10 Sep 2020 13:15
10 September 2020
Path Investments plc
("Path" or "the Company")
Final Results for the Year Ended 31 December 2019
Path Investments plc (TIDM: PATH), the natural resources investment company, announces its audited results for the year ended 31 December 2019.
Highlights
· | Sale of Legacy Turkish assets
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· | A number of transactions were considered and certain progressed in detail during the year
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· | Strict cost control maintained, including restricted cash-paid emoluments to Directors
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· | Post year-end signed Asset Purchase Agreement for acquisition of DT Ultravert |
Enquiries:
Path Investments plc | C/O IFC |
Christopher Theis |
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IFC Advisory (Financial PR & IR) | 020 3934 6630 |
Tim Metcalfe |
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Zach Cohen |
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Grant Thornton UK LLC (Financial Adviser) Samantha Harrison Harrison Clarke | 020 7383 5100
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Keith, Bayley, Rogers & Co. Limited (Broker) |
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Brinsley Holman | 07776 30 22 28 |
Graham Atthill-Beck | 07506 43 41 07
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About Path Investments plc
The strategy of the Company is focused on delivering a material acquisition in natural resources production or near production assets with the objective of providing the Company's shareholders with access to a low risk and, over time, diversified portfolio which can offer a dividend stream as well as offering development potential for capital growth. The Directors are focused on the creation of a diversified portfolio of assets that is mindful of the maturity of asset developments, life of income stream and the potential for growth, and a number of opportunities have been evaluated and developed.
CHAIRMAN'S STATEMENT
Review
The year commenced with the sale of the legacy Turkish assets in January 2019. This was a welcome development and the result of patient discussion. Further details are contained within the Financial Review.
As foreshadowed in my report last year, your directors spent a great deal of time carrying out due diligence studies over a number of potential transactions, culminating in the signing of a Share Purchase Agreement with FineGems Extraction Corporation ("FGE") in August, offering shareholders exposure to the tourmaline volume marketplace and high grade manganese production.
As Chris notes in his report below, the global pandemic has affected all walks of life, and the semi-precious gemstone and manganese markets have not been insulated from this. It seemed sensible therefore to allow the Agreement to lapse in early 2020 and to concentrate our efforts on assets that are initially less capital intensive and at the same time potentially highly impactful.
The DT Ultravert transaction would appear to offer those characteristics. The use of nitrogen within the technology brings clear environmental benefits, as well as providing cost benefits to well owners. There may be a number of other markets where the technology could be of use, offering other potential revenue streams to the company. Having signed a binding Asset Purchase Agreement with the vendors, we look forward to completion of the transaction with the publication of a prospectus shortly.
The directors continue to manage the company's modest cash reserves judiciously, and as such have received restricted remuneration to date.
Nigel Brent Fitzpatrick
Non-Executive Chairman
CHIEF EXECUTIVE OFFICER'S REPORT
OPERATIONAL REVIEW
The Company was incorporated and registered in England and Wales on 2 June 2000 under the Companies Act 1985 as a public company limited by shares with the name Hallco 459 plc and with registered number 04006413. On 28 November 2000, the Company changed its name to The Niche Group PLC. On 20 February 2016, the Company changed its name to Path Investments Plc. It is domiciled and its principal place of business is in the United Kingdom and is subject to the City Code.
The strategy of the Company is focused on delivering a material acquisition in natural resources production or near production assets with the objective of providing the Company's shareholders with access to a low risk and, over time, diversified portfolio which can offer a dividend stream as well as offering development potential for capital growth. The Directors are looking to create a diversified portfolio of assets that is mindful of the maturity of asset developments, life of income stream and the potential for growth, and a number of opportunities have been evaluated and developed. The Company is open to ideas but intends that the Reverse Takeover will be of a business that can act as the cornerstone for building a substantial group within the sector.
The Company was admitted to the Official List by way of a Standard Listing and to trading on the London Stock Exchange's Main Market for listed securities on 30 March 2017. The Company's shares are currently suspended from trading pending completion of a binding transaction, for which there can be no guarantee of certainty.
The Company has not traded over the past twelve months. Over that period its expenses have related to pre-deal costs, professional and associated expenses related to advisory and consultancy fees, along with general administration expenses.
The previous sustained period of high commodity prices had seen companies in the sector raise their appetite for risk. The subsequent fall in commodity prices has led to pressure on project commitments and cash flow shortages which have left many proven and producing projects starved of capital. This is particularly acute at the smaller end of the quoted sector where capital commitment obligations are much higher.
The Directors believe that attractive opportunities currently exist to acquire interests in producing resource assets which are profitable and have future development potential. In addition to the decreased costs at which interests in assets can be acquired in the current climate, new entrant advantages include ongoing reductions in project costs along with, in many cases, the benefits of significant historically incurred costs, existing infrastructure and technical understanding. Revenue generation from some of these assets can be either immediate or imminent.
The Company intends to focus on identifying acquisition opportunities which are, in the opinion of the Directors, underperforming, undeveloped and/or currently undervalued, and where the Directors believe that their expertise and experience, in conjunction with that of the incumbent management, can be deployed to facilitate growth and unlock inherent value.
A number of transactions were considered and certain progressed in detail during the year. On 5th November 2018 the Company announced that it had decided to withdraw from its previously announced Conditional Farm-In Agreement with 5P Energy GmbH, under which Path will acquire a 50% Participating Interest in the Alfeld-Elze II License and field, subject to completion. Post the review period, on 18th January 2019 the Company also announced the signing of a Heads of Agreement for the proposed acquisition of ARC Marlborough Pty. Limited. The Company withdrew from negotiations on 13 March 2019.
Whilst this was regrettable, there is a risk/reward trade-off to each transaction, where the risk may change over time, particularly during a negotiation period. This proved to be the case in both of these instances.
FINANCIAL REVIEW
In the year ended 31 December 2019, the Company recorded a loss of £317,647 (2018 restated loss: £1,331,341).
On 30th January 2019, the Company disposed of its 5% interest in ARAR and Alpay Enerji AS for a consideration of £400,000, together with the transfer by their major shareholder of 357,412 Ordinary Shares in the Company to be held in Treasury and 357,412 Deferred Shares for cancellation. The Company currently has no distributable earnings from which a distribution to deferred shareholders can be made, and alternative methods of returning value to such shareholders are under consideration. Such funds received were therefore used towards the satisfaction of the Company's debts.
Cash flow
During the year, the Company issued convertible loan notes amounting to £11,000 and repaid £10,000 pursuant to an instrument to issue £150,000 nominal convertible unsecured loan stock in 2018 of which a total of £94,000 has been issued
Christopher Theis
Chief Executive Officer
strategic report
The Directors present their strategic report on the company for the year ended 31 December 2019.
Principal Activities
Path Investments Plc is a public company incorporated under the Companies Act 1985 and domiciled in the United Kingdom. The strategy of the Company is focused on delivering a material acquisition in natural resources production or near production assets with the objective of providing the Company's shareholders with access to a low risk and, over time, diversified portfolio which can offer a dividend stream as well as offering development potential for capital growth.
Business Review
The Directors are looking to create a diversified portfolio of assets that is mindful of the maturity of asset developments, life of income stream and the potential for growth, and a number of opportunities have been evaluated and developed. The Company is open to ideas but intends that the Reverse Takeover will be of a business that can act as the cornerstone for building a substantial group within the sector.
The requirements of the enhanced business review are contained in the Chairman's Statement and in the Operational and Financial Reviews on pages 3 - 5 of this document.
Key performance indicators
The Company has not traded over the past twelve months and the Directors are of the opinion that analysis using key performance indicators is not necessary for an understanding of the business at the present time.
Position of the Company's business at the year-end
At the year-end, the Company's Statement of Financial Position shows net liabilities totalling £1,905,186.
The future plans of the Company
On 27th May 2020 the Company announced the conditional acquisition of a patented proprietary technology DTU for use initially within the oil and gas sectors from Zoetic International plc. The Transaction is considered a Reverse Takeover and as such trading in the Company's shares is suspended. A Prospectus is required to be published prior to a re-Admission of the Company's ordinary shares to trading on the London Stock Exchange. This process is underway; the publication of our 2019 results forms an integral part of the procedure.
Employees
The Company's only employee is its one Executive Director. There are no other employees.
Employee gender diversity
| Male | Female |
Directors of the company | 3 | - |
Total number of employees | 1 | - |
Principal risks and uncertainties
The Company is subject to various risks relating to investments, industry, business and financial conditions. The following risk factors, which are not exhaustive, are particularly relevant to the Company and its business activities:
Risk | Mitigation |
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Due diligence on potential investments |
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Any due diligence by the Company in connection with a proposed investment may not reveal all relevant considerations or liabilities, which could have a material adverse effect on the Company's financial condition or results of operations. There can be no assurance that the due diligence undertaken with respect to a potential investment opportunity will reveal all relevant facts that may be necessary to evaluate such opportunity. The Company may also make subjective judgements regarding the results of operations, financial condition and prospects of a potential investment opportunity which by their nature may subsequently result in substantial impairment charges or other losses.
| The Company intends to conduct such due diligence as it deems reasonably practicable and appropriate based on the facts and circumstances applicable to any potential investment prior to entering into any legally binding agreement in connection therewith to acquire any assets. The objective of the due diligence process will be to identify material issues which might affect the decision to proceed with any one particular investment opportunity or the consideration payable for that investment. |
Lack of control over investment |
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It is likely that, in many cases, the Company will acquire an interest in an underlying asset which does not confer upon it the ability to control the underlying asset. Accordingly, the Company's decision making authority may be limited. Such investments may also involve the risk that such other stakeholders may become insolvent or unable or unwilling to fund additional investments in the underlying asset.
| The Company will seek the greatest protection it can when negotiating the investment instrument. The company considers contingency plans in the event of default or non-performance of partners or material counterparties. |
Operational risk in sector |
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Activities in the resources sector can be dangerous and may be subject to interruption. The assets in which the Company will make investments are subject to the significant hazards and risks inherent in the resources sector and countries in which the underlying assets are located. Disruption caused by such risks could affect the Company's performance, financial condition and business prospects.
| The Company will make use of industry norm insurance arrangements as well as ensuring best operational practices are strictly adhered to. |
Lack of operational control |
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The Company will need to rely on third parties to operate its assets and will not have direct control over production from its assets. Any failure by an external contractor may lead to delays or curtailment of the production, transportation, or delivery of natural resources products and result in adverse effect on the revenues to the Company.
| The Company will, through its membership of each respective asset's Operational Committee, have direct involvement in day to day decisions. |
Additional cost contribution |
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The Company may be required to contribute to unexpected costs in the underlying assets in which it invests.
| Whilst it is difficult to mitigate against unexpected costs, best operational practices and tight budgetary control assist in the avoidance of such events.
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Investments that do not proceed to completion |
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The Company expects to incur certain third party costs associated with any investment opportunity that may ultimately lead to a completed transaction. The greater the number of these deals that do not reach completion, the greater the impact of such costs on the Company's performance, financial condition and business prospects.
| The Company will seek to minimise such costs with reference to its current financial resources. |
Resource Sector conditions |
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The Company's revenues, profitability and future growth are substantially dependent on prevailing prices of the natural resources into which it chooses to invest and its ability to either enter into, realise or seek a return from its investments. The prices of natural resources are subject to large fluctuations in response to a number of factors including relatively minor changes in the supply of, and demand for natural resources, in addition to other factors beyond the control of the Company.
| The Company takes a conservative approach to making investment decisions and these decisions are based upon a detailed assessment of expected natural resource prices. The methodologies used to assess investments against future natural resource prices are in line with best practice generally adopted in the natural resources industry. |
Foreign currency exposure |
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Investments in overseas assets will expose the Company to exchange rate fluctuations.
| The Company may seek to manage its foreign exchange exposure by active use of hedging and derivative instruments.
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Further funding for investments |
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The Company's investments or future acquisitions, expansion, activity and/or business development will require additional capital, whether from equity or debt sources. There can be no guarantee that the necessary funds will be available on a timely basis, on favourable terms, or at all, or that such funds if raised, would be sufficient.
| The Company will not enter into any binding agreement without assurance of requisite funding being in place. The company is actively seeking to diversify its sources of funding to mitigate against the risk of any single source becoming inaccessible. |
Credit & Counterparty risks |
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Any investment concluded by the Company could underperform due to one or more of the partners or counterparties (both suppliers and customers) to the project defaulting or not performing. | The Company considers the credit and counterparty risks of the different partners and customers in any investment it considers and where necessary seeks to transfer, insure or prepares contingency plans in the event of default or non-performance.
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Regulatory Risks |
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In all EU markets where access to markets and to most of the logistical infrastructure are regulated, the Company is exposed to changes in regulations that could substantially alter the economics of market access and logistics. In turn, this could alter the economics of investments in natural resources. Similarly, all markets have regulated fiscal regimes for natural resources and changes to these natural resource regimes could materially impact the returns on investments.
| The Company will invest in countries with established and stable regulatory regimes and actively monitors the regulatory policies and regimes to anticipate and wherever possible mitigate the impact of regulatory changes. |
Covid-19 - global pandemic |
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In March 2020 the WHO announced that Covid-19 was a global pandemic. | The Company has put in place measures to protect its personnel from the risk of Covid-19. All personnel are able to work remotely and further measures have been put in place to ensure meetings can take place remotely. All unnecessary travel has been stopped and government guidance has been adhered to. |
The Strategic Report was approved by the board of Directors and signed on its behalf by:
Christopher Theis
Chief Executive Officer
INDEPENDENT AUDITORS' REPORT
Opinion
We have audited the financial statements of Path Investments Plc (the 'company') for the year ended 31 December 2019 which comprise the Statement of Comprehensive Income, the Statement of Changes in Equity, the Statement of Financial Position and the Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
· give a true and fair view of the state of the company's affairs as at 31 December 2019 and of its loss for the year then ended;
· have been properly prepared in accordance with IFRSs as adopted by the European Union; and
· have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 1.2 in the financial statements, which identifies conditions that may cast significant doubt on the company's ability to continue as a going concern. The company incurred a net loss of £317,647 during the year ended 31 December 2019 and, as of that date, had net liabilities of £1,905,186.
The ability of the company to continue as a going concern depends on the continued financial support of its creditors and directors, and the ability to raise further equity funds.
As stated in note 1.2, these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
Our application of materiality
We have determined the materiality for the financial statements as a whole to be £14,400, calculated based on 2% of expenses incurred.
We consider this benchmark to be the most significant determinant of the company's financial performance used by shareholders. Until the company finds a suitable investment, it will be non-revenue generating therefore we have based our assessment of materiality on total expenses to reflect activity carried out during the period.
We set performance materiality at 70% of materiality for the financial statements as a whole.
We agreed with the Board that we would report to them all individual audit differences identified during the course of our audit in excess of £720.
An overview of the scope of our audit
In designing our audit, we determined materiality and assessed the risk of material misstatement in the financial statements. There were no areas within the financial statements which involved significant accounting estimates or judgements by the directors. We also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud. The company's finance function is located in the United Kingdom. Our audit was conducted from our London office, with regular contact from the key individuals responsible for the accounting function.
Key audit matters
Except for the matter described in the material uncertainty related to going concern section, we have determined that there are no key audit matters to communicate in our report.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
· the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
· the financial statements and the part of the directors' remuneration report to be audited are not in agreement with the accounting records and returns; or
· certain disclosures of directors' remuneration specified by law are not made; or
· we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Other matters which we are required to address
We were appointed by the Board on 20 May 2019 to audit the financial statements for the year ended 31 December 2019. Our total uninterrupted period of engagement is 2 years, covering the periods ending 31 December 2018 to 31 December 2019.
The non-audit services prohibited by the FRC's Ethical Standard were not provided to the company and we remain independent of the company in conducting our audit.
We communicated identified laws and regulations to management and throughout our audit team and remained alert to any indications of non-compliance with the London Stock Exchange's Admission and Disclosure Standards during the audit. We reviewed the Company's Corporate Governance Statement included within this Annual Report for any instance of non-compliance which had not been explained and disclosed.
As with any audit, there remained a higher risk of non-detection irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
Our audit opinion is consistent with the additional report to the audit committee.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
David Thompson (Senior Statutory Auditor) 15 Westferry CircusFor and on behalf of PKF Littlejohn LLP Canary WharfStatutory Auditor London E14 4HD9 September 2020
STATEMENT OF COMPREHENSIVE INCOME
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Year ended 31 December |
Year ended 31 December | ||
| Note |
| 2019 |
| 2018 |
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| Restated |
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| £ |
| £ |
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Administrative expenses | 3 |
| (612,537) |
| (1,237,889) |
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Operating loss | 4 |
| (612,537) |
| (1,237,889) |
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Finance income | 7 |
| 68 |
| 81 |
Finance cost | 7 |
| (105,178) |
| (93,533) |
Profit on sale of investments | 10 |
| 400,000 |
| - |
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Loss on ordinary activities before taxation |
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| (317,647) |
| (1,331,341) |
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Income tax | 8 |
| - |
| - |
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Loss for the year and total comprehensive loss attributable to the equity holders |
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| (317,647) |
| (1,331,341) |
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Earnings per share |
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- Basic & diluted attributable to the equity holders | 9 |
| (0.16) |
| (0.68) |
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All operating income and operating gains and losses relate to continuing activities.
There was no other comprehensive income for the year (2018:£Nil)
The notes form an integral part of the financial statements.
STATEMENT OF CHANGES IN EQUITY
| Share Capital | Share Premium | Retained earnings | Total |
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| £ | £ | £ | £ |
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As at 1 January 2018 | 8,979,767 | 25,413,617 | (34,407,084) | (13,700) | ||
Correction of error (note 20) | - | - | (242,500) | (242,500) | ||
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As at 1 January 2018 (Restated) | 8,979,767 | 25,413,617 | (34,649,582) | (256,198) | ||
Comprehensive income Loss for the period (restated) |
- |
- |
(1,331,341) |
(1,331,341) | ||
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Total Comprehensive loss | - | - | (1,331,341) | (1,331,341) | ||
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Total contributions by and distributions to owners of the company | - | - | - | - |
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As at 31 December 2018 | 8,979,767 | 25,413,617 | (35,980,923) | (1,587,539) | ||
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As at 31 December 2018 as originally presented | 8,979,767 | 25,413,617 | (35,466,144) | (1,072,760) | ||
Correction of error (note 20) | - | - | (514,779) | (514,779) | ||
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Restated total equity as at 1 January 2019 | 8,979,767 | 25,413,617 | (35,980,923) | (1,587,539) | ||
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Comprehensive income Loss for the period |
- |
- |
(317,647) |
(317,647) |
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As at 31 December 2019 | 8,979,767 | 25,413,617 | (36,298,570) | (1,905,186) |
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The Share Capital represents the nominal value of the equity shares.
The Share Premium represents the amount subscribed for share capital, in excess of the nominal amount, less costs directly relating to the issue of shares.
The Retained Earnings reserve represents the cumulative net gains and losses less distributions made. Retained Earnings also includes the share based payment reserve which represents the cumulative fair value of options and warrants granted,
The notes form an integral part of the financial statements.
STATEMENT OF FINANCIAL POSITION
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| As at 31 December 2019 | As at 31 December 2018 |
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| Restated |
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| £ | £ |
| Note |
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ASSETS |
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Non-current assets |
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Investments - available for sale | 10 |
| - | - |
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| -
| -
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Current assets |
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Trade and other receivables | 11 |
| 10,056 | 2,220 |
Cash and cash equivalents | 15 |
| 162 | 473 |
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| 10,218 | 2,693 |
LIABILITIES |
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Current liabilities |
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Trade and other payables | 12 |
| (1,915,404) | (1,590,232) |
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Net Current Liabilities |
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| (1,905,186) | (1,587,539) |
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NET LIABILITIES |
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| (1,905,186) | (1,587,539) |
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SHAREHOLDERS' EQUITY |
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Called up share capital | 13 |
| 195,943 | 195,943 |
Deferred shares | 13 |
| 8,783,824 | 8,783,824 |
Share premium account |
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| 25,413,617 | 25,413,617 |
Retained earnings |
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| (36,298,570) | (35,980,923) |
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TOTAL EQUITY |
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| (1,905,186) | (1,587,539) |
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STATEMENT OF CASH FLOWS
| Notes | Year ended 31 December 2019
| Year ended 31 December 2018 Restated |
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| £ | £ |
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Cash flows from operating activities |
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Cash expended from operations | 14 | (400,201) | (158,580) |
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Net cash outflow from operating activities |
| (400,201) | (158,580) |
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Cash flows from investing activities |
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Proceeds from sale of investment | 10 | 400,000 | - |
Interest received |
| 68 | 81 |
Finance costs |
| (178) | (533) |
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Net cash generated from/(used in) investing activities |
| 399,890 | (452) |
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Net decrease in cash and cash equivalents |
| (311) | (159,032) |
Cash and cash equivalents at beginning of year |
| 473 | 159,505 |
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Cash and cash equivalents at end of year | 15 | 162 | 473 |
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The notes form an integral part of the financial statements
The financial statements were approved by the board of directors and authorised for issue on 9 September 2020 and signed on its behalf by:
Christopher Theis
Chief Executive Officer
The notes form an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
1.1 Basis of preparation
Path Investments Plc is a public limited company incorporated in the United Kingdom, registered under company number 04006413. The address of the registered office is Aston House, Cornwall Avenue, London, N3 1LF, England. The principal activity of the Company is the investment in both mining and oil and gas development and production companies.
The financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the European Union ('IFRS') and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements are presented in UK pounds Sterling which is the Company's functional and presentational currency and all values are rounded to the nearest pound except where indicated otherwise.
The financial statements have been prepared under the historical cost convention or fair value where appropriate. The significant accounting policies adopted are described below.
The financial statements disclose information about the company only as the subsidiaries were dissolved during the year (see note 20).
The preparation of the Financial statements in conformity with IFRS requires the use of certain critical accounting estimates, It also requires the board to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 1.9.
1.2 Going concern
The Directors have prepared the financial statements on a going concern basis. The Directors consider the use of the going concern assumption to be appropriate. At the latest reported date of 31 December 2019, the Company had cash and cash equivalents totalling £162 and net current liabilities of £1,905,186. As at 9 September 2020, the Company had cash equivalents totalling £6,493 and net current liabilities.
The Company plans to to raise further funds by a placing of ordinary shares at the time of its re-Admission to the Standard List of the Main Market of the London Stock Exchange. Should a placing not take place in a timely manner, or should the Company's creditors demand payment, the Directors will need to immediately raise additional funds in order to be able to continue as a going concern. The ability of the Company to raise additional funds is dependent upon investor appetite and if necessary the Directors' ability to obtain alternative sources of funding. The Company is therefore able to continue as a going concern only as a result of the support through deferred payment of its creditors and Directors. Additional funding is not guaranteed however to date the Company the Company has been able to secure funding when required. The ongoing uncertainty from COVID-19 may further impact the ability of the Company to raise sufficient future funds.
For the above detailed reasons, the Directors believe there is a material uncertainty over the Company's status as a going concern. However, the Directors have a reasonable expectation that the Company will be able to raise sufficient funding to allow it to cover its working capital for a period of twelve months from the date of approval of the financial statements. It is for this reason they continue to adopt the going concern basis of accounting in preparing the financial statements. The financial statements do not include the adjustments that would be required should the going concern basis of preparation no longer be appropriate.
1.3 Financial instruments
Classification and measurement
The Company classifies its financial assets into the following categories: those to be measured subsequently at fair value (either through other comprehensive income (FVOCI) or through the income statement (FVPL) and those to be held at amortised cost.
Classification depends on the business model for managing the financial assets and the contractual terms of the cash flows.
Management determines the classification of financial assets at initial recognition. The Company's policy with regard to financial risk management is set out in note 16. Generally, the Company does not acquire financial assets for the purpose of selling in the short term.
The Company's business model is primarily that of "hold to collect" (where assets are held in order to collect contractual cash flows). When the Company enters into derivative contracts, these transactions are designed to reduce exposures relating to assets and liabilities, firm commitments or anticipated transactions.
Financial Assets held at amortised cost
The classification applies to debt instruments which are held under a hold to collect business model and which have cash flows that meet the "solely payments of principal and interest" (SPPI) criteria.
Other financial assets are initially recognised at fair value plus related transaction costs, they are subsequently measured at amortised costs using the effective interest method. Any gain or loss on derecognition or modification of a financial asset held at amortised cost is recognised in the income statement.
Financial Assets held at fair value through other comprehensive income (FVOCI)
The classification applies to the following financial assets:
- Equity investments where the Company has irrevocably elected to present fair value gains and losses on revaluation of such equity investments, including any foreign exchange component, are recognised in other comprehensive income. When equity investment is derecognised, there is no reclassification of fair value gains or losses previously recognised in other comprehensive income to the income statement. Dividends are recognised in the income statement when the right to receive payment is established.
Financial Assets held at fair value through profit or loss (FVPL)
The classification applies to the following financial assets. In all cases, transaction costs are immediately expensed to the income statement.
- Debt instruments that do not meet the criteria of amortised costs or fair value through other comprehensive income. The Company has a significant proportion of trade receivables with embedded derivatives for professional pricing. These receivables are generally held to collect but do not meet the SPPI criteria and as a result must be held at FVPL. Subsequent fair value gains or losses are taken to the income statement.
- Equity investments which are held for trading or where the FVOCI election has not been applied. All fair value gains or losses and related dividend income are recognised in the income statement.
- Derivatives which are not designated as a hedging instrument. All subsequent fair value gains or losses are recognised in the income statement.
Financial liabilities
Borrowings and other financial liabilities (including trade payables but excluding derivative liabilities) are recognised initially at fair value, net of transaction costs incurred, and are subsequently measured at amortised costs.
Impairment of financial assets
A forward looking expected credit loss (ECL) review is required for: debt instruments measured at amortised costs. Other financial assets are held at fair value through other comprehensive income: loan commitments and financial guarantees not measured at fair value through profit or loss; lease receivables and trade receivables that give rise to an unconditional right to consideration.
As permitted by IFRS 9, the Company applies the "simplified approach" to trade receivable balances and the "general approach" to all other financial assets. The general approach incorporates a review for any significant increase in counter party credit risk since inception. The ECL reviews including assumptions about the risk of default and expected loss rates. For trade receivables, the assessment takes into account the use of credit enhancements, for example, letters of credit.
1.4 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and at bank and other short-term deposits. They are stated at carrying value which is deemed to be fair value.
1.5 New Standards and Interpretations
The IASB and IFRIC have issued the following standards and interpretations which are in issue but not in force at 31 December 2019:
|
| Effect annual periods beginning before or after |
March 2018 | Amendments to References to the Conceptual Framework in IFRS Standards
| 1 January 2020 |
October 2018
| Amendment to IFRS 3: Business Combinations | 1 January 2020 |
October 2018 | Amendments to IAS 1 and IAS 8: Definition of Material
| 1 January 2020 |
January 2020
| Amendments to IAS 1: Presentation of Financial Statements: Classification of Liabilities as Current or Non-current
| 1 January 2022 |
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements other than in terms of presentation.
1.6 Share-based payments
The Company operates a number of equity-settled share-based compensation plans, under which the entity receives services from employees or suppliers as consideration for equity instruments (options) of the Company. The fair value of the employee or supplier services received in exchange for the grant of options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:
· including any market performance conditions;
· excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period); and
· excluding the impact of any non-vesting conditions (for example, the requirement of employees to save).
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-marketing vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
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 (nominal value) and share premium when the options are exercised.
1.7 Taxation
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantially enacted by the balance sheet date.
Deferred tax is recognised, using the liability method, in respect of temporary differences between the carrying amount of the Company's assets and liabilities and their tax base.
Deferred tax liabilities are offset against deferred tax assets. Any remaining deferred tax asset is recognised only when, on the basis of all available evidence, it can be regarded as probable that there will be suitable taxable profits, within the same jurisdiction, in the foreseeable future against which the deductible temporary difference can be utilised.
Deferred tax is determined using tax rates that are expected to apply in the periods in which the asset is realised or liability settled, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date.
Current and deferred tax are recognised in the income statement, except when the tax relates to items charged or credited directly in equity, in which case the tax is also recognised in equity.
1.8 Sources of estimation uncertainty
The preparation of financial statements requires the use of estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reporting amount of income and expenses during the period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.
Share based payments
The share-based payment charge is calculated using the Black-Scholes model which requires the estimation of share price volatility, expected life and the bid price discount.
2. SEGMENTAL REPORTING
a. Primary segment - business
The Company has only one business segment, which is investing in natural resources, primarily either by way of equity or convertible loans.
b. Secondary segment - geographical
The Company's loss for the period was derived wholly from activities undertaken in the United Kingdom. The Company's net assets are located entirely in the United Kingdom.
3. EXPENSES BY NATURE
| 2019 | 2018 |
| £ | £ Restated |
|
|
|
Staff costs | 334,274 | 402,271 |
Other expenses | 278,263 | 835,618 |
|
612,537 |
1,237,889 |
|
|
|
4. OPERATING LOSS
The operating loss is stated after charging:
| 2019 | 2018 |
| £ | £ |
|
|
|
Auditors remuneration - audit services | 15,000 | 16,000 |
|
|
|
Non- Audit Services |
|
|
Reporting accountants services | 15,000 | - |
|
|
|
Total fees | 30,000 | 16,000 |
|
|
|
5. EMPLOYEES
Number of employees
The average monthly number of employees (including Directors) during the period was:
| 2019 | 2018 |
| Number | Number |
Administration | 3 | 4 |
|
|
|
|
|
|
| 2019 | 2018 Restated |
| £ | £ |
Employment costs |
|
|
Wages and salaries (including benefits in kind) Social security costs Pension costs | 313,537 20,670 67
334,274 | 370,435 31,723 113
402,271 |
|
|
|
Included in employment costs above are Directors' accrued salaries, together with employer's national insurance contributions, amounting to £292,537, (2018 restated:£373,173).
6. DIRECTORS' REMUNerATION
|
|
2019 |
|
2018 Restated |
|
| £ |
| £ |
| Aggregate emoluments | 319,916 |
| 402,158 |
| Pension costs | 67 |
| 113 |
|
|
319,983 |
|
402,271 |
|
|
|
|
|
Remuneration for the highest paid director was £225,000 (2018 restated : £225,000). The figure at 31 December 2019 includes remuneration accrued but not paid of £313,213 (2018 restated: £373,173).
During the period, retirement benefits are accruing to one Director (2018: retirement benefits are accruing to two Directors).
7. FINANCE income and costs
|
|
2019 |
|
2018 |
|
| £ |
| £ |
| Finance Income |
|
|
|
| Bank interest | 68 |
| 81 |
|
|
|
|
|
|
| 68 |
| 81 |
| Finance costs |
|
|
|
| Bank charges | (178) |
| (533) |
| Convertible loan note interest | (105,000) |
| (93,000) |
|
|
|
|
|
| Net finance cost | (105,110) |
| (93,452) |
|
|
|
|
|
8. TAXATION
No corporation tax charge arises in respect of the period due to the trading losses incurred. The Company has surplus management expenses available to carry forward and use against trading profits arising in future periods of approximately £6,180,000 (2018: £5,704,000). In addition, the Company has non-trading loan relationship debits to carry forward to offset against future non-trading loan relationship credits of approximately £18,197,000 (2018: £18,917,000).
|
|
2019 |
|
2018 |
|
| £ |
| £ Restated |
| Current tax | - |
| - |
|
|
|
|
|
|
|
|
|
|
| Loss on ordinary activities before taxation | (317,647) |
| (1,331,341) |
|
|
|
|
|
| Loss on ordinary activities before taxation multiplied by average effective rate of corporation tax of 19% (2018: 19%)
| (60,353) |
| (252,955) |
| Effects of: |
|
|
|
| Non-deductible expenses | 18,616 |
| 27,869 |
| Short term timing differences | 28,458 |
| 63,232 |
| Other adjustments - non taxable gains | (76,000) |
| - |
| Tax losses upon which no deemed tax asset is recognised | 89,279 |
| 161,854 |
|
|
|
|
|
| Current tax | - |
| - |
|
|
|
|
|
|
|
|
|
|
A deferred tax asset of approximately £1,562,000 (2018 restated: £1,244,000) in respect of losses has not been recognised due to the uncertainty regarding the availability of future profits against which the losses of the Company could be offset.
The UK corporation tax at the standard rate for the year is 19.0% (2018: 19.0%).
In the Finance Act 2016 the UK government announced its intention to reduce the standard corporation tax rate to 17% by 2020. The measure to reduce the rate to 17% for the financial year beginning 1 April 2020 was substantively enacted on 6 September 2016 and has, where applicable, been reflected in the financial statements. However, the UK government announced that the corporation tax rate will remain at 19% but was not substantively enacted until after the balance sheet date.
9. EARNINGS PER SHARE
The calculation of the basic and diluted loss per share is based on the loss on ordinary activities after taxation of £317,647 (2018 restated: £1,331,341) and on the weighted average number of ordinary shares of 195,943,802 (2018: 195,943,802) in issue. The basic and diluted profit per share is 0.16p (2018 restated: 0.68p loss per share). There was no dilutive effect from the share options or warrants.
In order to calculate the diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares according to IAS 33. Dilutive potential ordinary shares include convertible loan notes and share options granted to Directors and consultants where the exercise price (adjusted according to IAS 33) is less than the average market price of the Company's ordinary shares during the period.
10. INVESTMENTS - AVAILABLE FOR SALE
The unlisted investments as at 31 December 2018 comprised of a 5 per cent. interest each in ARAR and Alpay Enerji as at an aggregate cost of £8 million. In 2016, Mr. S. Faith Alpay, the majority owner of ARAR and Alpay Enerji AS, made an initial offer to the Company of £1,050,000 for its 5% interest in both companies payable in instalments. However, since the offer was received, progress towards a legal sale and purchase agreement had not occurred, and as the payment was by instalment over a period of time, the directors considered the likelihood of finding an alternative buyer to be low and accordingly impaired the asset to £nil in the year ended 31 December 2016.
On 30 January 2019, the Company disposed of its 5% interest in ARAR and Alpay Enerji AS for a consideration of £400,000, together with the transfer by their major shareholder of 357,412 Ordinary Shares in the Company to be held in Treasury and 357,412 Deferred Shares for cancellation.
11. Trade and other receivables
|
|
|
| 2019 | 2018 |
|
|
|
| £ | £ |
|
|
|
|
|
|
|
| Prepayments |
| 10,056 | 2,220 |
|
|
|
|
|
|
|
|
|
| 10,056 | 2,220 |
|
|
|
|
|
|
12. TRade and other payables
|
|
| 2019 | 2018 |
|
|
| £ | £ |
|
|
|
| Restated |
|
|
|
|
|
| Trade payables |
| 323,416 | 369,939 |
| Other payables (including convertible loan notes) | 291,198 | 193,956 | |
| Accruals and deferred income |
| 1,300,790 | 1,026,337 |
|
|
|
|
|
|
|
| 1,915,404 | 1,590,232 |
|
|
|
|
|
Convertible Unsecured Loan Stock
On 3 April 2018 the Company constituted an instrument to issue £150,000 nominal convertible unsecured loan stock 2018. On admission of the Company to AIM or other recognised investment exchange, the convertible loan notes are, at the option of the loan note holder, either convertible into shares at the price at which the placing associated with the listing occurs or will be repayable out of the placing proceeds together with 100% interest to compensate for the risk associated with the loan. If the listing did not occur before 31 July 2018 the loan note holder may convert the loan together with interest into fully paid Ordinary Shares in the Company at the nominal value of an Ordinary Share.
Subsequently the Company raised £93,000 under this instrument including the following amounts raised from the Directors:
Director | Amount |
| £ |
C Theis1 | 50,000 |
A Yeo | 25,000 |
Brent Fitzpatrick | 18,000 |
|
|
Total | 93,000 |
|
|
1 The amount was provided by Networkguru Limited, a company owned and controlled by Chris Theis' son.
At 31 December 2018, the convertible loans amounting to £186,000 , including accrued interest of £93,000 remained outstanding. On 11 March 2019, £10,000 was repaid to the holder of a convertible loan note with interest thereon remaining due. The remaining loan note holders, all of whom were directors or their related parties, agreed to extend conversion or repayment of the loans from 31 July 2018 until 30 September 2019. or earlier if the company was admitted to the Standard List of the London Stock Exchange or a material transaction is completed.
During the year ended 31 December 2019, a further £11,000 was raised under the instruments from the following Directors:
Director | Amount |
| £ |
C Theis | 1,000 |
Brent Fitzpatrick | 10,000 |
|
|
Total | 11,000 |
|
|
On 26 November 2019 the final repayment date of the convertible unsecured loan notes was extended to 31 December 2020. In the event that a listing does not occur on or before 31 December 2020 the loan note holder may seek repayment together with 200% interest at the Final repayment date. As a result an additional £105,000 interest was accrued in the period, of which £105,000 related to the Directors.
13. SHARE Capital
Allotted, called up and fully paid |
|
|
|
|
| Ordinary Shares of 0.1p each | Deferred shares of 39.9p each | ||
| no | £ | no | £ |
|
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|
|
|
|
|
|
|
|
At 1 January 2018 and 1 January 2019 | 195,943,802 | 195,943 | 22,014,596 | 8,783,824 |
|
|
|
|
|
|
|
|
|
|
At 31 December 2018 and at 31 December 2019 |
195,943,802 |
195,943 |
22,014,596 |
8,783,824
|
The ordinary shares shall confer upon the holders the right to receive dividends and other distributions and participate in the income or profits of the company, provided that the Ordinary shares shall not confer upon the holders the rights to receive dividends paid, made or declared of the proceeds of the sale of assets held by the Company at 10 October 2016 and included on the Company's Balance Sheet as "Investments - Available for Sale" as at the date of the General Meeting (the "Legacy Assets").
The deferred shares shall confer upon the holders the following rights and shall be subject to the following restrictions, notwithstanding any other provisions in these Articles:
Return of Capital
On return of assets on a winding up of the Company after the holders of Ordinary shares have received the aggregate amount paid up thereon plus £10,000,000 for each such share held by them, there shall be a distribution to the holders of deferred shares an amount equal to the nominal value of shares held and thereafter any surplus held will be distributed to holders of ordinary shares.
Dividends
Holders of deferred shares have no rights to dividends or other distributions or to participate in the income and profits of the company, except that deferred shareholders have a right to receive any dividends declared, made or paid out of the proceeds of the sale of Legacy Assets.
Transfers
The company may acquire all or any of the deferred shares in issue at any time for no consideration.
14. Reconciliation of operating loss to net cash outflow from Operating activities
|
|
2019 |
2018 |
|
| £ | £ Restated |
|
|
|
|
| Operating loss | (317,647) | (1,331,341) |
| Decrease in debtors | (7,836) | 6,758 |
| Decrease in creditors within one year | 314,282 | 1,259,003 |
| Profit from sale of investments | (400,000) | - |
| Convertible loan note interest | 11,000 | (93,000) |
|
|
|
|
| Net cash outflow from operating activities | (400,201) | (158,580) |
|
|
|
|
|
|
|
|
15. CASH & CASH EQUIVALENTS
|
|
|
| 2019 | 2018 | |
|
|
|
| £ | £ | |
|
|
|
|
|
| |
|
| Cash at bank and in hand |
| 162 | 473 | |
|
|
|
|
|
| |
16. financial instruments
The Company's financial instruments comprise cash and cash equivalents and various other items, such as available for sale investments and trade receivables and payables, which arise directly from its operations. It is, and has been throughout the period under review, the Company's policy to ensure that there is no trading in financial instruments. The main purpose of these financial instruments is to finance the Company's operations.
Categories of Financial Instruments
|
|
| 2019 | 2018 |
|
|
| £ | £ Restated |
| Financial Assets at amortised cost |
|
|
|
| Cash and cash equivalents |
| 162 | 473 |
|
|
|
|
|
|
|
| 162 | 473 |
|
|
|
|
|
| Financial Liabilities at amortised cost |
|
|
|
| Trade and other payables |
| 1,624,206 | 1,404,232 |
| Convertible loan notes |
| 291,198 | 186,000 |
|
|
|
|
|
|
|
| 1,915,404 | 1,590,232 |
|
|
|
|
|
|
|
|
|
|
| Net Financial Liabilities |
| (1,915,242) | (1,589,759) |
|
|
|
|
|
Financial Assets and Liabilities
Financial assets and financial liabilities are recognised on the Company's balance sheet when the Company becomes party to the contractual provisions of the instrument.
Financial Risk Factors
The Company's activities expose it to liquidity risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance.
Liquidity Risk
The Company has to date financed its operations from cash reserves funded from share issues. Management's objectives are now to manage liquid assets in the short term through closely monitoring costs.
The Company has no borrowing facilities that require repayment and therefore has no interest rate risk exposure.
Fair Values of Financial Assets and Liabilities
The Directors consider that the fair value of the Company's financial assets and liabilities are not considered to be materially different from their book values.
17. Share options AND WARRANTS
The following share options have been granted by the Company and are outstanding:
Date of grant | Number of ordinary shares under option at 1 January 2018 | Granted during year | Exercised during year | Lapsed/ waived during year | Number of ordinary shares under option at 31 December 2018 | Weighted average exercise price | Expiry date |
03/05/2011 | 600,000 | - | - | - | 600,000 | £2.80 | 02/05/2021 |
30/03/2017 | 32,500,000 | - | - | - | 32,500,000 | 0.1p | 29/03/2027 |
30/03/2017 | 28,375,000 | - | - | - | 28,375,000 | 1p | 29/03/2027 |
30/03/2017 | 12,312,500 | - | - | - | 12,312,500 | 2p | 29/03/2027 |
|
|
|
|
|
|
|
|
Total | 73,787,500 | - | - | - | 73,787,500 | 3p |
|
Date of grant | Number of ordinary shares under option at 1 January 2019 | Granted during year | Exercised during year | Lapsed/ waived during year | Number of ordinary shares under option at 31 December 2019 | Weighted average exercise price | Expiry date |
03/05/2011 | 600,000 | - | - | - | 600,000 | £2.80 | 02/05/2021 |
30/03/2017 | 32,500,000 | - | - | - | 32,500,000 | 0.1p | 29/03/2027 |
30/03/2017 | 28,375,000 | - | - | - | 28,375,000 | 1p | 29/03/2027 |
30/03/2017 | 12,312,500 | - | - | - | 12,312,500 | 2p | 29/03/2027 |
|
|
|
|
|
|
|
|
Total | 73,787,500 | - | - | - | 73,787,500 | 3p |
|
All options outstanding at the year-end are exercisable at that date.
The following warrants have been granted by the Company and subsequently lapsed without excercise :
Date of grant | Number of warrants at 1 January 2018 | Granted during year | Exercised during year | Lapsed during year | Number of warrants at 31 December 2018 | Weighted average exercise price | Exercise date |
30/03/2017 | 1,400,000 | - | - | - | 1,400,000 | 1p | 29/03/2019
|
Total | 1.400,000 | - | - | - | 1,400,000 | 1p |
|
Date of grant | Number of warrants at 1 January 2019 | Granted during year | Exercised during year | Lapsed during year | Number of warrants at 31 December 2019 | Weighted average exercise price | Exercise date |
30/03/2017 | 1,400,000 | - | - | 1,400,000 | - | 1p | 29/03/2019
|
Total | 1.400,000 | - | - | - | - | 1p |
|
The fair value of equity settled share options and warrants granted is estimated at the date of grant using a Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model:
|
| Options | Options | Warrants |
Date of grant Expected volatility Expected life Risk-free interest rate Expected dividend yield Possibility of ceasing employment before vesting Fair value per option/warrant |
| 03 May 2011 54% 3.5 years 1.72% - - -
0.014p | 30 Mar 2017 33.9% 3 years 0.18% - - -
0.9p/0.243p/0.1p | 30 Mar 2017 33.9% 3 years 0.18% - - -
0.243p
|
|
|
|
|
|
The expense recognised by the Company for share based payments during the year ended 31 December 2019 was £Nil (2018: £Nil).
The average volatility is used in determining the share based payment expense to be recognised in the period. This was calculated by reference to the standard deviation of the share price over the preceding 12-month period.
Movement in the number of options and warrants outstanding and their related weighted average exercise price are as follows:
At 31 December 2019 At 31 December 2018
|
Number of Options & Warrants
|
Weighted average exercise price per share |
Number of Options & Warrants
|
Weighted average exercise price per share |
|
At 1 January |
75,187,500 |
3p |
75,187,500 |
3p |
|
Granted | - | - | - | - |
|
Exercised | - | - | - | - |
|
Expired or waived
| (1,400,000) | 1p | - | - |
|
At 31 December | 73,787,500 | 3p | 75,187,500 | 3p |
The weighted average remaining contractual life of options as at 31 December 2019 was 7.2 years (2018: 8.2 years).
18. RELATED PARTY TRANSACTIONS
The following share options were held by the directors during the year:
Director | Date of grant | Held at 1 January 2019 | Lapsed during the year | Granted during the Year | Held at 31 December 2019 | Exercise price |
C Theis | 30/03/2017 | 20,000,000 | - | - | 20,000,000 | £0.001 |
C Theis | 30/03/2017 | 16,000,000 | - | - | 16,000,000 | £0.01 |
C Theis | 30/03/2017 | 6,500,000 | - | - | 6,500,000 | £0.02 |
A Yeo | 30/03/2017 | 8,500,000 | - | - | 8,500,000 | £0.001 |
A Yeo | 30/03/2017 | 6,500,000 | - | - | 6,500,000 | £0.01 |
A Yeo | 30/03/2017 | 2,875,000 | - | - | 2,875,000 | £0.02 |
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| 60,375,000 | - | - | 60,375,000 |
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As at 31 December 2019, included in other payables were the following convertible loan notes issued to the Directors together with accrued interest thereon.
| Outstanding at 31 December 2018 | Convertible loan notes issued during year | Interest accrued during the year | Converted during the year | Repaid during the year | Outstanding at 31 December 2019 |
Director | £ | £ | £ | £ | £ | £ |
C Theis* | 100,000 | - | 50,000 | - | - | 150,000 |
C Theis | - | 1,000 | 2,000 | - | - | 3,000 |
A Yeo | 50,000 | - | 25,000 | - | - | 75,000 |
N Fitzpatrick | 16,000 | 10,000 | 28,000 | - | - | 54,000 |
Total | 166,000 | 11,000 | 105,000- | - | - | 282,000 |
* these loan notes were issued to Networkguru Limited, a company owned by Chris's Theis' son, who subscribed under the convertible loan note instrument.
Included in other payables are loans of £Nil (2018: £2,067), £Nil (2018:£2,067) and £2,067 (2018:2,067) made by each of the Directors Andrew Yeo, Nigel Fitzpatrick and Chris Theis.
19. ultimate controlling party
The Company considers that there is no ultimate controlling party.
20. INVESTMENT IN SUBSIDIARIES
As at 31 December 2018, the company held more that 20% of the share capital in the following companies:
Subsidiary Undertaking | Country of Incorporation | Class | Shares held | Principal Activity |
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|
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Path (Germany) Limited | UK | Ordinary | 100% | Dormant |
This company was dissolved on 21 May 2019 having never traded.
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21. PRIOR PERIOD ADJUSTMENT - correction of error
The financial statements have been restated to incorporate the impact of expenses recognised in 2019 that should have been accrued in 2018. The change has resulted in the loss for the year ended 31 December 2018 being increased by £138,904 and the loss for the year ended 31 December 2019 being reduced by the same amount.
The financial statements have also been restated to incorporate the impact of a further accrual for directors emoluments that should have been accrued in 2018 and 2017. The change resulted in the brought forward reserves at 1 January 2018 being restated by £242,500 to reflect the accrual for 2017; the brought forward accruals were increased by the same amount. In addition, the loss for the year ended 31 December 2018 has been increased by £133,375 to reflect the emoluments accrual needed for 2018 with the accrued cost being increased by the same amount.
22. SUBSEQUENT EVENTS
On 21 January 2020 Andrew Yeo resigned as a director. Compensation payments totalling £84,000 are payable. £30,000 is payable 24 months from the date of resignation or the date of a further capital raise if earlier. The balance is payable in monthly instalments commencing 25 months from the date of resignation or the date of a further capital raise if earlier.
On 11 March 2020, the World Health Organisation declared the Coronavirus outbreak to be a pandemic in recognition of its rapid spread across the globe, with over 200 countries now affected. Many governments are taking increasingly stringent steps to help contain or delay the spread of the virus and as a result there is a significant increase in economic uncertainty.
For the Company's 31 December 2019 financial statements, the Coronavirus outbreak and the related impacts are considered non-adjusting events. Consequently, there is no impact on the recognition and measurement of assets and liabilities.