA principles is
summarized in the table below. Further details are made available on our website at
https://www.tekcapital.com/investors/#section-ecc78d7-5.
No
1
QCA principle
Establish a strategy and
business model which
promote long-term value for
shareholders
Tekcapital adoption
Tekcapital’s mission is to transform university
discoveries into valuable products. Our investment
objective is to achieve long-term growth of net
assets and returns on invested capital through the
commercialisation of university discoveries that can
make a positive impact on people’s lives. We believe
the combination of these factors will maximize long-
term value for shareholders.
33
2
3
4
Seek to understand and meet
shareholder needs and
expectations
Take into account wider
stakeholder and social
responsibilities and their
implications for long-term
success
Embed effective risk
management, considering
both opportunities and
threats, throughout the
organization
5
Maintain the board as a well-
functioning, balanced team
led by the chair
The Board also considers long term impact of
climate change and related violent climate events’
impact on different business verticals during
investment decision process.
The Board also considers factors such as impact of
supply chain, manufacturing, CO2 emission, health
implications of each potential investee’s
product/service on the environment and society as a
whole as part of investment screening process.
The board engages with shareholders and the
broader investment community via a variety of
channels and activities including the annual general
meeting, updates to shareholders via reporting and
the regulatory news service, and institutional
presentations. The Chairman and CEO are the
primary contacts for investor interaction alongside
SP Angel.
Tekcapital’s culture is very open and this includes
reaching out and seeking feedback and insights from
our various stakeholders. In addition to the investor
outreach described above, key practical elements of
this philosophy for other stakeholders include having
a flat organization with few tiers of management,
meeting regularly; all-hands communications via
web-meetings; engagement with portfolio companies
through regular meetings, satisfaction surveys.
The board is responsible for identifying the major
business risks faced by the group and for
determining the appropriate course of action to
manage those risks. The board has adopted a
framework for the effective identification,
assessment, and management of risks to the
achievement of corporate objectives. The risks that
the board consider to be principal risks to the
group’s business and how they are mitigated are set
out on page 23 of the Strategic Report.
The QCA Code requires that boards have an
appropriate balance between executive and non-
executive directors and that each board should have
at least two independent directors. The board is
made up of one executive director and three non-
executive directors. The non-executive directors are
mature, experienced and independent persons who
have each succeeded in their own businesses and are
not dependent upon income from the group, and they
include: Louis Castro, FCA (attend 6 Board
34
6
Ensure that between them the
directors have the necessary
up-to-date experience, skills
and capabilities
meetings during 2023), Lt Hon Lord David Willets
(4) and Robert Miller (5). They have developed a
strong and detailed understanding of the business,
and are prepared and able to intervene and challenge
the executive director. Clifford Gross attended 6
Board of Directors meetings in 2023.
Details of the background and experience of the
directors of the Company are set out on page 27 of
this report. These demonstrate that our team
collectively has the necessary skills and experiences,
as well as the required caliber, to carry out the
group’s strategy and business model effectively. The
non-executive directors comprise an investment
specialist, a professor and pharmaceuticals specialist,
and a former minister for universities and science.
All three have experience of working in a public
Company environment. Each Director maintains his
skillset by participating in industry events, online
trainings as well as experience on other boards seats
they occupy.
7
8
9
Evaluate board performance
based on clear and relevant
objectives, seeking
continuous improvement
A board self-evaluation process led by the chairman
takes place every three years, using a QCA-
sponsored questionnaire and process. Low scoring or
divergent scoring responses are discussed, with gaps
and actions for improvement identified.
Promote a corporate culture
that is based on ethical
values and behaviours
Tekcapital’s core values statement and guiding
principles, developed by the extended management
team, support the group’s culture with a strong
footing in ethical values. These are reinforced in the
staff handbook and the staff appraisal and
development process, which formally embeds
cultural and ethical considerations as part of each
employee’s self-evaluation.
Maintain governance
structures and processes that
are fit for purpose and
support good decision-
making by the board
Formal board meetings are held quarterly to review
strategy, management and performance of the group,
with additional meetings between those dates
convened as necessary. We have two board
committees, the Audit Committee and the
Remuneration Committee.
10
Communicate how the
Company is governed and is
performing by maintaining a
dialog with shareholders and
other relevant stakeholders
The group’s approach to investor and shareholder
engagement is described under Principle 2 above.
Annual reports, Annual General Meeting notices,
regulatory announcements, trading updates and other
governance-related are available from the group’s
website.
35
Directors’ Remuneration report
The Board has delegated to its Remuneration Committee, chaired by 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. The remuneration
committee meets at least 2 times during the calendar year.
INDEPENDENT AUDITORS
MHA were appointed as auditor to the Group and the Company and in accordance with section 485
of the Companies Act 2006. Following a rebranding exercise on 15 May 2023 the trading name of
the company’s independent auditor changed from MHA MacIntyre Hudson to MHA. A resolution
to reappoint MHA as independent auditor will be proposed at the next Annual 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
21 May 2024
36
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF TEKCAPITAL PLC
For the purpose of this report, the terms “we” and “our” denote MHA in relation to UK legal,
professional and regulatory responsibilities and reporting obligations to the members of Tekcapital
plc. For the purposes of the table on page 39 that sets out the key audit matter and how our audit
addressed the key audit matter, the terms “we” and “our” refer to MHA. The Group financial
statements, as defined below, consolidate the accounts of Tekcapital plc and its subsidiaries (the
“Group”). The “Parent Company” is defined as Tekcapital plc, as an individual entity. The relevant
legislation governing the Company is the United Kingdom Companies Act 2006 (“Companies Act
2006”).
Opinion
We have audited the financial statements of Tekcapital plc for the year ended 31 December 2023
which comprise:
the Consolidated Statement of Comprehensive Income
the Consolidated Statement of Financial Position
the Consolidated Statement of Changes in Equity
the Consolidated Statement of Cash Flows
Notes to the consolidated financial statements, including significant accounting policies
Notes to the company financial statements, including significant accounting policies.
the Company Statement of Financial Position
the Company Statement of Changes in Equity and
The financial reporting framework that has been applied in the preparation of the Group financial
statements is applicable law and UK adopted International Financial Reporting Standards. The
financial reporting framework that has been applied in the preparation of the parent company
financial statements is applicable law and United Kingdom Accounting Standards, including
Financial Reporting Standard 101 Reduced 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 31 December 2023 and of the Group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with UK adopted
International Financial Reporting Standards;
the parent company financial statements have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report. We are independent
37
of the Group 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 ethical responsibilities in accordance with those 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
In auditing the financial statements, we have concluded that the Directors' use of the going basis of
accounting in the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and the Parent Company’s ability to
continue to adopt the going concern basis of accounting included:
The consideration of inherent risks to the group and parent company’s operations and
specifically its business model and the evaluation of how those risks might impact on the
Group and Parent Company’s available financial resources.
Evaluating the directors’ assessment of the group’s ability to continue as a going concern,
including an examination of cash flow forecasts, challenging the underlying data and key
assumptions in those forecasts, being the level of sales, operating expenses and planned
funding for investments, used to make the assessment and comparing these to historical
performance and post year-end information.
Examining management’s budgets and forecasts and their basis of preparation, including
review and assessment of the model’s appropriateness, mechanical accuracy and the
reasonableness of assumptions included within, including sensitivity analysis on key cash
changes from movements in key assumptions.
Consideration of availability of funds (including fund-raising post year-end) required to
settle obligations, as they fall due, during the going concern review period. Assessing the
reasonableness and practicality of the mitigation measures identified by management in
their conservative case scenario and considered by them in arriving at their conclusions
about the existence of any uncertainties in respect of going concern.
Additionally, we reviewed and challenged management’s budgets and forecasts to assess
the reasonableness of the economic assumptions in light of the impact of the current macro-
economic environment, including impending elections in the UK & US, and the effects on
the group’s solvency and liquidity position.
Based on the work we have performed, we have not identified any material uncertainties relating
to events or conditions that, individually or collectively, may cast significant doubt on the Group’s
and Parent Company’s ability to continue as a going concern for a period of at least twelve months
from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
38
Overview of our audit approach
Scope
Our audit was scoped by obtaining an understanding of the Group,
including the Parent Company, and its environment, including the
Group’s system of internal control, and assessing the risks of material
misstatement in the financial statements. We also addressed the risk of
management override of internal controls, including assessing whether
there was evidence of bias by the directors that may have represented a
risk of material misstatement.
Materiality
Group
2023
$400k
Parent Company
$200k
2022
$420k
$188k
0.8% of total assets (2022: 0.7% of total
assets).
0.9% of total assets (2022: 0.7% of total
assets).
Key audit matters
Recurring
Valuation of investments in unquoted companies
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial statements of the current year and include the most significant assessed
risks of material misstatement (whether or not due to fraud) that we identified. These matters
included those matters 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.
Valuation of investments in unquoted companies
Key audit
matter description
Refer to Note 2 – Accounting policies and Note 12 – Financial
Assets at fair value through profit and loss.
As at 31 December 2023, the Group held investments in two
unquoted companies: Microsalt Limited and Guident Limited.
These investments make up 71% of the Group’s total assets, by
value, as at that date.
The unquoted investments are held by Tekcapital Europe Limited,
the Parent Company’s wholly owned subsidiary.
Unquoted investments are measured at fair value, which involves
judgement. Due to the level of judgement involved in quantifying
the value of unquoted investments, we determined this to be a key
audit matter.
Our audit work included, but was not restricted to the following:
• We assessed
the directors’
the appropriateness of
accounting policy in respect of unquoted investments, in
39
How the scope of our
audit responded to the
key audit matter
line with the requirements of the applicable accounting
standards.
• We reconciled management’s valuation methodology to the
accounting policies and to the requirements of IFRS 13
‘Fair Value Measurement’.
• We involved third party valuation experts to critically
assess management’s valuation methodology.
• We
audited management’s
valuation
interrogating both assumptions used,
methodology and the mechanics of the model.
assessment,
the valuation
• We
re-performed calculations
to ensure numerical
accuracy.
• 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 reviewed documentation related to the raising of capital
of the relevant investment entities, to ascertain existence of
any observable transactions and understand their relevance
to the valuations.
• We reconciled the fair value movements to the financial
statements.
• We reviewed the appropriateness of the Group’s disclosures
within the financial statements in relation to critical
judgements, valuation methodology, key
accounting
valuation inputs and valuation uncertainty.
Key
observations
communicated to the
Audit Committee
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 application of materiality
Our definition of materiality considers the value of error or omission on the financial statements
that, individually or in aggregate, would change or influence the economic decision of a reasonably
knowledgeable user of those financial statements. Misstatements below these levels will not
necessarily be evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when evaluating their effect on
the financial statements as a whole. Materiality is used in planning the scope of our work, executing
that work and evaluating the results.
Materiality in respect of the Group was set at $400,000 (2022: $420,000) which was determined on
the basis of 0.8% of the Group’s total assets (2022: 0.7% of the Group’s total assets). Materiality
in respect of the Parent Company was set at $200,000 (2022: $188,000), determined on the basis of
0.9% of the Group’s total assets (2022: 0.7% of the Group’s total assets). Total assets were deemed
to be the most appropriate benchmark to set materiality. The Group’s assets are principally made
up of investments in portfolio companies. The potential future earnings of the investee entities is
best reflected in the carrying value of investments, which we deem to be the primary metric that the
users of the financial statements are interested in.
Performance materiality is the application of materiality at the individual account or balance level,
set at an amount to reduce, to an appropriately low level, the probability that the aggregate of
40
uncorrected and undetected misstatements exceeds materiality for the financial statements as a
whole.
Performance materiality for the Group was set at $280,000 (2022: $294,000) and at $140,000 (2022:
$131,600) for the Parent Company which represents 70% (2022: 70%) of the above materiality
levels.
The determination of performance materiality reflects our assessment of the risk of undetected
errors existing, the nature of the systems and controls and the level of misstatements arising in
previous audits.
We agreed to report any corrected or uncorrected adjustments exceeding $20,000 and $10,000 in
respect of the Group and Parent Company respectively (2022: $21,000 and $9,400 respectively) to
the Audit Committee as well as differences below this threshold that in our view warranted
reporting on qualitative grounds.
Overview of the scope of the Group and Parent Company audits
Our assessment of audit risk, evaluation of materiality and our determination of performance
materiality sets our audit scope for each company within the Group. Taken together, this enables
us to form an opinion on the consolidated financial statements. This assessment takes into account
the size, risk profile, organisation / distribution and effectiveness of group-wide controls, changes
in the business environment and other factors when assessing the level of work to be performed at
each component.
In assessing the risk of material misstatement to the consolidated financial statements, and to ensure
we had adequate quantitative and qualitative coverage of significant accounts in the consolidated
financial statements we identified all 3 components in the UK and USA as representing the principal
business units within the Group.
Full scope audits - Full scope audits of the complete financial information for each of the 3
components (Tekcapital PLC, Tekcapital Europe Limited and Tekcapital LLC) were undertaken.
The procedures cover 100% of the group’s revenue, loss before tax and total assets.
The control environment
We evaluated the design and implementation of those internal controls of the Group, including the
Parent Company, which are relevant to our audit, such as those relating to the financial reporting
cycle.
Reporting on other information
The other information comprises the information included in the annual report other than the
financial statements and our auditor’s report thereon. The directors are responsible for the other
information contained within the annual report. 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. 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 course of 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 this gives rise to a material
misstatement in the financial statements themselves. 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.
41
We have nothing to report in this regard.
Strategic report and directors report
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.
In the light of the knowledge and understanding of the Group and the Parent Company and their
environment obtained in the course of the audit, we have not identified material misstatements in
the strategic report or the directors’ report.
Matters on which we are required to report by exception
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 by 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
As explained more fully in the directors’ responsibilities statement, the directors are responsible for
the 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 Parent Company or to cease operations, or have no realistic
alternative but to do so.
Auditor 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
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
42
A further description of our responsibilities for the financial statements is located on the FRC’s
website at: www.frc.org.uk/auditorsresponsibilities . This description forms part of our auditor’s
report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We
design procedures in line with our responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud.
These audit procedures were designed to provide reasonable assurance that the financial statements
were free from fraud or error. The risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error and detecting irregularities that result
from fraud is inherently more difficult than detecting those that result from error, as fraud may
involve collusion, deliberate concealment, forgery or intentional misrepresentations. Also, the
further removed non-compliance with laws and regulations is from events and transactions reflected
in the financial statements, the less likely we would become aware of it.
Identifying and assessing potential risks arising from irregularities, including fraud
The extent of the procedures undertaken to identify and assess the risks of material misstatement in
respect of irregularities, including fraud, included the following:
We considered the nature of the industry and sector, the control environment, business
performance including remuneration policies and the Group’s, including the Parent
Company’s, own risk assessment that irregularities might occur as a result of fraud or error.
From our sector experience and through discussion with the directors, we obtained an
understanding of the legal and regulatory frameworks applicable to the Group focusing on
laws and regulations that could reasonably be expected to have a direct material effect on
the financial statements, such as provisions of the Companies Act 2006, listing rules and tax
legislation.
We enquired of the directors and management concerning the Group’s and the Parent
Company’s policies and procedures relating to:
-
identifying, evaluating and complying with the laws and regulations and whether
they were aware of any instances of non-compliance;
- detecting and responding to the risks of fraud and whether they had any knowledge
-
of actual or suspected fraud; and
the internal controls established to mitigate risks related to fraud or non-compliance
with laws and regulations.
We assessed the susceptibility of the financial statements to material misstatement,
including how fraud might occur by evaluating management’s incentives and opportunities
for manipulation of the financial statements. This included utilising the spectrum of inherent
risk and an evaluation of the risk of management override of controls. We determined that
the principal risks related to management bias in accounting estimates, particularly in
determining the valuation of investments in unquoted companies, or posting inappropriate
journal entries to increase revenue or reduce costs.
Audit response to risks identified
In respect of the above procedures:
we corroborated the results of our enquiries through our review of the minutes of the
Group’s audit committee meetings and board meetings;
43
audit procedures performed by the engagement team in connection with the risks identified
included:
-
reviewing financial statement disclosures and testing to supporting documentation
to assess compliance with applicable laws and regulations expected to have a direct
impact on the financial statements.
testing journal entries, including those processed late for financial statements
preparation, those posted by infrequent or unexpected users, those posted to unusual
account combinations;
-
- evaluating the business rationale of significant transactions outside the normal
course of business, and reviewing accounting estimates for bias;
- enquiry of management around actual and potential litigation and claims.
- challenging the assumptions and judgements made by management in its significant
accounting estimates, in particular those relating to the valuation of investments in
unquoted companies as reported in the key audit matter section of our report; and
- obtaining confirmations from third parties to confirm existence of balances.
the Senior Statutory Auditor considered the experience and expertise of the engagement
team to ensure that the team had the appropriate competence and capabilities; and
we communicated relevant laws and regulations and potential fraud risks to all engagement
team members, including experts, and remained alert to any indications of fraud or non-
compliance with laws and regulations throughout the audit.
Use of our 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.
Andrew Gandell FCA (Senior Statutory Auditor)
for and on behalf of MHA, Statutory Auditor
London, United Kingdom
21 May 2024
MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership in England
and Wales (registered number OC312313)
44
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME FOR THE YEAR
ENDED 31 DECEMBER 2023
Group
Note
Continuing operations
Year ended
31 December
2023
US $
Period ended
31 December
2022
US $
Revenue from services
Cost of sales
Changes in fair value on financial assets at fair value
though profit or loss
Interest from financial assets at fair value through
profit or loss
Operating expenses
Other income
6
12
12
7
6.1
735,265 615,214
(222,361)
(314,083)
(14,229,009)
(10,978,372)
455,096
(2,353,704)
20,384
286,583
(2,524,496)
79,638
Operating loss and loss before tax
(15,686,051)
(12,743,794)
Income tax expense
9
(2,266)
(1,714)
Loss after tax for the year/period
(15,688,317)
(12,745,507)
Other comprehensive income*
Translation of foreign operations
Total other comprehensive income/(expense)
900,722
900,722
(212,803)
(212,803)
Total comprehensive loss for the year/period
(14,787,595)
(12,958,311)
Earnings per share
Basic losses per share
Diluted losses per share
10
10
(0.09)
(0.09)
(0.09)
(0.09)
* May be reclassified to profit or loss in future years.
All comprehensive income as presented above belongs to the owners of the Group.
The notes on pages 50 to 80 are an integral part of these consolidated financial statements.
45
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AT 31 DECEMBER 2023
Group
Assets
Non-current assets
Intangible assets
Financial assets at fair value through profit and loss
Property, plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Deferred revenue
Total liabilities
Net assets
Equity attributable to owners of the Parent
Ordinary shares
Share premium
Retained earnings
Translation reserve
Other reserve
Total equity
Note
As at 31 December As at 31 December
2022
US$
2023
US$
13
12
14
15
16
19
20
18
218,158
46,653,995
14,271
46,886,424
242,940
56,184,146
9,969
56,437,055
1,114,753
620,248
1,735,001
1,088,043
628,640
1,716,683
48,621,425
58,153,738
517,154
217,391
734,545
215,998
172,610
388,608
734,545
47,886,880
388,608
57,765,130
973,329
28,937,011
17,073,617
975,092
(72,169)
47,886,880
839,723
24,240,930
32,682,276
74,370
(72,169)
57,765,130
The notes on pages 50 to 80 are an integral part of these financial statements.
The financial statements on pages 45 to 80 were approved and authorised for issue by the Board
of Directors on 21 May 2024 and were signed on its behalf.
Dr Clifford M Gross
Chairman and CEO
Louis Castro
Director
Tekcapital PLC
registered number
08873361
46
STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 31 DECEMBER
2023
Group
Note
Attributable to equity holders of the parent company
Ordinary
Shares
US $
Share
Premium
US $
Translation
Reserve
US $
Other
Reserve
US $
Retained
Earnings
US $
Total
Equity
US $
At 30 November 2021
793,792
21,793,644
287,173
(72,169)
45,259,827
68,062,267
Profit for the year
-
-
-
- (12,745,508)
(12,745,508)
Other comprehensive income
Total comprehensive income for the year
Transactions with owners, recorded
directly in equity
-
-
-
-
(212,803)
(212,803)
-
-
(12,745,508)
(212,803)
(12,958,311)
Share issue
18
40,486
2,489,878
-
-
-
2,530,364
Cost of share issue
Share issue in share option exercise
Share based payments
Total transactions with owners
18
24
- (142,839)
100,247
5,445
-
-
-
(142,839)
105,692
-
45,931
-
2,447,286
-
-
-
-
167,957
167,957
167,957
2,661,174
At 31 December 2022
839,723
24,240,930
74,370
(72,169)
32,682,276
57,765,130
Loss for the period
Other comprehensive loss
Total comprehensive loss for the period
Transactions with owners, recorded
directly in equity
Share issue
-
-
900,722
900,722
-
(15,688,317)
(15,688,317)
(15,688,317)
900,722
(14,787,595)
18
133,606
5,045,893
-
-
-
- 5,179,499
Cost of share issue
-
(349,812)
-
-
-
(349,812)
Share issue in share option exercise
Share based payments
Total transactions with owners
18
24
-
-
-
-
133,606
4,696,081
-
-
-
-
-
-
-
-
79,658 79,658
4,909,345
79,658
At 31 December 2023
973,329
28,937,011
975,092
(72,169)
17,073,617
47,886,880
48
Share premium - amount subscribed for share capital in excess of nominal value, net of directly
attributable costs.
Translation reserve - foreign exchange differences recognized in other comprehensive income.
Other reserve – historic other reserve outside of share premium, translation reserve and share
premium.
Retained earnings - cumulative net gains and losses recognised in the consolidated statement of
comprehensive income, net of dividends paid.
The notes on pages 50 to 80 are an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
Cash flows from operating activities
Loss after income tax
Adjustments for
- Impairment Loss
- Depreciation
- Amortisation
- Share based payment expense
- Management services income
- Interest from financial assets at FVTP&L
- Unrealised (gains)/losses on foreign
exchange
- Fair value (gain)/losses on financial assets at
FVTP&L
Movement in working capital:
- Movement in trade and other receivables
- Deferred revenue movement
- Movement in trade and other payables
Net cash outflows from operating activities
Cash flows from investing activities
Additions to financial assets at fair value
through profit and loss
Proceeds from disposals of financial assets at
fair value through profit and loss
Purchases of intangibles
Purchases of property, plant and equipment
Net cash outflows investing activities
Cash flows from financing activities
Proceeds from issuance of ordinary shares
Costs of raising finance
Net cash inflows from financing activities
Net (decrease)/increase in cash and cash
equivalents
Cash and cash equivalents at beginning of year
Exchange gains/(losses) on cash and cash equivalents
Cash and cash equivalents at end of
period/year
Note
31 December
2023
US $
Period ended 31
December 2022
US $
(15,688,317)
(12,745,508)
-
2,523
83,786
79,658
(455,777)
(455,096)
37,584
6,553
83,877
167,957
(419,697)
(286,583)
620,843
(220,080)
14,229,009
11,014,609
(26,710)
44,781
301,156
(1,264,144)
(399,040)
3,326
(21,653)
(2,778,655)
12
(3,999,072)
(3,970,900)
12
13
14
478,008
1,073,792
(59,004)
(6,825)
(3,586,893)
-
(9,919)
(2,907,027)
18
18
5,179,498
(349,812)
4,829,686
2,636,056
(142,839)
2,493,217
16
271,543
628,640
12,961
(3,192,465)
3,543,762
277,343
16
620,248
628,640
49
NOTES TO THE FINANCIAL STATEMENTS
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 32 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 Group is to provide universities and corporate clients with valuable technology transfer services.
The Group also acquires exclusive licences to university technologies that it believes can positively
impact people’s lives, for subsequent commercialisation.
The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated. During the previous period, the Group and the Company
changed their accounting reference date from 30 November to 31 December to follow the
accounting periods of portfolio companies. As a result, the consolidated financial statements of
Tekcapital PLC have been prepared for the 12 month period to 31 December 2023. Comparative
amounts presented in the Group and Company financial statements are for the 13 months ended 31
December 2022, and as such the amounts presented are not entirely comparable.
Amounts presented in this report are rounded to nearest US$1.
2. MATERIAL ACCOUNTING POLICIES
2.1 STATEMENT OF COMPLIANCE
The consolidated financial statements of Tekcapital have been prepared in accordance with
International Financial Reporting Standards as adopted in the United Kingdom ("UK adopted
IFRS") UK-adopted International Financial Reporting Standard ("UK adopted IFRS") and those
parts of the Companies Act 2006 that are relevant to companies which report in accordance with
UK adopted 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 accordance with UK-adopted International Financial
Reporting Standards requires the use of certain critical accounting estimates. It requires
management to exercise its judgement in the process of applying the Group’s accounting policies.
The areas involving a higher degree of judgment or complexity, or areas where assumptions and
estimates are significant to the consolidated financial statements are disclosed in note 4.
2.1.1 GOING CONCERN
The financial statements have been prepared on a going concern basis.
The Group and Company meet their day to day working capital requirements through service
offerings, monetisation of quoted equity stakes and monies raised through issues of equity. As
disclosed in note 26, the Group announced a placing to raise £2,000,000 in February 2024. This has
resulted in an increase in the Group’s cash balance since the year end.
50
The Group’s forecasts and projections indicate that the Group and Company have sufficient cash
reserves to operate within the level of its current funds. The forecasts and projections included
assumptions and estimation uncertainties related to Group’s service revenues, cost of goods sold
and operating expenses, as determined by impact to the cash runway of the Group and the Company.
The Group has no third party debt facilities.
The Directors have prepared detailed cash flow projections for the period to 30 May 2025 (“going
concern assessment period”). The cash flow projections have been subjected to sensitivity analysis
which demonstrate that the Group and Company will maintain a positive cash balance through the
going concern assessment period.
The Directors have also considered the geo-political environment, including rising inflation, and
whilst the impact on the Group is currently deemed minimal, the Directors remain vigilant.
On this basis, the Directors have therefore concluded that it is appropriate to prepare the financial
statements on a going concern basis.
2.1.2 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES
Standards and Interpretations not yet effective
The Group has applied the following standards and amendments for the first time for its annual
reporting period commencing 1 January 2023:
• IFRS 17 Insurance Contracts;
• Definition of Accounting Estimates – amendments to IAS 8;
• International Tax Reform – Pillar Tow Model Rules – amendments to IAS 12;
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction – amendments
to IAS 12; and
• Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2.
The amendments listed above did not have any impact on the amounts recognised in prior periods
and are not expected to significantly affect the current or future periods.
There are a number of standards, amendments to standards, and interpretations which have been
issued that are effective in future accounting periods that the Group has decided not to adopt early
as they will not have a significant impact on the presentation of the Group financial statements.
2.2 CONSOLIDATION
The consolidated financial statements comprise the financial statements of Tekcapital PLC and all
subsidiaries controlled by it, except from indirect subsidiaries
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.
51
2.3 FOREIGN CURRENCIES
(a) Functional and presentation currency
These consolidated financial statements are presented in US Dollars which is the presentation
currency of the Group. The Directors consider this to be the most appropriate presentational
currency. Each subsidiary within the Group has its own functional currency which is dependent on
the primary economic environment in which that subsidiary operates. The functional currency of
Tekcapital Plc is UK sterling as this is the currency the entity undertakes its primary economic
activity.
(b) Transactions and Balances
Foreign currency transactions are translated into functional currency using the exchange rates
prevailing at the dates of the transactions or valuation where items are re-measured.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at the year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement. Foreign exchange gains and losses that relate to
cash and cash equivalents are presented in the consolidated statement of comprehensive income
statement within ‘operating expenses’.
(c) Group companies
The results and financial position of all Group entities (none of which has the currency of a hyper-
inflationary economy) that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
(i) Monetary assets and liabilities for each balance sheet presented are translated at the closing
exchange rates at the date of that balance sheet.
(ii) Income and expense for each income statement are translated at the average rates of exchange
during the period (unless this average is not a reasonable approximation of the cumulative effect of
the rates prevailing on the transaction dates, in which case income and expenses are translated at
the rate on the dates of the transactions)
(iii) All resulting exchange differences are recognized in other comprehensive income.
2.4 INVESTMENT IN PORTFOLIO COMPANIES
Investments in portfolio companies are held at fair value through the profit and loss. Directors’
judgment was exercised in determination that the Group meets the following criteria and should be
recognized as an investment entity under IFRS 10 par. 27. Directors re-evaluated the below criteria
and concluded they were met as at 31 December 2023:
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
52
to investors, clients and third parties. The Board considers that the criteria are met in the group’s
current circumstances.
The Board envisages that Tekcapital’s shareholder returns will derive primarily from mid to long-
term capital appreciation of a portion of its intellectual property investments, as well as from
providing IP investment services to clients. Consequently, the Group’s portfolio companies are
measured at fair value in accordance with IFRS 9 as disclosed in Note 2.8.3.
2.5 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at historical cost less accumulated depreciation. Historical
cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent
costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. All other repairs and maintenance are
charged to the income statement during the financial period in which they are incurred. Depreciation
of assets are calculated to write off the cost less the estimated residual value of tangible fixed assets
by equal instalments over the estimated useful economic lives as follows:
Furniture
Computer equipment
Leasehold improvements
3years
3years
5years
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 ‘Operating expenses’ in the income statement.
2.6 INTANGIBLE ASSETS
Intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and
accumulated impairment losses. Amortisation is charged to the administrative expenses in the
Statement of Comprehensive Income on a straight-line basis over the estimated useful lives of
intangible assets unless such lives are indefinite.
(a)
INVENTION EVALUATOR
This is an intangible asset and a piece of computer software acquired for use by one of the
subsidiaries of the Group.
The estimated useful life of the Invention Evaluator intangible asset is 10 years. The useful life is
estimated based upon management’s best estimate of the expected life of the asset. The useful life
is reconsidered if circumstances relating to the asset change or if there is an indication that the
initial estimate requires revision.
The intangible asset has a finite life of 10 years over which amortisation is charged on a straight
line basis.
(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
53
and testing of identifiable and unique software products controlled by the Group are recognised as
intangible assets when the following criteria are met:
it is technically feasible to complete the software product so that it will be available for use;
(i)
(ii) management intends to complete the software product and use or sell it;
(iii)
(iv)
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
(v)
software product is available; and
(vi)
the expenditure attributable to the software product during its development can be reliably
measured.
Computer software development costs recognised as assets are amortised over their estimated
useful lives, which do not exceed four years.
(c) VORTECHS GROUP
This is an intangible asset acquired for use by one of the subsidiaries of the Group. The estimated
useful life of the Vortechs Group intangible asset is 10 years over which amoritsation is charged on
a straightline basis. The useful life is estimated based upon management’s best estimate of the
expected life of the asset. The useful life is reconsidered if circumstances relating to the asset change
or if there is an indication that the initial estimate requires revision.
2.7 IMPAIRMENT OF NON-FINANCIAL ASSETS
Intangible assets that have an indefinite useful life or intangible assets not ready to use are not
subject to amortisation and are tested annually for impairment. Assets that are subject to
amortisation are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognized 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 are reviewed for possible reversal at
each reporting date.
2.8 FINANCIAL INSTRUMENTS
2.8.1 CLASSIFICATION AND MEASUREMENT
The Group classifies its financial assets depending on the purpose for which the asset was acquired.
Management determines the classification of its financial assets at initial recognition.
During the financial year the Group held investments in portfolio companies classified as equity
investments. They are included in non-current assets and are measured at fair value through profit
and loss in accordance with IFRS 9.
The Group has convertible loan note receivables. These financial assets are classified and measured
at fair value through profit and loss in accordance with IFRS 9.
54
The Group also has receivables carried at amortised cost. They are included in current assets. The
Group’s service income receivables comprise ‘trade and other receivables’ in the balance sheet,
also held at amortised cost. The Group also has cash and cash equivalents.
All short-term liabilities are measured at amortised cost, the Group does not hold any long-term
financial liabilities.
2.8.2 DERECOGNITION
Loans and receivables are recognised and carried at amortised cost. Financial assets are
derecognised when the rights to receive cash flows from the loans or receivables have been
collected, expired or transferred and the Group has subsequently transferred substantially all risks
and rewards of ownership.
2.8.3 FAIR VALUE
Financial instruments are measured at fair value including investments in portfolio companies, cash
and cash equivalents, trade and other receivables, trade and other payables, and convertible loan
note receivables. This measurement policy does not apply to subsequent measurement at amortised
cost of short term financial liabilities and trade receivables.
The Group measures portfolio companies using valuation techniques appropriate in the
circumstances and for which sufficient data are available to measure fair value, maximising the use
of relevant observable inputs and minimising the use of unobservable inputs. Our fair value
valuation policy is as follows:
The fair value of new portfolio companies is estimated at the cost of the acquired IP or equity plus
associated expenses to facilitate the acquisition.
Existing portfolio companies are valued as follows:
If a market transaction such as third-party funding has occurred during the past 12 months,
we will value our ownership in the portfolio Company at this observed valuation, taking
account of any observed material changes during the period, including quoted prices in
active markets (Level 1 input).
In the absence of a recent market transaction, fair value will be estimated by alternative
methods and where appropriate by an external, qualified valuation expert. The valuation
techniques fall under Level 2 – Observable techniques other quoted prices and Level 3 -
other techniques as defined by IFRS 13.
Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other
receivables, and trade and other payables approximate their fair value.
2.9 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.
2.10 IMPAIRMENT OF FINANCIAL ASSETS
Impairment provisions for trade receivables are recognized based on the simplified approach within
IFRS 9 using the lifetime expected credit losses. During this process the probability of the non-
55
payment of the trade receivables is assessed, including forward-looking information on customers
standing and macroeconomic information including sector specific circumstances This probability
is then multiplied by the amount of the expected loss arising from default to determine the lifetime
expected credit loss for the trade receivables. For trade receivables, which are reported net, such
provisions are recorded in a separate provision account with the loss being recognized within
operating expenses in the consolidated statement of comprehensive income. On confirmation that
the trade receivable will not be collectable, the gross carrying value of the asset is written off against
the associated provision.
Financial assets held at amortised cost comprise trade and other receivables, and cash and cash
equivalents in the consolidated statements of financial position.
2.11 CASH AND CASH EQUIVALENTS
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand,
deposits held at call with other banks, other short term highly liquid investments with maturities of
three months or less from inception.
2.12 SHARE CAPITAL
Ordinary Shares
Ordinary Shares are classified as equity.
Share premium
The share premium account has been established to represent the excess of proceeds over the
nominal value for all share issues, including the excess of the exercise share price over the nominal
value of the shares on the exercise of share options as and when they occur. Incremental costs
directly attributable to the issue of new ordinary shares and new shares options are shown in equity
as a deduction, net of tax, from the proceeds.
2.13 TRADE PAYABLES
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary
course of business from suppliers. Accounts payable are classified as current liabilities if payment
is due within one year or less (or in the normal operating cycle of business if longer). If not, they
are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest rate method.
2.14 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);
• excluding the impact of any non-vesting conditions (for example the requirement of the
employees to save).
Assumptions about the number of options that are expected to vest include consideration of non-
market vesting conditions. The total expense is recognised over the vesting period, which is the
56
period over which all of the specified vesting conditions are to be satisfied. At the end of each
reporting period, the entity revises its estimates of the number of options that are expected to vest
based on the non-market vesting conditions. It recognises the impact of the revision to the original
estimates, if any, in the income statement, with a corresponding adjustment to equity.
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.
2.15 CURRENT AND DEFERRED TAX
The tax expense for the year comprises current and deferred tax. Tax is recognised in the
consolidated income statement, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of tax laws enacted or substantively enacted
at the balance sheet date in the countries where the Company and its subsidiaries operate and
generate taxable income. Management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill;
deferred income tax is not accounted for if it arises from initial recognition of an asset or liability
in a transaction other than a business combination that at the time of the transaction affects neither
accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively
enacted by the balance sheet date and are expected to apply when the related deferred income tax
asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable
profit will be available against which the temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable temporary differences arising from
investments in subsidiaries except for deferred income tax liability where the timing of the reversal
of the temporary difference is controlled by the Group and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised on deductible temporary differences arising from
investments in subsidiaries only to the extent that it is probable the temporary difference will reverse
in full in the future and there is sufficient taxable profit available against which the temporary
difference can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to
offset current tax assets against current tax liabilities and when the deferred income tax assets and
liabilities relate to income taxes levied by the same taxation authority on either the same taxable
entity or different taxable entities where there is an intention to settle balances on a net basis.
57
2.16 REVENUE RECOGNITION
Revenue is measured at the fair value of the consideration received or receivable, and represents
amounts receivable for the services supplied, stated net of discounts, and value added taxes. The
Group recognises revenue when the contract is identified, performance obligation is determined,
transaction price (as defined for each service below) is determined and allocated to performance
obligation in accordance with IFRS 15.
Provision of services
The Group provides following lines of services:
•
Invention Evaluator services: provision of reports assessing potential of any new
technology. Revenue is recognised upon delivery of a complete report, when the report is
made available to each customer. Upon access to the report delivered via online portal,
customers consume the benefits of the contractual obligation, and the performance
obligation is met. Directors consider transaction price to be clearly determined upon
payment of fixed fee for each report prior to report’s delivery. Directors considered
uncertainty of cash flows from sales to be limited, considering prepayment is made for each
report prior to report’s delivery.
• Tech transfer recruitment services (Vortechs Group): recruitment services specialising in
technology transfer executives. Revenue is recognised upon placement of an executive,
when hire is made by Tekcapital’s customer and the performance obligation is met.
Directors consider transaction price to be clearly determined when both parties agree to
placement fee for each successful hire. Directors considered uncertainty of cash flows from
sales to be limited, considering payments are made by universities with excellent track
record of payments and clear definition of performance obligation upon which such
payment is made.
• Management services: accounting, tax, legal and other services provided to portfolio
companies. Revenue is recognized upon delivery of services to each portfolio Company and
performance obligation is met as defined in the management service contract. Directors
considering transaction price to be clearly determined by amounts specified in the
management service agreements. Directors considered uncertainty of cash flows from sales
to be limited, considering payments are made by companies with excellent track record of
payments and clear definition of performance obligation upon which such payment is made.
For breakdown of revenue from services recognised over time and at point of time, please refer to
Note 6 to Financial Statements.
2.17 OTHER INCOME
The Group recognizes research and development (R&D) relief under other income.
2.18 INTEREST INCOME
Interest income is accrued on a time basis, by reference to the principal outstanding and at the
effective interest rate applicable (10%).
3. FINANCIAL RISK MANAGEMENT
3.1 FINANCIAL RISK FACTORS
(a) Portfolio risk/investment management
Investment into portfolio companies held by the Group requires long-term commitment with no
certainty of return.
58
The fair value of each portfolio Company represents the best estimate at a point in time and may be
impaired if the business does not perform as well as expected, directly impacting the Group’s value
and profitability. This risk is mitigated as the size of the portfolio increases. The Group performed
sensitivity analysis with regards to assumptions used in determination of fair value of the portfolio
in Note 12.
The Group also regularly monitors portfolio companies’ liquidity required for returns to occur.
(b) Credit risk management
Credit risk is managed on a Group basis. In order to minimise this risk, the Group endeavours to
only deal with companies that are demonstrable creditworthy, and the Directors continuously
monitor the exposure. The Directors determine the default as lack of payment after more than 180
days and or counter party’s bankruptcy filings. The Group’s maximum exposure to credit risk for
the components of financial position at 31 December 2023 and 31 December 2022 is the carrying
amount of its current trade and other receivables as illustrated in Note 15.
While IFRS 9 does not require expected credit loss allowance on assets held at fair value through
profit and loss, the Group monitors credit risk related to performance of portfolio companies,
including considerations related to recoverability of convertible loan notes held as carrying amount
of notes represent the maximum exposure to credit risk. Progress is monitored and regular
discussions are held with management of portfolio companies to assess commercial progress and
financial information provided.
IFRS9 requires the Company to assess expected credit losses on assets classified as held at
amortised cost, under a forward-looking model approach. For the Group accounts this includes
Receivables from related parties and other immaterial receivables. For the Company accounts this
includes Receivables from Group Companies.
The Group also monitors credit risk from balances with banks and institutions.
(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. Post period
end, the Group announced placing to raise GBP 2,000,000 on 29 February 2024. At the reporting
date the Group held bank balances of US$620,248. 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
US$1,275,482.
(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.
59
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. The Group only has exposure to movements of the US dollar against UK Sterling. As
at 31 December 2023, the Group’s UK Sterling net exposure relating to cash, receivables and
payables denominated in UK Sterling totals $27,279. A 20% strengthening or weakening of the US
dollar against the UK Sterling would have an immaterial impact on the consolidated results and
equity.
(g) Interest rate risk management
The Group has no borrowings.
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’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 monetise these returns with exits from its
investments in portfolio companies.
60
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances. The Directors made the following judgements:
- determination as to the classification of the Group as an investment entity as discussed in
Note 2.4
- determination of operating segments as disclosed in Note 5
- determination of reliance of the Group’s portfolio companies on funding to achieve their
fair values discussed in Note 12.
The Directors also make estimates and assumptions concerning the future. The resulting accounting
estimates will by definition, seldom equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying value of the assets and
liabilities within the next financial year are detailed below.
Key
judgment area
estimate/
Key assumption
Valuation
unquoted
investments
of
equity
of
future
potential
In applying valuation techniques to
determine the fair value of unquoted
equity investments the Group makes
estimates and assumptions regarding
the
the
investments. The policy of the Group
is to value new portfolio companies
at cost of the acquired IP or equity
plus associated expenses to facilitate
the acquisition. Existing portfolio
companies are valued using either a
market transaction such as third-
party funding or, in the absence of a
by
recent market
alternative methods and where
appropriate by an external, qualified
valuation expert.
The fair value of Guident Limited
reflects input in the form of value of
Guident Ltd’s shares in its US
as
subsidiary
determined
recent market
transactions of these shares.
(Guident Corp)
by
transaction,
Potential
impact
within
the next
financial
year
Yes
Potential
impact in
the
longer
term
Note
reference
for
sensitivity
analysis
Yes
Note 12
61
Valuation
of
unquoted
investments
equity
Valuation
of
convertible loan notes
Inc)
This
input was corroborated by
Guident’s enterprise valuation by
estimating the net present value of
future cashflows associated with its
business. Key assumptions used in
estimating future cash flows are
projected profits including remote
monitor and control centre and shock
absorber sales and a discount factor
applied for the net present value of
future cashflows from the platform.
The fair value of Microsalt plc
reflects input in the form of value of
Microsalt Ltd’s shares in its US
subsidiary
as
(Microsalt
determined by pre money valuation
determined by the bankers as part of
Company’s pre IPO procedures.
This
input was corroborated by
Microsalt’s enterprise valuation by
estimating the net present value of
future cashflows associated with its
business. Key assumptions used in
estimating future cash flows are
projected sales of Microsalt® and a
discount factor applied for the net
present value of future cashflows
from the platform.
In applying valuation techniques to
determine
of
convertible loan notes the Group and
Company make
and
assumptions regarding the future
potential
investments,
the
including discount factor applied for
the net present value of future
cashflows from the loan.
estimates
value
fair
the
of
Yes
Yes
Note 12
Yes
Yes
Note 12
62
5. SEGMENTAL REPORTING
The Directors consider the business to have two segments for reporting purposes under IFRS 8
which are:
professional services, including the provision of recruitment services via Vortechs Group,
provision of invention evaluator services, as well as R&D tax relief credits and provision of
management services to its portfolio companies. The activities grouped under this segment
share similar economic characteristics of provision of intellectual property services to third
party services;
licensing and investment activities, including acquiring licences for technologies, portfolio
Company investment, development and commercialisation. The activities share the goal of
increasing the fair value of investments made into portfolio companies by the Group.
Year ended 31 December 2023
Consolidated income statement
Revenue from Services
Changes in fair value on financial assets at fair value
though profit or loss
Cost of Sales
Interest Income
Administrative Expenses
Professional
Services
US $
Licensing and
Investment
US $
735,265
TOTAL
US $
-
-
(314,083)
-
(592,315)
(14,229,009)
-
455,096
(1,675,081)
735,265
(14,229,009)
(314,083)
455,096
(2,267,396)
Depreciation and Amortization
Other Income
Group operating loss
(21,577)
20,384
(172,325)
(64,732)
-
(15,513,726)
(86,309)
20,384
(15,686,051)
Loss on ordinary activities before income tax
Income tax expense
(172,325)
(566)
(15,513,726)
(1,699)
(15,686,051)
(2,265)
Loss after tax
(172,891)
(15,515,425)
(15,688,316)
Period ended 31 December 2022
Consolidated income statement
Revenue from Services
Changes in fair value on financial assets at fair value
though profit or loss
Cost of Sales
Interest Income
Administrative Expenses
Depreciation and Amortization
Other Income
Group operating (loss)/profit
(Loss)/profit on ordinary activities before income tax
Income tax expense
(Loss)/profit after tax
Professional
Services
US $
Licensing and
Investment
US $
TOTAL
US $
615,214
-
615,214
-
(222,361)
-
(895,517)
(1,638)
79,638
(424,664)
(424,664)
(429)
(425,093)
(10,978,372)
-
286,583
(1,622,426)
(4,915)
-
(12,319,130)
(12,319,130)
(1,285)
(12,320,415)
(10,978,372)
(222,361)
286,583
(2,517,943)
(6,553)
79,638
(12,743,794)
(12,743,794)
(1,714)
(12,745,508)
63
Segment assets and liabilities
2023
Consolidated statement of
financial position
Assets
Liabilities
Net Assets
2022
Consolidated statement of
financial position
Assets
Liabilities
Net Assets
Professional
Services
US $
Licensing and
Investment
US $
1,967,430
(734,545)
1,232,885
46,653,995
-
46,653,995
TOTAL
US $
48,621,425
(734,545)
47,886,880
Professional
Services
US $
Licensing and
Investment
US $
1,969,592
(388,608)
1,580,984
56,184,146
-
56,184,146
TOTAL
US $
58,153,738
(388,608)
57,765,130
United Kingdom
Changes in fair value on financial assets at fair value though
profit or loss
United States
Revenue from Services
Total revenue
United Kingdom
Assets
Liabilities
United States
Assets
Liabilities
Total Net Assets
Year ended 31
December 2023
US $
Period ended 31
December 2022
US $
(13,753,529)
(10,612,151)
735,265
(13,018,264)
615,214
(9,996,937)
2023
US $
2022
US $
46,653,995
-
56,184,146
-
1,967,430
(734,545)
47,886,880
1,969,592
(388,608)
57,765,130
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.
Group
Major service lines:
- Sales of Invention Evaluator
reports
- Tech transfer recruitment
services
- Management services
Total Revenue from
Services
Transferred
at a point in
time
Transferred
over time
Total
2023
US $
Transferred
at a point in
time
Transferred
over time
Total
2022
US $
178,488
-
178,488
156,517
-
156,517
101,000
-
101,000
39,000
-
39,000
-
455,777
455,777
-
419,697
419,697
279,488
455,777
735,265
195,517
419,697
615,214
64
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. For services transferred over time, output method was used as measure of fulfillment
of the performance obligation. Considering the nature of the accounting, tax, legal and other
services being provided under the agreements, this method most faithfully depicts the transfer of
the services to the customer. Payment is typically due on a Net 30 basis.
6.1 OTHER INCOME
R&D expenditure credit
Other
Dividends earned
Total 2023
US $
-
2,781
17,603
20,384
Total 2022
US $
79,638
-
-
79,638
7. OPERATING EXPENSES AND COST OF GOODS SOLD
Group
Cost of goods related to services
Depreciation of property plant and equipment
Research and development expenses
Amortisation of intangible assets
Marketing and PR
IT&Software
Audit and accounting
Share based payments
Nominated Advisor and other exchange listing
expenses
Director emoluments
Other administration expenses including salaries
Foreign exchange movements
Total expenses
7.2 AUDITOR REMUNERATION
Group
Fees payable to the group's auditor and its associates for the
audit of the Group and Company financial statements
Audit of company's subsidiaries
2023
US $
314,083
2,523
155,094
83,786
96,575
26,925
182,145
79,658
139,261
409,681
639,374
538,682
2,667,787
2022
US $
222,361
6,553
433,166
121,461
149,169
72,495
216,285
167,957
175,888
662,052
648,646
(129,176)
2,746,857
2023
US $
2022
US $
107,335
121,408
37,316
13,379
144,651
134,787
8. EMPLOYEES
65
8.1 DIRECTOR’S EMOLUMENTS
Group
2023
US $
2022
US $
Directors emoluments
Directors portion of Share Based
Payments
Total
*excludes Directors NI of US$23,004 (2022:US$26,551).
386,677*
662,052
1,362
388,039
62,747
724,799
The highest paid Director received a salary of US$254,096 (2022: $250,889) and benefits of
US$27,846 (2022: US$29,833). The highest paid Director received a bonus of US$ Nil (2022:
US$250,000). The highest paid Director did not exercise any share options. The share-based
payments associated with the highest paid Director amounted to US$1,362 (2022: US$60,948).
Key management personnel (including Directors and Group Chief Financial Officer) received
salary of US$509,681 (2022: US$820,557), excluding Employers National Insurance, Benefits in
Kind and Share Base Compensation disclosed in Directors Remuneration Report. Please also refer
to Director’s Report. No Directors exercised their share options during the year. No post-
employment benefits or other long-term benefits are applicable for Directors.
8.2 EMPLOYEE BENEFIT EXPENSES
Group
Wages and salaries including restructuring costs and
other termination benefits
Directors remuneration
Social security costs
Pension costs
Share options granted to directors and employees
2023
US $
2022
US $
405,898
358,830
62,338
-
79,658
906,725
459,435
605,668
70,511
-
167,957
1,303,571
8.3 AVERAGE NUMBER OF PEOPLE EMPLOYED
To enhance flexibility and improve cost control, the Group utilises consultants for scientific review,
administrative and operations support, software development and other knowledge-intensive
services.
Group
Number of employees
Average number of people (including executive
directors) employed
Operations
Management
Total average headcount
4
2
6
4
2
6
2023
2022
9. INCOME TAX EXPENSE
66
Group
Current tax
Current tax on profits for the year
Total current tax
Income tax expense
Group
Profit before tax
Tax calculated at domestic tax rates applicable to profits
Tax effects of:
- Expenses not deductible for tax purposes
- Income not taxable
- Capital allowances in excess of depreciation
- Unrelieved tax losses and other deductions
Total income tax expense
2023
US $
2022
US $
2,265
2,265
1,714
1,714
2,265
1,714
2023
US $
(15,686,051)
(2,980,350)
19,604
2,703,512
16,413
243,086
2,265
2022
US $
(12,743,794)
(2,421,321)
39,103
2,085,891
24,323
273,718
1,714
The weighted average applicable tax rate was 19% (2022: 19%).
Unused tax losses of US$2,099,550 for which no deferred tax assets have been recognised is
attributable to the uncertainty over the recoverability of those losses through future profits.
The UK Government announced in the 2021 budget that from 1 April 2023, the rate of corporation
tax in the United Kingdom will increase from 19% to 25%. Companies with profits of £50,000 or
less will continue to be taxed at 19%, which is a new small profits rate. Where taxable profits are
between £50,000 and £250,000, the higher 25% rate will apply but with a marginal relief applying
as profits increase.
10. EARNINGS PER SHARE (EPS)
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders
by the weighted average number of Ordinary Shares outstanding during the period.
Earnings attributable to equity holders of the Group
(US$)
Weighted average number of ordinary shares in issue:
Basic
Diluted
Basic earning per share
Diluted earning per share
2023
US $
2022
US $
(15,688,317)
(12,745,508)
172,214,589
146,043,720
176,681,255
150,483,172
(0.091)
(0.091)
(0.087)
(0.087)
67
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 31 December 2023.
Diluted EPS includes impact of vested Employees Share Option Awards whose strike price was
below Tekcapital’s share price as quoted on the AIM market, which would have dilutive impact of
4,466,667 shares.
The Group completed placements of total of 27,395,934 new ordinary shares during the financial
year.
11. INVESTMENTS OF THE GROUP
Nature of business
Provider of high-tech
eyewear
Provider of high-tech
eyewear
Developer of low sodium
salt and snack foods
Developer of low sodium
salt and snack foods
Developer of autonomous
vehicle software safety
solutions
Developer of autonomous
vehicle software safety
solutions
Developer for baked food
coating to reduce fat
Capital and
reserves as at 31
Dec 2023
Net
Profit/(Los
s) for year
ended 31
Dec 2023
US$
US$
(895,147)
(5,998,918)
5,558,826
(6,663,428)
(1,996,000)
(3,473,000)
(265,077)
(2,057,852)
17,387,274
-
(2,703,683)
(1,183,396)
(116,114)
-
N/A
10%
Portable oxygen
N/A
concentrator producer
Entity name
Country of
incorporatio
n
The following are under ownership of Tekcapital Europe
Limited
Proportion
of ordinary
shares
directly and
indirectly
held
Lucyd Limited
Innovative Eyewear Inc1
Microsalt Limited
Microsalt Inc2
Guident Limited
Guident CORP3
England and
Wales
United States
of America
England and
Wales
United States
of America
England and
Wales
United States
of America
100%
40%
87%
80%
100%
90%
Smart Food Tek Limited England and
100%
Belluscura plc
Wales
England and
Wales
(1) owned by Lucyd Limited
(2) owned by Microsalt Limited
(3) owned by Guident Limited
As at the year end, the Group has no interest in the ownership of any other entities or exerts any
significant influence over or provides funding which constitutes an “unconsolidated structured
entity”.
All UK subsidiaries are exempt from the requirement to file audited accounts by virtue of section
479A of the Companies Act 2006.
Tekcapital Europe Ltd (registered address 12 New Fetter Lane, London, United Kingdom, EC4A
1JP) and Tekcapital LLC (registered address 11900 Biscayne Blvd, Suite 630, Miami, Florida,
68
33181, United States) are consolidated by Tekcapital plc because they continue to provide advisory
services in IP search and technology transfer. Tekcapital plc owns 100% of both entities.
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, Microsalt Limited
and Guident Limited, as well as has provided working capital assistance to Microsalt Limited and
Guident Limited through convertible loan note financing (see also Note 12). The Group also assists
the entities with their fundraising activities.
Registered office of all four directly owned subsidiaries owned by Tekcapital Europe Limited: Acre
House, 11-15 William Road, London, England, NW1 3ER.
12. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
The Group’s financial assets at fair value through profit and loss consist of equity investments
(2023:US $41,125,568, 2022:US $54,878,609) and convertible loan notes (2023:US$5,528,427,
2022:US $1,305,537) totalling US $46,653,995 (2022:US $56,184,146).
12.1 EQUITY INVESTMENTS
The Group’s investments in portfolio companies in the years ended 31 December 2023 and 31
December 2022 are listed below. The principal place of business for portfolio companies listed
below is the UK and in the U.S.
Proportion
of ordinary
shares as
at 31 Dec
2022
1 Jan 2023 Additions
Disposal
Other
adjustments
Fair Value
change
31 Dec 2023
US $
US $
US $
US $
US $
US $
100.00%
100.00%
87.24%
10.28%
18,083,264
8,175,403
16,508,694
12,072,826
-
-
500,000
-
-
-
-
(272,514)
-
-
882,546
(634,065)
-
(5,985,609)
(1,220,093)
(7,023,307)
18,083,264
2,189,794
16,671,147
4,142,940
100.00%
38,422
-
-
-
-
38,422
54,878,609
500,000
(272,514)
248,481
(14,229,009)
41,125,567
Group
Guident Limited
Lucyd Limited
Microsalt Limited
Belluscura Plc
Smart Food Tek
Limited
Total Balance
Other adjustments relate primarily to foreign exchange movements on translation of investments
into the Group’s presentational currency.
Proportion
of ordinary
shares as
at 31 Dec
2022
100.00%
100.00%
97.15%
11%
100.00%
Group
Guident Limited
Lucyd Limited
Microsalt Limited
Belluscura Plc
Smart Food Tek
Limited
Total Balance
1 Dec 2021
Additions
Disposal
Other
adjustments
Fair Value
change
31 Dec
2022
US $
18,083,264
17,345,195
4,356,520
22,695,518
US $
-
2,002,275
2,409,579
-
US $
-
-
-
(1,073,792)
US $
-
-
-
-
(11,172,067)
US $
US $
- 18,083,264
8,175,403
9,742,595 16,508,694
(9,548,900) 12,072,826
43,161
-
-
(4,739)
-
38,422
62,523,658
4,411,854
(1,073,792)
(4,739)
(10,978,372) 54,878,609
The valuation techniques used fall under, Level 1 – Observable inputs that reflect quoted prices
(unadjusted) for identical assets or liabilities in active markets, and Level 3- Other techniques as
69
defined by IFRS 13. These techniques were deemed to be the best evidence of fair values
considering the early stage of portfolio companies.
Lucyd Ltd’s Innovative Eyewear Inc commenced trading on the NASDAQ market in H2 2022. Due
to Innovative's secondary offering in June 2023, Lucyd Ltd became a minority shareholder and thus
the control premium applied in the Group's valuation of the investment in Lucyd as at 31 December
2022 has been removed. As such, the Group’s investment in Lucyd Ltd has been re-classified under
Level 2 as of 31 December 2023. Fair value measurement hierarchy for financial assets as at 31
December 2023 with comparative amounts as of 31 December 2022:
31 December 2023
Belluscura Plc
Lucyd Limited
Guident Limited
Microsalt Limited
Smart Food Tek Limited
Total Balance
Total
US$
4,142,940
2,189,794
18,083,264
16,671,147
38,422
41,125,567
Level 1
US$
4,142,940
-
-
-
-
4,142,940
Level 2
US$
-
2,189,794
-
-
-
2,189,794
Level 3
US$
-
-
18,083,264
16,671,147
38,422
34,792,833
31 December 2022
Belluscura Plc
Lucyd Limited
Guident Limited
Microsalt Limited
Smart Food Tek
Limited
Total Balance
Total
US$
12,072,826
8,175,403
18,083,264
16,508,694
38,422
Level 1
US$
12,072,826
-
-
-
-
Level 2
US$
-
-
-
-
-
54,878,609
12,072,826
-
Level 3
US$
-
8,175,403
18,083,264
16,508,694
38,422
42,805,783
BELLUSCURA PLC (US $7.7M LOSS)
The fair value of the holding decreased by US$7.7m during the year due to the movement in
Company’s share price at AIM market of London Stock Exchange, and closing price of 23p as of
31 December 2023. With 15,138,767 shares held by Tekcapital plc, a fair value of US$4,142,940
was arrived at as of 31 December 2023.
LUCYD (US $11.2M LOSS)
The fair value of the holding decreased by US$6.0m during the year due to the movement in the
Company’s share price at NASDAQ market, and closing price of US$0.42 as of 31 December 2023,
compared to $1.37 as of 31 December 2022. With 5,189,085 shares held by Tekcapital plc, a fair
value of US$2,189,794 was arrived at as of 31 December 2023.
MICROSALT (US$1.2M LOSS)
The total fair value of US$16,671,147 is based on valuation of 30,747,609 shares held in Microsalt
Ltd, as determined by the price range agreed upon between Company’s bankers and the Company
as part of its IPO process. Upon review of business updates in H2 2023, management noted no
material events necessitating revisions. Addition of $500,000 was recorded due to conversion of
part of the existing convertible loan note in April 2023. This proposed valuation of shares to be sold
in the initial public offering was corroborated to management prepared discounted cash flow
workings using management projections and the price per share at which Tekcapital converted it’s
convertible loan note in May 2022.
70
Key assumptions used in management’s discounted cash flow valuation are:
- Compound annual growth rates over a 5 year forecast period of 113%
- 15% discount rate used to discount forecasted free cash flows
The discounted cash-flow method did not provide an indication that the valuation at year end was
materially misstated.
GUIDENT LTD (NIL GAIN / NIL LOSS)
The fair value of Guident remain unchanged compared to previous period as the Company
continued to receive investment at US$1 per share as specified in the 2021 Private Placement
Memorandum offering.
In August 2021, Guident CORP entered into Private Placement Memorandum outlining offering of
securities at US$1 per unit, with each unit consisting of one share of Class A Convertible Preferred
Stock and a Warrant to acquire a share of common stock (also at US$1 per unit). While Guident
has not received funding from the offering until after the reporting date, the management considers
the exit price (of securities offered in the private placement) negotiated with the investment bank
as “privately negotiated acquisition of the equity instruments” as defined under IFRS 13. The
Offering was facilitated by Dawson James Securities Inc. Dawson James is a broker-dealer
registered with the SEC as a broker dealer and is a member of FINRA. FINRA is currently the only
such registered national securities association in the U.S.
This input was corroborated by Guident CORP’s enterprise valuation by estimating the net present
value of future cashflows associated with its business as of 31 December 2023.
Key assumptions used in management’s discounted cash flow valuation are:
- Compound annual growth rates over a 5 year forecast period of 122%
- 24% discount rate used to discount forecasted free cash flows
The discounted cash-flow method did not provide an indication that the valuation at year end was
materially misstated.
SMART FOOD TEK (NIL GAIN / NIL LOSS)
Considering early commercialisation stage, the Group records its investment in Smart Food Tek at
cost. The directors do not consider that any other available information would materially change or
give a more reliable representation of the value.
The Group exercised judgment in determination of sufficiency of portfolio companies’ cash
reserves, forecasts and ability to raise money to achieve their fair values. Directors reviewed and
questioned the forecasts used, standing liquidity and working capital balances, as well as discussed
capability and plans to raise money in the future with directors or management of portfolio
companies. Based on the review, the Group made a positive determination as to portfolio
companies’ likely ability to achieve fair values considering liquidity factors.
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 31 December 2023
are shown as below. No sensitivities have been disclosed on immaterial, non-listed investments as
the fair value equates to cost.as the fair value equates to cost.
71
Investment Valuation
Technique
Guident
Income
Approach
Royalty Relief
Method
Significant
unobservable applied
input
Discount to
Future Cash
Flows
24%
CAGR
91%
Microsalt
Income
Approach
Royalty Relief
Method
15%
Discount to
Future Cash
Flows
CAGR
53%
Estimate Sensitivity of the input
to fair value
in
5% increase in the discount factor would
decrease
the Guident valuation by
US$4.3m, a 5% decrease in the discount
the value by
increase
factor would
US$6.4m.
A 50% increase in the compound annual
growth rate of sales projections would
the Guident valuation by
increase
US$40.2m. A 50% decrease
the
compound annual growth rate of sales
projections would decrease the Guident
valuation by US$15.8m.
5% increase in the discount factor would
decrease
the Microsalt valuation by
US$5.1m, a 5% decrease in the discount
the value by
increase
factor would
US$10.4m,
A 50% increase in the compound annual
growth rate of sales projections would
the Microsalt valuation by
increase
US$25.4m. A 50% decrease
the
compound annual growth rate of sales
projections would decrease the Microsalt
valuation by US$12.6m
in
12.2 CONVERTIBLE LOAN NOTES
During the year, the Group also held multiple convertible loans issued by its portfolio companies,
including:
• Convertible note issued by Innovative Eyewear Inc, for the total of US$2,000,000 that bears
interest at 10% per annum, which includes the option to convert the debt into the Company
's common stock at market price. The Note matured on December 1, 2023 with no amounts
outstanding.
• Convertible note issued by Guident Ltd for the total of US$3,000,000, issued at 10% coupon
rate including option to convert the debt into shares at market price (no discount against
future equity placements offered). The note can be converted into Guident’s equity upon
occurrence of certain conversion events
including future share placements. The
US$3,000,000 note originated in September 2023 or can be converted into Guident’s equity
upon occurrence of certain conversion events. No conversions occurred during the period.
As of 31 December 2023, US$3,000,000 was outstanding.
72
• Convertible loan note instruments in favour of Microsalt Inc were constituted on 21
September 2020 (2020 CLN) and 1 June 2022 (2022 CLN). The principal amounts of
convertible loan notes under the 2020 CLN and the 2022 CLN was each limited to
US$2,000,000. The convertible loan notes under the 2020 CLN and the 2022 CLN each
carry interest at the rate of 10 per cent. per annum. As of 31 December 2023, US$2,000,000
was outstanding on the convertible loan notes.
• A convertible loan note instrument in favour of Tek Europe was constituted by the Company
on 1 March 2023. The principal amount of convertible loan notes was limited to
US$2,000,000. The convertible loan notes carry interest at the rate of 10 per cent. per
annum. A convertible loan note instrument in favour of Tek Europe, as assignee of
Tekcapital, was constituted by the Company on 7 November 2023. The principal amount of
convertible loan notes was limited to US$2,000,000. The convertible loan notes carry
interest at the rate of 10 per cent. per annum. . As of 31 December 2023, US$528,427 was
outstanding on the convertible loan notes.
The Group’s investments in convertible notes in the years ended 31 December 2023 and 31
December 2022, as well as their fair value hierarchy, are listed in tables below:
Group
Innovative Eyewear
Guident Corp
Microsalt Inc
31 Dec 2022
Additions
Disposal
FX reval
US $
147,375
1,000,000
158,162
US $
37,757
1,999,562
2,872,626
US $
(190,983)
(514,511)
US $
5,851
438
12,150
Fair
Value
change
US $
-
-
-
31 Dec 2023
US $
-
3,000,000
2,528,427
Total Balance
1,305,537
4,909,945
(705,494)
18,439
-
5,528,427
Included in additions are non-cash movements, in relation to management services income of
US$455,777 and interest income of US$ 455,096.
31 December 2023
Innovative Eyewear
Guident Corp
Microsalt Inc
Total Balance
Total
Level 1
Level 2
Level 3
US $
-
3,000,000
2,528,427
5,528,427
US $
-
-
-
-
US $
-
-
-
-
US $
-
3,000,000
2,528,427
5,528,427
31 December 2022
Total
Innovative Eyewear, Inc
Guident Corp
Microsalt Inc
Total Balance
US $
147,375
1,000,000
158,162
1,305,537
Level 1
US $
-
-
-
-
Level 2
US $
-
-
-
-
Level 3
US $
147,375
1,000,000
158,162
1,305,537
The fair value of the convertible loans issued by Guident Corp and Microsalt has been calculated
using a Discounted Cash Flow Analysis. The significant unobservable input used in the fair value
assessment is the discount rate of 10%. Increasing the discount rate by 2% used would result in:
- a $139k decrease in the fair value of the asset for Guident and
- a $84k decrease in the fair value of the asset for Microsalt
73
A 2% decrease in the discount rate would result in:
-
a $153k increase in the fair value of the asset for Guident
- a $92k increase in the fair value of the asset for Microsalt.
12.3 INTEREST FROM FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT
AND LOSS
The Group earned following interest income from its portfolio companies during the period:
Innovative Eyewear Inc
Microsalt Inc
Guident Corp
Total Balance
31/12/2023
31/12/2022
12,281
139,421
303,394
455,096
140,689
72,159
73,736
286,583
13. INTANGIBLE ASSETS
The Directors have undertaken an impairment review based on the future cash flow projections of
the Vortechs Group intangible asset and consider the recoverable amount to be higher than the
carrying value and have therefore recorded no impairment.
Remaining amortisation period of each asset with remaining amortisation:
- Vortechs: 5 years
-
Invention Evaluator: 2 years
Group
Cost
As at 31 December 2022
Addition
As at 31 December 2023
Accumulated amortisation
As at 31 December 2022
Amortisation
As at 31 December 2023
Net Book Value
As at 31 December 2022
As at 31 December 2023
Vortechs
US $
Website
development
US $
500,000
-
500,000
28,121
-
28,121
Invention
Evaluator
US $
338,770
59,004
397,774
Total
US $
866,891
59,004
925,895
(324,813)
(50,000)
(374,813)
(28,121)
-
(28,121)
(271,017)
(33,786)
(304,803)
(623,951)
(83,786)
(707,737)
175,187
125,187
-
-
67,753
92,971
242,940
218,158
74
14. PROPERTY, PLANT AND EQUIPMENT
GROUP
Closing cost 30 November 2021
Additions
Closing cost 31 December 2022
Additions
Closing cost 31 December 2023
Leasehold
Improvements
US $
13,775
3,766
17,541
-
17,541
Office
equipment
US $
25,980
5,000
30,980
6,087
37,067
Computer
Equipment
US $
29,377
1,153
30,530
738
31,268
Total
US $
69,132
9,919
79,051
6,825
85,876
Accumulated depreciation and impairment
Accumulated depreciation at 30 November 2021
Depreciation charge
Accumulated depreciation at 31 December 2022
Depreciation charge
(13,775)
-
(13,775)
-
(20,175)
(5,620)
(25,795)
(1,687)
(28,579)
(933)
(29,512)
(836)
(62,529)
(6,553)
(69,082)
(2,523)
Accumulated depreciation at 31 December 2023
(13,775)
(27,482)
(30,348)
(71,605)
Closing net book value 31 December 2022
Closing net book value 31 December 2023
3,766
3,766
5,184
9,584
1,018
920
9,969
14,271
15. TRADE AND OTHER RECEIVABLES
Trade receivables
Trade receivables – net
Vat recoverable
Prepayments and other debtors
Receivables from related parties
Total trade and other receivables
2023
US $
101,608
101,608
36,675
25,817
950,653
1,114,753
2022
US $
9,831
9,831
21,951
27,604
1,028,657
1,088,043
The fair value of trade and other receivables are not materially different to those disclosed above.
The credit loss allowance was assessed for the Group as at 31 December 2023 and there was no
increase/decrease in the expected credit loss allowance (2022: $nil). Group’s exposure to credit risk
related to trade receivables is detailed in Note 3 to the consolidated financial statements.
The Group had outstanding receivables from its portfolio companies as at 31 December 2023 in the
amount of:
- US$74,170 due to Lucyd Ltd (2022:US$ 54,466)
- US$63,418 due from Smart Food Tek Ltd (2022: US$63,418)
- US$259,390 due from Guident Ltd (2022: US$951,098)
- US$6,039 due from Innovative Eyewear Inc (2022: US$13,410)
- US$629,000 owed from Microsalt plc (2022: US$958).
75
16. CASH AND CASH EQUIVALENTS
GROUP
2023
US $
2022
US $
Cash at bank and in hand
620,248
628,640
Total cash and cash equivalents
620,248
628,640
17. CATEGORIES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
GROUP
Financial assets at fair value through profit and loss
Financial assets at amortised cost
Cash and equivalents at amortised cost
2023
US $
46,653,995
1,052,261
620,248
48,326,504
2022
US $
56,184,146
1,088,043
628,640
57,851,274
Financial liabilities
Trade and other payables at amortised cost
504,784
203,886
18. SHARE CAPITAL
Group and Company
Issued and fully paid up
As at 30 November 2021
Shares issued through share option
exercise
Number
of shares
Ordinary
Share US$
Total
US $
141,542,328
793,792
793,792
1,150,000
5,445
5,445
Shares issued in further public offering
As at 31 December 2022
Shares issued in further public offering
As at 31 December 2023
8,000,000
150,692,328
27,395,934
178,088,262
40,486
40,486
839,723
839,723
133,606 133,606
973,329
973,329
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 2023: 14,062,500 shares were issued in the placing of new ordinary shares at
£0.16p. Total proceeds of US$2,640,909 were netted against cost of raising finance in the
amount of US$179,371
• April 2023: 13,333,334 shares issued in the placing of new ordinary shares at £0.15p. Total
proceeds of US$2,404,984 were netted against cost of raising finance in the amount of
US$170,441
76
The Company has authorised share capital of 178,088,162 with a nominal value of £0.004. Of these
shares, 178,088,162 were issued and fully paid up.
19. 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.
Group
Trade creditors
Amounts due to related parties
Social security and other taxes
Accruals and other creditors
20. DEFERRED REVENUE
2023
US $
250,218
109,344
12,371
145,221
517,154
2022
US $
77,263
-
12,111
126,624
215,998
The Group’s deferred revenue balance of US$172,610 as of 31 December 2022 was adjusted for:
•
•
receipt of Invention Evaluator payments in the amount of US$68,078 to be delivered after
31 December 2023, recognized as addition to the balance of deferred revenue during the
year ended 31 December 2023
recognition of US$23,297 of revenue deferred as of 31 December 2022 for reports delivered
during the financial year 2023 bringing the total outstanding balance of Deferred Revenue
as at 31 December 2023 to US$217,391.
21. DEFERRED INCOME TAX
Unused tax losses for which no deferred tax assets have been recognised is attributable to the
uncertainty over the recoverability of those losses through future profits. A tax rate of 25% has
been used to calculate the potential deferred tax.
Deferred tax
Accelerated capital allowances
Short term timing difference
Tax losses
Unprovided deferred tax asset
2023
US $
(16,413)
(2,115,963)
2,132,376
-
2022
US $
(24,323)
(2,356,784)
2,381,107
-
22. DIVIDENDS
No dividend has been recommended for the period ended 31 December 2023 (2022: Nil) and no
dividend was paid during the year (2022: Nil).
77
23. COMMITMENTS
Capital commitments
The Group entered into multiple convertible loan note agreements with its portfolio companies.
Please see note 15 for details regarding outstanding commitments.
Lease commitments
The Group did not have any material contracts withing the scope of IFRS 16. Consequently, the
Group did not recognise any right-of-use assets and lease liabilities during the period.
24. 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 £0.06p. Volatility was calculated using
Group’s historical share price performance since 2017. The share-based payment expense for the
year was $79,658 (2022: $167,957). Details of the number of share options and the weighted
average exercise price outstanding during the year as follows:
Group and Company
As at 1 January 2023
Granted
Exercised
Forfeited/expired
As at 31 December 2023
Exercisable as at period end
Av. Exercise
Options
price per
share £
0.2746
(Number)
8,865,000
0.2746
8,865,000
5,900,000
Av. Exercise
price per
share £
0.2110
0.3250
0.0783
0.3034
0.2746
Options
(Number)
8,200,000
1,990,000
(1,100,000)
(225,000)
8,865,000
4,750,000*
*The weighted average exercise price for the options exercisable as at 31 December 2023 and 31
December 2022 was £0.11p and £0.11p respectively.
78
The weighted average remaining contractual life is 3.0 years (2022: 3.0 years). The weighted
average fair value of options granted during the year was £0.06p (2022: £0.12p). The range of
exercise prices for options outstanding at the end of the year was £0.052p - £0.325p (2022: £0.052p
- £0.325p).
25. RELATED PARTY TRANSACTIONS
Details of Directors’ remuneration and grant of options are given in the Directors’ report. Please
also refer to Note 8.1 for payments related to key management personnel.
525,000 options were held by Harrison Gross, family member of Dr. Clifford Gross (2022:
525,000).
Please refer to tables below for detail of relationships and transactions between The Group and its
subsidiaries.
Convertible note receivable
Group
Guident Corp
Microsalt Inc
Innovative Eyewear Inc
Intercompany receivable
Group
Guident Corp
Smart Food TEK
Lucyd Ltd
Innovative Eyewear Inc
Microsalt plc
Other
Management fees
Group
Guident Corp
Microsalt Inc
Lucyd Ltd
Innovative Eyewear Inc
Interest Income
Group
Guident Corp
2023
US $
3,000,000
2,528,427
-
5,528,427
2022
US $
1,000,000
158,161
147,375
1,305,536
2022
2023
US $
US $
951,098
209,184
63,418
66,681
54,466
(74,170)
13,410
6,039
(958)
629,000
3,573 -
1,081,434
840,307
2022
2023
US $
US $
140,227
176,301
141,332
139,788
- -
138,138
139,687
419,697
455,776
2022
US $
303,394
2022
US $
73,736
79
Microsalt Inc
Innovative Eyewear Inc
139,421
12,281
455,096
72,159
140,688
286,583
Related party transactions were made on terms equivalent to those that prevail in arm’s length
transactions and are made only if such terms can be substantiated.
26. EVENTS AFTER THE REPORTING PERIOD
Post period end, Microsalt successfully completed its Initial Public Offering and commenced
trading on the AIM market of the London Stock Exchange on February 1st, 2024.
Post period end, Group announced placings to raise GBP 2,000,000 before expenses on 29 February
2024.
80
COMPANY
STATEMENT OF
POSITION AT 31 DECEMBER 2023
FINANCIAL
Company
Assets
Non-current assets
Investment in subsidiaries
Financial assets at fair value through profit and loss
Non current receivables
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Total liabilities
Net Assets
31 December
2023
US$
31 December
2022
US$
Note
C.4
C.5
C.6
C.7
C.8
851,665
4,171,972
11,998,392
17,022,029
851,665
12,072,827
9,330,391
22,254,883
3,874,618
255,440
4,130,058
2,586,963
248,869
2,835,832
21,152,087
25,090,715
C.11
175,966
175,966
129,874
129,874
175,966
20,976,121
129,874
24,960,841
Equity attributable to the owners of the parent
Ordinary shares
Share premium
Retained earnings
Translation reserve
Total equity
C.10
973,329
28,937,011
(8,128,037)
(806,182)
839,723
24,240,930
365,728
(485,540)
20,976,121
24,960,841
The Company’s loss after tax for the year ended 31 December 2023 was US$8,493,765 (loss after
tax for the period ended 31 December 2022: US$11,166,674). The Company has used the
exemption under S408 CA 2006 not to disclose the Company income as primary statement. The
notes on pages 83 to 86 are an integral part of these financial statements.
The financial statements on pages 81 to 86 were approved and authorised for issue by the Board of
Directors on 21 May 2024 and were signed on its behalfits behalf.
Dr Clifford M Gross
Chairman and CEO
81
Louis Castro
Director
Tekcapital PLC
registered number
08873361
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR
ENDED 31 DECEMBER 2023
Company
Ordinary
Shares
US $
Note
Attributable to owners of the parent company
Translation
Reserve
US $
Retained
(Deficit)/Earnings
US $
Share
Premium
US $
Total
Equity
US $
Balance as at 30 November 2021
793,792
21,793,644
(177,860)
11,364,445
33,774,021
Loss for the period
Other comprehensive income
Total comprehensive income for the year
Transactions with owners, recorded
directly in equity
Share issue
Cost of share issue
Share issue in share option exercise
Share based payments
-
-
(307,680)
(307,680)
(11,166,674)
(11,474,354)
(307,680)
(11,166,674)
(11,166,674)
40,486
5,445
2,489,878
(142,839)
100,247
18
18
24
2,530,364
(142,839)
105,692
167,957 167,957
Total transactions with owners
45,931
2,447,286
-
167,957
2,661,174
Balance as at 31 December 2022
839,723
24,240,930
(485,540)
365,728
24,960,841
Loss for the year
Other comprehensive loss
Total comprehensive loss for the period
Transactions with owners, recorded
directly in equity
-
(320,642)
- (320,642)
(8,573,423)
(8,573,423)
Share issue
18
133,606
5,045,893
Cost of share issue
Share issue in share option exercise
Share based payments
18
24
(349,812)
Total transactions with owners
133,606
4,696,081
-
79,658
4,909,345
Balance as at 31 December 2023
973,329
28,937,011
(806,182)
(8,128,037)
20,976,121
(8,573,423)
(320,642)
(8,894,065)
5,179,499
(349,812)
-
79,658
79,658
Share premium – amount subscribed for share capital in excess of nominal value, net of directly attributable issue costs.
Translation reserve – foreign exchange differences recognized in other comprehensive income.
Retained earnings – cumulative net gains and losses recognized in the consolidated financial statements of comprehensive income.
The notes on pages 83 to 86 are an integral part of these financial statements.
83
NOTES TO THE COMPANY FINANCIAL
STATEMENTS
C.1. GENERAL INFORMATION
Tekcapital PLC (Companies House registration number: 08873361) is a Company incorporated in
England and Wales and domiciled in the UK. The address of the registered office is detailed on
page 28 of these financial statements. the Company is a public limited Company limited by shares,
which listed on the AIM market of the London Stock Exchange in 2014. The principal activity of
the Company is that of investment in portfolio companies. the Company also acquires exclusive
licences to university technologies that it believes can positively impact people’s lives, for
subsequent commercialisation.
The Company had no employees during the period.
C.2 STATEMENT OF COMPLIANCE
The financial statements of the parent company have been prepared in accordance with Financial
Reporting Standard 101 “Reduced disclosure framework” (‘FRS 101’). the Company will continue
to prepare its financial statements in accordance with FRS101 on an ongoing basis until such time
as it notifies shareholders of any change to its chosen accounting framework.
The principal accounting policies applied in the preparation of these financial statements are set out
in Note 2 of the consolidated financial statements.
Exemptions
The Company financial statements have been prepared using the historical cost convention except
where other measurement basis are required to be applied and in accordance with IFRS under FRS
101. In accordance with FRS101, the Company has taken advantage of the following exemptions:
• Statement of Cash Flows
• Financial instrument disclosures.
• Capital management disclosures.
• Additional comparative information.
• A reconciliation of share options in the year
• Related party disclosures with wholly owned subsidiaries.
Changes in accounting policy and disclosures
All changes to accounting standards are explained in note 2 to the consolidated financial statements.
C.3 PROFIT/(LOSS) FOR THE YEAR
As permitted by section 408 of the Companies Act 2006, the Company has elected not to present
its own profit and loss account for the year. The auditor’s remuneration for audit and other services
are disclosed in note 7 to the consolidated financial statements.
C.4 INVESTMENT IN SUBSIDIARIES
Net Book Value
As at 1 January 2023
Balance at 31 December 2023
Shares in
subsidiaries
Loans to Subsidiaries
79,426
79,426
772,239
772,239
Total
US $
851,665
851,665
The Net Book Value is stated at cost less any adjustment for impairment. As at 31st December 2023
the total impairment recognised on investment in subsidiaries was US$1,103,550 (2022:
US$1,103,550).
Subsidiaries
name
(consolidated)
Direct
Tekcapital
Europe Limited
Tekcapital LLC
England
and
Wales
USA
Proportion of
ordinary shares
directly held
Nature of business Capital and
reserves as
at 31 Dec
2023
Net
Profit/(Loss)
for year ended
31 Dec 2023
100%
100%
Provision
of
Intellectual property
research services
Provision
of
Intellectual property
research services
26,985,802
(5,445,453)
(5,262,405)
(1,038,190)
* As at the year end, the Company has no interest in the ownership of any other entities or exerts
any significant influence over or provides funding which constitutes an “unconsolidated structured
entity”.
All UK subsidiaries are exempt from the requirement to file audited accounts by virtue of section
479A of the Companies Act 2006.
Tekcapital Europe Ltd (registered address 12 New Fetter Lane, London, United Kingdom, EC4A
1JP) and Tekcapital LLC (registered address 11900 Biscayne Blvd, Suite 630, Miami, Florida,
33181, United States) are consolidated by Tekcapital plc because they continue to provide advisory
services in IP search and technology transfer.
C.5 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
The Company ’s investment in Belluscura plc in the period ended 31 December 2023 and 31
December 2022 is listed below and classified as equity instruments. The principal place of business
for Belluscura plc is England and Wales.
Proportion of
ordinary shares
as at 31 Dec
2023
1 Jan 2023 Additions
Disposal
Other
adjustments
Fair Value
change
31 Dec
2023
7.70%
12,072,826
12,072,826
-
-
(272,514)
(634,065)
(7,023,307)
4,142,940
(272,514)
(634,065)
(7,023,307)
4,142,940
Company
Belluscura Plc
Total
Balance
The valuation technique used falls under, Level 1 – Observable techniques, other than quoted prices.
The fair value of the holding decreased by US$7.7m during the year due to market movement in
Company’s shares listed at AIM market of London Stock Exchange, and closing price of 23p as of
85
31 December 2023. With 15,138,767 shares held by Tekcapital plc, a fair value of US$4,142,940
was arrived at as of 31 December 2023.
C.6 NON CURRENT RECEIVABLES
As at 31st December 2023, the Company was owed a total of US$17,259,355 (2022:
US$13,507,967) from one of it's subsidiaries (Tekcapital LLC), which an IFRS9 Expected Credit
Loss provision totaling US$5,265,819 (2022: US$4,177,576) has been provided for. The net
receivable due from Tekcapital LLC at 31st December 20233 of US$11,993,535 (2022:
US$9,330,391) will be recovered in greater than one year.
C.7 TRADE AND OTHER RECEIVABLES
Company
Receivables from Group companies
VAT
Prepayments
Total trade and other receivables
2023
US $
3,834,888
32,678
7,052
3,874,618
2022
US $
2,540,557
29,620
16,786
2,586,963
The credit loss allowance on Trade and Other Receivables was assessed as at 31 December 2023
and there was no increase/decrease in the expected credit loss allowance (2022: $nil).
C.8 CASH AND CASH EQUIVALENTS
Company
2023
US $
2022
US $
Cash at bank and in hand
255,440
248,869
Total cash and cash equivalents
255,440
248,869
C.9 CATEGORIES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Company
Financial assets at fair value through profit and loss
Financial assets at amortised cost
Cash and equivalents at amortised cost
2023
US $
4,462,437
15,815,338
255,440
20,533,215
2022
US $
12,072,827
12,904,198
248,869
25,225,894
Financial liabilities
Trade and other payables at amortised cost
175,966
129,874
86
C.10 SHARE CAPITAL
Group and Company
Issued and fully paid up
As at 30 November 2021
Shares issued through share option exercise
Shares issued in further public offering
As at 31 December 2022
Shares issued in further public offering
As at 31 December 2023
Number
of shares
Ordinary
Share US$
Total
US $
141,542,328
1,150,000
8,000,000
150,692,328
27,395,934
178,088,262
793,792
5,445
40,486
839,723
133,606
973,329
793,792
5,445
40,486
839,723
133,606
973,329
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 2023: 14,062,500 shares were issued in the placing of new ordinary shares at
£0.16p. Total proceeds of US$2,640,909 were netted against cost of raising finance in the
amount of US$179,371
• April 2023: 13,333,334 shares issued in the placing of new ordinary shares at £0.15p. Total
proceeds of US$2,404,984 were netted against cost of raising finance in the amount of
US$170,441
The Company has authorised share capital of 178,088,162 with a nominal value of £0.004. Of these
shares, 178,088,162 were issued and fully paid up.
C.11 TRADE AND OTHER PAYABLES
Company
Accruals and other creditors
Accounts payable
2023
US $
145,236
30,729
175,965
2022
US $
127,902
1,972
129,874
C.12 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 25% has been
used to calculate the potential deferred tax.
C.13 DIVIDENDS
No dividend has been recommended for the year ended 31 December 2023 (2022: Nil) and no
dividend was paid during the year (2022: Nil).
87
RISK FACTORS AND FORWARD-LOOKING
STATEMENTS
This Report is directed only at Relevant Persons and must not be acted on or relied upon by persons
who are not Relevant Persons. Any other person who receives this Report should not rely or act
upon it. By accepting this Report the recipient is deemed to represent and warrant that: (i) they are
a person who falls within the above description of persons entitled to receive the Report; (ii) they
have read, agree and will comply with the contents of this notice. The securities mentioned herein
have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the
“Securities Act”), or under any U.S. State securities laws, and may not be offered or sold in the
United States of America or its territories or possessions (the “United States”) unless they are
registered under the Securities Act or pursuant to an exemption from or in a transaction not subject
to the registration requirements of the Securities Act. This Report is not being made available to
persons in Australia, Canada, Japan, the Republic of Ireland, the Republic of South Africa or any
other jurisdiction in which it may be unlawful to do so, and it should not be delivered or distributed,
directly or indirectly, into or within any such jurisdictions.
Investors must rely on their own examination of the legal, taxation, financial and other
consequences of an investment in the Company, including the merits of investing and the risks
involved. Prospective investors should not treat the contents of this Report as advice relating to
legal, taxation or investment matters and are advised to consult their own professional advisers
concerning any acquisition of shares in the Company. Certain information contained in this Report
has been obtained from published sources prepared by other parties. Certain other information has
been extracted from unpublished sources prepared by other parties which have been made available
to the Company. The Company has not carried out an independent investigation to verify the
accuracy and completeness of such third-party information. No responsibility is accepted by the
Company or any of its directors, officers, employees or agents for the accuracy or completeness of
such information.
All statements of opinion and/or belief contained in this Report and all views expressed represent
the directors’ own current assessment and interpretation of information available to them as at the
date of this Report. In addition, this Report contains certain “forward-looking statements”,
including but not limited to, the statements regarding the Company’s overall objectives and
strategic plans, timetables and capital expenditures. Forward-looking statements express, as at the
date of this Report, the Company’s plans, estimates, valuations, forecasts, projections, opinions,
expectations or beliefs as to future events, results or performance. Forward-looking statements
involve a number of risks and uncertainties, many of which are beyond the Company’s control, and
there can be no assurance that such statements will prove to be accurate. No assurance is given that
such forward-looking statements or views are correct or that the objectives of the Company will be
achieved. Further, valuations of the Company’s portfolio investments and net asset value can and
will fluctuate over time due to a wide variety of factors both Company-specific and macroeconomic.
Changes in net asset values can have a significant impact on revenue and earnings of the Company
and its future prospects.
As a result, the reader is cautioned not to place reliance on these statements or views and no
responsibility is accepted by the Company or any of its directors, officers, employees or agents in
respect thereof. the Company does not undertake to update any forward-looking statement or other
information that is contained in this Report. Neither the Company nor any of its shareholders,
directors, officers, agents, employees or advisers take any responsibility for, or will accept any
liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise,
88
in respect of, the accuracy or completeness of the information contained in this Report or for any
of the opinions contained herein, or for any errors, omissions or misstatements or for any loss,
howsoever arising, from the use of this Report. Neither the issue of this Report nor any part of its
contents is to be taken as any form of contract, commitment or recommendation on the part of the
Company or the directors of the Company. In no circumstances will the Company be responsible
for any costs, losses or expenses incurred in connection with any appraisal, analysis or investigation
of the Company. This Report should not be considered a recommendation by the Company or any
of its affiliates in relation to any prospective acquisition or disposition of shares in the Company .
No undertaking, Report, warranty or other assurance, express or implied, is made or given by or on
behalf of the Company or any of its affiliates, any of its directors, officers or employees or any
other person as to the accuracy, completeness or fairness of the information or opinions contained
in this Report and no responsibility or liability is accepted for any such information or opinions or
for any errors or omissions.
Intellectual Property Risk Factors
Tekcapital plc’s mission is to create valuable products from university intellectual property that can
improve people’s lives. Therefore, our ability to compete in the market may be negatively affected
if our portfolio companies lose some or all of their intellectual property rights, if patent rights that
they rely on are invalidated, or if they are unable to obtain other intellectual property rights. Our
success will depend on the ability of our portfolio companies to obtain and protect patents on their
technology and products, to protect their trade secrets, and for them to maintain their rights to
licensed intellectual property or technologies. Their patent applications or those of our licensors
may not result in the issue of patents in the United States or other countries. Their patents or those
of their licensors may not afford meaningful protection for our technology and products. Others
may challenge their patents or those of their licensors by proceedings such as interference,
oppositions and re-examinations or in litigation seeking to establish the invalidity of their patents.
In the event that one or more of their patents are challenged, a court may invalidate the patent(s) or
determine that the patent(s) is not enforceable, which could harm their competitive position and
ours. If one or more of our portfolio Company patents are invalidated or found to be unenforceable,
or if the scope of the claims in any of these patents is limited by a court decision, our portfolio
companies could lose certain market exclusivity afforded by patents owned or in-licensed by us,
and potential competitors could more easily bring products to the market that directly compete with
our own.
The uncertainties and costs surrounding the prosecution of their patent applications and the cost of
enforcement or 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 against others.
However, these activities are expensive, take significant time and divert management’s attention
from other business concerns. They may not prevail in these activities. If they are not successful in
these activities, the prevailing party may obtain superior rights to our claimed inventions and
technology, which could adversely affect the ability of our portfolio companies to successfully
market and commercialize their products and services. Claims by other companies may infringe the
intellectual property rights on which our portfolio companies rely, and if such rights are deemed to
be invalid it could adversely affect our portfolio companies and ourselves as investors in these
companies.
From time to time, companies may assert, patent, copyright and other intellectual proprietary rights
against our portfolio Company ’s products or technologies. These claims can result e in lawsuits
being brought against our portfolio companies or their holding Company in the future. They and
we may not prevail in any lawsuits alleging patent infringement, given the complex technical issues
89
and inherent uncertainties in intellectual property litigation. If any of our portfolio Company
products, technologies or activities, from which our portfolio companies derive or expect to derive
a substantial portion of their revenues and were found to infringe on another Company’s intellectual
property rights, they could be subject to an injunction that would force the removal of such product
from the market or they could be required to redesign such product, which could be costly. They
could also be ordered to pay damages or other compensation, including punitive damages and
attorneys’ fees to such other Company. A negative outcome in any such litigation could also
severely disrupt the sales of their marketed products to their customers which in turn could harm
their relationships with their customers, their market share and their product revenues. Even if they
are ultimately successful in defending any intellectual property litigation, such litigation is
expensive and time-consuming to address, will divert our management’s attention from their
business and may harm their reputation and ours.
Several of our portfolio companies may be subject to complex and costly regulation and if
government regulations are interpreted or enforced in a manner adverse to them, they may be
subject to enforcement actions, penalties, exclusion, and other material limitations on their
operations and this may 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.
90
STAY IN TOUCH
U.K: +44 (0) 1865 338102
E-mail: info@tekcapital.com
U.S: +1 (305) 200-3450
www.tekcapital.com
12 New Fetter Lane
London, EC4A 1JP
United Kingdom
91