Annual Results for year to 31 January 2023

Semper Fortis Esports PLC

31 July 2023

 

31 July 2023

Semper Fortis eSports Plc

("Semper" or the "Company")

Annual Results for year to 31 January 2023

Chairman's Statement

In the prior year financial statements we advised that despite growth in the sector, monetisation had remained a key challenge for all esports organisations globally and that due to economic uncertainty and difficult capital market conditions, the Company intended to significantly reduce its overheads and conserve cash. This is exactly what we have done.

We chose not to renew the contracts of our esports talent and reduced other overheads where we could, whilst looking at various different strategies for the Company.

Post year-end Jassem Osseiran stepped down from the board and I would like to record my sincere thanks to Jassem for his valued contribution during his tenure.

In April 2023 the Company raised £100,000 before expenses through a subscription for an aggregate of 100m new ordinary shares.

On 16 May 2023 Semper agreed to subscribe for £250,000 of Convertible Loan Notes ("CLNs") of £1 each in GL Membership Limited (trading as Good Life+ "Good Life+"). Should the CLNs convert, they are expected to do so following the acquisition of the entire issued share capital of Good Life+ by Semper by way of a reverse takeover transaction.

Good Life+ was founded in September 2021 offering a monthly membership that gives members access to daily, luxury prize draws whilst simultaneously providing access to thousands of discounts and deals. The membership base has seen significant growth over the last 12 months to 14,500 active members and the Convertible Loan Note, along with further planned fundraising, will allow for rapid customer acquisition and expansion, with the immediate aim of obtaining 50,000 active members within 12 months.

The founders of Good Life+ have built an impressive management team and the calibre of existing investors lends weight to our view that there is considerable upside potential in this early-stage investment.

We have commenced a sustained period of due diligence and look forward to informing our shareholders of progress.

Keith Harris

Chairman

31 July 2023

Enquiries: 

Semper Fortis Esports plc
Max Deeley, Finance Director https://semperfortisesports.com

Novum Securities Limited                                                        + 44 20 7399 9400

AQSE Corporate Adviser and Broker

David Coffman / George Duxberry - Corporate Finance              

Colin Rowbury - Corporate Broking                                           

STRATEGIC REPORT

The Directors present their Strategic Report on Semper Fortis Esports PLC ("Semper") for the year ended 31 January 2023.

Principal Activity

The Company's principal activity at the start of the financial year was that of a professional esports organisation and lifestyle brand. However during the course of the year a decision was made to end all contracts with esports talent and reduce overheads; whilst considering various different strategies for the Company.

The Company currently has no active operating business.

Post year end the Company agreed to subscribe for £250,000 of Convertible Loan Notes of £1 each in GL Membership Limited and it has now commenced due diligence as the Company looks to explore the opportunity to acquire GL Membership Limited by way of a reverse takeover.

Review of the business and developments during the year

Esports Teams

During the year the Company made the decision to stop running esports teams. This was due to the high costs of contracting esports professional players together with no visibility of any material earnings in the near future. As part of this process the Company managed to sell one of its Rocket League players for a transfer fee of $35,000.

Play-to-Earn

In February 2022, the Company launched a new play-to-earn gaming division, believing it would bring the Company material revenues.

However the play-to-earn industry revolves around the Cryptocurrency market which suffered a significant crash in May 2022 with some stable coins losing 97% of their value. This dramatically reduced the value of the in-game items and the earning potential of players.

The Company therefore prudently raised an impairment of £32,649 against the value of the NFTs it owns reducing the values to zero.

Establishment of Employee Benefit Trust

During the year, the Company established an Employee Benefit Trust ("EBT") for the benefit of current and future employees.

In March 2022, the EBT acquired all the Ordinary Shares (41,000,000 Ordinary Shares) and all the Redeemable Preference Shares (12,587 Redeemable Preference Shares) held by GIMA Group Inc for a total consideration of £56,747. This concluded all matters relating to the departure of Mr Soltani (the former CEO) who held his share interests in the Company through GIMA Group Inc.

Board changes

On 20 July 2022 Nolan Bushnell stepped down as non-executive director and on 22 March 2023 Jassem Osseiran stepped down as a director of the Company. The Board would like to thank both Nolan and Jassem for their hard work and valued contribution during their time with the Company.

Outlook

The Company has significantly reduced its overheads to a minimum in order to conserve its cash position.

Post year end the Company raised £100,000 before expenses through a subscription for an aggregate of 100,000,000 new ordinary shares of 0.01 pence par value each at a price of 0.1 pence per share.

In May 2023 the Company agreed to subscribe for £250,000 of Convertible Loan Notes ("CLNs") of £1 each in GL Membership Limited (trading as Good Life+ "Good Life+").

Good Life+ offers a monthly membership that gives members access to daily, luxury prize draws whilst simultaneously providing access to thousands of discounts and deals.

The Convertible Loan Notes have been secured against the assets of Good Life+ and the funding will assist Good Life's rapid expansion and growth in the subscription model space.  It will also allow it to continue to develop its product offering.

Should the CLNs convert, they are expected to do so following the acquisition of the entire issued share capital of Good Life+ by Semper by way of a reverse takeover transaction under the AQSE Access Growth Market Rules ("Reverse Takeover"). The subscription price at conversion is expected to be at a discount to the price per ordinary share expected to be paid for Good Life+ on completion of a Reverse Takeover.  

Section 172(1) Statement - Promotion of the Company for the benefit of members as a whole:

The Directors believe they have acted in the way they considered in good faith, that would most likely to promote the success of the Company for the benefit of its members as a whole, as required by s172 of the Companies Act 2006, and in doing so have had regard to:

·      the likely consequences of any decision in the long term;

·      The need to act fairly between the members of the Company;

·      The desirability of maintaining the Company's reputation for high standards of business conduct;

·      Consider the interests of the Company's employees;

·      The need to foster the Company's relationships with suppliers, customers and others; and

·      the impact of the Company's operations on the community and the environment.

In order to fulfil their duties under section 172 and promote the success of the Company for the benefit of all its stakeholders, the directors need to ensure that they not only act in accordance with the legal duties but also engage with, and have regard for, all its stakeholders when taking decisions. The Company has a number of key stakeholders that it is committed to maintaining a strong relationship with. Understanding the Company's stakeholders and how they and their interests will impact on the strategy and success of the Company over the long term is a key factor in the decisions that the Board make.

Shareholders The promotion of the success of the Company is ultimately for the benefit of the Company's shareholders who provide the Company's permanent capital. As a company listed on the Access segment of the AQSE Growth Market, the Company is responsible for ensuring that it is aware of shareholder needs and expectations. The Directors attach great importance to maintaining good relationships with all of its shareholders and interested parties and seeks to ensure that they have access to correct and adequate information in a timely fashion. The Directors are aware that as stakeholders, its shareholders play a vital role in the fabric of the Company and therefore regularly engages in dialogue with the Company's shareholders and is available for meetings with institutional and major shareholders following the release of the Company's Annual and Interim Results. The Directors welcome all shareholders to make contact with the Company and provide any feedback or comments that they may have, and contact details are available on the Company's website. The Company's Annual General Meeting is also an important opportunity for shareholders to meet and engage with Directors and ask questions on the Company and its performance.

Employees Our employees are key to the success of the Company and recruiting, retaining and developing our team is one of the Company's most important priorities. The Directors expect a high standard of integrity and accountability from the Company's employees. Directors encourage an open communication forum, aided by the Company's small size and relatively flat hierarchical structure.

Regulatory Bodies Although the Company is not itself directly regulated, it operates within a regulated environment (e.g. AQSE rules) and therefore actively engages with various regulatory bodies and advisory firms to ensure that compliance standards are maintained and that the Company continues to act with the high standards of business conduct that have established its reputation thus far.

Suppliers and Advisors The Company's suppliers and advisors are integral to the day to day operation of the Company. Relationships with suppliers are carefully managed to ensure that the Company is always obtaining value for money. The Company seeks to ensure that good relationships are maintained with its suppliers and advisors through regular contact and the prompt payment of invoices. The Company has appointed Shakespeare Martineau's company secretarial services to ensure that high standards and timeliness are key to the Board's delivery of its objectives to shareholders.

Other stakeholders and the wider community The Directors are committed to ensuring that none of its activities have a detrimental impact on the wider community and the environment.

Events after the reporting date

On 28 April 2023 the Company raised £100,000 before expenses through a subscription for an aggregate of 100,000,000 new ordinary shares of 0.01 pence par value each at a price of 0.1 pence per share.

These new Ordinary Shares were admitted to trading on the Access segment of the AQSE Growth Market on 4 May 2023.

Following Admission of the New Ordinary Shares, the Company's issued ordinary share capital consisted of 515,499,800 ordinary shares of 0.01 pence each.

On 16 May 2023 the Company agreed to subscribe for £250,000 of Convertible Loan Notes of £1 each in GL Membership Limited which are secured on the assets of the company.

Principal Risks and Uncertainties

Reliance on key personnel

The Company is dependent on the Directors, its management and employees. The future success of the Company depends on the ability of the Company to attract and retain its management and employees.

The unexpected departure or loss of members of the Board could have an adverse impact on the financial condition and results of operations of the Company, and there can be no assurance that the Company will be able to attract or retain suitable replacements for those members of the Board who depart.

Transaction Risk

The Company is currently conducting due diligence on a potential acquisition of the entire issued share capital of GL Membership Limited by way of a reverse takeover transaction under the AQSE Access Growth Market Rules. There is no guarantee that the terms of an SPA will be agreed or that a Reverse Takeover will conclude.

Liquidity risk

The Company is at an early stage of its development and is reliant upon access to sufficient funding to continue its operations.  The Directors continually monitor the cash flows of the business and identify at an early stage whether further funding is required to support its activities and future development plans.  There is no guarantee such funding will be available at terms which are acceptable to the Directors or the company's shareholders.

Assessment of business risk

The Board regularly reviews operating and strategic risks. The Company's operating procedures include a system for reporting financial and non-financial information to the Board including:

·      reports from management with a review of the business at each Board meeting, focusing on any new decisions/risks arising; and

·      consideration of reports prepared by third parties.

Financial risk management

Details of the Company's financial instruments and its policies with regard to financial risk management are contained in note 15 to the financial statements.

Results for the year and dividends

The loss for the year after tax was £578,309 (2022: loss of £1,221,367). Since the Company does not have any distributable reserves, the Directors are unable to recommend the payment of a dividend.

INCOME STATEMENT AND STATEMENT OF COMPRENSIVE INCOME

For the year ended 31 January 2023

		Year		Period
		ended		ended
	Note	31 January 2023		31  January 2022
		£		£
Revenue	4	100,977		31,629
Operating and administrative expenses	5	(679,286)		(1,252,996)
Loss before income tax		(578,309)		(1,221,367)
Income tax	7	-		-
Loss for the year / period and total comprehensive loss		(578,309)		(1,221,367)
Earnings per share attributable to equity owners
Basic and diluted earnings per share	12	(0.001)		(0.003)

The income statement has been prepared on the basis that operations are discontinued.

The accounting policies and notes form an integral part of these financial statements.

STATEMENT OF FINANCIAL POSITION

As at 31 January 2023

		As at 31 January 2023		As at 31 January 2022
	Note	£		£
ASSETS
Current assets
Trade and other receivables	8	46,086		107,622
Cash and cash equivalents	9	527,879		1,328,418
Other assets	10	1,432		-
Total current assets		575,397		1,436,040
Total assets		575,397		1,436,040
EQUITY AND LIABILITIES
Equity attributable to owners
Share capital	13	76,550		76,550
Share premium		2,487,410		2,487,410
Own shares	14	(56,747)		-
Share based payments reserve		157,598		155,077
Retained earnings		(2,152,482)		(1,574,173)
		512,329		1,144,864
Current liabilities
Trade and other payables	11	63,068		291,176
Total equity and liabilities		575,397		1,436,040

STATEMENT OF CHANGES IN EQUITY

As at 31 January 2023

		Share capital		Share premium		Own shares		Share based payments reserve		Retained earnings		Total
		£		£		£		£		£		£
At 01 February 2021		50,500		-		-		-		(356,674)		(306,174)
Issue of ordinary shares		26,050		2,562,410		-		-		-		2,588,460
Total comprehensive loss for the period		-		-		-		-		(1,221,367)		(1,221,367)
Share issue cost		-		(75,000)		-		-		-		(75,000)
Share based payment		-		-		-		158,945		-		158,945
Forfeiture of share options		-		-		-		(3,868)		3,868		-
At 31 January 2022		76,550		2,487,410		-		155,077		(1,574,173)		1,144,864
Total comprehensive loss for the year		-		-		-		-		(578,309)		(578,309)
Share based payment		-		-		-		2,521		-		2,521
Acquired in the year		-		-		(56,747)		-		-		(56,747)
At 31 January 2023		76,550		2,487,410		(56,747)		157,598		(2,152,482)		512,329

Share Capital

Share capital represents the nominal value of shares that have been issued.

Share premium

Share premium represents the aggregate amount of premiums received on issuing shares after deduction of attributable expenses.

Own shares

The own shares reserve represents the cost of shares in Semper Fortis Esports Plc purchased and held by the employee benefit trust.

Share based payments reserve

Share based payments reserve is a reserve used to recognise the cost and equity associated with the fair value of share options and warrants that have been issued by the Company.

Retained earnings

Retained earnings is the balance of profit or loss retained by the Company net of any distributions made.

The accounting policies and notes form an integral part of these financial statements.

STATEMENT OF CASH FLOWS

For the year ended 31 January 2023

		Year		Period
		ended		ended
		31 January 2023		31 January 2022
		£		£
Cash flows from operating activities
Loss before income tax		(578,309)		(1,221,367)
Adjustments:
Share based payments		2,521		83,945
Fair value loss on other assets	10	32,649		-
Movement in working capital
Decrease/(increase) in receivables	8	61,536		(50,277)
(Decrease)/increase in payables	11	(228,108)		(145,501)
Net cash flow from operating activities		(709,711)		(1,333,200)
Cash flows from investing activities
Purchase of other assets	10	(34,081)
Purchase of own shares	14	(56,747)		-
Net cash flows from investing activities		(90,828)		-
Cash flows from financing activities
Issue of ordinary shares	13	-		2,588,460
Net cash flows from financing activities		-		2,588,460
Net (decrease)/increase in cash and cash equivalents		(800,539)		1,255,260
Cash and cash equivalents at beginning of year / period		1,328,418		73,158
Cash and cash equivalents at end of year / period		527,879		1,328,418

The accounting policies and notes form an integral part of these financial statements.

NOTES TO THE FINANCIAL INFORMATION

For the year ended 31 January 2023

1.          General information

Semper Fortis Esports PLC (the "Company") was incorporated on 14 January 2020 in England and Wales, with registered number 12403380 under the Companies Act 2006. The registered office of the Company is 6^th Floor 60 Gracechurch Street, London, United Kingdom, EC3V 0HR.

During part of the year the principal activity of the Company was that of an esports organisation and lifestyle brand. As at the year end the Company had no active operating business.

2.          Basis of preparation

The financial information and accompanying notes are based on the following policies which have been consistently applied:

The financial information of the Company has been prepared in accordance with UK-adopted International Accounting Standard and in conformity with the requirements of the Companies Act 2006.

The financial statements are presented in Sterling, which is the Company's functional and presentational currency and has been prepared under the historical cost convention.

The preparation of financial information requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Information are disclosed in Note 3.

Going Concern

The financial statements have been prepared on a going concern basis notwithstanding operating losses and net current liabilities.

The directors have prepared a liquidity forecast for a period of at least 12 months from the date of approval of these financial statements which indicate that the Company will have sufficient funds to meet its liabilities as they fall due for that period. These forecasts are dependent on the ability of the Company to reduce its costs during the going concern period to meet its working capital needs as they fall due and raise funds, if required, to fund new business opportunities. This indicates that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern and the auditors have included a material uncertainty in respect of going concern in the auditor's report.

The directors are confident that the Company will continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

Adoption of new and revised standards

New standards, amendments and interpretations

The Company has adopted all of the new and amended standards and interpretations issued by the International Accounting Standards Board that are relevant to its operations and effective for accounting periods commencing on or after 1 February 2022.

New standards, amendments and Interpretations in issue but not yet effective or not yet endorsed and not early adopted

Standard	Key requirements	Effective date for annual periods beginning on or after:
IAS 1	Amendments to IAS 1, 'Presentation of Financial Statements' regarding the classification of liabilities	Not yet adopted
IAS 12	Amendments to IAS 12, 'Income Taxes' regarding deferred tax related to assets and liabilities arising from a single transaction	1 January 2023
IAS 1	Amendments to IAS 1, 'Presentation of Financial Statements' regarding the amendments of disclosure of accounting policies	Not yet adopted
IAS 8	Amendments to IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors' to distinguish between accounting policies and accounting estimates.	1 January 2023

These standards are not considered to have a material impact on the financial statements.

3.          Accounting policies

The accounting policies set out below have, unless otherwise stated, been applied consistently.

There have been no judgements made by the Directors, in the application of these accounting policies that have significant effect on the financial information and estimates with a significant risk of material adjustment in the next year.

Other assets

Digital assets and tokens

These are assets which do not qualify as cash and cash equivalents or financial assets and have an active market which provides pricing information on an ongoing basis. Digital assets and tokens are measured at fair value to profit and loss.

Digital assets are included in current assets as management intends to dispose of them within 12 months of the reporting period.

Digital assets comprise of crypto coins and non-fungible tokens (NFTs). The price of crypto coin are directly observable and are therefore level 1 as per the fair value hierarchy under IFRS 13 - fair value measurement and NFTs are denominated in crypto currencies and their fair value is determined based on the value of the crypto currency and therefore their prices are not directly observable and based on the input used for fair valuation it is classified as a level 2 as per the fair value hierarchy under IFRS 13 - fair value measurement.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and short-term deposits with an original maturity of three months or less.

Equity

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs, or at fair value where no proceeds are received.

Financial instruments

Financial assets - Trade and other receivables

Financial assets are recognised in the statement of financial position when the Company becomes party to the contractual provisions of the instrument.

Financial assets are classified into specified categories, such as trade and other receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of recognition.

Financial assets are subsequently measured at amortised cost, fair value through OCI, or FVPL.

The classification of financial assets at initial recognition that are debt instruments depends on the financial asset's contractual cash flow characteristics and the Company's business model for managing them. The Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.

In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are solely payments of principal and interest ("SPPI")' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.

The Company's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

financial assets at amortised cost;

financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments);

financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments); and

financial assets at FVPL.

   Financial assets at amortised cost (debt instruments)

This category is the most relevant to the Company. The Company measures financial assets at amortised cost if both of the following conditions are met:

•   the financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and

•   the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest rate ("EIR") method and are subject to impairment. Interest received is recognised as part of finance income in the statement of profit or loss and other comprehensive income. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. IFRS 9.5.4 The Company's financial assets at amortised cost include other receivables and cash and cash equivalents.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognised when:

•   the rights to receive cash flows from the asset have expired; or

•   the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either: (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Company also recognises an associated liability.

The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Impairment of financial assets

The Company recognises an allowance for expected credit losses ("ECLs") for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

The Company recognises an allowance for ECLs for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original EIR. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For other receivables due in less than 12 months, the Company applies the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Company does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset's lifetime ECL at each reporting date.

The Company considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows and usually occurs when past due for more than one year and not subject to enforcement activity.

At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Financial liabilities - Trade and other payables

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, or payables, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company's financial liabilities include trade and other payables.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

•   loans and borrowings and trade and other payables;

•   after initial recognition, interest-bearing loans and borrowings and trade and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are derecognised, as well as through the EIR amortisation process;

•   amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss and other comprehensive income.

This category generally applies to trade and other payables.

Derecognition

A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss and other comprehensive income.

Financial risk management

Equity instruments issued by the Company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the Company. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Financial Risk Factors

The Company's cash holdings are all held with major financial institutions whose financial status is regularly reviewed.

Credit Risk

Credit risk arises from outstanding receivables. Management does not expect any losses from non-performance of these receivables. The amount of exposure to any individual counter party is subject to a limit, which is assessed by the Board.

The Company considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk, which is stated under the cash and cash equivalents accounting policy.

Liquidity risk

The Company's continued future operations depend on its ability to raise sufficient working capital through the issue of share capital and generate revenue.

Capital risk management

The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders. The Company's capital structure primarily consists of equity attributable to the owners, comprising issued capital, reserves and retained losses.

Current and deferred tax

Current tax

The tax currently payable is based on taxable profit or loss for the year. Taxable profit or loss differs from the profit or loss for the financial year as reported in the statement of total comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax

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

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax is calculated at the tax rates that are expected to apply in the year when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the reporting date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the subsidiary intends to settle its current tax assets and liabilities on a net basis.

Deferred tax will be recognised on the losses incurred when the Company has sufficient visibility over the usage of these loses and is forecasting future profits in the short term.

Critical accounting estimates and judgements

The Company makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual results may differ from these estimates and assumptions. There are no estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Revenue

Revenue relates to prize winnings, online in-game sales, sponsorship and ad hoc revenue.  It is recognised to the extent that economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates and taxes. Prize winnings, online in-game sales and adhoc revenue are recognised at a point in time.

Sponsorship and similar commercial income is recognised over the duration of the respective contracts.

Provisions and contingencies

Provisions are recognised when the Company has an obligation at the reporting date as a result of a past event, it is probable that the Company will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position and the amount of provision as an expense.

Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation.

Expenses

Expenses on goods and services are recognised when, and to the extent that they have been received, and is measured at the fair value of those goods and services. Expenses are recognised in operating expenses except where it results in the creation of non-current assets or is related to issue of shares.

Share-based payments

For grants of share options and warrants, the fair value as at the date of grant is calculated using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the options are granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that are likely to vest.

4.          Revenue

	2023		2022
	£		£
Prize winnings and online in-game sales	60,821		31,629
Sponsorship	10,000		-
Ad hoc revenue- player transfer fee	30,156		-
	100,977		31,629

In the opinion of the directors, during the year the Company had one class of business, the operation of a professional esports organisation and lifestyle brand. All the Company's revenue was generated in the United Kingdom.

5.          Operating expenses by nature

	2023		2022
	£		£
Directors' remuneration	191,066		240,313
Salaries	8,000		-
Professional fees	234,696		575,502
Esports team costs	179,488		297,757
Share based payments	2,521		83,945
Fair value adjustment	32,649		-
Sundry expenses	30,866		55,479
	679,286		1,252,996

Auditors' remuneration included in the above amounted to £25,000 (2022: £18,000) for audit services and £Nil (2022: £nil) for non-audit services.

6.          Staff costs

The average monthly number of employees, including Directors, during the year was four (2022: 4). Their aggregate remuneration comprised:

	2023		2022
	£		£
Wages and salaries	183,252		214,506
Social security costs	15,814		25,807
Share based payments	2,521		5,801
	201,587		246,114

               Directors' remuneration for the year was £175,252 (2022: £214,506).

Remuneration disclosed above includes £70,000 paid to the highest paid director (2022: £70,000).

No pension contributions were paid.

7.          Taxation

	2023		2022
	£		£
Current tax	-		-
Deferred tax	-		-
Tax charge/(credit) for the year / period	-		-

The Company has a potential deferred tax asset arising from unutilised management expenses available for carry forward and relief against future taxable profits. The deferred tax asset has not been recognised in the financial statements in accordance with the Company's accounting policy for deferred tax.

The Company's unutilised tax losses carried forward at 31 January 2023 amounted to £1,710,487 (2022: £1,167,896).

The standard rate of tax for the current year, based on the UK effective rate of corporation tax is 19% (2022: 19%). The actual tax for the current and previous year varies from the standard rate for the reasons set out in the following reconciliation:

	2023		2022
	£		£
Loss for the year / period	(578,309)		(1,221,367)
Tax on ordinary activities at standard rate	(109,879)		(232,060)
Effects of:
Expenses not deductible for tax purposes	6,786		51,891
Tax losses available for carry forward against future profits	103,093		180,169
Tax for the year / period	-		-

From 1 April 2023 the corporation tax rate increased to 25% for companies with profits of over £250,000. A small profits rate has also been introduced for companies with profits of £50,000 or less so that they will continue to pay corporation tax at 19%. From this date companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate.

The Company is loss making at present and an assessment of the impact of the change in future tax rates is not possible at this stage.

8.          Trade and other receivables

	2023		2022
	£		£
Trade receivables	-		25,817
Other receivables	46,086		81,805
	46,086		107,622

9.          Cash and cash equivalents

	2023		2022
	£		£
Cash at bank	527,879		1,328,418
	527,879		1,328,418

10.        Other assets

	2023		2022
	£		£
Additions at cost	34,081		-
Fair value adjustments	(32,649)		-
As at 31 January 2023	1,432		-

The closing balance relates to crypto coins which are level 1 as per the fair value hierarchy under IFRS 13 - fair value measurement.

11.        Trade and other payables

Amounts falling due within one year:

	2023		2022
	£		£
Trade payables	17,958		125,413
Other payables	45,110		165,763
	63,068		291,176

12.               Earnings per share

The basic earnings per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number of shares in issue.

The Company had in issue 415,499,800 ordinary shares at 31 January 2023. The loss attributable to equity holders and weighted average number of ordinary shares for the purposes of calculating diluted earnings per ordinary share are identical to those used for basic earnings per ordinary share.

	2023		2022
Loss for the year / period attributable to equity holders (£)	578,309		1,221,367
Weighted average number of shares in issue (number)	415,499,800		355,287,471
Basic and diluted earnings per share (£)	(0.001)		(0.003)

13.        Share capital and premium

	Number of Ordinary shares	Number of Deferred shares	Share capital	Share premium	Total
			£	£	£
At 1 February 2022	415,499,800	35,000	41,550	2,487,410	2,563,960
Issue of ordinary shares	-	-	-	-	-
At 31 January 2023	415,499,800	35,000	41,550	2,487,410	2,563,960

The ordinary shares have full voting, dividend and capital distribution (including on winding up) rights. The nominal value of the ordinary shares is £0.0001. 

The redeemable deferred shares hold no voting rights or rights to receive dividends and are not fully paid.

14.        Own shares

On 17 February 2022 the Company established an Employee Benefit Trust ("EBT") for the benefit of current and future employees.

On 30 March 2022 the EBT completed the acquisition of all the Ordinary Shares (41,000,000 Ordinary Shares representing 9.87% of the issued capital) and all the Redeemable Preference Shares (12,587 Redeemable Preference Shares) held by GIMA Group Inc for a total consideration of £56,747. The Company provided the EBT with a loan of £56,747 to fund this share acquisition. This transaction had been agreed between Mr Soltani (the former CEO) and the Company in December 2021 at the time of his departure. Mr Soltani held his share interests in Semper Fortis Esports within GIMA Group Inc.

15.        Financial instruments

The Company's financial instruments comprise cash, trade and other receivables and trade and other payables that arise from its operations. The main purpose of these financial instruments is to provide finance for the Company's future activities and day to day operational needs.

The main risks faced by the Company are limited to interest rate risk on surplus cash deposits and liquidity risk associated with raising sufficient funding to meet the operational needs of the business.

The Board reviews and agrees policies for managing these risks and they are summarised below.

Financial assets by category

The categories of financial assets included in the statement of financial position and the headings in which they are included are as follows:

	2023		2022
At amortised cost	£		£
Trade and other receivables	46,086		107,622
Cash and cash equivalents	527,879		1,328,418
	573,965		1,436,040

Financial liabilities by category

The categories of financial liabilities included in the statement of financial position and the headings in which they are included are as follows:

	2023		2022
At amortised cost	£		£
Trade and other payables	63,068		291,176

The above trade and other payables are due within six months and represent the undiscounted contractual payments.

Interest rate risk

The Company manages the interest rate risk associated with the Company's cash assets by ensuring that interest rates are as favourable as possible, whilst managing the access the Company requires to the funds for working capital purposes.

The Company's cash and cash equivalents are subject to interest rate exposure due to changes in interest rates. Short-term receivables and payables are not exposed to interest rate risk.

Capital risk management

The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through optimisation of the debt and equity balance. The capital structure of the Company currently consists cash and cash equivalents, and equity attributable to equity holders of the Company, comprising issued capital, reserves and retained earnings, all as disclosed in the Statement of Financial Position.

Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 3 to the financial statements.

16.        Share based payments

Share options

On 26 April 2021, 12,464,994 share options were granted with an exercise price of £0.031 and a vesting period of 2 to 4 years.   One third of the shares subject to options vest on each of the 2^nd, 3^rd and 4^th anniversaries of admission to AQSE.

The fair value has been calculated using the Black-Scholes valuation model. Volatility was in the range of 74% to 86%, with a dividend yield of 0% and a risk-free interest rate in the range of 0.05% to 0.22%. This resulted in a charge of £2,521 (2022: £5,802).

One of the directors left the Company in December 2021, resulting in 8,309,996 options lapsing.

4,154,998 options were outstanding at 31 January 2023 (2022: 4,154,998), with an average exercise price of £0.031 per share and a weighted average remaining life of 2 years 3 months. These options lapsed in March 2023 when the director left the Company.

Warrants

On 4 September 2020, 50,000,000 warrants were granted to investors with an exercise price of £0.005 exercisable in whole or in part within a period of five years from Admission on 26 April 2021. There was no charge to the Income Statement in the year in respect of these warrants.  18,000,000 of these warrants have been forfeited.

On or around 26 April 2021, 26,000,000 warrants were granted with an exercise price of £0.01 exercisable in whole or in part within a period of five years from Admission.  Of these 7,500,000 warrants were issued to the Company's broker which if fully exercised would represent a total aggregate price of £75,000. 18,500,000 warrants were granted in exchange for services provided. The fair value has been calculated using the Black-Scholes valuation model. Volatility was 86%, with a dividend yield of 0% and a risk-free interest rate in the range of 0.05%. This resulted in a charge of £nil in the year ended 31 January 2023 as the warrants were fully vested (2022: £78,143).

58,000,000 warrants were outstanding at 31 January 2023 (2022: 58,000,000) with a weighted average exercise price of £0.007 per share and a weighted average remaining life of 3.24 years.

17.        Related party transactions

Directors' remuneration is disclosed in note 6. There were no other related party transactions during the year.

18.        Controlling party

The Directors do not consider there to be an ultimate controlling party.

19.        Subsequent events

On 28 April 2023 the Company raised £100,000 before expenses through a subscription for an aggregate of 100,000,000 new ordinary shares of 0.01 pence par value each at a price of 0.1 pence per share.

On 22 March 2023 Jassem Osseiran resigned from the board, resulting in 4,154,998 options lapsing.

On 16 May 2023 the Company agreed to subscribe for £250,000 of Convertible Loan Notes of £1 each in GL Membership Limited.

 

END