Blue Star Regulatory News (BLU)

Blue Star Capital plc

("Blue Star" or the "Company")

Final Results for the year ended 30 September 2020

Blue Star Capital plc (AIM: BLU), the investing company with a focus on esports, technology and its applications within media and gaming, is pleased to announce its final results for the year ended 30 September 2020. 

Highlights: 

· The value of the investment portfolio has grown by approximately 78% per cent over the year increasing from £5,101,587 to £9,063,432. The increase comes from an investment of approximately £1.7 million in seven esports businesses and an increase in value over the period of approximately £2.2 million.

· The Company made a profit for the period of £1,714,155 compared with a loss in the corresponding period of £684,964. The major contributor factor being the uplift in valuation achieved on the investments in Guild Esports and Dynasty Esports.

· The cash position of the Company at 30 September 2020 was £132,167 compared to £120,828 in the corresponding period. Post the year end the Company raised £95,000 through the exercise of warrants.

The Annual Report and notice of Annual General Meeting ("AGM") will be posted to shareholders shortly and will be available to view on the Company's website http://www.bluestarcapital.co.uk.

The AGM will take place on 8 February 2021 at 4.00 p.m at the offices of Cairn Financial Advisers LLP, Cheyne House, Crown Court, 62-63 Cheapside, London, EC2V 6AX. However, in the light of the ongoing impact of COVID-19 and the Government guidelines and other restrictions, shareholders are strongly urged not to attend the AGM in person. Only the formal business set out in the notice of AGM will be considered at the AGM.

Shareholders wishing to vote on any matters of business at the AGM are strongly urged to do so through completion of a proxy form which can be completed and submitted to the Company. Proxies should be completed and returned in accordance with the instructions on the form of proxy by no later than 4.00 p.m. on 4 February 2021.

Tony Fabrizi Chief Executive Officer of Blue Star Capital plc, commented:

"The Company has enjoyed an excellent year with diversification into the fast growing esports sector and strong progress at our tech payments businesses. We consider the portfolio to be well positioned to maintain this growth in the coming year and we look forward to the updating the market as the year progresses." 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

For further information, please contact: 

Chairman's Statement

The Company has enjoyed an excellent year with strong performance from its esports portfolio and encouraging progress from its tech payment businesses. The overall portfolio has been successfully diversified with the move into esports and this sector is seen as a major focus moving forward.

Financials

The Company reported a profit for the period of £1,714,155 compared to a loss of £684,964 in the corresponding period. This reflects the net revaluation of the portfolio with the significant gains made in the esports portfolio being the major contributory factor.

Net assets have increased to £9,326,560 at 30 September 2020, from £5,209,377 at 30 September 2019. Blue Star's cash position at 30 September 2020 was £132,167 compared to a balance of £120,808 at 30 September 2019. Post year end, the Company raised £95,000 through the exercise of warrants in November 2020.

Portfolio Review Esports portfolio

Background on Esports

Esports are electronic sports, usually in the form of competitions, using video or electronic games for multiple professional players and watched at a physical venue or through digital media. The esports market is large and experiencing significant growth. By way of illustration, in 2020 the market was estimated at approximately 495 million viewers and is projected to reach around 646 million viewers by 2023. This is expected to result in revenues growing over the same period from $950 million to $1.60 billion.

As esports are now one of the most popular spectator sports, its increasing global following has enabled esports businesses to commercialise their activities through sponsorship, merchandising, licensing, broadcasting and tournaments. Given the growth in the market and the diverse array of commercial opportunities, the Board firmly believes that esports will eventually constitute a significant proportion of the global sports industry.

Esports portfolio and investment approach

In October 2019, the Board was presented with an opportunity to invest in a number of esports businesses and given the early stage nature of these businesses the Board decided it prudent to adopt a portfolio approach. An investment of approximately £900,000 was made, split broadly equally between the six esports companies. At the time it was the intention of each of the six esports businesses to create or acquire esports businesses, such as a competitive esports franchise, a platform on which esports competitors gather to compete, or the creation of esports tournaments. Each investee company was planning to monetize engagement of the growing number of esports participants, fans and sponsors, generating revenue from a variety of sources, including, tournament winnings, digital marketing opportunities, sponsorship, merchandise, platform fees, and promotional tours and events. Each of the companies was targeting a different region globally for financing and launch, but all would attempt to become global players.

Over the last twelve months, the portfolio has enjoyed two major successes and at the year end the valuation of the esports portfolio stood at approximately £3.8 million compared with an accumulated investment to date of approximately £1.7 million. The board remains highly confident in the strong underlying trends in esports and believes there is significant upside to be achieved moving forward from the esports portfolio.

Further details on each of the esports companies Blue Star has invested in are shown below:

Guild Esports plc, is a UK based company with a focus on the European esports market. On 25 June 2020, Guild announced its global launch and association with David Beckham, an investor in Guild. Guild is developing a talent pipeline in the UK, based on the traditional academy model, with the intention that the most able esports players are coached and nurtured by industry leaders in order to attain the skillset required to compete professionally. Guild's intention is for a roster of scouts to continually find and sign the best young talent. Guild listed on the Standard list of the London Stock Exchange in October 2020, raising £20 million.

Guild has established a management team of esports veterans with experience as professional players, coaches and esports media. Guild Executive Chairman, Carleton Curtis, is well- known in the industry and architect of the Overwatch League and Call Of Duty Leagues.

Prior to joining Guild, he held senior esports roles at Activision Blizzard and Red Bull. His expertise complements David Beckham's position in the world of mainstream sports to create a unique esports proposition.

Guild intends to develop into various esports disciplines over the course of the 2020/2021 season with its first team making its debut in autumn 2020 expecting to compete in the most popular titles including Rocket League, EA Sports FIFA and Fortnite. The company's ambition is to build a culture of excellence around its brand and digital presence.

Blue Star holds 5.95% of the issued share capital of Guild with a cost of £706,000 and a valuation at 30 September 2020 of approximately £1.85 million.

Dynasty Esports PTE is a Singapore-based business initially addressing the Malaysian market. On 24 June 2020 Dynasty announced that it has signed a five year exclusive partnership agreement with Malaysia Esports Federation ("MESF",) to provide its esports Portal Management ("EPM") platform to enable effective management and control of the esports ecosystem within Malaysia.

Dynasty's EPM platform is a fully white-labelled, customised and branded for MESF and brings together the main elements of the esports ecosystem being the players, the organisations and the tournaments, under one single integrated digital platform with the intention of providing a shared national and global view of the esports industry.

Under the terms of the partnership agreement, MESF will actively endorse, promote and drive all esports related traffic in Malaysia to the EPM platform. MESF will also regulate and ensure that all domestic esports events, leagues or tournaments in Malaysia will be exclusively hosted on the MESF platform as the single destination site for esports.

The Malaysian gaming and esports ecosystem is considered to be one of the more developed markets for esports. Malaysia is estimated to have over 20 million gamers who spent an estimated RM 2.9 billion (approximately GBP543 million) on gaming in 2019.

Dynasty will generate income throughout the term of the partnership via a matrix of revenue streams including management fees, advertising, sponsorship, exclusive esports broadcast rights (both nationally and internationally), and other revenue share arrangements with MESF.

During Q3 2020, Dynasty signed three separate SaaS agreements to provide it's white-labelled platform to two esports franchises and to the largest telecom carrier in the Middle East to launch a branded Dynasty platform in three of the regions key gaming and esports countries.

Blue Star holds 13.0% of the issued share capital of Dynasty with a cost of £428,000 and a valuation at 30 September 2020 of £1.38 million.

Googly Esports plc is a UK/India based company with a focus on the Indian market. The company is aiming to become the largest and most respected professional esports events/media company in India, playing in the intersection between traditional sports (eg: cricket) and esports. Blue Star holds 11.1% of the issued share capital of Googly with a current valuation at 30 September 2020 equal to cost of £156,000.

The Dibs Esports Corp is a US incorporated business based in Los Angeles. The company will focus on empowering female esports players and has the goal of creating the largest female network of esports in the North American esports market. At 30 September 2020 Blue Star held $185,000 of loan notes in The Dibbs yielding 5% per annum and convertible into 13.7% of the issued share capital of the Dibbs with a current valuation equal to cost of approximately £156,000.

Diemens Esports PTY Ltd formally The Cubs is an Australian based company. On 3 February 2020 Diemens announced its intention to merge with Critical Hit Entertainment. However, the merger did not proceed and Diemens are now looking at alternative deals. A further update will be made in due course. Blue Star holds 13.3% of the issued share capital of Diemens with a current valuation at 30 September 2020 equal to cost of £139,000.

The Drops Esports Inc is a Canadian based company. On 12 January 2020 The Drops entered into a letter of intent with Fibresources Corporation to acquire the entire issued share capital of The Drops for common shares in Fibresources. This transaction did not complete and The Drops board are now pursuing an alternative strategy. Blue Star holds 13.6% of the issued share capital of Drops with a current valuation at 30 September 2020 equal to cost of £154,000.

FORMATION Esports SAS is incorporated in France and has been established to launch a dedicated esports platform aimed at providing contact sports clubs with revenue and sponsorship generating opportunities and increased exposure. FORMATION will cover the entire spectrum of contact sports fans and clubs. In addition, FORMATION expects to launch its own academy with physical workshops across France and Europe. Blue Star holds 9.6% of the issued share capital of FORMATION with a current valuation at 30 September 2020 equal to cost of £115,000.

LEAF Mobile Inc

Company description

LEAF is a leading creator of counter-culture mobile games. LEAF owns a number of successful games titles and is focussed on delivering highly engaging games that provide enduring player engagement. Having listed on the TSX Venture Exchange in Canada in April 2020, LEAF announced on 7 October 2020 a letter of intent with East Side Games to acquire all of the outstanding shares of East Side Games Inc. (the "Acquisition") for $150million at which point its shares were suspended. LEAF announced on 23 December 2020 that it has received the conditional approval of the TSX Venture Exchange with respect to Acquisition as well as the conditional approval of the Toronto Stock Exchange to list its common shares for trading after completion of the Acquisition.

Blue Star's Shareholding in Leaf In April 2020 Blue Star invested approximately £57,000 into LEAF at a price of CAD0.16 per share, prior to LEAF's listing on the TSX Venture Exchange. LEAF's shares are currently suspended and last traded at a price of CAD0.225, valuing Blue Star's holding in LEAF's at approximately £80,000.

SatoshiPay

Company Description

SatoshiPay is a fintech company supplying payment and money transfer infrastructure based on blockchain technology to digital industries and globally operating SMEs. Having initially focussed on building a micropayment infrastructure and platform the decision was taken just over a year ago to use the same technology and experience to move into B2B cross border payments service for businesses. The reaction to this new product has been positive and the Board are encouraged by recent developments.

SatoshiPay Technology

The SatoshiPay technology is designed to overcome existing issues with online payments. In the field of micropayments, it is addressing issues that have prevented them from achieving mainstream adoption, primarily the high level of transaction costs driven by existing bank infrastructure that makes such levels of payments commercially unfeasible.

The foundation of SatoshiPay's payments platform is built upon blockchain technology. A blockchain is a decentralised database of transactions that exists on multiple computers at the same time. It is a record keeping technology that, in simple terms, is conceptually similar to a spreadsheet that is duplicated thousands of times across a network of computers and that is constantly update.

The advantages of blockchain are that it is, by its inherent set-up, independent, transparent and secure. Its security comes from the fact that its data cannot be altered, it cannot be controlled by any single entity and has no single point of failure that can be exploited by hackers. Encryption technology allows individuals' digital assets to be kept anonymous and protected. Further, removing intermediaries from the process allows transactions on a blockchain to be carried out faster and cheaper than traditional methods.

SatoshiPay's payment platform is based on the Stellar blockchain network, a distributed ledger technology, and uses Stellar lumens (XLM) as the underlying settlement token.

Potential Applications of SatoshiPay

The directors of SatoshiPay believe that its technology can be employed in a range of sectors. Examples include purchase of digital goods, money transfer and in-app/game closed-loop systems.

B2B Cross Border Payments and SatoshiPay's solution "DTransfer"

On 9 December 2019, SatoshiPay announced its move into the international B2B money transfer space. Using its existing technology platform, SatoshiPay has developed a service allowing companies to instantly transfer funds globally, generating recurring revenues and processing high transaction volumes by facilitating macro- payments. Introduced under the name DTransfer on 22 September 2020, the service aims to solve issues typically connected with cross-border payments, such as delayed transfers, high transaction and forex costs, and lack of transparency, by leveraging the Stellar network and its connected financial services institutions across the globe.

SatoshiPay has seen strong market interest in DTransfer and 11 business clients from around the world have been signed, expecting to transfer over £70 million annually using the service. The company continues to sign new clients for DTransfer and intends to build recurring revenues in 2021.

Micropayments and the SatoshiPay Solution Existing issues relating to micropayments include financial costs (transaction costs being high in relation to the level of payment) and usability costs (cumbersome, multi-step online payment mechanisms for the end user).

SatoshiPay's micropayment solution is able to overcome these issues by offering a P2P payment method which does not require download, installation or log-in for the end user, and that is transferable across vendor platforms and facilitates instant transactions of very small amounts. This flexible, low-cost solution allows for pricing strategies at a more granular level, and the board of Blue Star believe that it has many potential longer-term applications.

Blue Star's holding in SatoshiPay

Blue Star's shareholding in SatoshiPay was acquired for £1.88 million and represents 27.7% at 30 September 2020. It is valued on the basis of SatoshiPay's last fund raise at £4.87 million.

Sthaler Limited

Company Description

Sthaler is a biometric identity and payments technology business which enables an individual to identify themselves and pay using the unique vein patterns within a finger. The system, recently renamed FinGo ID, uses a biometric called VeinID which instantly recognises an individual through the unique pattern of veins inside each finger.

In the past year, FinGo was piloted successfully by the UK's Open Banking Authority with the Financial Conduct Authority to introduce a new fraud free bank-to-bank account payment scheme. In Manchester, having now been approved as official ID in place of a passport and driving license, the company is working closely with the mayor of Greater Manchester to align FinGo with several key initiatives across the City involving retail, education and transport.

In the last year the company has been building strong interest overseas, most notably in Egypt, with a population of 100 million. In the last six months, the company has made significant progress in gaining the support of the national banking system, Government ministries as well as a leading e-payments platform across the region. Finally, the company is developing new opportunities in the USA and more widely across the Middle East.

Overall, the Board is pleased with progress at Sthaler over the last year and believes the company is very close to securing a major deal which will provide strong foundations for its future growth.

Blue Star's Shareholding in Sthaler

Blue Star's shareholding in Sthaler is approximately 0.8% at 30 September 2020 and is valued on the basis of Sthaler's last completed fund raise at approximately £347,000, compared with a cost of £50,000.

Outlook

The Board believes the Company's portfolio has developed significantly during the year with the diversification into esports proving a strong strategic move. The Company's historic tech payment investments in SatoshiPay and Sthaler continue to make strong progress and 2021 is expected to be the year of commercialisation for both businesses. Overall, the Directors believe the Company has developed into a more solid business over the past year and the Board views the future outlook with confidence.

Board Changes

After seven years as CEO, Tony Fabrizi will be stepping down from the Board once a new non-executive director has been appointed. The Board are most grateful for Tony's efforts over the period and believe he is leaving the Company in excellent shape. Derek Lew will assume the role of CEO on Tony's departure.

Derek Lew

Chairman

12 January 2021

Strategic Report

The Directors present their strategic report on the Company for the year ended 30 September 2020.

Review of Business and Analysis Using Key Performance Indicators

The full year's profit was £1,714,155 compared to a loss of £684,964 for the year ended

30 September 2019.

Net assets have increased to £9,326,560 at 30 September 2020, changing from £5,209,377

at 30 September 2019.

The cash position at the end of the year increased to £132,167 from £120,828 as at 30 September 2019.

Key Performance Indicators

The Board monitors the activities and performance of the Company on a regular basis. The indicators set out below have been used by the Board to assess performance over the year to 30 September 2020. The main KPIs for the Company are listed as follows:

Investing Policy

Assets or Companies in which the Company can invest

The Company can invest in assets or companies in the following sectors:

· Technology;

· Gaming and esports; and

· Media.

The Company's geographical range is mainly UK companies but considers opportunities globally and will actively co-invest in larger deals.

The Company can take positions in investee companies by way of equity, debt or convertible or hybrid securities.

Whether investments will be active or passive investments

The Company's investments are passive in nature but may be actively managed. The Company may be represented on, or observe, the boards of its investee companies.

Holding period for investments

The Company's investments are likely to be illiquid and consequently are to be held for the medium to long term.

Spread of investments and maximum exposure limits, Policy in relation to cross- holdings and Investing Restrictions

The Company does not have any maximum exposure limits, limits on cross-holdings or other investing restrictions. Under normal circumstances, it is the Directors intention not to invest more than 10% of the Company's gross assets in any individual company (calculated at the time of investment). The Company has accumulated a 27.7% stake in SatoshiPay, which the Board believes represents a rare opportunity to generate significant shareholder value. In addition, the Company has accumulated stakes above 10% in some of its esports investments which are early stage and expected to be diluted over time.

Policy in relation to gearing

The Directors may exercise the powers of the Company to borrow money and to give security over its assets. The Company may also be indirectly exposed to the effects of gearing to the extent that investee companies have outstanding borrowings.

Returns and Distribution Policy

It is anticipated that returns from the Company's investment portfolio will arise upon realisation or sale of its investee companies, rather than from dividends received. Whilst it is not possible to determine the timing of exits, the Board will seek to return capital to shareholders when appropriate.

Life of the Company

The Company has an indefinite life dependent on obtaining sufficient funding.

Future Developments

The Company is continuing to develop an investment portfolio with the capacity for substantial growth and increases in value.

Promotion of the Company for the benefit of the members as a whole

The Director's believe they have acted in the way 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.

The requirements of s172 are for the Directors to:

· Consider the likely consequences of any decision in the long term,

· Act fairly between the members of the Company,

· Maintain a reputation for high standards of business conduct,

· Consider the interests of the Company's employees,

· Foster the Company's relationships with suppliers, customers and others, and

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

The following paragraphs summarise how the Directors' fulfil their duties:

The Company is quoted on AIM and its members will be fully aware, through detailed announcements, shareholder meetings and financial communications, of the Board's broad and specific intentions and the rationale for its decisions. The Board recognises its responsibility for setting and maintaining a high standard of behaviour and business conduct. There is no special treatment for any group of shareholders and all material information is disseminated through appropriate channels and available to all through the Company's news releases and website.

When selecting investments, issues such as the impact on the community and the environment have actively been taken into consideration. The Company's approach is to use its position to promote positive change for the people with whom it interacts.

The Company is committed to being a responsible business. The Company pays its employees and creditors promptly and keeps its costs to a minimum to protect shareholders funds. There were no employees in the Company other than the 3 Directors in the current and prior-year and therefore effectiveness of employee policies is not relevant for the Group.

Principal risks and uncertainties

The Company seeks investments in late stage venture capital and early stage private equity opportunities, which by their very nature allow a diverse portfolio of investments within different sectors and geographic locations.

The Company's primarily risk is loss or impairment of investments. This is mitigated by careful management of the investment and in particular, only continuing to support those investments which demonstrate potential to achieve a positive exit and decisively determining those which do not. Portfolio and capital management techniques are fully applied according to industry standard practice.

It will be necessary to raise additional funds in the future by a further issue of new Ordinary shares or by other means. However, the ability to fund future investments and overheads in Blue Star Capital Plc as well as the ability of investments to return suitable profit cannot be guaranteed, particularly in the current economic climate.

The Company may not be able to identify suitable investment opportunities and there is no guarantee that investment opportunities will be available, and the Company may incur costs in conducting due diligence into potential investment opportunities that may not result in an investment being made.

The value of companies similar to those in Blue Star Capital's portfolio and in particular those at an early stage of development, can be highly volatile. The price at which investments are made, and the price which the Company may realise for its investment, will be influenced by a large number of factors, some specific to the Company and its operations and some which may affect the sector.

By Order of the Board

Derek Lew

Chairman

12 January 2021

Directors Report

The Directors present their report together with the audited financial statements for the year ended 30 September 2020.

Results and dividends

The trading results for the year ended 30 September 2020 and the Company's financial position at that date are shown in the attached financial statements.

The Directors do not recommend the payment of a dividend for the year (2019: £nil).

Principal activities and review of the business

The principal activity of the Company is to invest in the technology and the esports and gaming sectors. A review of the business is included within the Chairman's Statement and Strategic Report.

Directors serving during the year

Anthony Fabrizi

Sean King Derek Lew

Appointed on 6 November 2019

William Henbrey

Resigned on 6 November 2019

On 6 November 2019, Derek Lew was appointed as Chairman of the Company.

Directors' interests

The Directors at the date of these financial statements who served and their interest in the ordinary shares of the Company are as follows:

Significant shareholders

As at 8 January 2021 so far as the Directors are aware, the parties (other than the interests held by Directors) who are directly or indirectly interested in 3% or more of the nominal value of the Company's share capital is as follows:

Related party transactions

Related party transactions and relationships are disclosed in note 18.

Going concern

The Company has reported a loss for the year excluding fair value gain on the valuation of investments of £342,543. The Company carries out regular fund-raising exercises in order that it can provide the necessary working capital to continue its activities.

The board expects to continue to raise additional funding as and when required to cover the Company's activities, primarily from the issue of further shares. Since the year end, the Company has raised £95,000, before expenses.

Although the Directors have a reasonable expectation that the Company has adequate resources to continue its operational existence for the foreseeable future the successful completion of future fund raisings constitutes a material uncertainty that may cast doubt over the Company's ability to continue as a going concern. The financial statements do not contain the adjustments that would result if the Company was unable to continue as a going concern.

The Company's employees carry out their duties remotely, via the network infrastructure in place. As a result, there was no disruption to the operational activities of the Company during the COVID-19 social distancing and working from home restrictions. All key business functions continue to operate at normal capacity and overall, the Company's investment portfolio has been relatively unaffected by the impact of COVID-19.

Events after the reporting date

On 9 November 2020, 95,000,000 new ordinary shares were issued at a price of 0.1p per share from the exercise of warrants. Anthony Fabrizi exercised 25,000,000 warrants at a price of 0.1p.

Political Donations

There were no political donations during the current or prior year.

Provision of information to Auditor

In so far as each of the Directors are aware:

• there is no relevant audit information of which the Company's auditor is unaware; and

• the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

Auditor

Adler Shine LLP have expressed their willingness to continue as auditor and a resolution to re appoint Adler Shine LLP will be proposed at the Annual General Meeting.

On behalf of the board of Directors

Derek Lew

Chairman

12 January 2021

Share capital

Share capital represents the nominal value on the issue of the Company's equity share capital, comprising

£0.001 ordinary shares.

Share premium

Share premium represents the amount subscribed for the Company's equity share capital in excess of nominal value.

Other reserves

Other reserves represent the cumulative cost of share-based payments.

Retained earnings

Retained earnings represent the cumulative net income and losses of the Company recognised through the statement of comprehensive income.

1. Accounting policies General information

Blue Star Capital Plc (the Company) invests principally in the media, technology and gaming sectors.

The Company is a public limited company incorporated and domiciled in the United Kingdom. The address of its registered office is Griffin House, 135 High Street, Crawley RH10 1DQ.

The Company is listed on the Alternative Investment Market (AIM) market of the London Stock Exchange plc.

Summary of significant accounting policies

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

Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs") and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of assets and liabilities held at fair value.

Associates are those entities in which the Company has significant influence, but no control, over the financial and operating policies. Investments that are held as part of the Company's investment portfolio are carried in the statement of financial position at fair value even though the Company may have significant influence over those companies. This treatment is permitted by IAS 28 Investment in Associates, which requires investments held by venture capital organisations to be excluded from its scope where those investments are designated, upon initial recognition, as at fair value through profit or loss and accounted for in accordance with IFRS 9, with changes in fair value recognised in the statement of comprehensive income in the period of the change. The Company has no interests in associates through which it carries on its business.

The preparation of financial statements in conformity with IFRS 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 in the financial statements, are disclosed in note 2.

The Company is an investment entity and, as such, does not consolidate the investment entities it controls. The Company's interests in subsidiaries are recognised at fair value through profit and loss.

Going concern

The Company has reported a loss for the year excluding fair value gain on the valuation of investments of £342,543.

The Company carries out regular fund-raising exercises in order that it can provide the necessary working capital to continue its activities.

The board expects to continue to raise additional funding as and when required to cover the Company's activities, primarily from the issue of further shares. Since the year end, the Company has raised £95,000, before expenses.

Although the Directors have a reasonable expectation that the Company has adequate resources to continue its operational existence for the foreseeable future the successful completion of future fund raisings constitutes a material uncertainty that may cast doubt over the Company's ability to continue as a going concern. The financial statements do not contain the adjustments that would result if the Company was unable to continue as a going concern.

New standards, amendments and interpretations adopted by the Company

The Company has applied the following standards and amendments for the first time for its annual reporting period commencing 1 October 2019:

• IFRS 16, 'Leases';

• Prepayment Features with Negative Compensation - Amendments to IFRS 9;

• Long-term Interests in Associates and Joint Ventures - Amendments to IAS 28;

• Annual Improvements to IFRS Standards 2015-2017 Cycle;

• Plan Amendments, Curtailment or Settlement - Amendments to IAS 19;

• Interpretation 23 'Uncertainty over Income Tax Treatments'; and

• Definition of Material - Amendments to IAS 1 and IAS 8.

None of these standards are considered to have a material effect on the Company's financial statements.

New standards, amendments and interpretations not yet adopted

The International Accounting Standards Board (IASB) has issued the following new and revised standard, that is not effective for the financial year ended 30 September 2020 and have not been adopted early.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements.

Financial assets

The Company classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Company has not classified any of its financial assets as held to maturity or available for sale.

The Company's accounting policy for each category is as follows:

Fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets designated upon initial recognition as at fair value through profit or loss.

Financial assets designated at fair value through the profit or loss are those that have been designated by management upon initial recognition. Management designated the financial assets, comprising equity shares and warrants, at fair value through profit or loss upon initial recognition due to these assets being part of the Company's financial assets, which are managed and their performance evaluated on a fair value basis.

Financial assets at fair value through the profit or loss are recorded in the statement of financial position at fair value. Changes in fair value are recorded in "Fair valuation movements in financial assets designated at fair value through profit or loss".

Financial assets, comprising equity shares and warrants, are valued in accordance with the International Private Equity and Venture Capital ("IPEVC") guidelines.

(a) Early stage investments: these are investments in immature companies, including seed, start-up and early stage investments. Such investments are valued at cost less any provision considered necessary, until no longer viewed as an early stage or unless significant transactions involving an independent third party arm's length, values the investment at a materially different value:

(b) Development stage investments: such investments are in mature companies having a maintainable trend of sustainable revenue and from which an exit, by way of floatation or trade sale, can be reasonably foreseen. An investment of this stage is periodically re-valued by reference to open market value. Valuation will usually be by one of five methods as indicated below:

I. At cost for at least one period unless such basis is unsustainable;

II. On a third-party basis based on the price at which a subsequent significant investment is made involving a new investor;

III. On an earnings basis, but not until at least a period since the investment was made, by applying a discounted price/earnings ratio to the profit after tax, either before or after interest; or

IV. On a net asset basis, again applying a discount to reflect the illiquidity of the investment.

V. In a comparable valuation by reference to similar businesses that have objective data representing their equity value.

(c) Quoted investments: such investments are valued using the quoted market price, discounted if the shares are subject to any particular restrictions or are significant in relation to the issued share capital of a small quoted company.

At each balance sheet date, a review of impairment in value is undertaken by reference to funding, investment or offers in progress after the balance sheet date and provisions is made accordingly where the impairment in value is recognised.

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less.

For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

Financial liabilities

The Company classifies its financial liabilities in the category of financial liabilities measured at amortised cost. The Company does not have any financial liabilities at fair value through profit or loss.

Financial liabilities measured at amortised cost

Financial liabilities measured at amortised cost include:

Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method

Finance income

Finance income relates to interest income arising on cash and cash equivalents held on deposit and interest accrued on loans receivable. Finance income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

Operating loss

Operating loss is stated after crediting all items of operating income and charging all items of operating expense.

Deferred taxation

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its tax base.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, it's carrying amount is the present value of the cash flows (when the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Present obligations under onerous leases are recognised and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.

Share-based payments

All services received in exchange for the grant of any share-based remuneration are measured at their fair values. These are indirectly determined by reference to the fair value of the share options/warrants awarded. Their value is appraised at the grant date and excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets).

Share based payments are ultimately recognised as an expense in the Statement of Comprehensive Income with a corresponding credit to other reserves in equity, net of deferred tax where applicable. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options/warrants expected to vest. Non-market vesting conditions are included in assumptions about the number of options/warrants that are expected to become exercisable. Estimates are subsequently revised, if there is any indication that the number of share options/warrants expected to vest differs from previous estimates. No adjustment is made to the expense or share issue cost recognised in prior periods if fewer share options ultimately are exercised than originally estimated.

Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium.

Where share options are cancelled, this is treated as an acceleration of the vesting period of the options. The amount that otherwise would have been recognised for services received over the remainder of the vesting period is recognised immediately within the Statement of Comprehensive Income.

2. Critical accounting estimates and judgements

The Company makes certain 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 experience may differ from these estimates and assumptions. The 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 are those in relation to:

Fair value of financial instruments

The Company holds investments that have been designated at fair value through profit or loss on initial recognition. The Company determines the fair value of these financial instruments that are not quoted, using valuation techniques, contained in the IPEVC guidelines. These techniques are significantly affected by certain key assumptions. Other valuation methodologies such as discounted cash flow analysis assess estimates of future cash flows and it is important to recognise that in that regard, the derived fair value estimates cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realised immediately.

In certain circumstances, where fair value cannot be readily established, the Company is required to make judgements over carrying value impairment, and evaluate the size of any impairment required.

The methods and assumptions applied, and the valuation techniques used, are disclosed in note 10.

Share based payments

The estimates of share-based payments requires that management selects an appropriate valuation model and make decisions on various inputs into the model including the volatility of its own share price, the probable life of the options before exercise, and behavioural consideration of employees.

3. Nature of expenses

4. Operating profit/(loss)

5. Finance income

6. Share based payments

Share warrants

The contracted average remaining life of warrants at year end was 0.78 years (2019: 0.8 years).

The total share-based payment reversal for the lapsed shares was £64,190 (2019: £nil)

At 30 September 2020, the Company had the following warrants in issue:

The fair value of warrants is determined using the Black-Scholes valuation model. The charge to the profit and loss account was £190,130 (2019: £nil).

The fair value of warrants have been calculated using the Black-Scholes valuation model. The assumptions used in the calculation of the fair value of the warrants was as follows:

The warrants granted on 8 June 2020 and 3 August 2020 fall outside the scope of IFRS 2 and as such no charge has been made.

7. Staff costs, including Directors

During the year the Company had an average of 3 employees who were management (2019: 3). The employees are Directors and key management personnel of the Company.

8. Directors' and key management personnel

Directors' remuneration for the year ended 30 September 2020 is as follows:

Directors' remuneration for the year ended 30 September 2019 is as follows:

Emoluments above are paid in full at the end of both financial years.

9. Taxation

The tax assessed on loss before tax for the year differs to the applicable rate of corporation tax in the UK for small companies of 19% (2019: 19%). The differences are explained below:

The Company has incurred tax losses for the year and a corporation tax expense is not anticipated. The amount of the unutilised tax losses has not been recognised in the financial statements as the recovery of this benefit is dependent on future profitability, the timing of which cannot be reasonably foreseen. The unrecognised and revised deferred tax asset at 30 September 2020 is £717,511 (2019: £646,754).

10. Earnings/(loss) per ordinary share

The earnings and number of shares used in the calculation of loss/earnings per ordinary share are set out below:

As at the end of the financial period ended 30 September 2020, there were 1,448,333,333 share warrants in issue, which had an anti-dilutive effect on the weighted average number of shares.

11. Financial assets held at fair value through profit of loss

The methods used to value these unquoted investments are described below.

Fair value

The fair value of unquoted investments is established using valuation techniques. These include the use of quoted market prices, recent arm's length transactions, the Black-Scholes option pricing model and discounted cash flow analysis. Where a fair value cannot be estimated reliably the investment is reported at the carrying value at the previous reporting date in accordance with International Private Equity and Venture Capital ("IPEVC") guidelines.

The Company assesses at each balance sheet date whether there is any objective evidence that the unquoted investments are impaired. The unquoted investments are deemed to be impaired, if and only if, there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (an incurred 'loss event') and that loss event (or events) has an impact on the estimated future fair value of the investments that can be reliably measured.

12. Convertible loan note

On 11 October 2019, the Company invested US$185,000 in convertible loan notes issued by The Dibs Esports Corp. The loan notes carry interest of 5% per annum and have a 36-month life span.

13. Trade and other receivables

The Directors consider that the carrying value of trade and other receivables approximates to the fair value.

14. Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and other short-term highly liquid investments with an original maturity of three months or less. The Directors consider that the carrying value of cash and cash equivalents approximates to their fair value.

15. Trade and other payables

All trade and other payables fall due for payment within one year. The Directors consider that the carrying value of trade and other payables approximates to their fair value.

16. Share capital

During the year ended 30 September 2020 the following shares were issued:

During the year ended 30 September 2019 the following shares were issued:

17. Financial instruments

Categories of financial assets and liabilities

The following tables set out the categories of financial instruments held by the Company:

The Company's financial instruments comprise investments recognised at fair value through profit and loss, cash and cash equivalents, convertible loan notes, other receivables and trade payables that arise directly from the Company's operations. The main purpose of these instruments is to invest in portfolio companies. Investments are held at fair value through profit and loss. The main risks arising from holding these financial instruments is market risk and credit risk.

Interest rate risk

The Company's exposure to changes in interest rates relate primarily to cash and cash equivalents. Cash and cash equivalents are held either on current or on short term deposits at floating rates of interest determined by the relevant bank's prevailing base rate. The Company seeks to obtain a favourable interest rate on its cash balances through the use of bank treasury deposits. Any reasonable change in interest rate would not have a material impact on finance income that the Company could receive in the course of a year, based on the current level of cash and cash equivalents either held in current accounts or short-term deposits.

Market risk

All trading instruments are subject to market risk, the potential that future changes in market conditions may make an instrument less valuable, due to fluctuations in security prices, as well as interest and foreign exchange rates. Market risk is directly impacted by the volatility and liquidity in the markets in which the related underlying assets are traded.

Sensitivity analysis

The following table looks at the impact on net result and net assets based on a given movement in the fair value of all the investments;

10% movement either way will result in £906,343 profit or (loss) (2019: £510,159 profit or (loss))

20% movement either way will result in £1,812,686 profit or (loss) (2019: £1,020,317 profit or (loss))

30% movement either way will result in £2,719,030 profit or (loss) (2019: £1,530,476 profit or (loss))

Borrowing facilities

The operations to date have been financed through the placing of shares and investor loans. It is the Board's policy to keep borrowing to a minimum, where possible.

Liquidity risks

The Company seeks to manage liquidity risk by ensuring sufficient liquid assets are available to meet foreseeable needs and to invest liquid funds safely and profitably. All cash balances are immediately accessible and the Company holds no trades payable that mature in greater than 3 months, hence a contractual maturity analysis of financial liabilities has not been presented. Since these financial liabilities all mature within 3 months, the Directors believe that their carrying value reasonably equates to fair value.

Foreign currency risk management

The Company undertakes certain transactions denominated in currencies other than pound sterling, hence exposures to exchange rate fluctuations arise. The fair values of the Company's investments that have foreign currency exposure at 30 September 2020 are shown below.

The Company accounts for movements in fair value of financial assets in the comprehensive income. The following table illustrates the sensitivity of the equity in regard to the company's financial assets and the exchange rates for £/ Euro, £/ Singapore Dollar, £/ US Dollar and £/ Canadian Dollar.

It assumes the following changes in exchanges rates:

- £/EUR +/- 20% (2019: +/- 20%)

- £/SGD +/- 20% (2019: +/- 20%)

- £/USD +/- 20% (2019: +/- 20%)

- £/CAD +/- 20% (2019: +/- 20%)

The sensitivity analysis is based on the Company's foreign currency financial instruments held at each balance sheet date.

If £ Sterling had weakened against the currencies shown, this would have had the following effect:

 If £ Sterling had strengthened against the currencies shows, this would have had the following effect:

2020

The Company has also invested in a convertible loan note, denominated in USD, of $185,000. An adverse movement in the exchange rate will impact the ultimate amount of the investment held, a 20% weakening or strengthening in £ Sterling would result in a profit of £29,956 (2019: nil) and a loss of £24,964 (2019: nil) respectively.

The Company's functional and presentational currency is the pound sterling as it is the currency of its main trading environment.

Credit risk

The Company's credit risk is attributable to cash and cash equivalents and trade and other receivables.

Cash is deposited with reputable financial institutions with a high credit rating. The maximum credit risk relating to cash and cash equivalents and trade and other receivables is equal to their carrying value of £134,835 (2019: £131,103).

Capital Disclosure

As in previous years, the Company defines capital as issued capital, reserves and retained earnings as disclosed in statement of changes in equity. The Company manages its capital to ensure that the Company will be able to continue to pursue strategic investments and continue as a going concern. The Company does not have any externally imposed financial requirements.

18. Related party transactions

The Company has a 5.95% investment in Guild Esports plc. Derek Lew, a director of the Company, is also a non-executive director of Guild Esports plc. The Company also has a 0.30% investment in Leaf Mobile Inc where Derek Lew is the CEO.

19. Operating lease commitments

At the balance sheet date, the Company had no outstanding commitments under operating leases.

20. Ultimate Controlling Party

The Company considers that there is no ultimate controlling party.

21. Post Balance Sheet Events

On 9 November 2020, 95,000,000 new ordinary shares were issued at a price of 0.1p per share from the exercise of warrants. Anthony Fabrizi exercised 25,000,000 of these warrants.