Falcon Regulatory News (FAL)

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31 July 2017

Falcon Media House Limited

("Falcon" or the "Company")

Final Results

Falcon, the international media group focused on the over-the-top ('OTT') video streaming market, announces its final results for the 15-month period ending 31 March 2017. 

Overview

· Readmission to LSE after raising £4 million to acquire Orbital Multi Media Holdings Corporation and Teevee Networks Limited in line with strategy to buid an integrated business focused on the rapidly growing Over-The-Top ('OTT') market, which allows consumers to access media content they want, whenever and however they want to

o Name changed to Falcon Media House Limited at the time of readmission

· Focused on positioning proprietary Q-Flow software as the must-have technology powering the OTT industry and building own Teevee brand

· Memorandum of Understanding (the 'MoU') signed with leading global network solutions provider Tata Communications ('Tata') with regards to embedding Q-Flow into its existing OTT video service and technology platform to deliver an industry-defining offering

· Partnership secured with Verimatrix, the world leading specialist in securing and enhancing revenue for multi-network, multi-screen digital TV services around the globe, to deliver the first secure OTT services in West Africa

· Partnership and MOU signed with Tata to acquire connectivity, hosting and operational media workflow services that power the Group's Teevee Direct-to-Consumer ('D2C') brand

· Launch of a dedicated sports OTT service with The Eastern College Athletic Conference ('ECAC') the largest US east coast collegiate athletic college conference comprising approximately 250 schools - offers sports fans, families and friends the chance to live stream more than 30 men's and women's college sports

· Expansion of global reach with MoUs signed with Media Nucleus to target Southeast Asia and Africa OTT and Broadcast Markets and with LaserNet Group to Target OTT opportunities across Africa, offering an industry leading OTT service to millions of users internationally

Chairman's Statement

Our vision, when we listed on the main market of the London Stock Exchange in January 2016, was to position Falcon at the heart of the media broadcasting revolution that is the Over-The-Top ('OTT') market, whereby consumers can access the media content they want, whenever and however they want to.

At the time of our listing, Falcon was essentially a start-up with a team of highly experienced TMT professionals but no operating businesses; the OTT sector meanwhile was already a multi-billion-dollar market having grown exponentially in a short space of time. We were confident we could achieve our objective, however, we recognised that the rapid proliferation and uptake of OTT platforms had come at the expense of quality of service and user experience. A company that could put this right would be ideally placed to be a leader in this huge and rapidly growing market.

Fast forward to today and although it is at the pre-revenue earning stage, Falcon has the potential to become that company. After relisting, Falcon changed its company name to Falcon Media House. We have a solution that has the potential to be a game-changer for both the OTT market and Falcon by becoming established as the enabling technology that powers the industry, including distribution and original content, around it. Our aim is for Falcon to be an integrated OTT business that can act as a consolidator of content for branded channels and provide a platform for third party operators to launch new OTT services.

The size of the OTT prize

OTT platforms deliver audio and video content to customers either over the open internet without a multiple-system operator or via an internet-enabled device - smart televisions with a broadband connection, phones, tablets, and set-top boxes. The market has grown rapidly thanks to several structural growth drivers including: high penetration of broadband and mobile devices such as tablets and smartphones; consumers' increasing willingness to pay for content; cost advantages over established pay-tv services; a wealthy and scalable US market, a world leader in technology and media; and the success of Netflix, Amazon and HBO which has stimulated competition. Thanks to these and more, global OTT subscription numbers and market value is forecast to grow to 332.2 million (2014: 92.1 million) and US$31.6 billion (2018: US$8 billion) by 2019.

The OTT problem and the Falcon solution

As mentioned above, despite, or rather because of, the phenomenal growth recorded to date, OTT services are far from the finished article. View media content via an OTT platform on the go or at home via a smartphone or tablet and the chances are frequent loss of signal or interference will blight the experience. Even the largest operators in this market have so far failed to achieve seamless streaming.

Falcon has the solution. Following the acquisition of Quiptel Group in March 2017, we own an innovative technology that enables unrivalled high-quality streaming over virtual paths, minimises bandwidth consumption, and delivers across any network to any device. By enabling "Intelligent Streaming", our Q-Flow software constantly seeks the best route for video delivery, whilst maintaining the highest possible quality. It is proven to deliver between 30% and 40% more streams in the same bandwidth regardless of video type, network and user. As a result, our complete software solution provides cutting edge architecture for OTT streaming that delivers a step change in the viewing experience for the user, while at the same time fast-tracks the route to market for service providers.

Rolling out the must-have technology to power the OTT industry

It is one thing to claim to have a disrupting technology that can transform what is already a huge industry, but another to roll it out by convincing key market participants to embed it in their products. Our job is made that much easier as our technology solves a major quality issue for the end user that is there for all to see. At the same time, it enables enterprise customers, such as media content owners, mobile and broadband telecoms providers, to deliver content over-the-top of existing infrastructure, thereby shortening the time and expense it takes to come to market. With such clear benefits on offer for both the user and the provider, we are confident Q-Flow will become the must-have technology for enterprise customers. With this in mind, we are highly encouraged by the progress we have made in the short space of time since we completed the acquisition of Quiptel. We acknowledge that Falcon is yet to start producing significant revenue, but we think we have brought the Group into an excellent starting position to deliver shareholder value in the future.

Post period end, we signed a MoU with leading global network solutions provider Tata Communications ('Tata'). Subject to the signing of a Definitive Agreement, Tata will embed Q-Flow into its existing OTT video service and technology platform to deliver an industry-defining offering that elevates the quality of video streaming experience to a new level and shortens the time to market for brands and content rights holders. To be working with a partner of the calibre of Tata is in our view testament to the game-changing qualities of Q-Flow. We are confident we will secure agreements with other major suppliers to the industry in line with our strategy to establish Q-Flow as the leading enabling technology that powers the rapidly expanding OTT streaming market.

In addition to the MoU with Tata, we have partnered with Verimatrix, a specialist in securing and enhancing revenue for multi-network, multi-screen digital TV services around the globe, to deliver the first secure OTT service in West Africa. This service, which has been commissioned by a leading oil organisation, will be powered by Q-Flow to provide uninterrupted live and on-demand TV to households on Bonny Island in West Africa, an area which currently suffers from poor TV quality and frequent loss of signal. The revenue model is based on an initial upfront fee plus on-going annual licence and support fees. We are looking forward to the launch of this stand-alone OTT service with an initial 21 channels during summer 2017, with more to be added. Once up and running, this will provide a ready-made example of how Q-Flow transforms the OTT viewing experience in even the remotest areas where there is limited infrastructure in place. This service launch is the first showcase for OTT in West Africa and will open the door for more service offerings with Verimatrix over the coming months. We aim to build similar dedicated OTT channels for organisations in the corporate and sporting arenas.

Despite these positive developments the group is facing a delay in revenue generation in comparison to its original business plan which has resulted in a requirement for additional working capital financing. We now anticipate the first significant revenues from the MoU's discussed above to flow to the group in December 2017. The success of the group in closing these MoUs has resulted in interest from potential investors with whom we are in advanced negotiations to secure financing that will help the group to bridge its working capital requirements.

Falcon: an integrated OTT business

We do not intend to just wait for existing players and new entrants to license our technology. Instead, we are using Q -Flow to build our own OTT service and offering. In the second half of 2017, we are launching our product together with the Eastern College Athletic Conference ('ECAC'), the largest US east coast sports college franchise, which sponsors over 30 men and women's varsity sports as a service to the market. Powered by Q-Flow and partnered with Teevee Makers (which was founded as Teevee Media and Production and renamed at the end of 2016), our own media and production studio company.

As well as partnering with brand owners Teevee Makers will generate its own content and licence relevant independent content from third party studios and production companies. This will then be marketed and distributed through Falcon in parallel to selling content to traditional broadcast networks.

Falcon: a team to deliver

We are very proud of our diverse team, which has extensive telecom, digital media and technology experience combined with a proven track record in the equity capital markets. Post period end, on 16 June, we appointed Diane McGrath to the newly created position of Global Chief Strategy Officer to help us secure key strategic partners across the world from her base in New York City, US. Diane comes with a brilliant and successful track record of developing strategic alliances in the media and technology sector, building hugely successful commercial businesses and generating shareholder value; we are delighted to have her on board.

Gert Rieder

Executive Chairman

28 July 2017

Consolidated Statement of Financial Position

The consolidated statement of financial position as at 31 March 2017 is set out below. All figures for current and previous accounts are presented in £'000 in this Annual Report.

Consolidated Statement of Financial Position (continued)

As approved and authorised for issue by the Board of Directors on 28 July 2017 and signed on its behalf by:

Gert Rieder

Executive Chairman

Consolidated Statement of Comprehensive Income

The consolidated statement of comprehensive income for the period from 1 January 2016 to 31 March 2017 is set out below:

Consolidated Statement of Changes in Equity

The consolidated statement of changes in equity for the period from 1 January 2016 to 31 March 2017 is set out below:

Share capital comprises the Ordinary Shares, the Preferred Shares and the Founder Share issued by the Group. Refer to Note 5.

Share premium has been reduced by a total of £ 260,000 for expenses in relation to the issue of Ordinary Shares on admission of the Company to the London Stock Exchange's main market in 2016. In the context of the Quiptel acquisition, issue of new shares, as well as the respective re-admission, a further £ 351,000 of expenses were charged against share premium.

Consolidated Statement of Cash Flows

The consolidated cash flow statement for the period from 1 January 2016 to 31 March 2017 is set out below:

Notes to the Annual Report

1. General information

Falcon Acquisitions Limited (the "Company") was incorporated to acquire companies or businesses with a focus on opportunities in the media and technology sectors.

On re-admission to the London Stock Exchange on 27 March 2017 the name of the Company was changed from Falcon Acquisitions Limited to Falcon Media House Limited.

On that date the Group acquired control of the Quiptel Group and Teevee Networks and is developing into being an integrated Over-The-Top ("OTT") business provider that wants to act as a consolidator of content for branded channels as well as a provider of a technical platform for third party operators to launch new OTT services. OTT platforms deliver audio and video content to customers either over the open internet without a multiple-system operator or via an internet enabled device - smart televisions with a broadband connection, phones, tablets, and set top boxes.

As the accounting date of the acquired Quiptel Group is 31 March, the directors decided to change the accounting reference date of the Company to this date to align with the operations of Quiptel.

The Company was incorporated under the section II of the Companies Law 2008 in Guernsey on 29 January 2015, and is limited by shares and has registration number 59731.

The Company's registered office is located at Hadsley House, Lefebvre Street, St Peter Port, Guernsey, GY1 2JP, Channel Islands.

All amounts in the financial statements, for both the current and previous accounting periods, are presented in £'000.

2. Significant Accounting Policies

Basis of preparation

By founding the subsidiary Teevee Media and Production Ltd in 2016 (renamed to Teevee Makers Inc) and acquiring the Quiptel Group and Teevee Networks on 27 March 2017, the Company became a Group.

The consolidated financial statements of Falcon Media House Limited for the period ended 31 March 2017 have been prepared in accordance with International Financial Reporting Standards as adopted by the EU (IFRS's as adopted by the EU), issued by the International Accounting Standards Board (IASB), including interpretations issued by the International Reporting Interpretations Committee (IFRIC) applicable to the companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention.

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 Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 3.

Comparative figures

The comparative figures presented in the Annual Report cover the period from incorporation on 29 January 2015 to 31 December 2015. The current accounting period comprises fifteen months as the Company changed its accounting reference date from 31 December to 31 March to align with the accounting reference date of the Quiptel Group.

Going concern

The consolidated financial statements have been prepared on the assumption that the group will continue as a going concern for a period of at least twelve months from the date of approval of the financial statements.

At the balance sheet date the group had cash of £3.2 million, net current assets of £2.3 million and net assets of £10.9 million following the successful acquisitions of Quiptel and Teevee Networks on 27 March 2017 and the issue of 12 million new Ordinary Shares and 4,000,000 Preferred Shares on that date which raised total funds of £4 million. However, the group incurred a loss of £3.5 million in the period ended 31 March 2017 (period ended 31 December 2015: loss of £0.2 million).

Since the balance sheet date, the Company has signed MoUs with several leading global network solutions providers to utilise the Q-Flow technology developed by Quiptel and has partnered with another global company to deliver OTT services in West Africa. The group expects other agreements with major suppliers to follow. In addition, the group expects to earn revenue from the content licence agreement held by Teevee Makers and to further develop the media and studio production business. However, the group does not now anticipate its first significant revenues until December 2017, rather than in July 2017 as anticipated in the group's business plan.

The Directors are in advanced discussions with certain existing shareholders to provide short term working capital finance to bridge the group's working capital requirements. In addition, the success of the group in closing MoUs with prospective customers has resulted in interest from potential investors and the Directors are in advanced negotiations with a potential strategic investor to provide more substantial development capital to the group.

As a result of the later than expected revenue inflows, the Company does currently not have the liquidity needed to execute its business plan for the next 12 months and this has resulted in a requirement for additional working capital financing. The Directors have prepared financial projections and plans for a period of at least 12 months from the date of approval of these financial statements and have considered both the anticipated additional finance and the mitigating actions which could be taken.

The Directors have made an informed judgement, at the time of approving these financial statements, that there is a reasonable expectation that the Company will be able to raise sufficient working capital finance. As a result, the Directors have adopted the going concern basis of accounting is in the preparation of the annual financial statements. However, at the date of approval of these financial statements the availability of the necessary additional finance is not certain.

These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Company was unable to continue as a going concern.

Standards and interpretations issued but not yet applied

A number of new, revised and amended accounting standards and interpretations have been issued but are not yet effective and have not been adopted in preparing these financial statements.

The Group has not yet commenced operations or earned any revenue and the directors are currently developing an appropriate accounting policy for revenue recognition that would conform to IFRS 15 'Revenue from contracts with customers' which would be effective for the Group's 2019 financial statements unless early-adopted. The directors do not expect that the adoption of the remaining new standards will have a material impact on the financial statements of the Group in future periods. The Group has not yet adopted IFRS 16 'Leases'. IFRS 16 will be effective for periods beginning on or after 1 January 2016, early adoption allowed. The directors expect this standard to increase the assets as well as the liabilities due to the accounting for the lease liability and the right of use of the asset.

Principles of consolidation

Subsidiaries

Subsidiaries are all entities over which the Company has control. The Company controls an entity when it is exposed to, or has the right to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which control is transferred to the Company. They are deconsolidated from the date that control ceases.

The Company applies the acquisition method to account for business combinations.

Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

Foreign Currency Translation

Functional and presentation currency

Items included in the financial statements of each of the group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in British Pounds (GBP), which is the functional and presentation currency of Falcon Media House.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in profit or loss. Foreign exchange gains and losses are presented in the statement of profit or loss, within finance income or finance costs, except when foreign exchange gains and losses are resulting from operations, in which case they would be shown as part of the operating loss.

Group companies

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency which is different from the presentational currency of the Group are translated as follows:

· assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet

· income and expenses for each statement of profit or loss and statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and

· all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

Receivables

Receivables are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

Fixed Assets

Fixed assets are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Individual assets up to £ 5,000 will be directly expensed. Depreciation is calculated using straight-line method to allocate the cost over their estimated useful lives between 3 and 8 years.

Intangible assets

Software

Costs associated with maintaining software programmes are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the group are recognised as intangible assets when the following criteria are met:

· it is technically feasible to complete the software so that it will be available for use

· management intends to complete the software and use or sell it

· there is an ability to use or sell the software

· it can be demonstrated how the software will generate probable future economic benefits

· adequate technical, financial and other resources to complete the development and to use or sell the software are available, and

· the expenditure attributable to the software during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the software include employee costs and an appropriate portion of relevant overheads. Software has a finite useful life and is carried at cost less accumulated amortisation.

Trademarks and Licenses

Separately acquired trademarks and licenses are shown at historical cost. Trademarks and licenses acquired in a business combination are recognised at fair value at the acquisition date. Trademarks and licenses have a finite useful life and are carried at cost less accumulated amortisation.

Samples, Models, Plans

Costs directly attributable to the development or production of samples, models and plans in relation to content being developed by the group are capitalised as intangible assets only when technical feasibility of the project is demonstrated, the group has an intention and ability to use the samples, models or plans and the costs can be measured reliably.

Amortisation methods and useful lives

The group amortises intangible assets with a limited useful life using the straight-line method over the following periods:

· Software: 3-5 years

· Licenses, advertising rights, brands: duration of contract or 5 years

· Content samples produced: duration of contract/production or 5 years

Amortisation of Software starts once the product is in commercial use, for Licensing and Samples it starts with the contracted delivery date. In the Statement of Comprehensive income the expenses for the amortisation are disclosed in "Amortisation".

Financial assets

The group's financial assets comprise loans and receivables. On initial recognition, the group measures a financial asset at its fair value plus transaction costs that are directly attributable to the acquisition of the financial asset.

Loans and receivables are subsequently carried at amortised cost using the effective interest method.

Interest on loans and receivables calculated using the effective interest method is recognised in the statement of profit or loss as part of revenue from continuing operations

Financial liabilities

The group's financial liabilities comprise amounts payables for goods and services that have been acquired in the ordinary course of business from suppliers. The amounts are unsecured and are classified as current liabilities if the Group does not have an unconditional right to defer payment by more than 12 months. If not they are presented as non-current liabilities.

Payables are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

Share capital

Ordinary Shares, Preferred Shares and Founder Shares are recorded at nominal value and the proceeds received in excess of the nominal value of shares issued, if any, are accounted for as share premium. Both share capital and share premium are classified as equity. Costs incurred directly in relation to the issue of shares are accounted for as a deduction from share premium, otherwise they are charged to the income statement.

Share-based payments

The Company operates an equity-settled, share-based compensation plan, under which the entity receives services from employees and service providers as consideration for equity-instruments (options) of the Group. The fair value of the services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:

- including any market performance conditions

- excluding the impact of any services and non-market performance vesting conditions

- including the impact of any non-vesting conditions.

At the end of each reporting period the Company revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions and service conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

In addition, in some circumstances, employees may provide services in advance of the grant date and therefore the grant date fair value is estimated for the purpose of recognising the expense during the period between service commencement period and grant date.

When the options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital and share premium.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of financial statements requires the Group to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, results and related disclosures. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions.

The estimates and judgments that have a significant impact on the carrying amounts of assets and liabilities are addressed below:

- Intangible Assets: with the acquisition of the Quiptel Group and Teevee Networks several intangible assets were recognized, as further described in Notes 10 and 22. In addition, further intangible asset arise in the Company's existing subsidiary, Teevee Makers as described in note 10. Management has assessed the expected contribution to be generated from these intangible assets and deemed that no adjustment is required to the carrying values. The recoverable amounts of the assets have been determined based on value in use calculations which require the use of estimates and judgments. Management will reassess the valuations and estimated useful lives on a regular basis.

4. Business Segments

For the purpose of IFRS8, the Chief Operating Decision Maker "CODM" takes the form of the board of directors. The Directors are of the opinion that until the acquisition of the Quiptel Group and Teevee Networks the business of the Company comprised a single activity, being the identification and acquisition of target companies or businesses in the media and technology sectors. The future operating business segments of the group are currently being evaluated by the board of directors following the acquisition of the Quiptel Group and Teevee Networks in March 2017.

5. SHARE CAPITAL

*Note: including reduction of issue-related expenses

Ordinary Shares

Each Ordinary Share ranks pari passu for Voting Rights, dividends and distributions and return of capital on winding up.

Preferred Shares

Each Preferred Share ranks pari passu for dividends and distributions and returns of capital on winding up. Preferred shares entitle the holders to the same rights as Ordinary Shares, with the difference that Preferred Shares do not have voting rights. The Preferred Shares can be converted into Ordinary Shares at the discretion of the holder and will automatically convert in Ordinary Shares five years after the date of re-admission, which was on 27 March 2017.

Movements in share capital

On 29 January 2015, the Company was incorporated with an issued share capital of one hundred (100) Ordinary Shares of £0.01 each.

On 27 July 2015, an additional 4,375,000 Ordinary Shares were issued at £0.08 per share to the sole shareholder, GSC SICAV plc - GSC Global Fund, for a cash consideration of £350,000. As a result, share capital of £43,750 and share premium of £306,250 were recognized.

On 16 September 2015, one Founder Share was issued to GSC SICAV plc - GSC Global Fund, for cash consideration of £8.00. As a result, share capital of £0.01 and share premium of £7.99 were recognised. The Founder Share is a separate class of shares which is non-voting and which gives the holder certain rights, including the right to appoint up to three directors until immediately on the occurrence of a Founder Share Conversion Event.

On 18 January 2016 the Company was admitted to trading at the London Stock Exchange, at which point the Company issued 16 million Ordinary Shares at £0.10 per Ordinary Share, raising a total of £ 1.6 million, consisting of share capital of £160,000 and share premium of £1,440,000.

On 21 April 2016 the Company issued 10,000,000 Ordinary Shares at a price of £ 0.20 per Ordinary Share, raising £ 2 million, consisting of share capital of £100,000 and share premium of £1,900,000.

On 17 June 2016 the Company issued a further 815,000 Ordinary Shares at a price of £ 0.20 per Ordinary Share, raising £ 163,000, consisting of share capital of £ 8,150 and share premium of £ 154,850.

On 27 March 2017, the Company issued 12,000,000 Ordinary Shares at a price of £ 0.25 and 4,000,000 Preferred Shares at a price of £ 0.25, raising a total of £ 4 million, comprising share capital of £160,000 and share premium of £3,840,000.

On the same date, 800,000 Ordinary Shares were issued at a price of £ 0.25 pursuant to the Quiptel Management Incentive Plan, comprising share capital of £8,000 and share premium of £ 192,000 on acquisition of the Quiptel Group. These shares were issued instead of settling the full liabilities of the Plan.

In conjunction with the acquisition of both the Quiptel Group as well as Teevee Networks the Company issued a further 11,420,166 Ordinary Shares at a price of £ 0.35 and 19,722,685 Preferred Shares at a price of £ 0.35. The Fair Value of both the Ordinary as well as the Preferred Shares was determined at a value of £ 0.22 per share in accordance with IFRS 3. Therefore a rise in share capital of £311,429 and share premium of £ 6,851,427 was recognized. These shares included shares issued to Nuovo Capital and Digital Realm, as explained in Note 15.

All shares have been fully paid up. At 31 March 2017, the number of Ordinary Shares and Preferred Shares authorised for issue was unlimited.

6. CASH AND CASH EQUIVALENTS

7. PREPAYMENTS AND OTHER RECEIVABLES

Prepayments consist of prepaid expenses for management and accounting fees.

8. FIXED ASSETS

9. FINANCIAL ASSETS

For renting office spaces in London and New York after the period end, security deposits were paid to the landlords.

10. INTANGIBLE ASSETS

Software

With the acquisition of the Quiptel Group on 27 March 2017, capitalized software development costs of £ 5.2 million were acquired which had previously been recognized by Quiptel. Additionally, £ 1.5 million of the purchase price was allocated to Software as the Directors valued the intangible asset at £ 6.7 million, as further described in note 22.

Licenses

On 20 October 2016, Teevee Makers entered into an agreement with Eastern College Athletic Conference (ECAC) to televise and distribute ECAC games and events over the next four years. A value of USD 1 million (£800,000) was agreed between the parties, payments to ECAC by Teevee Makers are scheduled to be made by instalments between November 2016 and March 2020. The asset is being amortised over the 4 year contract period.

Advertising rights

These comprise contractual advertisement rights acquired by Teevee Makers on 10 March 2017. The valuation has been determined with reference to the fair value of 4,000,000 Preference Shares issued to acquire them, at a fair value per share of £0.22

Brands

Brands include £ 0.3 million from the estimated fair value of the acquired Teevee brand which will be amortised over its estimated useful life of five years. Additionally the costs for producing a demo-tape regarding a TV-show in the US of £75,000 is included.

Goodwill

The group annually tests the goodwill for impairment or more frequently if there are indications that the goodwill might be impaired. Goodwill acquired in a business combination has been allocated to the cash-generating unit ("CGU") that is expected to benefit from that business combination, namely the Quiptel business. In order to determine whether impairments are required, the group has estimated the recoverable amount of the CGU based on projecting future cash flows over a 3 year period at a discount rate of 15% and has not identified any impairment. The impairment analysis assumes that sufficient funds are available to the group, as further explained in Note 2, that the group commences earning revenue in December 2017 and a growth rate of 5%. The group has applied sensitivity analysis using a discount rate of 10% and growth rate of 5% with no material change in outcome.

11. TRADE AND OTHER PAYABLES

Other Short-term payables are mainly related to the Quiptel Management Incentive Plan (£ 409k) and contractual obligations of £ 320k, presented in the scheduled payments of the ECAC-contract (please refer to note 10) with payments due within one year from the reporting date. Later payments with regard to this contract represent the value of the Long-term contractual obligations.

The Quiptel Management Incentive Plan is a cash incentive plan for the key employees in Quiptel, which was taken over as a liability with the acquisition of the Quiptel Group. The Incentive Plan foresees cash payments at defined dates. Parts of this cash obligation has been settled in Ordinary as agreed with some of the key employees (please see note 5).

As at 31 March 2017, the trade and other payables were classified as financial liabilities measured at amortised cost. A maturity analysis of the Group's trade payables due in less than one year is as follows:

12. OPERATING LEASE COMMITMENTS

The group leases office spaces under non-cancellable operating lease agreements. The future aggregate minimum lease payments are as follows:

13. EMPLOYEE BENEFITS AND EXPENSES

14. RELATED PARTY TRANSACTIONS

The following transactions were carried out with related parties:

Key Management Compensation

The Key Management Personnel are introduced in the section "Board of Directors and Senior Management" on pages 11 to 15 of this Annual Report. For the remuneration of the Directors please see "Directors Remuneration Report" on page 31 to 33.

Directors are remunerated through payment to their service companies, except where stated in Note 13. Besides that just one member of the Senior Management is directly employed with the Group as key management personnel. The total compensation paid or payable to directors and key management for employment services is shown below:

The group obtained key management personnel services from other entities for all other Senior Management members. For payments to these entities please refer to the next section.

There were 3,250,000 share options granted to the members of the Senior Management. As the fair value of the options is considered to be immaterial in the current year, there is no P&L impact of this grant. For further details of the options please refer to note 15 "Share Based Payment".

Purchase of Services

Under the Advertising Placement Agreement advertising spots worth £ 880k were bought from the related party Digital Realm. Payment was made in shares, please refer to note 15.

The group obtains key management personnel services from other entities. These entities are controlled by the respective personnel. Besides the service fee, the amount of £602k also includes expenses of the personnel that have been reimbursed by the Group. Included in this figures are the payments made to the consulting companies of the Directors.

Year-end balances arising from services

The payables to related parties arise from services provided by key management personnel, are due immediately and bear no interest.

15. SHARE BASED PAYMENTS

Share options have been granted to directors, employees and key service providers. The exercise price of the granted options at £ 0.25 is equal to the conditions of the capital raise in March 2017 when the options were granted. Options are conditional on being a director, employee or consultant to the Group on the respective Vesting Date.

The options are exercisable on the following vesting dates:

- 16th of March 2018: 33 % of the option shares

- 16th of March 2019: 66 % of the option shares

- 16th of March 2020: 100% of the option shares

The options have a contractual term of 5 years. The Group has no legal or constructive obligation to repurchase or settle the options in cash. Movements in share options are given below:

Out of the 11,160,897 outstanding options (2015: 0), no options are exercisable.

Share options outstanding at the end of the year have the following expiry date and exercise prices:

The weighted average fair value of the options granted during the period determined using a Black-Scholes valuation model was 3.43p per option. The significant inputs to the model were the weighted average share price of £ 0.22 at the grant date, exercise as shown above, volatility of 20%, expected option life of 5 years and an annual risk-free interest rate of 1.5%. The volatility measured at the standard deviation of continuously compounded share returns is based on statistical analysis of the share price since incorporation. A charge will be recognised in the next financial year but no material charge was made in the current period.

In connection with the acquisition of the Quiptel Group two contracts were settled in the form of shares.

Pursuant to the Nuovo Capital Service Agreement, 634,453 Ordinary Shares and 794,117 Preferred Share were issued to Nuovo at £ 0.35 each. The respective costs of £ 500k were in respect of professional services provided by Nuovo during the acquisition process and have been allocated to the General Administrative Expenses, £ 101k thereof have been expensed against share premium.

Under the terms of the Advertising Placement Agreement, 4,000,000 Preferred Shares were issued to Digital Realm Inc. at £ 0.22 in return for advertising rights, valuing these rights at £ 880,000.

16. FINANCE INCOME AND COST

17. TAXATION

The Group is subject to income tax at a rate of nil in Guernsey and around 15% in the US, as at 31 March 2017.

Deferred tax has not been provided as the applicable tax rate is 0%,

18. LOSS PER SHARE

The calculation for loss per Ordinary Share (basic and diluted) for the relevant period is based on the loss after income tax attributable to each equity Shareholder for the period from 1 January 2016 to 31 March 2017 as follows:

Loss and diluted loss per Ordinary Share are calculated using the weighted average number of Ordinary Shares in issue during the period. There were no dilutive potential Ordinary Shares outstanding during the period.

19. FINANCIAL INSTRUMENTS - RISK MANAGEMENT

The Group is exposed through its operations to foreign currency risk, credit risk and liquidity risk and in common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout this Annual Report.

Financial instruments

The financial instruments used by the Group, from which financial instrument risk arises, are as follows:

The risk associated with the cash and cash equivalents is that the Group's bank will enter financial distress and be unable to repay the Group its cash on deposit. To mitigate this risk, cash and cash equivalents are only lodged with independent financial institutions designated with minimum rating "A".

The risk associated with loans and the financial assets is that the counterparty will not be able to repay the outstanding interest and debt.

The risk associated with the other payables and liabilities is that the Group will not have sufficient funds to settle the liability when it falls due. The Directors seek to maintain a cash balance sufficient to meet expected requirements for a period of at least 45 days.

Foreign currency risk is associated with all of the above balances and results of assets and liabilities denominated in foreign currency. The most relevant currency pair for the business is USD / GBP. The directors are aware of this risk and seek to enter into as little foreign currency risk as possible. The foreign currency positions are regulatory monitored by the CFO.

General objectives, policies and processes

The Directors have overall responsibility for the determination of the Group's risk management objectives and policies. Further details regarding these policies are set out below:

Credit risk

The Group's credit risk arises from cash and cash equivalents with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating "A" are accepted.

Liquidity risk

The Directors' objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. At the date of this financial information, the Company had been financed from equity. In the future, the capital structure of the Company is expected to consist of convertible notes and equity attributable to equity holders of the Company. As a result of later than expected revenue inflows the Company does currently not have the liquidity needed to execute its business plan for the next 12 months and this has resulted in a requirement for additional working capital financing. The Directors are therefore in discussions with certain existing shareholders to provide short term working capital finance to bridge the group's working capital requirements.

20. CAPITAL RISK MANAGEMENT

The Directors' objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. At the date of these Annual Report, the Group has been financed by equity. In the future, the capital structure of the Group is expected to consist of borrowings and equity attributable to equity holders of the Group, comprising issued share capital and reserves.

21. SUBSEQUENT EVENTS

Subsequent to the period end the following events occurred:

On 19 April 2017 the Company announced it is working together with Tata Communications to acquire connectivity, hosting and operational media workflow services for its OTT services.

On 24 May 2017 the Company announced a partnership with Verimatrix to deliver first secure OTT service in West Africa.

On 16 June 2017 the Company announced the appointment of Diane McGrath as Global Chief Strategy Officer.

On 23 June 2017 the Company announced a MoU with Tata Communications (UK) Limited to collaborate on an OTT service aimed at brands and content right holders.

On 30 June 2017 the Company announced the beta launch of its ECAC sports service.

On 13 July 2017 the Company announced a MoU with Media Nucleus to offer an industry leading OTT service to millions of users internationally.

On 24 July 2017 the Company announced a MoU with LaserNet to deliver OTT services to millions of users across Africa.

22. GROUP STRUCTURE AND ACQUISITIONS

On 27 March 2017, Falcon acquired 100% of the issued share capital of Orbital Multi Media Holdings Limited (the "Quiptel Group") and of Teevee Networks Limited (Teevee). All information regarding the acquisitions can be found in the Group's prospectus on its website under http://www.falconmediahouse.com/wp-content/uploads/2016/12/falcon-acquisitions-limited-prospectus.pdf.

The Quiptel Group acquisition

The Group acquired the Quiptel Group for consideration with a total fair value of £5,343,000. The consideration was settled on readmission to trading on the London Stock Exchange's main market by the issuance of 10,785,713 Ordinary Shares and 13,499,997 Preferred Shares. The Fair Value per share for both the ordinary and preferred shares was considered to be £ 0.22 as this was the opening share price on readmission.

The following table summarises the consideration paid for the Quiptel Group and the fair value of assets acquired and liabilities assumed at the acquisition date.

In addition to the consideration paid, the Company may pay additional variable cash amounts equal to 30% of the amount by which the consolidated EBITA of Orbital Multi Media Holdings exceeds £ 2,500,000 for the business years up to 31 March 2018. No provision has been made as the EBITDA is not expected to exceed this amount.

The Company granted an unsecured interest-free working capital loan to the Quiptel Group of £1.5 million prior to acquisition.

The goodwill arising represents a premium paid for the Quiptel business and has been tested for impairment by the directors, as set out in Note 10.

The Teevee Networks Limited Acquisition

The Group acquired Teevee Networks Limited for consideration with a total fair value of £314,000 The consideration was settled on readmission to trading on the London Stock Exchange's main market by the issuance of 1,428,571 Preferred Shares. The fair value per share for preferred shares was considered to be £ 0.22 as this was the opening share price on readmission.

The following table summarises the consideration paid for Teevee, the fair value of assets acquired and liabilities assumed at the acquisition date.

Total acquisition and re-admission costs were £ 1,232k. They were partially (£ 351k) set off against share premium as in so far as the costs were relating to the issue of new ordinary shares. The remainder was expensed in the current years Administrative Expense.

As the acquisitions were closed on 27 March 2017 there is no effect on the income Statement for the remaining 4 days.

The Company had the following active subsidiaries as of 31 March 2017:

The group had the following dormant subsidiary as of 31 March 2017:

Quiptel UK commenced business during May 2017.

23. ULTIMATE CONTROLLING PARTY

As at 31 March 2017, no single entity owned more than 50% of the issued share capital. Therefore the Company does not have an ultimate controlling party.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

**ENDS**

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