Love Hemp Group PLC - Interim Results
RNS Number : 1675U
Love Hemp Group PLC
31 March 2021
 

31 March 2021

 

Love Hemp Group PLC / Market: AQSE

 

 

LOVE HEMP GROUP PLC

("Love Hemp Group" or the "Company")

Interim Results

 

Love Hemp Group PLC, the AQSE listed investment company with a focus on developing business opportunities in the regulated cannabis industry in Europe, is pleased to announce its interim results for the six months ended 31 December 2020.

 

Chairman's Statement

 

I am very happy to provide shareholders with this update on the progress which Love Hemp Group PLC has made, and continues to make, this year, especially given the many challenges that we have all experienced through 2020 and into 2021.

 

Being able to adapt and pivot the business to mitigate the impact of Covid-19 and the pandemic has demonstrated the Company's ability to be agile and resilient with an ability to move forward, even in adversity.

 

During the six months ending 31 December 2020 the Company undertook a strategic review that culminated in a set of corporate activities in early 2021 which included the appointment of a new Chief Executive and a change of name.

 

In the first half of 2020, the primary focus of World High Life (as we were then known) was to support the efforts and operations of our wholly owned subsidiary and operational company, Love Hemp Ltd (together the "Group"). This resulted in steady growth of both high street and online sales. 

 

Our plans to roll out a global brand and begin accessing wider markets began to gather momentum as the year progressed. In line with our plans, the Company completed small financings in late 2020 and early 2021 that supported our operations. This was combined with the conversion of Convertible Loan Notes that were originally used to finance the Company from inception. Alongside this, was the issuance of the balance of equity for the completion of the acquisition of Love Hemp Ltd. These actions resulted in approximately £4.5m of debt being removed from the Company's Balance Sheet.

 

In February 2021, we announced that Tony Calamita, who had been one of the Founders of Love Hemp Ltd, had agreed to become Chief Executive of World High Life and in March we changed the company name to Love Hemp Group PLC. Furthermore, James Mahony was engaged as a non-board chief financial officer in February 2021.

 

While most of these events occurred in the early part of 2021, they were well underway through the last half of 2020. Our plans achieved a significant landmark on 15 March 2021 when Love Hemp signed a multiyear, category exclusive marketing relationship with Ultimate Fighting Championship (UFC), the world's premier mixed martial arts organisation and the largest Pay-Per-View event provider in the world. The profile that this relationship brings to the Love Hemp Group will provide access to a global marketplace.

 

Combining the UFC exposure opportunities alongside our existing strategies and an ever-growing retail presence should result in continued growth of the Company's sales.

 

Love Hemp Ltd also acquired new premises which are presently being fitted out for production, distribution and head office. It anticipated these facilities will be available from mid-2021.

 

We have continued with relentless focus on our strategy to deliver one of the most recognised and award winning cannabidiol (CBD) brands in the UK.  Our increasing brand recognition has already opened doors and will allow the Company to look farther afield for new opportunities for profitable growth.

 

When we move into our new facilities in South London in mid-2021, we will have the capacity to manufacture up to 500,000 units of CBD products monthly. Building on the sales and opportunities we have before us is key to continued growth through both retail and digital/e-commerce platforms. As part of this planning, the Company has hired key marketing and operational individuals who have the ability to support our expansion plans.

 

We continue to make additions to our team and build out the infrastructure needed for our expansion aspirations. However, overall, I am incredibly pleased with the effort and dedication from the entire team, who continue to demonstrate their passion and desire to grow this business. Being well positioned for growth is imperative and we continue to review and analyse our needs on an ongoing basis.

 

I would also like to thank our shareholders for their support and continued investment with Love Hemp Group. Looking ahead, the opportunities to continue our growth are significant, and we are well placed to capitalise on them.

 

Financials

 

Gross revenue for the six-month period ended 31 December 2020 was £2,379,144 (six months ended 31 December 2019: £426,465) representing a 557% increase. For the six-month period ended 31 December 2020 the Group reported a pre-tax loss of £962,171 (loss reported for the six months ended 31 December 2019: £9,835,551). The Group's net cash balance as at 31 December 2020 was £78,977 (six months ended 31 December 2019: £213,538). 

 

Responsibility Statement

 

We confirm that to the best of our knowledge: 

 

·      the interim financial statements have been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting, as adopted by the EU;

·      the interim financial statements give a true and fair view of the assets, liabilities, financial position and loss of the Group;

·      the Interim report includes a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the set of interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

·      The Interim report includes a fair review of the information required by DTR 4.2.8R of the Disclosure and Transparency Rules, being the information required on related party transactions.

 

The interim report was approved by the Board of Directors and the above responsibility statement was signed on its behalf by:

 

Andrew Male

Chairman and Director

31 March 2021
 

For further information please contact:

Andrew Male
Chairman & Director

+44 (0) 7926 397 675

andrew@lovehempgroup.com

 

 

 

 

 

AQSE Corporate Adviser

Mark Anwyl/Allie Feuerlein

Peterhouse Capital Limited

+44 (0) 20 7469 0930

ma@peterhousecap.com

af@peterhousecap.com

Financial PR

Tim Blythe

Alice McLaren

Madeleine Gordon-Foxwell

+44 (0) 207 138 3205

lovehemp@blytheweigh.com

 

Financial Advisor

Rupert Fane

H&P Advisory Limited

+44 (0) 20 7907 8500

rf@hannam.partners 

 

For more information on Love Hemp Group please visit:            www.lovehempgroup.com

www.worldhighlife.uk

 

 

 

 

LOVE HEMP GROUP PLC                                                                 CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

        UNAUDITED

 

 

 

 

AS AT

 

31 December 2020

30 June            2020

 

Note

£

£

 

 

 

 

ASSETS

 

 

 

Current

 

 

 

   Cash

 

78,977

200,546

   Trade receivables and other

5

628,980

282,295

   Inventory

 

520,717

281,351

 

 

1,228,674

764,192

Non-current

 

 

 

   Property and equipment

 

260,235

224,707

   Right of use assets

9

1,246,419

1,246,419

   Goodwill and intangible assets

6

2,700,000

2,700,000

 

 

4,206,654

4,171,126

Total assets

 

5,435,328

4,935,318

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Current

 

 

 

   Accounts payable and accrued liabilities

7

1,020,011

573,660

   Lease liability

9

180,930

180,918

   Deferred consideration

6

2,000,000

4,000,000

   Loans payable

8

269,659

172,843

   Derivative financial instrument

10

1,356

451,187

 

 

3,471,956

5,378,608

Non-current

 

 

 

   Lease liability

9

892,762

962,807

   Loans payable

8

321,002

272,662

   Convertible debentures

10

1,869,132

1,734,304

 

 

 3,082,896

2,969,773

Total liabilities

 

6,554,852

8,348,381

 

 

 

 

Equity

 

 

 

   Share capital

 

2,301,198

1,456,007

   Share premium

 

8,436,692

4,661,576

   Shares to be issued

 

                         -

2,251,845

   Other reserves

11

1,855,816

968,568

   Retained losses

 

(13,713,230)

(12,751,059)

Total equity

 

(1,119,524)

(3,413,063)

Total liabilities and equity

 

5,435,328

4,935,318

 

 

 

 

 

The accompanying notes are an integral part of these consolidated interim financial statements.

 

LOVE HEMP GROUP PLC                                                          CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

                                                                                                                                                                                                          UNAUDITED

 

 

 

 

 

 

Six months ended

Six months ended

 

 

31 December 2020

31 December 2019

 

Note

£

£

 

 

 

 

Revenue

 

2,379,144

                426,465

Cost of goods sold

 

1,228,502

                216,861

Gross profit

 

1,150,642

                209,604

 

 

 

 

Expenses

 

 

 

   Selling, general, and administrative

 

692,145

                772,121

   Salaries and wages

 

208,521

                142,417

   Consulting

 

379,444

                228,848

   Professional fees

 

253,921

                404,428

   Transaction costs

 

-

                201,407

   Depreciation

 

22,731

                    5,227

   Share-based compensation

11

887,248

                  23,044

   Interest and accretion

9,10

196,360

                  65,527

   Foreign exchange

 

(4,335)

                  46,346

Total expenses

 

2,636,035

             1,889,365

Loss before other items

 

(1,485,393)

          (1,679,761)

  Impairment - intangible assets

 

-

          (7,473,831)

  Derivative fair value adjustment

 

449,831

             (681,959)

  Other gains/(losses)

 

73,391

-

Net and comprehensive loss for the period

 

(962,171)

          (9,835,551)

 

 

 

 

Loss per share

 

 

 

    Basic and diluted

 

(0.50)

                    (0.14)

 

 

 

 

Weighted average number of ordinary shares

 

 

 

    Basic and diluted

 

192,822,435

11,789,186

 

 

 

 

The accompanying notes are an integral part of these consolidated interim financial statements.

 

LOVE HEMP GROUP PLC                                                                     CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

PERIOD ENDED 31 DECEMBER 2020

UNAUDITED

 

 

 

 

 

 

 

 

 

Number of ordinary shares

Share Capital

Share Premium

Share subscriptions received

Deficit

Total equity

 

 

£

£

£

£

£

£

Balance, 30 June 2019

    88,641,363

       886,413

       291,233

         175,493

                    -  

       (79,128)

    1,274,011

   Ordinary shares issued at £0.10 each

       8,100,000

         81,000

                    -  

                    -  

                    -  

                    -  

         81,000

   Ordinary shares issued at £0.60 each

         675,000

            6,750

         33,750

                    -  

                    -  

                    -  

         40,500

   Ordinary shares issued at £1.00 each

    10,991,737

       109,917

       989,257

      (175,493)

                    -  

                    -  

       923,681

   Ordinary shares issued for services

     4,960,980

         49,610

       446,488

                      -  

                      -  

                      -  

       496,098

   Ordinary shares to be issued - debt settlements

       2,231,650

         22,317

       200,848

                      -  

                      -  

                      -  

        223,165

   Ordinary shares issued to acquire Love Hemp Ltd.

  30,000,000

       300,000

    2,700,000

                      -  

                      -  

                      -  

    3,000,000

   Ordinary shares to be issued - conversion of   debenture

                      -  

                    -   

                    -  

     2,251,845

                      -  

                      -  

    2,251,845

   Share-based compensation

                    -  

                    -  

                    -  

                    -  

         968,568

                    -  

       968,568

   Net loss for the period

                    -  

                    -  

                    -  

                    -  

                    -  

 (12,671,931)

(12,671,931)

Balance, 30 June 2020

  145,600,730

    1,456,007

    4,661,576

     2,251,845

        968,568

 (12,751,059)

  (3,413,063)

   Ordinary shares issued at £0.10 each

      6,787,870

        67,879

       610,908

                   -  

                    -  

                     -  

      678,787

   Ordinary shares issued at £0.90 each

    38,918,279

      389,183

    3,120,425

   (2,251,845)

                    -  

                     -  

   1,257,763

   Ordinary shares issued at £0.06 each

           17,877

             179

              894

                   -  

                    -  

                     -  

           1,073

   Ordinary shares issued for services at £0.073 each

         680,778

          6,808

         42,889

                   -  

                    -  

                     -  

         49,697

   Ordinary shares issued at £0.01 each

    38,114,285

      381,142

                   -  

                   -  

                    -  

                     -  

       381,142

   Share-based compensation

                      -  

                  -  

                   -  

                   -  

         887,248

                     -  

       887,248

   Net loss for the period

                    -  

                  -  

                   -  

                   -  

                   -  

       (962,171)

     (962,171)

Balance, 31 December 2020

  230,119,819

  2,301,198

   8,436,692

                   -  

     1,855,816

 (13,713,230)

  (1,119,524)

The accompanying notes are an integral part of these consolidated interim financial statements.

 

LOVE HEMP GROUP PLC                                                                                                                                 STATEMENT OF CASH FLOWS

                                                                                                                                                       SIX MONTHS ENDED 31 DECEMBER 2020

UNAUDITED

 

 

 

 

31 December 2020

31 December 2019

 

£

£

 

 

 

Operating activities

 

 

Net loss for the period

(962,171) 

          (9,835,551)

Adjusted for:

 

 

   Depreciation

22,731 

                    5,227

   Other losses

8,465 

-

   Other gains

(82,534) 

-

   Share based payments

887,248 

                  23,044

   Accretion and interest

180,716 

                  59,215

   Shares issued for services

49,697 

                330,468

   Accrued interest

                    5,434

  Impairment - intangible assets

             7,473,831

  Derivative fair value adjustment

(449,831) 

                681,959

 

 

 

Changes in non-cash working capital:

 

 

   Receivables and other

(346,685) 

                  17,964

   Inventory

446,340 

                116,780

   Accounts payable and accrued liabilities

(239,366) 

             (111,970)

Cash flows from operating activities

(485,390) 

          (1,233,599)

 

 

 

Investing activities

 

 

   Acquisition of Love Hemp Limited, net

          (2,915,651)

   Property and equipment

(58,259) 

               (13,946)

Cash flows from investing activities

(58,259) 

          (2,929,597)

 

 

 

Financing activities

 

 

   Ordinary shares issued for cash

381,143 

             1,045,181

   Convertible debentures

             2,355,782

   Convertible debentures - transaction costs

               (45,883)

   Lease payments

(90,460) 

               (15,663)

   Loans received

               178,687

                           -

   Loan repayments

(47,290) 

             (270,139)

Cash flows from financing activities

422,080 

             3,069,278

 

 

 

Change in cash

(121,569) 

          (1,093,918)

Cash, beginning of period

200,546 

             1,307,456

Cash, end of period

78,977 

                213,538

 

 

 

The accompanying notes are an integral part of these consolidated interim financial statements.

 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

1.            NATURE AND CONTINUANCE OF OPERATIONS

 

Love Hemp Group PLC (formerly World High Life plc) was incorporated by in England and Wales on 30 January 2019 with registration number 11797850 under the Companies Act 2006. The limited company reregistered as a public company on 6 August 2019, and thus became World High Life PLC (the "Company") on the same date.  The Company changed its name to Love Hemp Group PLC on 27 February 2021. The Company's head office and registered and records office address is 7-9 Swallow Street, 2nd Floor, London, United Kingdom, W1B 4DE.

 

The Company is an investment issuer with a focus on developing business opportunities in the CBD Health and Wellness market, as well as the Regulated Medicinal Cannabis in the UK and Europe. The Company's focus is on building and facilitating the growth of a diversified portfolio of companies, assets and opportunities within its focus mandate.

 

2.            BASIS OF PRESENTATION

 

The condensed consolidated interim financial statements for the six-month period ended 31 December 2020 have been prepared in accordance with the requirements of the relevant AQSE regulations. As permitted, the Group has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing this interim financial information. The condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements for the year ended 30 June 2020, which were been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The condensed annual consolidated financial statements have been prepared under the historical cost convention.

 

The condensed consolidated interim financial statements of Love Hemp Group PLC are unaudited, condensed consolidated financial statements for the six months to 31 December 2020. These include unaudited comparatives for the six-month period to 31 December 2019 together with audited comparatives for the year to 30 June 2020. The condensed consolidated financial statements do not constitute statutory accounts.

 

The condensed consolidated interim financial statements for the six-month period ended 31 December 2020 were approved by the Board of Directors on 31 March 2021.

 

3.            SIGNIFICANT ACCOUNTING POLICIES

 

The accounting policies applied in preparing these financial statements are in terms of IFRS and are consistent with those applied in the previous annual consolidated financial statements for the year ended 30 June 2020.

 

It has been prepared assuming that the Group will continue as a going concern in accordance with the recognition and measurement criteria of IFRS as adopted by the European Union.

 

Under this assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor necessity of liquidation, ceasing trading or seeking protection from creditors for at least 12 months from the date of the signing of the financial statements.

 

An assessment of going concern is made by the Directors at the date the Directors approve the interim financial statements, taking into account the relevant facts and circumstances at that date including:

 

• Review of profit and cash flow forecasts;

• Review of actual results against forecast;

• Timing of cash flows;

• Financial or operational risks; and

• The impact of COVID-19

 

 

The Directors have a reasonable expectation that the Group has or will have adequate resources to continue in operational existence for the foreseeable future, and have therefore adopted the going concern basis of preparation in the interim financial statements.

 

The statutory consolidated financial statements for the period to 30 June 2020, approved by the Board of Directors on 7 December 2020, have been reported on by the Group's auditors and delivered to Companies House. The report of the auditors on those financial statements was unqualified. The auditors made reference to the existence of a material uncertainty in relation to going concern within that audit report, to which we draw your attention.

 

4.            ADOPTION OF RECENT ACCOUNTING PRONOUCEMENTS

 

(a) New and amended standards mandatory for the first time for the financial periods beginning on or after 1 January 2020

 

As of 1 January 2020, the Company adopted IAS 1 (amendments) definition of material, IAS 8 (amendments) definition of material, IFRS 3 (amendments) definition of material and Amendments to References to the Conceptual Framework in IFRS Standards.

 

Of the other IFRSs and IFRICs, none are expected to have a material effect on future Company Financial Information. 

 

b) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted 

 

Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows: 

 

Standard   

Impact on initial application 

Effective date 

IFRS 17 

Insurance contracts 

*1 January 2021 

IAS 1 (Amendments)

Classification of Liabilities as Current or Non-Current. 

1 January 2022 

 * Subject to EU endorsement 

 

The Group is evaluating the impact of the new and amended standards above which are not expected to have a material impact on future Group financial statements.

 

5.            TRADE RECEIVABLES AND OTHER CURRENT ASSETS

 

 

 

 

31 December

30 June

 

2020

2020

 

£

£

Trade receivables

498,570

75,641

Other receivables

38,545

                       -

Prepaid expenses and deposits

91,865

206,654

Total

628,980

282,295

 

 

 

 

 

 

 

6.            ACQUISITION OF LOVE HEMP LIMITED

 

On 18 October 2019 the Company acquired 100% of Love Hemp Ltd. ("Love Hemp") for consideration of between £9 million and £10 million as follows:

 

·           £3 million of the consideration paid in cash on completion

·           £3 million satisfied by the issue of 30,000,000 Ordinary Shares on completion

 

A further earn out of up to a maximum of £4 million to be paid.

 

·          £1,500,000 in cash on the date falling six months and one day from the date of completion, provided that at the Company's election it can alternatively pay to the sellers an amount of £2,000,000 to be satisfied by the issue of Ordinary Shares calculated on a 10% discount to the 10 day VWAP preceding the date of the issue of those shares.

·          £1,500,000 in cash on the date falling twelve months and one day from the date of completion provided that at the Company's election it can alternatively pay to the sellers an amount of £2,000,000 to be satisfied by the issue of Ordinary Shares calculated on a 10% discount to the 10 day VWAP preceding the date of the issue of those shares.

 

Subsequent to 30 June 2020 the Company entered a Deed of Variation with the Sellers of Love Hemp Ltd. whereby the purchase consideration was amended as follows:

 

·          On 25 September 2020 the Company issued 22,222,222 Ordinary shares at a deemed price of £0.09 per share as settlement of the first earn out payment which was due under the original agreement.

·          £1,500,000 in cash on 15 January 2021 provided that at the sellers election the Company can alternatively pay to the sellers an amount of £2,000,000 to be satisfied by the issue of Ordinary Shares calculated on a 10% discount to the 10 day VWAP preceding the date of the issue of those shares.

 

The continuity of goodwill arising on acquisition is as follows:

 

 

 

 

 

£

1 July 2019

 

                       -

Acquisition of Love Hemp

 

     10,173,831

Impairment

 

     (7,473,831)

30 June 2020

 

       2,700,000

31 December 2020

 

       2,700,000

 

 

 

The valuation of goodwill is reviewed by the Directors once a year with the last review taking place upon preparation of the 30 June 2020 consolidated financial statements. Nothing has come to the Company's attention since the last review and the date of issue of these accounts, to indicate that the assets are potentially impaired since the last review.

 

7.            ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

 

 

 

 

 

31 December

30 June

 

2020

2020

 

£

£

Accounts payable

425,832

506,308

VAT payable

86,812

 

Accrued liabilities and other

507,367

67,352

Total

1,020,011

573,660

 

 

 

 

8.            LOANS PAYABLE

 

A continuity of the loan balance is as follows:

 

 

 

 

 

 

31 December

30 June

 

 

2020

2020

 

 

£

£

Opening balance

 

445,505

-

Balance acquired - Love Hemp acquisition

 

-

586,627

Accrued interest

 

13,770

29,885

Loans issued

 

178,685

659,415

Shares to be issued for debt settlement

 

-

(308,636)

Shares issued

 

-

(223,165)

Re-payments

 

(47,299)

(298,621)

Total

 

590,661

445,505

Current portion

 

(269,659)

(172,843)

Non-current portion

 

321,002

272,662

 

 

 

 

a)     During April 2019, Love Hemp entered a loan agreement for a principal amount of up to £360,343 bearing interest at 9.90%. The loan matures in sixty months and requires monthly repayments of £7,638. Upon maturity, Love Hemp is required to pay a completion fee of £10,495. The loan is secured by the assets of Love Hemp.

b)    Love Hemp issued a 12% promissory note of £250,000 which was repaid following the close of the acquisition.

c)     During the period, the Company entered into loans totalling £178,573 which are interest free and repayable on demand.

 

9.            LEASES

 

The follow lease liabilities arose in respect of the recognition of right of use assets with a net book value of £1,246,419.

 

 

 

 

 

Total

 

 

£

Balance, 30 June 2019

 

                       -  

Acquired in Love Hemp transaction (Note 9)

 

       1,246,419

Principal reduction

 

       (102,694)

Balance, 30 June 2020

 

       1,143,725

Principal reduction

 

          (90,460)

Finance costs

 

            20,427

Balance, 31 December 2020

 

      1,073,692

Less: Current portion

 

       (180,930)

Non-current portion

 

          892,762

 

 

 

No property and equipment was held by the Company at the period end.

 

 

10.          CONVERTIBLE DEBENTURES

 

 

 

 

 

 

October

November

 

 

2019

2019

Total

 

£

£

£

Balance, 30 June 2019

                           -  

                           -  

                           -  

Convertible debentures issued (a,b)

          2,338,554

                17,228

          2,355,782

Transaction costs - cash

             (48,459)

                           -  

             (48,459)

Conversion feature

           (250,452)

                (1,884)

           (252,336)

Accretion expense

              120,385

                      681

              121,066

Interest expense

              169,836

                  1,292

              171,128

Converted to Ordinary Shares

           (612,877)

                          -  

           (612,877)

Balance, 30 June 2020

          1,716,987

                17,317

          1,734,304

Accretion expense

               61,997

                     471

               62,468

Interest expense

               83,190

                     861

               84,051

Converted to Ordinary Shares

             (11,691)

                          -  

             (11,691)

Balance, 31 December 2020

          1,850,483

                18,649

         1,869,132

 

 

 

 

In October and November of 2019, the Company issued 2,355,782 £0.10 convertible debenture units raising gross proceeds of £2,355,782. The convertible debentures units each consist of one debenture convertible into £0.01 nominal value Ordinary Shares at a price of £0.10 and one share purchase warrant exercisable at a price of £0.15 for a period of two years from closing, subject to the Company's right to accelerate the maturity date upon 30 days' notice in the event that the Ordinary Shares trade at £0.25 or higher for a 10 day period.

 

The debentures accrue interest of 10% annually and are subject to the Company's right to force conversion upon 30 days' notice in the event that the Ordinary Shares trade at £0.30 or higher for a 10-day period. Interest may be paid in cash or in Ordinary Shares, or a combination thereof at the discretion of the Company. The Debentures will mature in two years plus one day from the closing dates.

 

 

In connection with the above the Company paid cash transaction costs of £45,883 and issued a total of 54,970 share purchase warrants exercisable at a price of 0.15 per ordinary share for a period of two years from issue. As stated in the convertible debenture agreements the conversion price will be adjusted if the Company completes a rights offering for less than 90% of the quoted price. The variability of the conversion price creates a derivative which has been recognized as a financial liability.

 

A continuity of the derivative liability related to the debenture conversion feature is as follows

 

 

 

 

 

October

November

 

 

2019

2019

Total

 

£

£

£

Balance, 30 June 2019

                           -  

                           -  

                           -  

Conversion feature - initial recognition

              250,452

                  1,884

              252,336

Fair value adjustment

              380,285

                  2,854

              383,139

Allocated to equity

           (184,288)

                          -  

           (184,288)

Balance, 30 June 2020

              446,449

                  4,738

              451,187

Fair value adjustment

           (445,110)

                (4,721)

           (449,831)

Balance, 30 June 2020

                  1,339

                        17

                  1,356

 

The conversion feature was valued at 31 December, 2019 using the Black-Scholes valuation model with the following assumptions: Expected life 1.8 years, volatility 75%, discount rate 2.25%, dividend yield 0%.

 

11.          SHARE CAPITAL AND RESERVES

 

Authorised 

 

Unlimited ordinary shares with £0.10 par value. As of 31 December 2020, there were 230,119,819 ordinary shares in issue.

 

Share Option Reserve

 

As at 30 June 2020 there were existing share options in issue of 66,914,285.  The subscription price for these options were 12.8p and they expired on 27 February 2025. During the period, 6,352,381 options were granted with a subscription price of 1p and an expiry date of 3 November 2022. The options were valued using the Black Scholes method at a price of 0.7p per option. The total share option expense for the period was £887,248.

 

 

12.          SUBSEQUENT EVENTS

 

Subsequent to 31 December 2020, the Company completed the following transactions:

 

a)     On 27 January 2021 the Company issued 56,620,600 Ordinary shares of £0.01 each for £0.01 per share for a total consideration of £566,206.  Each share was issued with 1 Share Purchase Warrant exercisable at 1p per share, vesting on 27 January 2021 and expiring on 27 January 2023.

 

b)    On 3 February 2021 the Company issued 68,000,000 Ordinary shares of £0.01 each for £0.015 per share for a total consideration of £1,020,000 in order to settle a portion of the deferred consideration outstanding at the year end.  

 

c)     On 3 February 2021 the Company issued 46,700,000 Ordinary shares of £0.01 each for £0.01 per share for a total consideration of £467,000.  Each share was issued with 1 Share Purchase Warrant exercisable at 1p per share, vesting on 3 February 2021 and expiring on 3 February 2023.

 

d)    On 11 March 2021, a deed of variation was entered into to convert the outstanding convertible loan notes into a total of 77,220,315 Ordinary Shares at a price of 2.5p per share. Each Convertible Debenture Share was issued with 1 Share Purchase Warrant exercisable at 5p per share, vesting on 15 March 2021 and expiring on 14 March 2023.

 

e)    On 11 March 2021, the Company also agreed to issue 8,876,040 Ordinary Shares at a price of 2.5p per share in exchange for debt with an aggregate amount of £221,901.

 

f)     On 11 March 2021 the Company issued 229,415 Ordinary Shares at a price of 2.5p per share for settlement of fees in lieu of cash.

 

 

 

 

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