Huuuge Inc.

Huuuge, Inc. HUUGE INC. SEP ARA TE FINANCI AL ST A TEMENT S as of and for the year ended December 31, 2021 prepared in accor dance with International Financial Repor ting Standards as adopted by the Eur opean Union T able of contents Company’ s separ ate statement of comprehensive income 5 Company’ s separ ate statement of ﬁnancial position 6 Company’ s separ ate statement of changes in equity 7 Company’ s separ ate statement of cash ﬂows 9 1. General information 11 2. Basis for preparation of the ﬁnancial statements 13 (a) Statement of compliance 13 (b) Historical cost convention 13 (c) Functional and presentation curr ency 13 (d) Key judgements and estimates 13 3. Adoption of new and revised Standards 16 4. Signiﬁcant accounting policies 17 (a) Foreign curr ency transactions – transactions and balances 17 (b) Revenue 18 (c) Income tax 18 (d) Shares in subsidiaries, associates and joint ventures 19 (e) Financial instruments 19 (f) Leases 20 (g) Impairment 21 (i) Financial assets 21 (ii) Non-ﬁnancial assets 21 (h) Cash and cash equivalents 22 (i) T rade and other receiv ables 22 (j) T rade and other pay ables 22 (k) Share capital and other components of the equity 22 (l) Series C prefer ence shares 23 (m) Interest-bearing loans and borrowings 24 HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 2 (n) Share-based payment arr angements 24 (o) Employee beneﬁts 25 (i) Deﬁned contribution plans – retirement beneﬁts 25 (ii) Other employee beneﬁts 25 (p) Provisions 25 (q) Research and development expenses 25 (r) Finance income and expense 25 5. Determination of fair values 25 (a) Prefer ence shares liability measured at fair value through pr oﬁt or loss 26 (b) T rade and other receiv ables measured at amortized cost 26 (c) Non-derivative ﬁnancial liabilities measured at amortized cost 26 6. Revenue 27 7. Segment information 27 8. Operating expenses 28 9. Other operating income and expense 28 10. Finance expense 28 11. Income tax 29 12. Investment in subsidiaries 31 13. Loans granted 32 14. Financial risk management 33 (a) Introduction 33 (b) Credit risk 33 (c) Liquidity risk 36 (d) Market risk 38 (i) Currency risk 38 (ii) Interest r ate risk 38 (e) Capital management 38 15. Accounting classiﬁcations of ﬁnancial instruments and fair values 40 16. T rade and other receivables 41 HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 3 17. Cash and cash equivalents 41 18. Share capital 41 19. Share-based payment arr angements 48 20. Conversion of series C prefer ence shares 53 21. T rade and other payables 54 22. Leases 54 23. Cash Flow reconciliation 55 24. Contingencies 56 25. Pledges and collaterals 56 26. Related party transactions 57 27. T ransactions with management of the Company 59 28. Audit fees 59 29. Employment structure 60 30. Subsequent events 60 HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 4 Company’ s separ ate statement of comprehensiv e income for the year ended December 31, 2021 Note Y ear ended December 31, 2021 Y ear ended December 31, 2020 Revenue 6 3,824 2,817 Cost of sales - Gross pr oﬁt 3,824 2,817 Sales and marketing expenses 8 (76) - Research and develop ment expenses 8 (1,447) (906) General and administr ative expenses 8 (5,206) (5,885) Other operating income/(ex pense), net 9 (80) 6,536 Operating result (2,985) 2,562 Finance income 57 166 Finance expense 10 (42,205) (128,309) Proﬁt/(loss) befor e tax (45,133) ( 125,581 ) Income tax 11 (73) (96) Net result for the year (45,206) (125,677) Other comprehensive income - - T otal comprehensive income/ (loss) for the year (45,206) (125,677) The accompanying notes are an integr al par t of these ﬁnancial statements. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 5 Company’ s separ ate statement of ﬁnancial position as of December 31, 2021 Note As of December 31, 2021 As of December 31, 2020 Assets Non-current assets Property , plant and equipment 87 36 Right-of-use asset 22 137 211 Investment in subsidiaries 1, 12 26,856 13,633 Loans granted 13 - 1,487 Other non-ﬁnancial assets 6 6 Deferred tax asset 11 48 - T otal non-current assets 27,134 15,373 Current assets T rade and other receiv ables 16 4,149 15,228 Corporate income tax r eceivable 303 583 Loans granted 13 - - Cash and cash equivalents 17 106,330 7,284 T otal current assets 110,782 23,095 T otal assets 137,916 38,468 Equity Share capital 18 2 2 T reasury shares 18 (19,954) (33,994) Supplementary capital 18 321,049 14,040 Employee beneﬁt re serve 19 19,813 8,053 Retained earnings/(Accumulated losses) (186,041) (140,835) T otal equity 134,869 (152,734) Non-current liabilities Prefer ence shares 20 - 176,606 Long-term lease liabilities 22 66 142 Deferred tax liability 11 - 28 T otal non-current liabilities 66 176,776 Current liabilities T rade and other pay ables 21 2,903 7,850 Short-term lease liabilities 22 78 76 Provisions 4p), 9 - 6,500 T otal current liabilities 2,981 14,426 T otal equity and liabilities 137,916 38,468 The accompanying notes are an integr al par t of these ﬁnancial statements. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 6 Company’ s separ ate statement of changes in equity As of December 31, 2021 Note Share capital T reasury shares Supplementary capital Employee beneﬁt reserve Retained earnings/(acc umulated losses) Equity As of January 1, 2021 2 (33,994) 14,040 8,053 (140,835) (152,734) Net proﬁt (loss) - (45,206) (45,206) T otal comprehensive income f or the period - (45,206) (45,206) Redemption of treasury shares 18 - 33,994 (33,994) - - - Conversion of pref erence shares 18, 20 - - 215,603 - - 215,603 Shares issued/(repur chased) 18 - (43,976) 152,929 - - 108,953 Exercise of st ock options 18 - 24,022 (22,672) - - 1,350 Employee share sch emes - value of employee services 19 - - - 11,830 - 11,830 Earn-out consideration - v alue of employee services 19 - - - (70) - (70) T ransaction costs of an issuance of equity instrum ents - - (4,857) - - (4,857) As of December 31, 2021 2 (19,954) 321,049 19,813 (186,041) 134,869 HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 7 As of December 31, 2020 Note Share capital T reasury shares Supplementary capital Employee beneﬁt reserve Retained earnings/(acc umulated losses) Equity As of January 1, 2020 2 (36,604) 14,477 4,295 (15,158) (32,988) Net proﬁt (loss) - - - - (125,677) (125,677) Other comprehensive income - - - - - - T otal comprehensive income f or the period - - - - (125,677) (125,677) Shares issued/(repur chased) 18 - 1,979 - - - 1,979 Acquisition of a subsidiaries (payment in tr easury shares reissued) 18 - 631 226 - - 857 Exercise of st ock options 18 - - 202 - - 202 T ransaction costs in anticipation of an issuance of equity instruments - - (865) - - (865) Employee share sch emes - value of employee services 19 - - - 3,469 - 3,469 Earn-out consideration - v alue of employee services 19 - - - 289 - 289 As of December 31, 2020 2 (33,994) 14,040 8,053 (140,835) (152,734) The accompanying notes are an integr al par t of these ﬁnancial statements. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 8 Company’ s separ ate statement of cash ﬂows for the year ended December 31, 2021 Note Y ear ended December 31, 2021 Y ear ended December 31, 2020 Cash ﬂows from oper ating activities Proﬁt/(loss) befor e tax (45,133) (125,581) Adjustments for: Depreciation and amortization 95 28 Non-cash employee beneﬁts expense - sh are-based payments 19 565 180 Remeasurement and other ﬁnance expenses r elated to prefer ence shares liability 20 38,997 128,249 Finance (income)/expense, net 10 2,622 (154) Changes in net working capital: T rade and other receiv ables 16 11,079 (6,094) Other non-ﬁnancial assets - 3 T rade and other pay ables 21 (2,249) 4,713 Provisions 4p) (6,500) - Other adjustments 25 - Cash ﬂows from oper ating activities (499) 1,344 Income tax refund receiv ed 105 - Net cash from oper ating activities (394) 1,344 Cash ﬂows from inv esting activities Acquisition of property , plant and equipment and intangible assets (72) (25) Purchase of shares in subsidi aries and capital injection 1, 12 (2,485) (2,328) Interest receive d 128 347 Repayment of loans gr anted to subsidiaries 13 1,400 2,000 Loans granted t o subsidiaries 13 - (600) Net cash from inv esting activities (1,029) (606) Cash ﬂows from ﬁnancing activ ities Proceeds from issue of com mon shares for public subscription 18 152,929 - Execution of stabilization option 18 (43,976) - Loss on foreign exchange fo rward contract 10 (2,662) - T ransaction costs of an issuance of equity instrum ents (7,097) (275) Exercise of st ock options 18 1,350 202 Proceeds from issue of com mon shares and shares series A and B 18 - 8,234 Proceeds from issue of sha res series C 18 - 1,447 Repurchase of own shares se ries A and B 18 - (6,255) Repurchase of own shares se ries C 18 - (1,444) Lease repayment and inter est paid 22 (75) (13) Net cash from ﬁnancing activiti es 100,469 1,896 Net increase/(decrease) in ca sh and cash equivalents 99,046 2,634 Cash and cash equivalents at the beginning of the perio d 17 7,284 4,650 Cash and cash equivalents at the end of the period 106,330 7,284 The accompanying notes are an integr al par t of these ﬁnancial statements. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 9 Notes t o the separ ate ﬁnancial statements HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 10 1. General inform ation Huuuge Inc. (hereinafter the “Company”) is a company r egistered in the United States of America. The Company’ s regis tered oﬃce is located in Dover , Delaware, 850 Burton Road, Suite 201, DE 19904 and the operating oﬃce is locate d in Las Vegas, Nevada, 2300 W . Sahara Av e., Suite 800, NV 89102. The Company was established with a notary deed on February 11, 2015. These separate ﬁnancial statements (her einafter “ﬁnancial statements”) of the Company cover year ended December 31, 2021 and includes compara tive data for the year ended December 31, 2020. The Company has an unlimited period of oper ation. The core business activities of Huuuge Inc. is holding activity for the Huuuge Inc. Group (the “Group ”), for which the Company is the ultimate parent. The core business activities of the Gr oup include: ● development of mobile games in the fr ee-to-play model, ● distribution and user acquisition of own mobile games. Identiﬁcation of consolidated ﬁnancial statements The Company is the ultimate parent of the Huuuge Inc Group. The Company has pr epared a consolidated ﬁnancial statements for the year ended December 31, 2021, which w ere approved on Mar ch 25, 2022 by the Board of Direct ors. Composition of the Company’ s Board of Direct ors as of December 31, 2021 and December 31, 2020 and as of the date of signing of this ﬁnancial statements The Company’ s Board of Dir ectors consists of Chief Executive Oﬃcer , who is also director , and non-executive directors. Directors hav e annual terms of duty and serve until the successors are duly elected. The preference shar eholders have the right to appoint certain directors. As of December 31, 2021 and as of the date of signing of these ﬁnancial statements Chief Executive Oﬃcer and director is Mr Anton Gauﬃn. As of December 31, 2020 non-executiv e directors were: ● Henric Suuronen, direct or , ● Sang-Ho Park, direct or , ● John Salter , direct or , ● Rod Cousens, director . On February 3, 2021 the following directors were elected, and after this change, as of December 31, 2021 as of the date of signing of these ﬁnancial statements non-executiv e directors were: ● Henric Suuronen, direct or , ● Krzysztof Kaczmarczyk, dir ector , ● John Salter , direct or , ● Rod Cousens, director . HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 11 Financial statements appro val These ﬁnancial statements were appr oved on March 25, 2022 by the Bo ard of Directors. Investments in subsidiaries The Company has direct and indir ect an interest in share capital of the following subsidiaries: Share in capital Name of entity Registered seat Activities As of December 31, 2021 As of December 31, 2020 Huuuge Games Sp. z o.o. Szczecin, Poland games development and operations 100% 100% Huuuge Global Ltd Larnaca, Cyprus games distribution, user acquisition 100% 100% Huuuge Publishing Ltd (formerly Fun Monke y Ltd) Larnaca, Cyprus games distribution 100% 100% Coffee Break Games Ltd Larnaca, Cyprus games distribution 100% 100% Huuuge Digital Ltd T el Aviv , Israel games development, R&D 100% 100% Playable Platform B.V . Amsterdam, Netherlands games advertisement 100% 100% Double Star Oy Vantaa, Finland games development 100% 100% Huuuge UK Ltd. London, United Kingdom corporate de velopment 100% - Huuuge Mobile Games Ltd Dublin, Ireland games distribution, user acquisition, in organization 100% 100% Emanon Ltd (formerly Billionaire Games Ltd) Dublin, Ireland games distribution, user acquisition - ** 100% Coffee Break Games Un ited Ltd Dublin, Ireland games distribution, user acquisition, in organization 100% 100% Cireneg Ltd (formerly Fun Monkey Games Ltd) Dublin, Ireland games distribution, user acquisition - ** 100% MDOK GmbH (formerly Huuuge Pop GmbH.) Berlin, Germany games development 100% 100% Huuuge Labs GmbH Berlin, Germany games development, R&D 100% 100% Huuuge T ap T ap Games Ltd Hong Kong games development, user acquisition 100% 100% On July 1, 2021 new entity Huuuge UK Ltd. (incorporated in the United Kingdom) was established. 100% of shares of this entity were taken up by Huuuge Inc. The entity was established with a share capital amounting to GBP 250 thousand. The new entity was established in the United Kingdom for the purposes of ext ension of international presence of the Group. On November 18, 2021, the Billionair e Games Ltd changed its name to Emanon Ltd, and Fun Mon key Games Ltd changed its name to Cireneg Ltd. On December 20, 2021 100% of the shares in Emanon Ltd, and 100% of the shares in Cireneg Ltd were sold for t otal consideration EUR 2. The shares were dir ectly held by Huuuge Global Ltd. As of December 31, 2021 and December 31, 2020 share in voting rights owned by the Company in its subs idiaries, is equal to Company’ s share in equi ty of those entities. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 12 2. Basis for prepar ation of the ﬁnancial statements (a) Statement of compliance These ﬁnancial statements of the Company have been prepar ed in accordance with the International Financial Repor ting Standards as adopted by the European Union (“IFRS”) and constitute the Company’ s separate ﬁnanc ial statement prepared in order to meet the legal r equirements imposed on issuers of the securities admitted t o trading on regulated ma rkets. The Company is the parent entity of the Huuuge Inc. Gr oup. The annual consolidated ﬁnancial statements of the Group ha ve been prepared in accordance with the r equirements of IFRS. In order to fully understand the ﬁnancial situation and the results of operations of the Company as the parent company in the Group, these ﬁnancial statements should be read together with the annual consolidated ﬁnancial statements for the period ended on 31 December 2021. The consolidated ﬁnancial statements of the Group are prepar ed and published at the same time as these separate ﬁnancial statements of the Company . (b) Hist orical cost convention These ﬁnancial statements are prepared on the hist orical cost basis, except for derivative s including the preferred shar es C series, which were measured at fair value with the gains/losses r ecognized in proﬁt or loss in the year ended De cember 31, 2021. (c) Functional and presentation currency The functional currency of the Company and the presentation currency of these ﬁnancial statements is the US dollar (“USD”). (d) K ey judgements and estimates The preparatio n of ﬁnancial statements in accordance with IFRS requires management t o make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from those estimated. Estimates and underlying assumptions are re viewed on an ongoing basis. Revisions to accounting estimates ar e recognized in the period in which the estimates ar e revised and in any future periods affected. In preparing these ﬁnancial statements, the signiﬁcant judgements and estimates made by management in applying the Company’ s accounting policies have been consistently applied by the Company and ar e consistent across the reported periods. Model of revenue r ecognition Agent vs principal considera tions – transactions between the Company and Huuuge Global L imited The Company purchases certain advertisement ser vices from third parties (mostly Platform providers such as F acebook), which are subsequently recharged to Huuuge Global Ltd. The Company’ s management has determined that in its relation to the platforms the Company acts as an agent on behalf of Huuuge Global Ltd. In accordance with IFRS 15.B34, when another entity is involved in pro viding goods or services to a customer , the entity evaluates the nature of its promise t o the customer , whether the nature of the entitys performance obligatio n is to provide the speciﬁed goods or services to the customer itself (in this case the entity is a principal) or to arrange for them to be provided by another entity (in this case the entity is an agent). In accordance with IFRS 15.B35, the entity acts as the principal, if it obtains control of the speciﬁed good or service before it is transferr ed to the customer , otherwise the entity acts as an agent arranging for the pro vision of the speciﬁed goods or service for another entitys customer . An agent HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 13 recognizes re venue on a net basis corresponding to an y fee or commission to which it expects t o be entitled in return for the arrangement of pr ovision of goods or services by another entity . The Company’ s management assessed that, taking into account the IFRS 15 guidance , the nature of the Company’ s performance obligation is to ensure the provision of adv er tisement services by Platform providers such as F acebook for Huuuge Global Ltd, and that the Company itself does not obtain control over the goods or services provided prior to its transf er to the customer . The Company’ s management therefor e assessed that the Company acts as an agent to Huuuge Global Limited. The conclusion that the Company acts as an agent is suppor ted mainly by the following fact ors: Platform providers (such as F acebook) have the ultimate responsibility for p roviding the services to Huuuge Global Ltd; the Company does not set the prices for the advertisement ser vices nor it has a discretion to select the Platforms, Platform pr oviders have right to chang e these prices at any time at their discretion. The Company being an agent presents re venues from those tr ansactions in net amounts – revenue fr om Huuuge Global Ltd for the provision of these services was fully netted with related costsin the statement of comprehensive income for the years ended December 31, 2021 and December 31, 2020. For details on the accounting policies related to the revenue recognition please r efer to Note 4 Signiﬁcant accounting policies , point (b) Revenue . Money market mutual funds As part of its liquidity management, the Company makes overnight deposits of its daily cash surpluses in money mark et mutual funds. The money market fund is an open-ended mutual fund that invests in short-term debt instruments (typically one day to one year) such as treasury bills, certiﬁcates of deposit, bonds, governmen t gilts and commercial paper with high ratings (mainly A3 based on Moody’ s r ating). The main goals are the preservation of principal, high liquidity and a modest incremental return o ver short-term interest rates or a benchmark r ate. Key judgement in applying accounting policies ref ers to the classiﬁcation of investments in money mar ket mutual funds as “Cash and cash equivalents” and not as “Other ﬁnancial assets”. The units of the funds held by the Company are short-term, highly liquid, readily convertible to known amounts of cash and ar e subject to an insigniﬁcant risk of future changes in v alue, thus they meet the critical criteria indicated in IAS 7 Statement of Cash Flows and have been considered in substance as cash equivalents. Investments in money market funds ha ve a determinable market value and the y are puttable, with a short notice period. The Company can dispose the investments in funds at its discretion any time (same-day access), funds are not closed for a selected group of participants. They are convertible into a cash and the cash amount t o be received on redemption is known at the time of the investment because at the time of the initial investment, the risk of changes in value is insign iﬁcant. The volatility of changes in fair value, in par ticular the credit and liquidity risk, is limited taking into account the level of diversiﬁcation of the por tfolio and its weighted aver age life of the underlying assets of the funds. The exposure to benchmark interest rat e risk is also assessed to be low because of short period of time until the next repricing of the assets held by the fund to curr ent benchmark interest rates. These facts support the view that the investment is liquid. In addition, the Company considered the assets held by the fund to establish whether substantially all of its investments qualify individually as cash and cash equivalents. The considera tion referred to all potential investments allowed b y the investment rules set for the fund, and not only the assets that the fund holds as of the e valuation date. It was assessed that in general the investments’ maturity is less than three months and thus, inves tments qualify individually as cash and cash equivalents. Due to the above, in the manageme nt’ s opinion, the Company’ s investments in money mark et funds have the attributes to be considered a cash equivalent. This analysis is performed at each reporting period. For details on the funds and their credit ratings please ref er to Note 14 Financial risk management , point (b) Credit risk . For carrying amounts as at December 31, 2021 and December 31, 2020 please ref er to Note 17 Cash and cash equivalents . HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 14 Prefer ence shares Classiﬁcation and measurement In September 2017, the Company issued series C preference shar es to several inv estors. The series C preference shar es were converted into ordinary shares on February 5, 2021. Details of the transaction is presented in Note 20 Conv ersion of series C prefer ence shares . The management has concluded that the series C pref erence shares meet the deﬁnition of a ﬁnancial liability as of year-end December 31, 2020 because they are effectively conve r tible into a v ariable number of ordinary shares upon occurrence of an uncertain future events, such as share split, combination or issuance of shares which are genuine and outside of the Company' s control (IAS 32 paragr aph 16(b) and 25). Accordingly , the series C pref erence shares are classiﬁed as a ﬁnancial liability and measured initially and subse quently at fair value through pr oﬁt or loss. This liability was presented as a non-current liability as of year-end December 31, 2020 based on IAS 1 para 69(d) which states that the terms of a liability that could, at the option of the counterpar ty , result in settlement by the issue of equity instruments do not affect its classiﬁcation. The settlement in (variable number of) ordinary shares was not result in an outﬂow from the entity' s working capital and hence the classiﬁcation as a non-curr ent liability under IAS 1.69(d). The further information on the fair value measurement of this liability is pro vided in Note 5 Determination of fair values, point (a) Preferen ce shares liability measured at fair value thro ugh proﬁt or loss . The fair value gains/losses are pr esented within “Finance expense”. Estimation uncertainty The assumptions made about the future and the ma jor sources of estimation uncertainty refer to the following ar eas: Deferred tax assets and liabilities, in par ticular the rea lizability of deferred tax assets In order to determine deferred tax assets and deferred tax liabilities the management needs to make estimates and judgments, especially in the valuation of deferred tax assets and liabilities. Signiﬁc ant management estimate is required to determine the amount of deferred tax assets that can be recogniz ed, based upon the likely timing and the level of future taxable proﬁts, together with future tax planning strategies. The proces s includes evaluation of the tax results of the Company , under consideration of local tax laws and regulati ons, assessment of the actual tax exposure and of temporary differences as well as assessment of the likelihood that deferred tax assets can be utilized in futur e periods through generation of taxable pr oﬁts. The recognition of a deferre d tax asset is based on the assumption that it will be recov erable against future taxable income. The deterioration of tax results in the future could cause that this assumption could not be justiﬁed. When accounting f or transactions the Company takes into account uncer tainties as to whether its treatment will be accepted by the tax authorities. Estimates used for the recognition of deferred tax assets ar e updated annually with factors such as expected tax rates and expected futu re tax results of the Company . Deferred tax liabilities and assets are not r ecognized for temporary diff erences between the carrying amount and tax bases of investments in subsidiaries as the Company is able to contro l the timing of the reversal of the tempor ary differences and in the management’ s assessment it is pr obable that the differences will not r everse in the foreseeable futur e. For more details on deferr ed tax assets and liabilities please refer t o Note 4 Signiﬁcant accounting policies , point (c) Income tax and to Note 11 Income tax . HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 15 Provisions and contingent liabilitie s Determination of provisions and contingent liabilities is based on management’ s assessment of the probability of the outﬂow of resources embodying economic beneﬁts, according to guidelines included in IAS 37 Provisions, Contingent Liabilities and Contingent Assets . Provisions are measur ed at management’ s best estimate of the expenditure required t o settle the obligation at the end of the reporting period and are discounted to pr esent value where the effect is material. As of December 31, 2019 the Company recognized pr ovision for a potential unfavourable outcome in the court case, presented in the line “Provisions” in the statements of ﬁnancial position. On or about April 6, 2018, a putative class action complaint was ﬁled against the Company in the U.S. District Court for the Western District of Washington by a playe r plaintiff. The complaint sought damages for alleged violations of Washington law associated wit h plaintiff’ s alleged in-app purchases within one or more of the Company’ s games. Speciﬁcally , the plaintiff alleged violations for the recovery of money lost in gambling and for violations of the Washington Consumer Protection Act. The plaintiff additio nally sought damages for unjust enrichment. The Company denied the plaintiff’ s allegations, denied that it violated any laws or r egulations, denied that the suit should be treated as a class action, denied the plaintiff’ s damages claims, and has been vigorously def ending itself against the plaintiff’ s claims. The Company ﬁled a motion to compel arbitration on July 2, 2018, which the District Court denied on November 13, 2018. The Company timely ﬁled a notice of appeal on December 6, 2018, and ﬁled its opening brief in the Ninth Circuit Court of Appeals on March 6, 2019. The Company also ﬁled a motion to stay the district cour t proceedings pending a decision on its appeal, which was granted on March 1, 2019. The pr ovision of USD 6,500 thousand was recognized in 2019 in the separat e line item in the statement of the ﬁnancial position as “Other provisions” and in the “Other operating income/(expense), net” line item in the state ment of comprehensive income. The Company’ s management estimated that the costs would be realized within a period for which the discounting effect would not be material and accounts for the provision in an u ndiscounted amount. The parties mediated on June 15, 2020 and reached agreement on a term sheet on a class action basis on June 16, 2020. On August 23, 2020, a class action settlement agreement was concluded between the class representative s, including the plaintiff, and ﬁled with the cour t, intending to fully , ﬁnally and forever r esolve, discharge and settle the claims related to this suit. The United States District Court ﬁnally approved the Settlement Agreement on F ebruary 11, 2021. The Court ﬁnds that the settlement is fair , reasonable and adequate and it is a re sult of extensive, arm ’ s-length negotiations. Subsequently the Court ordered the Company to settle ﬁnal claim s determinations, including payment and prospective relief. Payment was made on Mar ch 26, 2021, with the corresponding utilization of the pro vision. Further , Huuuge Global Ltd agreed to participate in covering costs related to conclusion of the settlement agree ment by compensating of the settlement fund amount. The Company has recognized income related t o the compensation received amounting USD 6,500 thousand in line “Other oper ating income/(expense) net” in statement of comprehensiv e income. 3. Adoption of new and re vised Standards New International Financial Reporting Standards and Interpretations published but no t yet effective: ● IFRS 14 Regulatory Deferr al Accounts (issued on January 30, 2014) – The European Commission has decided not to launch the endorsement process of this interim standard and to wait for the ﬁnal standard – not yet en dorsed by EU at the date of approval of these ﬁnancial statements for issu e – effective for ﬁnancial years beginning on or after January 1, 2016; ● Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets Between an Investor and its Associate or Joint Ventur e (issued on September 11, 2014) – the endorsement process of these Amendments has been postponed by EU - the effectiv e date was deferred indeﬁnitely by Internationa l Accounting Standards Board; ● IFRS 17 Insurance Contr acts (issued on May 18, 2017) including Amendments to IFRS 17 (issued on June 25, 2020) - effective for ﬁnancial y ears beginning on or after January 1, 2023; ● Amendments to IAS 1: Presentation of Financial Statements: Classiﬁcation of Liabil ities as Current or Non-curren t - Deferr al of Effective Date (issued on January 23, 2020 and July 15, 2020) – not yet endorsed by EU at the d ate of HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 16 approval of these ﬁnancial statements for issue – eff ective for ﬁnancial years beginning on or after January 1, 2023; ● Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies (issued on F ebruary 12, 2021) – effective for ﬁnancial y ears beginning on or after January 1, 2023; ● Amendments to IAS 8: Deﬁnition of Accounting Estimates (issued on February 12, 2021) – effective for ﬁ nancial years beginning on or after January 1, 2023; ● Amendments to IAS 12: Deferred T ax related to Assets and Liabilities arising from a Single T r ansaction (issued on May 6, 2021) – not yet endorsed by EU at the date of approv al of these ﬁnancial statements – effective for ﬁnancial years beginning on or after 1 January 2023; ● Amendments to IFRS 3: Reference t o the Conceptual Fr amework (issued on May 14, 2020) - effective for ﬁnancial years beginning on or after January 1, 2022; ● Amendments to IAS 16: Property , Plant and Equipment – Pr oceeds before Intended Use (issued on May 14, 2020) – effective for ﬁnancial y ears beginning on or after January 1, 2022; ● Amendments to IAS 37: Onerous Contr acts – Cost of Fulﬁlling a Contract (issued on Ma y 14, 2020) – effective for ﬁnancial years beginning on or after January 1, 2022; ● Annual Improvements t o IFRS Standards 2018–2020 (issued on 14 May 2020) – effective for ﬁnancial years beginning on or after 1 January 2022; ● Amendments to IFRS 17 Insurance con tracts: Initial Application of IFRS 17 and IFRS 9 – Compar ative Information (issued on 9 December 2021) - not yet endorsed by EU at the date of approval of these ﬁnancial statements – effective for ﬁnancial y ears beginning on or after 1 January 2023; These standards and amendments are not expected to ha ve a material impact on the Company in the current or future reporting periods and on foreseeable future tr ansactions. New International Financial Reporting Standards and Interpretations eff ective for the ﬁrst time for ﬁnancial year 2021 During the year 2021, the following IFRS and amendments to IFRS or interpretations entered int o force: ● Amendments to IFRS 16 Leases: Co vid-19-Related Rent Concessions beyond 30 June 2021 ● Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Inter est Rate Benchmark Reform – Phase 2 ● Amendments to IFRS 4 Insur ance Contracts – def erral of IFRS19. The amendments listed above did not have any impact on th e amounts recognized in prior periods and are not expected to signiﬁcantly affect the curr ent or future periods. 4. Signiﬁcant accounting policies The accounting policies applied by the Company in these ﬁnancial statements have been consistently applied by the Company and are consistent acr oss the reported periods, unless indicated otherwise. (a) Foreign curr ency transactions – transactions and balances T ransactions in foreign currencie s are translated to USD (which is the functional curr ency of the entity and the presentation currency of these ﬁnancial statements) at exchange r ates effective on the days of the transactions. Monetary assets and liabilities denominated in foreign currencies ar e translated into USD at the applicable closing exchange r ates as of the balance sheet date. The foreign exchange r ate differences arising on tr anslation of transactions denominated in foreign currencies are r ecognized in the proﬁt or loss in the statement of compr ehensive income. Non-monetary assets and liabilities that are measured at historical cost in foreign currency are tr anslated using the exchange rat e at the date of the transaction Non-monetary assets and liabilities denominated in foreign curr encies that are stated at fair value are tr anslated at the exchange r ates at the date the fair value was determined. T ranslati on differences on assets and liabilities carried at fair value ar e reported as par t of the fair value gain or loss. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 17 (b) Re venue The Company’ s revenue is generated by services provided to the other entities in the Group. The Company’ s revenue comprises revenues fr om adver tisement services, game design development services, and stewardship activities. In addition, revenue for t he year ended December 31, 2020 was generate d from legal services. Advertisement services The Company purchases certain advertisement ser vices from third parties (mostly Platform providers such as F acebook), which are subsequently recharged t o Huuuge Global Ltd. The Company’ s management has determined that in its r elation to the platforms the Company acts as an agent on behalf of Huuuge Global Ltd. Further information on the judgment in this respect is presented in Note 2 Basis for prepar ation of the ﬁnancial statements, point (d) Key judgements and estimates – Model for revenue r ecognition. The Company’ s management identiﬁed one performance obligation which is adv er tisement services in gaming applications. Revenue is recogniz ed over time, in the period in which services are pr ovided. Game design development services, legal services and stewards hip activities Under each of these revenue str eams, The Company’ s management identiﬁed one performance obligation. Revenue is recognized ov er time, in the period in which ser vices are pr ovided. For game design development services, legal services and stewardship activities. the Company has a right to consider ation in an amount that corresponds directly with the v alue to the customer of the entit y’ s performance completed to date. Management assesses that the Company does not have any contracts where the period between the tr ansfer of the promised goods or services and payment exceeds one year . As a consequence, the Company does not adjust any of the transaction prices for the time value of money . A receivable is recognized wh en the consideration is unconditional because only the passage of time is requir ed before the payment is due. In relation to these services, the Company’ s management has determined that the Company acts as the principal as it controls the speciﬁed good or ser vice before it is transferr ed to the customer . In such circumstances, the Company recognizes re venue in the amount of gross remuner ation to which it expects to be entitled in exchange for the goods or services transferr ed. (c) Income tax Income tax expense comprises current and deferr ed tax. Current tax and deferr ed tax are recognized in pr oﬁt or loss except to the extent that it relates to a business combination, or items are r ecognized directly in equity or in other compr ehensive income. Current tax is the expected tax payable or receiv able on the taxable income or loss for the year , using tax rates en acted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of pre vious years. Deferred tax is recogniz ed in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the ﬁnancial statements. Deferred tax is not recognized for tempor ary differences arising on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable proﬁt or loss. Deferred tax liabilities and assets are not recognized for tempor ary differences between the carrying amount and tax bases of investments in subsidiaries where the company is able t o control the timing of the reversal of the tempor ary differences and it is probable that the diff erences will not reverse in t he foreseeable future. In addition, deferred tax is not recogniz ed for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax r ates that are expected to be applied to the tempora ry differences when they revers e, based on the laws that have been enacted or substantively enacted b y the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset curr ent tax assets and liabilities, and they relate to income taxes HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 18 levied by the same tax authority on the same taxable entity , or on different tax entities, but the y intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will b e realized simultaneously . A deferred tax asset is r ecognized for unused tax losses, tax credits and deduct ible temporary differences, t o the extent that it is probable that future taxa ble proﬁts will be available against which the y can be utilized. Deferred tax assets are r eviewed at each reporting date and are reduced to the extent it is no longer probable that the related tax beneﬁt will be reali zed. (d) Shar es in subsidiaries, associates and joint ventures Shares in subsidiaries, associates and joint ventur es not classiﬁed as held for sale in accordance with IFRS 5, ar e measured at historical cost in accordance with IAS 27 reduced by impairment losses, if any arise in accordance with IAS 36. The impairment test is carried out if there are any indications of impairment . The amount of the impairment loss is assessed by comparing the carrying amount to the higher of fair value less costs to sell and value in use. Usually transactio n costs related to acquisition of shar es in subsidiaries increase the costs (the carrying amount) of the inves tment. Subsidiaries are entities contr olled by the Company . The Company controls an entity when it: ● has power to direct the r elevant activities of the investees that signiﬁ cantly affect their returns, ● has exposure, or rights, to v ariable returns from its involv ement with the investees, ● has the ability to use its power ov er the investees to affect the amount of the investor’ s returns. The Company veriﬁes if it has control over entities, if an event r esults in a change to one or more of the contr ol conditions listed above. An associate is an entity over which the Company has signiﬁcant inﬂuence. Signiﬁcant inﬂu ence is the power to participate in the ﬁnancial and operating policy decisions of the investee, but is not control or joint contr ol over those policies. The Company does not have any associate. (e) Financial instruments The Company recognizes the non-derivative ﬁnancial instruments such as other long-term ﬁnancial assets (mostly long-term deposits), trade and other receiv ables, cash and cash equivalents (including investments in mutual funds), loans and borrowings, and tr ade and other payables. At initial recognition, the Company measur es a ﬁnancial asset at its fair value plus, in the case of a ﬁnancial asset not a t fair value through proﬁt or loss (“FVPL ”), tr ansaction costs that are directly attributable to the acquisit ion of the ﬁnancial asset. T ransaction costs of ﬁnancial assets carried at FVP L are expensed in proﬁt or loss. The Company classiﬁes its ﬁnancial assets to the measurement category: debt instruments to be measured at amortized cost. The classiﬁcation depends on the entity’ s business model for managing the ﬁnancial asset s and the contractual terms of the cash ﬂows. Assets that are held for collection of contractual cash ﬂows, where those cash ﬂows re present solely payments of principal and interest (“SPPI test”), are measur ed at amor tized cost. Inter est income from these ﬁnancial assets is included in ﬁnance income using the effective interest r ate method. Any gain or loss arising on derecognition is recognized dir ectly in proﬁt or loss. Management assesses the Company ’ s expected credit losses (“ECLs”) associated with debt instruments measured at amortized cost, regardless of whether or not there has been any indication of impairment. Please refer t o Note 4 Signiﬁcant accounting policies , point (g) Impairment, (i) Financial assets below . HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 19 (f) Leases Management assesses at the time of entering into a contr act whether the contract is a lease or conta ins a lease. A contract is a lease or contains a lease if it conveys the right to control the usage of an identiﬁable asset for a given period in exchange for consider ation. The Company applies a uniform approach to the recognition and measurement of all lease agreements except for short-term leases and low value asset leases. On the commencement date of a lease, the Company recognizes a right-of-use asset and a lease liability . Right-of-use assets The Company recognizes right-of-use assets on the date of commencing a lease i.e. at the date at w hich the leased assets are available for use by the Company . The right-of-use assets are presented in a separate line in the statement of ﬁnancial position. The Company does not have any right-of-use assets that meet the deﬁnition of investment property which would be presented in statement of ﬁnancial position in a separate line as “investment pr oper ty”. Right-of-use assets are measur ed initially at cost comprising the following: ● the amount of the initial measurement of the lease liability , ● any lease payments made at or befor e the commencement date less any lease incentives receiv ed, ● any initial direct costs, ● restor ation costs. Subsequently , the right-of-use assets ar e measured at cost less accumulated depreciation and any accu mulated impairment losses and adjusted for remeasur ement of the lease liability due to reassessment or lease mo diﬁcations. The right-of-use assets are depreciated ov er the shor ter of the asset’ s useful life and the lease term on a straight-line basis. The amortization periods for the right-of-use assets are as follows: right of use for vehicles 3 years right of use for oﬃces 1 – 5 years Lease liabilities At the commencement date lease liabilities are measured at an amount equal to the pr esent value of the following lease payments for the underlying right-of-use assets during t he lease term: ● ﬁxed payments (including in subs tance ﬁxed payments), less any lease incentives r eceivable, ● variable lease payments that ar e based on an index or a rate, ● amounts expected to be pay able by the entity under residual value guar antees, ● the exercise price of a purchase option if the Company’ s management is reasonably cer tain to exer cise that option, ● payments of penalties for terminating the lease, if the le ase term reﬂects the Company would exer cise that option. The lease payments are discounted using the interest r ate implicit in the lease, if that rate can be readily determined, or the Company’ s incremental borr owing rate. Each lease payment is allocated between the liability and ﬁnance cost. The ﬁnance cost is char ged to proﬁt or loss ov er the lease period so as to produce a constant periodic rate of inter est on the remaining balance of the liability for each period. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 20 The carrying amount of liability is remeasured to reﬂect a ny reassessment, lease modiﬁcation or revised in -substance ﬁxed payments. The lease term includes the non-cancellable period of a lease plus periods covered by options to extend and/o r terminate the lease if it is reasonably certain that the lease will be extended or terminated. The Company applies the exemptions for short-term leases and leases of low-value assets. Payments associated with all short-term leases, i.e. with lease terms of 12 months or less, and certain leases of low-value assets, for which the underlying value is settled at USD 5 thousand or less, are r ecognized on a straight-line basis o ver the lease term as an expense in proﬁt or loss. (g) Impairment (i) Financial assets Management assesses the Company’ s ECLs associated with debt instruments measured at amortized cost, regardless of whether or not there has been any indication of imp airment. For trade r eceivables, the Company applies a simpliﬁed approach an d measures a loss allowance for expected credit losses at the amount equal to the expected credit losses over the instrument' s lifetime. The Company uses its hist orical data on credit losses, adjusted on an as-needed basis for th e impact of forward-looking statements. For other ﬁnancial assets the Company applies a three-stage model for impairment, based on changes in credit quality since initial recognition. A ﬁnancial instrument that is not credit-impair ed on initial recognition is classiﬁed in Stage 1. Financial assets in Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL that results from default events possible within the next 12 months or until contr actual maturity , if shorter (“12Months ECL ”). If the Company identiﬁes a signiﬁcant increase in credit risk (“SICR”) since initial r ecognition, the asset is transf erred to Stage 2 and its ECL is measured based on ECL on a lif etime basis, that is, up until contractual maturity but consider ing expected prepayments, if any (“Lifetime ECL ”). The ﬁnancial assets with objective evidence of impairment are classiﬁed t o Stage 3; for such assets lifetime ECL is recogniz ed. (ii) Non-ﬁnancial assets The carrying amounts of the Company’ s non-ﬁnancial assets, other than invent ories and deferred tax assets, ar e reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, or annual impairment testing for an asset is requir ed, then the asset’ s recove rable amount is estimated. The recover able amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated futur e cash ﬂows are discounted to their pr esent value using a pre-tax discount rate that reﬂects curr ent market assessments of the time value of money and the risks speciﬁc to the asset. F or the purpose of impairment testing, assets are grouped together int o the smallest group of assets that generates cash inﬂows from continuing use that are largely independent of the cash inﬂows of other assets or groups of assets (the “cash- generating unit”). An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its r ecoverable amount. Impairment losses are r ecognized in proﬁt or loss. For other assets impairment losses recognized in prior periods ar e assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed only t o the extent that the asset’ s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recogniz ed. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 21 At the end of each reporting period, management assesses whether there is any indication that any Company’ s assets may be impaired. Intangible assets with indeﬁnite useful lives are tested for impairment annually as at December 31 at the cash-generating unit le vel, irrespective of whether ther e is any indication of impairment. As at December 31, 2021 and December 31, 2020 the Company had no in tangible assets with an indeﬁnite useful life. (h) Cash and cash equivalents Cash and cash equivalents comprise cash balances, call deposits and highly liquid investments (including money market funds) with maturities at initial recognition of thr ee months or less. The judgement relating to the classiﬁcation of the investments in money mark et funds as “cash and cash equivalents’ is disclosed in Note 2 Basis for prepar ation of the ﬁnancial statements , point (d) Ke y judgements and estimates – Money market mutual funds . Cash on bank accounts and investments in money market mutual funds meets the SPPI test and the business model test "held to collect", therefore the y are measured at amortized cost including an impairment loss determined in accordance with the expected loss model described in Note 4 Signiﬁcant accounting p olicies , point (g) Impairment , (i) Financial assets . (i) T rade and other receivables T rade receivables ar e recognized initially at the fair value which is equal t o the nominal amount when the contract does not contain signiﬁcant ﬁnancing. Subsequently , they are carri ed at amor tized cost using the e ffective interest method, less loss allowance. The loss allowance is determined according to the accounting polic y presented in Note 4 Signiﬁcant accounting policies, point (g) Impairment (i) Financial assets . Other receivables include deposits made to purchase property , plant and equipment, receivables from emplo yees and receivables from the state budget. Other r eceivables that are not ﬁnancial assets as at the end of the reporting period are measured at the amount due. (j) Tr ade and other payables These amounts represent liabilities for goods and services pr ovided to the group prior t o the end of the ﬁnancial year which are unpaid. T rade and other payables ar e presented as current liabilities unless payment is not due within 12 mont hs after the reporting period. They are recognized initially at their fair v alue and subsequently measured at amortized cost using the effective inter est method. The other payables comprise employ ees related liabilities, tax other than income tax liabilities, and accrued expenses, which are measured at the am ount due. (k) Share capital and other components of the equity Share capital is presented at t he total nominal value of the register ed shares of the Parent Company . As of December 31, 2021 all ordinary shares and 2 preference s hares (series A and B) are classiﬁed as equity . Preferences attributable to series A and B of pr eference shares ar e described in Note 18 Share capital . Incremental costs directly attributable to the issue of new shares are presented as the deduction of equity , i.e. supplementary capital. Qualifying transaction costs incurred in anticipation of an issuance of equity instruments are also deducted from the equity , i.e. supplementary capital. If the equity instruments are not subsequently issued, the tr ansaction costs are recogniz ed as an expense. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 22 Any excess of the fair value of consider ation received o ver the nominal value of shares issued is r ecorded as share premium in equity , i.e. supplementary capital. As of December 31, 2020, and up to February 5, 2021, i.e. the date of the conv ersion, the preference shar es of series C were classiﬁed as ﬁnancial liability under IAS 32 – the accounting policy for those preference shares is pr esented in Note 4 Signiﬁcant accounting policies, point (l) Series C Preference Shares. The judgement r egarding the classiﬁcation of the prefer ence shares as debt or equity instrument is disclosed in Note 2 Basis for prepar ation of the ﬁnancial statements, point (d) Key judgements and estimates . Details regarding the conversion are disclosed in Note 20 Conversion of series C prefer ence shares. In the line “T reasury shares”, the Company presents the own shares repur chased, which are recognized at costs and are deducted from equity . No gain or loss is recognized in pr oﬁt or loss on the purchase, sale, issue or cancellation of the Company shares. Any difference between the carrying amount and the consideration, if reissued, is recogn ized in the supplementary capital. In accordance with Delaware Gener al Corporation Law , the Company may declare and pay dividends upon the shares of its capital stock either: 1. Out of its surplus, being the excess of its net assets over its capital (all or part of the consideration re ceived by the corporation in ex change for its capital stock, as determined by the Boar d of Directors); or 2. In case there shall be no such surplus, out of its net proﬁts for the ﬁscal year in which the dividend is declared and/or the preceding ﬁscal year . If the capital, as deﬁned above, shall have been diminished by depr eciation in the value of its property , or by losses, or otherwise, to an amount less than the aggregate amount of the capital represent ed by the issued and outstanding stock of all classes having a prefer ence upon the distribution of assets, the directors of such company shall not decla re and pay out of such net proﬁts any dividends upon any shares of any classes of its capital stock until the deﬁciency in the amount of capital represented by the issued and outstanding sto ck of all classes having a preference upon the distribution of assets shall have been rep aired. Employee beneﬁts reserve results from the share-based payment arrangements and is described in details in Note 4 Signiﬁcant accounting policies , (n) Share-based pa yment arrangements and Note 19 Shar e-based payment arrangements . (l) Series C prefer ence shares As of December 31, 2020 and up to February 5, 2021 (i.e. the date of the conv ersion) series C convertible preference shares represented a ﬁnancial instrument, which was classiﬁed as the ﬁnancial liability measure d at fair value through proﬁt or loss. The judgement regarding the classiﬁcation of these preference shar es as debt is disclosed in Note 2 Basis for prepar ation of the ﬁnancial statements, point (d) Key judgements and estima tes. On issuance of the preference shar es, the liability was measured at fair value. For this instrument issued in 2017, the fair value was determined to equal the proceeds fr om shares issuance. This amount was classiﬁed as a ﬁnancial liability as of year-end December 31, 2020, measured at fair value through proﬁt or loss until it was extinguished on conversion of prefer ence shares. The liability was remeasured to fair v alue reﬂecting the fair value of underlying or dinary shares for which series C shares were converted on February 5, 2021, based on contractual conversion fact or . Remeasurement gains and losses are presented in proﬁt or loss (ﬁnance income or ﬁnance costs). F ur ther information on the fair v alue measurement of this liability is presented in Note 5 Determination of the fair value. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 23 (m) Interest-bearing loans and borrowings Borrowings are initially recogniz ed at fair value, net of transa ction costs incurred. Borrowings are subs equently measured at amortized cost. Any difference between the pr oceeds (net of transaction costs) and the r edemption amount is recognized in proﬁt or loss over the period of the borrowings using the effectiv e interest method. Borrowings are derecogniz ed when the obligation speciﬁed in the contract is discharged, cancelled or expired. The difference between the carrying amount of a ﬁnancial liability that has been extinguished or transf erred to another party and the consideration paid, including any non-cash assets tr ansferred or liabilities assumed, is recogniz ed in proﬁt or loss as other income or ﬁnance costs. Modiﬁcations of liabilities that do not result in derecognition are accounted for as a change in estimate using a cumulative catch up method, with any gain or loss recognized immediately in proﬁt or loss, unless the economic substance of the difference in carrying values is attributed to a capital transaction wit h owners. Borrowings are classiﬁed as curre nt liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. (n) Share-based payment arr angements The Company runs an award progr am where the employees and contr actors are r eceiving free options which entitle them to purchase the shares in the Company . Such progr am is a share-based payment progr am which is classiﬁed as equity settled due to the fact that the Company does not hav e an obligation to settle the obligation arising under the prog ram by delivering cash to the employ ees or contractors. Equity-settled share-based payments to employees of the Company and its subsidiaries and others providing similar services are measured at the fair value of the equity instruments at the grant date. The gr ant date fair value of the award s is determined using a share option pricing model. Details regarding the determination of the fair value of equity-settled share-based transactions ar e set out in Note 19 Share-based payment arr angements . Options with the same grant date but with different periods during which all the speciﬁed vesting conditions of a share-based payment arr angement are to be satisﬁed are treate d as a separate awards with a different v esting period (staged vesting). The fair value determined at the grant date of the equity-settled shar e-based payments is expensed (options granted to employees of the Company) or allocated to investments in subsidiaries (options gr anted to employees of the Company’ s subsidiaries) over the vesting perio d, based on the Company’ s estimate of equity instruments that will eventually vest, with a corresponding increase in equity . At the end of each period the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any , is recognized in proﬁt or loss, or investment in subsidiaries, such that the cumulative expense reﬂects the revised estimate, with a corresponding adjustment to the equity-settled emplo yee beneﬁt reserve. IFRS 2 Share-based Payment does not addr ess whether an increase in equity recognized in connection with a share-based payment transaction should be presented in a separate component within equity or within r etained earnings. Such an increase is presented in emplo yee beneﬁt reserve. The amount recognized as an expense or allocated to investment in subsidiari es is adjusted to reﬂect the number of awar ds for which the related ser vice and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 24 (o) Employee beneﬁts (i) Deﬁned contribution plans – retir ement beneﬁts The Company has under local laws obligations to pay retir ement beneﬁts, however , as the average age of employ ees is low , no provision has been r ecorded due to its immaterial amount. (ii) Other employ ee beneﬁts Short-term employee beneﬁt obligations are measured on an undiscoun ted basis and are expensed as the related service is provided. A liability is recogniz ed for the amount expected to be paid under short-term cash bonus or proﬁt-sharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service pro vided by the employee, and the obligation can be estim ated reliably . (p) Provisions A provision is recogniz ed when the Company , as a result of a past ev ent, has a present obligation (legal or constructive) that can be estimated reliably and it is probable that the Company will be requir ed to settle that obligation (an outﬂow of economic beneﬁts will be required). Pro visions are measured at management’ s best estimate of the expenditure required t o settle the obligation at the end of the reporting period and are discounted t o present value where the eff ect is material. (q) Research and development expens es In the position “Research and dev elopment expenses”, the Company recognizes costs r elated to game design of the existing and the new games. (r) Finance income and expense Finance income comprises interest income on fund s invested and loans granted. Interest income is recogniz ed as it accrues in proﬁt or loss, using the eff ective interest method. Finance expenses comprise interest expense on borrowings, leases and v aluation of preferred shar es series C classiﬁed as non-current liabilities prior to conversion on February 5, 2021. Borrowing costs that are not directly attributabl e to the acquisition, construction or production of a qualifying asset are recognized in pr oﬁt or loss using the effective interest m ethod. Foreign curre ncy gains and losses are reported on a net basis as either ﬁnance income or ﬁnance cost depending on whether foreign currency mov ements are in a net gain or net loss position unless material, where separate pr esentation is required. 5. Determination of fair values A number of the Company’ s accounting policies and disclosures require the determination of fair value, for both ﬁnancial and non-ﬁnancial assets and liabilities. For assets and liabilities that are recogniz ed in the ﬁnancial statements at fair value on a recurring basis, management determines whether in the Company transf ers have occurred between lev els in the hierarchy b y re-assessing categorization (based on the lowest level input that is signiﬁcant to the fair value measurement as a whole) at the end of each r eporting period. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 25 The Company’ s management determines the policies and procedures for fair v alue measurement. External valuers are involved for valuation of signiﬁca nt assets and signiﬁcant liabilities. Selection criteria include market knowledge, r eputation, independence and whether professional standar ds are maintained. The management decides, after discussions with the Company’ s external valuers, which va luation techniques and inputs to use for each case. At each reporting date, the management analyses the movements in the values of assets and liabilities which ar e required to be remeasured or r e-assessed as per the Company’ s accounting policies. For this analysis, the management veriﬁes th e major inputs applied in the latest valuation by agreeing the information i n the valuation computation to contr acts and other relevant documents . Fair values ha ve been determined for measurement and for disclosur e purposes as explained below . (a) Prefer ence shares liability measured at fair value through proﬁt or loss On February 5, 2021 series C prefer ence shares were converted into common shares. A t the date of the conversion series C prefer ence shares liability was measured to fair value based on the value of shares established for the Company' s initial public offering, with the loss recognized in pr oﬁt or loss. For more information, please ref er to Note 18 Share capital and t o Note 20 C onversion of series C pref erence shares . Prior to conversion, series C pref erence shares liability was measured at fair value initially and aft er initial recognition with the gains/loss on subsequent remeasur ements being recognized in proﬁt or loss. The Company’ s ordinary shares and prefe rence shares as of December 31, 2020 were not yet tr aded on any public market. Since the prefer ence shares had the right to dividends and the y were convertible at any time, their fair value was determined based on the fair value of the Company’ s ordinary shares on a non-marketable, minority , per shar e basis. At the year-end December 31, 2020, no trans actions took place in its shares (e.g. repur chase of ordinary shares), the prices of which could be used by the Company to determine the fair value at the year-end December 31, 2020. In this case, the Company’ s management determined the fair value of the non-listed common shares of the Compan y which were the basis for valuation of liability resulting from issuance of series C pref erence shares using val uation techniques, in par ticular , the Option-Pricing Method. As of December 31,2020, the fair value measurements of series C prefer ence shares were classiﬁed in Level 3 of the fair value hierar chy . The signiﬁcant unobservable inputs used in the fair value measurements categorized within Le vel 3 of the fair value hierar chy as of December 31, 2020 were the following: EBI TDA multiple, discount for lack of marketabil ity , revenue multiple, discount rate, pr obability of the initial public offering. (b) Tr ade and other receivables measur ed at amor tized cost For trade and other r eceivables and deposits, the Company’ s management considers their carrying amounts be the best estimates of fair values, due to the short-term nature and high liquidity of these instruments. This fair value is determined for disclosure purposes. (c) Non-derivative ﬁnancial liabilities measured at amortized cost For trade accounts p ayable, the Company’ s management considers their carrying amounts t o be the best estimation of their respective fair values, determined for disclosur e purposes, due to the shor t term nature of these instrum ents. Fair value of non-derivative ﬁnancial liabilities other than tr ade accounts payable, is calculated based on the present value of future principal and interest cash ﬂows, discounted at the market r ate of interest at the reporting date. For lease liabilities, an interest rate implicit in the lease is used, if that r ate can be readily determined; if that r ate cannot be readily determined, the lessee' s incremental borrowing rate is used. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 26 As of December 31, 2021 and December 31, 2020 the Company does not classify any assets or liabilities to be subsequently measured at fair value excep t for the preference shar es (prior to its conversion on February 5, 2021) as indicated in point (a) above. 6. Revenue The Company’ s revenue is generated by services rendered to the other entities in the Group. The Company’ s revenue comprises revenues from facilitating the advertisement services on behalf of Huuuge Global Ltd. and delivering game design development services, legal services and stewardship activities. The Company as an agent presents r evenues from advertisement services in net amounts, for fur ther details on the judgement please refer to Note 2 Basis for pr eparation of the ﬁnancial statements , point (d) Key judgements and estimates . In the y ear ended December 31, 2021 the Company’ s revenues amounted t o USD 3,824 thousand (USD 2,681 thousand from game design services, USD 820 thousand from stewardship services and USD 323 thousand from legal services), and in the year ended December 31, 2020, – USD 2,817 thousand (USD 1,673 thousand from game design services and USD 1,144 thousand from legal services). 7. Segment information The Company uses the exemption with respect to the disclosur es of segment information in accordance with IFRS 8.4, therefore, the analysis of the C ompany's oper ating segments has been presented in the consolidated ﬁnan cial statements of the Group . HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 27 8. Operating expe nses For the years ended December 31, 2021 and December 31, 2020 operating expenses include: Expenses by nature Y ear ended December 31, 2021 Y ear ended December 31, 2020 Salaries and employee-r elated costs including: 2,957 2,215 - Share-based payment expense 565 180 - Other employee-re lated costs 189 92 - Social security contributions 73 75 - Salaries 2,130 1,868 Finance & legal services 3,385 2,407 Legal services related to acquisition of shar es in subsidiaries - 234 Legal services incurred in anticipation of the Company’ s initial public offering - 1,788 Property maintenance and external services 161 67 Other costs 226 80 T otal operating expenses 6,729 6,791 9. Other operatin g income and expense Y ear ended December 31, 2021 Y ear ended December 31, 2020 Compensation for court case received 6,500 Other operating income/(ex pense) net (80) 36 T otal other operating income/(ex pense) net (80) 6,536 For more information related t o recognition of court case provision and compensation for court case received please refer to Note 2 Basis for prepar ation of the ﬁnancial statements, point (d) K ey judgements and estimates. 10. Finance expense Finance expense Finance expenses include mainly valuation of pref erred shares from series C classiﬁed as non-current liabilities prior t o conversion on February 5, 2021 (for more information please r efer to Note 20 Conversion of series C prefer ence shares ) and net foreign exchange losses. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 28 Y ear ended December 31, 2021 Y ear ended December 31, 2020 Valuation of pr eferred shares classiﬁ ed as non-current liabilities 38,997 127,768 Loss on foreign exchange fo rward contract 2,662 - Finance expense recognized on r epurchase of series C pref erence shares - 481 Foreign ex change losses, net 540 22 Other 6 38 T otal ﬁnance expense 42,205 128,309 Prior to the initial public offering, the Company had entered int o foreign exchange forward contract contingen t upon the event of initial public offering. Upon the occurr ence of the initial public offering event, the Compa ny received proceeds from the newly issued shares converted to USD at a ﬁxed PLN/USD exchange rate, as determined in the forward contr act. The Company’ s policy choice is to present the proﬁt or loss on forward contr acts as ﬁnance income or expense accordingly . Loss of USD 2,662 thousand was incurred on the forward contract settl ement date, presented in the line “Finance expense” in the statement of comprehensive in come. 11. Income tax As of December 31, 2021 As of December 31, 2020 Deferred tax assets 92 132 Deferred tax liabilities 44 160 Net deferred tax asset/( liability) 48 (28) Y ear ended December 31, 2021 Y ear ended December 31, 2020 Current income tax - - Adjustments in respect of current income tax of prev ious year 150 Change in deferred inco me tax (77) 96 Income tax for the period 73 96 The tax on the Company’ s proﬁt before tax differs fro m the theoretical amount that would arise using the statutory tax r ate applied to its proﬁt as follow s: HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 29 Effective t ax rate reconciliation Y ear ended December 31, 2021 Y ear ended December 31, 2020 Proﬁt/(loss) before income t ax (45,133) (125,581) Statutory tax rate in the U nited States 21% 21% Theoretical tax expense/(beneﬁt) according to current tax rate in the United States (9,478) (26,372) T ax impact of non-taxable re venues - - T ax impact of non-deductible costs – ESOP 119 38 T ax impact of non-deductible costs – series C shar es valuation 8,189 26,831 GIL TI* income net of FDII deduction, net of foreig n tax credit 1,234 - T ax impact of non-deductible costs – provision for Washington court case - (1,365) T ax impact of non-deductible costs – other (141) 370 Non-deductible withholding tax - 2 T emporary differ ences with no deferred tax r ecognized - 592 Correction of the current tax r elating to previous y ears 150 - T ax charge 73 96 Effective t ax rate (0.2%) (0.1%) * GIL TI - Global Intangible Low-T axed Income ** FDII - Foreign-Deriv ed Intangible Income This is a reconciling item since the Company cannot recognize tax beneﬁt on the tax loss due to the foreign-derived intangible income. Deferred tax r econciliation Deferred tax assets As of December 31, 2021 As of December 31, 2020 Accrued expenses 62 86 Lease liabilities 30 46 Deferred tax assets 92 132 Compensation with deferr ed tax liabilities (44) (132) Deferred tax asset presented in the statement of ﬁnancial position 48 - Deferred tax assets ar e expected to be recov ered within 12 months from the r epor ting date. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 30 Deferred tax liabilities As of December 31, 2021 As of December 31, 2020 T angible assets 15 8 Right of use assets 29 44 Other differences - 108 Deferred tax liabilities 44 160 Compensation with deferr ed tax assets (44) (132) Deferred tax liability pr esented in the statement of ﬁnancial position - 28 Deferred tax liabilities ex pected to be settled within 12 months from the r epor ting date. Y ear ended December 31, 2021 Y ear ended December 31, 2020 Net deferred tax assets/ (liabilities) at the beginning of the period (28) 68 Net deferred tax assets/ (liabilities) at the end of the period 48 (28) Deferred tax in the net p roﬁt for the period (76) 96 As of December 31, 2020 the Company has incurred tax loss, unrecogniz ed in statements of comprehensive income deferred tax r elated to the loss amounts USD 592 thousand. As of December 31, 2021 there was no unused tax losses for which no deferred tax would be recognized in the statement of ﬁnancial position. 12. Investment in subsidiaries As of December 31, 2021 As of December 31, 2020 Investment in subsidiaries: Huuuge Games Sp. z o.o. 2,326 2,326 Huuuge Global Ltd 3,593 6 Huuuge Digital Ltd - - Huuuge T ap T ap Games Ltd 1 1 Playable Platform B.V . 1,826 1,588 Double Star Oy - 2,143 Huuuge UK 345 - Impairment - - Options granted to emplo yees of the Company’ s subsidiaries under stock option pr ogram (described in the Note 19 Share-based payment arr angements ) 18,765 7,569 T otal 26,856 13,633 On July 1, 2021 new entity Huuuge UK Ltd. (incorporated in United Kingdom) was esta blished. 100% of shares of this entity HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 31 were taken up by Huuuge Inc. The entity was established with a share capital amounting to GBP 250 thousand. The new entity was established in United Kingdom for the purposes of extension o f international presence of the Group. Increase in the investments in Play able Platform B.V . is due to the additional capital injection during period ended December 31, 2021 in the amount of USD 238 thousand. The difference between the consider ation paid for the acquisition of the shares of Playable Platform B.V . presented in the statement of cash-ﬂow for the period ended December 31, 2020 in the line “Purchase of shares in subsidiaries” and the carrying value of the investments in this subsidiary is due to the fact that payments for the tr ansaction were partially settled in the form of equity consideration. Increase in the investments in Double Star Oy (before tr ansfer to Huuuge Global Ltd.) is due to the capital injection during period ended December 31, 2021, earn-out consideration paid in cash in the amount of USD 426 thousand and due to the deferred payme nt in the total amount of USD 1,000 thousand (paid in January 2021) subject to the continuing employment claw back condition for the sellers of Double Star Oy , which is recogniz ed as an increase of the investment on a str aight-line basis throughout the period of one y ear after the acquisition date. On December 31, 2021, investment in Double Star Oy was transferr ed to Huuuge Global Ltd. On December 31, 2021 share capital of Huuuge Global Ltd. was increased by 1000 or dinary shares with the nominal value of USD 1.13 USD per shar e (not in thousand) and the share premium of USD 3,804.87 per share (not in thousand). The new shares issued wer e allotted to Huuuge Inc. The consideration for the newly issued shares in the amount of USD 3,806 thousand was r eceived by Huuuge Global Ltd. in the form of all of the investment made from Huuuge Inc to Double Star Oy , incorpor ated under the Laws Finland with its registered oﬃce in Hel sinki, Itamerentori 2, 00180, Helsinki, Finland with r egistration number 75919524. As a result of this transaction, Huuuge Globa l Ltd. is 100% owned and controlled by Huuuge Inc, and Huuuge Global Lt d. is a sole shareholder of Double Star Oy.Th e transaction has not impacted on both Huuuge Inc. ﬁnancial result and equity , i.e. carrying amount of investment in Double Star Oy in the amount of USD 3,806 thousand was tr ansferred to the in vestment in Huuuge Global Ltd. As at December 31, 2021 and December 31, 2020 there was no impairment of the investment in subsidiaries r ecognized due to the lack of the impairment indicators. When re viewing the indicators of impairment, the Company’ s management has considered the following fact ors: ● external sources, such as: observable indications that the assets’ v alue has declined signiﬁcantly more that would be expected; signiﬁcant changes with an adverse effect in the technological, market, economic or legal environment; market capita lization; ● internal sources, such as: evidence of obsolescence or physical damage of the assets; evidence that economic performance of the assets is or will be worse than expected; plans to discontinue or restructure the operation, plans to dispose the assets befor e than previously expected. 13. Loans granted Loans granted t o Huuuge Digital Ltd. In 2018, the Company granted four loans to Huuuge Digital Ltd. at the total amount of USD 800 thousand with interest r ate of 5%. Purpose of the loan granted was to ﬁnance curr ent operational activities of Huuuge Digital Ltd. The loans were granted on market condit ions with payment term of 270 days from date of transf er of the relevant tranche. In 2020, the Company granted Huuuge Digital Ltd a loan of USD 600 thousand with an interest r ate of 2% with maturity of 5 years. On December 31, 2020 the balance of loans amounted t o USD 1,487 thousand. The principal of the loans in amount of USD 1,400 thousand and due interests in amo unt of USD 128 thousand were paid on December 29, 2021. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 32 14. Financial risk management (a) Introduction Risk management performed by the Company is aimed at reducing the impact of adverse factors on the ﬁnancial statements. This note presents information about the Company’ s exposure to speciﬁc risks arising from ﬁnancial instruments as well as the Company’ s objectives aimed at maintaining effective process for risk ma nagement. The Company is exposed in particular to the following risks arising from ﬁnancial ins truments: ● credit risk, ● liquidity risk, ● market risk. Risk management framework The Board of Directors has o verall responsibility for the establishment and ov ersight of the Company’ s risk management framework. The Boar d of Directors continually identiﬁes, evaluates and manages the risks faced by the Company , sets appropriate risk limits and contr ols and monitors risks. The Company’ s management monitors ﬁnancial risks regarding the Group as a whole for the purpose of making risk management related decisions. (b) Credit risk Credit risk relating t o cash and cash equivalents The Company is exposed to credit risks mainly with regard t o cash and cash equivalents, that include bank deposits and investments in money market funds, which could arise if a counterparty becomes insolvent and accordingly is unable to return the deposited funds or execute the obligations as a result of the insolvency . To mitigate this risk, wherever possible the Company’ s management conducts tr ansactions and deposits funds with investment gr ade rated ﬁnancial institutions, as well as monitors and limits the concentration of tr ansactions with any single party. The Company’ s management uses Moody’ s credit r atings. The information about the cr edit risk rating gr ades is presented in the table below . Moody' s Rating As of December 31, 2021 As of December 31, 2020 Aaa 105 3,635 Aa3 - 3,649 A3 106,225 - T otal cash and cash equivalents 106,330 7,284 Cash and cash equivalents (investments in money market mutual funds) ar e kept in ﬁnancial institutions with Aaa and A3 rating only , which are investment ratings accor ding to Moody’ s. Cash and cash equivalents are kept at a limited number of major ﬁnancial institutions. The Company’ s management monitors the creditworthiness of the institutions and mitigates concentration risk by not limiting the exposure t o a single counter party , nevertheless at each reporting date there is a signiﬁcant concentration of the cr edit risk. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 33 As at December 31, 2021, the concentration of funds in two ﬁnancial institutions was respectively 85.6% and 14.4%. As at December 31, 2020, the largest concentration of funds in two ﬁnancial institutions was respec tively 49.9% and 49.9% with the remaining funds not being concentr ated more than 0.2% in a single ﬁnancial institution. T otal gross carrying amounts of cash and cash equivalents as of Decembe r 31, 2021 and December 31, 2020 were included in Stage 1, based on assessment that credit risk has not increas ed signiﬁcantly since initial recognition. For ﬁnancial assets in Stage 1, the Company recognizes 12 month ECL and recogniz es interest income on a gross basis – interest will be calculated on the gross carrying amount of the ﬁnancial asset befor e adjusting for ECL. Management has assessed that the Company’ s provision for expected credit losses r elated to cash and cash equivalents would not be material in any of the periods presente d. The carrying amount of cash and cash equivalents balance r epresents the maximum credit exposur e. Credit risk with respect t o trade receiv ables and other receivables The carrying amount of trade receiv ables represents the maximum credit expo sure. The maximum exposure to cr edit risk at the reporting dates was as follows: Carrying amount As of December 31, 2021 As of December 31, 2020 T rade receiv ables from third parties - - T rade receiv ables from related parties 3,893 15,071 T otal 3,893 15,071 The Company has trade receiv ables only from one related party – Huuuge Global Ltd. Tr ansactions with related parties are described in Note 26 Related party transactions . Allowance for expected credit losses The Company recognizes allowance for expected credit losses accor ding to IFRS 9 Financial Instruments, considering all reasonable and supportive information (e.g. customer r ating, historical reco verability). The Company has trade receiv ables only from its related party for each period presented therefore, the Company does not apply the portfolio approach, and instead performs the analysis on the individual basis. T aking into account that Company’ s trade receiv ables are only from one related party and there wer e no issues with historical recov erability , the related expecte d credit losses had been assessed as immaterial. There are no trade receivables which are overdue more than 90 days or individually identiﬁed as impaired, nor any receivables fr om loans granted. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 34 The ageing of trade r eceivables at the reporting dates was as follows: As of December 31, 2021 T otal not due and overdu e up to 1 month over 1 month t o 3 months over 3 months t o 6 months over 6 month t o 1 year over 1 year T rade receiv ables from related parties 3,893 3,466 106 321 - - Loans granted t o the related parties - - - - - - Allowance for expected credit losses/ impairment - - - - - - Receivables, net 3,893 3,466 106 321 - - As of December 31, 2020 T otal not due and overdu e up to 1 month over 1 month t o 3 months over 3 months t o 6 months over 6 month t o 1 year over 1 year T rade receiv ables from related parties 15,071 15,071 - - - - Loans granted t o the related parties 1,487 1,487 - - - - Allowance for expected credit losses/ impairment - - - - - - Receivables, net 16,558 16,558 - - - - HUUUGE INC. Financial statements as of and for the year ended December 31, 2020 (all amounts in tables presented in thousand USD , except where stated otherwise) 35 (c) L iquidity risk Liquidity risk means the risk that the Company may encounter diﬃculty in meeting the obligations associated with its ﬁnancial liabilities that are settled by delivering cash or another ﬁn ancial asset. The Company’ s management approach to managing liquidity is to ensur e, as far as possible, that it will always have suﬃcient liquidity to meet its l iabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage t o the Company’ s reputation. Liquidity risk is assessed in conjunction wit h the Company’ s budgeted cash ﬂows and by managing a proper curr ent liabilities structure. In addition, in February 2021 Huuuge Inc, has launched its initial public offering, with ﬁnal listing date on the W arsaw Stock Exchange was F ebruary 19, 2021. Net proceeds from the issuance of the newly issued shares amounted to USD 101 million after deduction of costs and expenses associated with the offering, and a fter execution of the stabilization process described in Note 18 Share capital. Unexpected business circumstances that may lead t o deteriorating liquidity position are balanced wit h the demand for the Company’ s debt. The method of measuring the liquidity risk consists of the analysis of the cover of current liabilities with available cash r esources. There are no bank loan balances and bank loan agreements in force as at December 31, 2021, December 31, 2020 and as at date of approv al these ﬁnancial statements for issue, thus also interest rate risk is r emote from the Company’ s perspective. Moreover , it is not expected that the cash ﬂows included in the maturity analysis could occur signiﬁcantly earlier , or at signiﬁcantly different amounts. The Company’ s operation s, and thus its liquidity , have not been adversely a ffected by the global COVID-19 pandemic. HUUUGE INC. Financial statements as of and for the year ended December 31, 2020 (all amounts in tables presented in thousand USD , except where stated otherwise) 36 The following are the contr actual maturities of ﬁnancial liabilities including estimated interes t payments as of respective balance sheet dates: As of December 31, 2021 Carrying amount Contractual cash ﬂows 6 months or less 6 - 12 months 1 - 2 years 2 - 5 years over 5 years T rade payables 533 533 533 - - - - Accrued expenses (except tax es and employee-related) 1,733 1,733 1,733 - - - - Lease liabilities 144 144 39 39 66 - - Non derivative ﬁnancial liabilities 2,410 2,410 2,305 39 66 - - As of December 31, 2020 Carrying amount Contractual cash ﬂows 6 months or less 6 - 12 months 1 - 2 years 2 - 5 years over 5 years T rade payables 2,822 2,822 2,822 - - - - Accrued expenses (except tax es and employee-related) 3,494 3,494 3,494 - - - - Lease liabilities 218 220 38 38 78 66 - Non derivative ﬁnancial liabilities 6,534 6,536 6,354 38 78 66 - As of December 31, 2020 Series C preference shar es were not included in the maturity analysis as they were settled by delivery of the Company’ s own equity instruments, and, consequently , its settlement did not impact the over all liquidity position of the Company . There were no deriv ative ﬁnancial instruments at the end of reported periods. The changes in liabilities arising from ﬁnancing ac tivities are presented in Note 22 Lease and in Note 20 Conv ersion of series C preference shares . HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 37 (d) Market risk Market risk is the risk that changes in market prices, such as for eign exchange rates, inte rest rates and equity prices ma y affect the Company’ s income or the value of the ﬁnancial instruments held. The objective of market risk management is to manage and control market risk exposure s within acceptable parameters, while optimizing the return. The Company does not apply hedge accounting in order to manage volatility in pr oﬁt or loss and so far neither has entered into derivatives nor incurred external ﬁnancial liabilities. (i) Currency risk Management of the Company has analyzed currency risk related t o variability of exchange r ates and did not identify signiﬁcant balances of accounts denominated in foreign currencies (cash and cash equiv alents, trade receiv ables and trade pay ables) and transactions carried in for eign currencies which would be associated with a signiﬁcant curr ency risk for the Company . (ii) Interest rate risk As the Company has not entered in bank loan agr eements in all presented periods till December 31, 2021, the inter est rate risk is marginal. The Company does not have any signiﬁcant inter est bearing liabilities at variable ra te which would exposure the Company to the cash ﬂow risk. The Company’ s interest bearing assets are cash and cash equivalents. The cash at banks is on current account at v ariable interest rate. The inv estments in money market funds are at variable interest r ate. The interest bearing assets at variable rat e expose the Company to cash ﬂow risk. T aking into account the level of the inter est rates on the bank accounts and on the short term investments in money market funds (i.e. interest income gener ated in 2021 amounts to USD 53 thousand, in 2020: USD 166 thousand) the Compan y’ s proﬁt or loss is not sensitive to r easonably possible changes in interest r ates therefore the detailed sensitivity analysis is not pr esented. (e) Capital management The Board of Directors manages the Company’ s capital structure and makes adjustments in light of changes in economic conditions. The Board’ s of Direct ors policy is to maintain a strong capital base so as to maintain investors’ and mark et conﬁdence and to sustain future development of the business. The Company’ s management seeks to maintain a suﬃcient capital base for meeting the Company’ s operational and str ategic needs, with the objective to safeguar d the ability to continue as a going concern and optimize the capital structure in order t o reduce the cost of capital and maximize the return on capital to the shareholders. The amount of capital maintained in each reporting period (see table below) met management’ s objectives. The capital managed by the Company’ s management includes equity and prefer ence shares series C, classiﬁed as non-current ﬁnancial liabilities as of December 31, 2020 and further converted on February 5, 2021. As such, managed capital consists of ordinary shares, preference shares of series A and B, as well as repurchased own shares and options as of year-ended December 31, 2021. For the amounts please refer t o respective Note 18 Share capital, of these ﬁnancial statements. Ther e are no externally imposed capital management requir ements (such as covenants or similar). The Company’ s management monitors the return on capital on the basis of the basic and diluted earnings per share r atios. Further information on calculation of earnings per share rations is presented in the Group ’ s consolidated ﬁnancial statements. The objective of the Management is t o maximize the return on capital to the shar eholders. HUUUGE INC. Financial statements as of and for the year ended December 31, 2020 (all amounts in tables presented in thousand USD , except where stated otherwise) 38 No dividends were declared and paid by the Compa ny to its shareholders in the years ending Decem ber 31, 2021 and December 31, 2020. As of December 31, 2021 As of December 31, 2020 Equity 134,869 (152,734) Prefer ence shares series C (non-current liability) - 176,606 T otal capital 134,869 23,872 HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 39 15. Accounting classiﬁcations of ﬁnancial instruments and fair v alues The fair values of ﬁnancial assets and liabilities, t ogether with the carrying amounts shown in the statement of ﬁnancial position are as follow s: As of December 31, 2021 Financial assets measured at amortized cost Financial liabilities measured at fair value Financial liabilities at amortized cost Financial liabilities out of scope of IFRS 9 T otal carrying amount Fair value Assets 110,223 - - 110,223 110,223 T rade receiv ables from related parties 3,893 - - 3,893 3,893 Cash and cash equivalents 106,330 - - 106,330 106,330 Liabilities - - 553 144 677 677 Lease liability - - - 144 144 144 T rade payables - - 533 - 533 533 T otal 110,223 - 553 144 110,900 110,900 As of December 31, 2020 Financial assets measured at amortized cost Financial liabilities measured at fair value Financial liabilities at amortized cost Financial liabilities out of scope of IFRS 9 T otal carrying amount Fair value Assets 23,842 - - - 23,842 23,842 T rade receiv ables from related parties 15,071 - - - 15,071 15,071 Loans granted t o related parties 1,487 - - - 1,487 1,487 Cash and cash equivalents 7,284 - - - 7,284 7,284 Liabilities - 176,606 2,822 218 179,646 179,646 Prefer ence shares - 176,606 - - 176,606 176,606 Lease liability - - - 218 218 218 T rade payables - - 2,822 - 2,822 2,822 T otal 23,842 176,606 2,822 218 203,488 203,488 As at December 31, 2021 and December 31, 2020 the Company’ s management did not identify any ﬁnancial assets measured at fair value – neither through proﬁt or loss nor through other comprehensive income. The Company’ s management believes tha t the fair values of ﬁnancial instruments do not differ signiﬁcant ly from their carrying amounts. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 40 Series C prefer ence shares Prior to conversion on February 5, 2021 series C pr eference shares liability was measured at fair value initially with gains/losses on subsequent remeasurements being r ecognized in proﬁt or loss at each reporting period. The fair value measurements of series C prefer ence shares was classiﬁed as Level 3 of the f air value hierarchy . Further information regarding the gain/loss recognized in pr esented period on the remeasurement of the prefer ence shares liability is presented in Note 20 Conv ersion of series C preference shar es . 16. T r ade and other receivables As of December 31, 2021 As of December 31, 2020 T rade receiv ables and accrued revenues from r elated parties 3,893 15,071 T rade accounts receiv able from third parties - - Prepaid expenses 160 157 Other receivables 96 - T otal trade and other r eceivables 4,149 15,228 Allowance for expected credit losses/ impairment o f trade receivables is no t signiﬁcant. T ransactions with related parties are described in Note 26 Related party transactions . Prepaid expenses include advance payment s for services that will be received in the future. Main types of prepa yments are: subscription of Internet services, expenses from cloud computing arra ngements which do not include an intangible asset (software as a service contr acts) and domain costs. 17. Cash and cash equivalents As of December 31, 2021 As of December 31, 2020 Cash at banks (current accounts) 106,330 15 Money market mutual fund inv estments - 7,269 T otal cash and cash equivalents 106,330 7,284 Money market mutual fund inv estments have been classiﬁed as cash equivalents. F or the reasoning please ref er to Note 2 Basis for prepar ation of the ﬁnancial statements , point (d) Key judgements an d estimates . As of December 31, 2021 there was r estricted cash of USD 19 thousand (USD 15 thousand as of December 31, 2020). 18. Share capital Starting from February 5, 2021, Company's share capital comprised of common shar es and preference shares series A a nd B. Before February 5, 2021, Company' s share capital comprised of common and preferr ed shares series A, B and C. Below are presented movements on diff erent components of equity divided in the categories of shares (nominal v alues presented in USD , not thousand USD): HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 41 Shares classiﬁed as equity instruments as of Decem ber 31, 2021, i.e. including preference shares of series C after conversion (see Note 14 Financial risk manage ment point (e) Capital management)  Common shares Preference shar es (incl series C) Tr easury shares Tr easury shares allocated for the existing share-based payment progr ams Sub-total (issued) Shares allocated for the existing share-based payment programs (not issued) Grand total  Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value As of January 1, 2021 8,618,959 863 5,963,949 596 1,390,019 139 794,442 80 16,767,369 1,678 881,071 88 17,648,440 1,766 Redemption of treasury shares - - - - (1,390,019) (139) (794,442) (80) (2,184,461) (219) - - (2,184,461) (219) Exercise of stock options 6,411 1 - - - - - - 6,411 1 (6,411) (1) - Allocation of shares to Share-b ased payment program - - - - - - - - - - 794,442 80 794,442 80 All shares before share split 8,625,370 864 5,963,949 596 - - - - 14,589,319 1,460 1,669,102 167 16,258,421 1,627 All shares after share split 43,126,850 864 29,819,745 596 - - - - 72,946,595 1,460 8,345,510 167 81,292,105 1,627 Conversion of prefer ence shares 29,819,745 596 (29,819,745) (596) - - - - - - - - - - Shares issued 11,300,100 226 - - - - - - 11,300,100 226 - - 11,300,100 226 Stabilization option (3,331,668) (67) - - 3,331,668 67 - - - - - - - - Preference shar es issued - - 2 0 - - - - 2 0 - - 2 0 Reduction of shares allocated for the existing share-based payment progr ams (not issued) - - - - - - - - - - (1,775,320) (36) (1,775,320) (36) Allocation of treasury shares to shar e-based payment progr am - - - - (1,775,320) (36) 1,775,320 36 - - 5,897,271 118 5,897,271 118 Exercise of stock options 1,775,320 36 - - - - (1,775,320) (36) - - - - - - As of December 31, 2021 82,690,347 1,655 2 0 1,556,348 31 - - 84,246,697 1,686 12,467,461 249 96,714,158 1,935 HUUUGE INC. Financial statements as of and for the year ended December 31, 2020 (all amounts in tables presented in thousand USD , except where stated otherwise) 42 Shares classiﬁed as equity instruments as of Decem ber 31, 2020 (i.e. excluding prefer ence shares of series C prior to conv ersion):  Common shares Preference shar es (excl series C) Tr easury shares Tr easury shares allocated for existing share-based payment progr am Sub-total (issued) Shares allocated for the share-based payment progr am (not issued) Grand total  Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value As of January 1, 2020 8,396,921 840 2,532,450 253 1,890,872 189 405,000 41 13,225,243 1,323 1,057,080 106 14,282,323 1,429 Shares reissued/(repurchased) - - 192,802 19 (192,802) (19) - - - - - - - - Acquisition of subsidiaries 46,029 5 - - (46,029) (5) - - - - - - - Allocation of shares to Share-based payment program - - - - (389,442) (39) 389,442 39 - - - - - - Exercise of stock options 176,009 18 - - - - - - 176,009 18 (176,009) (18) - - As of December 31, 2020 8,618,959 863 2,725,252 272 1,262,599 126 794,442 80 13,401,252 1,341 881,071 88 14,282,323 1,429 All shares managed as capital as of December 31,2020 (see Note 14 Financial risk management point (e) Capital management ), thus comprising the equity and liability instruments (i.e. including prefer ence shares of series C):  Common shares Preference shar es (incl series C) Tr easury shares Tr easury shares allocated for existing share-based payment program Sub-total (issued) Shares allocated for the share-based payment progr am (not issued) Grand total  Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value Number of shares Nominal value As of January 1, 2020 8,396,921 840 5,749,621 575 2,039,818 204 405,000 41 16,591,360 1,660 1,057,080 106 17,648,440 1,766 Shares reissued/(repur chased) - - 214,328 21 (214,328) (21) - - - - - - - - Acquisition of subsidiaries 46,029 5 - - (46,029) (5) - - - - - - - - Allocation of shares to Share-based payment progr am - - - - (389,442) (39) 389,442 39 - - - - - - Exercise of stock options 176,009 18 - - - - - - 176,009 18 (176,009) (18) - - As of December 31, 2020 8,618,959 863 5,963,949 596 1,390,019 139 794,442 80 16,767,369 1,678 881,071 88 17,648,440 1,766 HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 43 The Company is authorized to issue up to 1 13,881,420 shares with a par value of USD 0.00002 (113,881,418 of c ommon shares and 1 share of series A preferre d share and 1 share of series B preferred share). As of December 31, 2021, 1,775,320 shar es were allocated to a reserve which could be issued only with majority shareholders appr oval. This is a consequence of using 1,775,320 treasury shares for the Company’ s ESOP obligations (as described below), which otherwise would need to be satisﬁed via issuance of new shares. As of December 31, 2021, the share capital of the Company comprised 84,246,697 shares with a par valu e of USD 0.00002 per share and the total value of USD 1,686 (not thousand), includin g 82,690,347 common shares held by shareholders, 2 prefer ence shares (one prefer ence share of series A and one prefer ence share of series B), and 1,556,348 of common shar es reacquired by the Company and not redeemed (treasury shares and treasury shares allocated for the existing share-based payment progr ams). As of December 31, 2020 there were ordinary and pref erence shares, including shares r eacquired by Huuuge Inc. and not redeemed (so-called treasury shares) of the nominal value of USD 0.0001 per shar e and the total value of USD 1,598 (not thousand). 9,226,810 ordinary shares include: 8,618,959 ordinary shares held by shar eholders and 607,851 of ordinary shares reacquired by the Company and not redeemed. As of December 31, 2020 there were 6,746,117 pr eference shares, out o f which 782,168 were reacquired b y Huuuge Inc. and not redeemed (treasury stock), including 257,103 pr eference shares of series A, 397,645 pr eference shares of serie s B and 127,420 shares of series C (presented in the ﬁnancial statements within ﬁnancial liabilities). During the year 2021, the number of shares (not issued) allocated for the existing share-based payment program s was reduced by 1,775,320 shares. This is because the tr easury shares were delivered t o employees for the part of options exercised during the year ended December 31, 2021. On August 9, 2021 the number of shares allocated (not issued) for employ ee stock option plan was extended by additional 5,897,271 shares. After the changes, as o f December 31, 2021 12,467,461 shares with a par value of USD 0.00002 per shar e were reserved for two stock option pr ograms established in 2015 and 2019 y ears. As of December 31, 2020 1,675,513 shares were reserved for two stock option pr ograms: 881,071 shares for the st ock option progr am established in year 2015 and 794,442 shares for the st ock option program establishe d in 2019. In 2021 and 2020, some share options held by the empl oyees under the share based payment progra m were exercised, re sulting in the issue of ordinary shares or the delivery of treasury shares with the difference between the ex ercise price paid by the employee and the nominal amount of shares recognized as share premium (pr esented within “Supplementary capital”), as described below in this note. Further information on the share-based program is pr esented in Note 19 Share-based payment arrangements . In the year ended December 31, 2021 the following tr ansactions in prefe rence shares took place: ● Redemption of treasury shares On January 15, 2021 the Board of Directors of the Company approv ed to retire all of the Company’ s common and prefer red shares that were held as tr easury shares, which were as follows: ● common shares – 1,402,293 shar es ● series A prefer ence shares – 257,103 shares ● series B prefer ence shares – 397,645 shares ● series C prefer ence shares – 127,420 shares. Common shares were r everted to the status of authorized but unissued shares, pr eferred shares wer e eliminated to no longer be issued or outstanding shares. HUUUGE INC. Financial statements as of and for the year ended December 31, 2020 (all amounts in tables presented in thousand USD , except where stated otherwise) 44 Redemption of treasury shares has been recognize d as a decrease in supplementary capital in the statement of changes in equity in the amount of USD 33,994 thousand. ● Share split On January 18, 2021 the Board of Directors approv ed the split of all of the Company’s existing com mon and preferred shar es. The Certiﬁcate of Incorporation of Huuuge Inc. was amended as following: The total number of shares of all classes of stock which Huuuge Inc. has authority to issue is 118,063,540 shares, which shall be divided into: (i) 88,243,795 common shares, with a par v alue of USD 0.00002 per share, and (ii) 29,819,745 preferr ed shares series consisting of: a) 8,714,485 series A prefe rred shares, with a par value of USD 0.00002 per share, b) 4,911,775 series B pr eferred shares, with a par v alue of USD 0.00002 per share, and c) 16,193,485 series C preferred shar es, with a par value of USD 0.00002 per share. After this amendment each one common and each one preferred shar e, with a par value of USD 0.0001 per share, issued and outstanding or held by Huuuge Inc. as treasury shares was automatically reclas siﬁed as ﬁve shares of common or preferred shares accordingly , with a par value of USD 0.00002 per share. Split of shares required weighted a verage number of shares presented in Note 12 Financial risk managemen t, point (f) Earnings per share of Huuuge Inc.Group consolidated ﬁnanc ial statement as of and for the year ended December 31, 2021 to be ad justed in the calculation of both basic and diluted earnings per share for all periods presented in accor dance with IAS 33 Earnings per share. ● Conversion of pref erence shares series A, B and C On February 5, 2021 all pref erence shares series A, B and C were converted into common shares, as shown in the table below: Before the conversion After conversion Series A prefer ence shares Series B prefer ence shares Series C prefer ence shares Common shares Number of shares 8,714,485 4,911,775 16,193,485 29,819,745 Conversion of prefer ence shares A,B and C has been recognized as an increase in supplementary capital in the statement of changes in equity in the amount of USD 215,603 thousand. ● Issuance of series A and series B pref erence shares On February 5, 2021 the Board of Dir ectors, issued one series A pref erence share to RPII HGE LL C (Raine Group), with a par value of USD 0.00002 per share for cash consider ation of USD 50 and one series B pref erence share to Big Bets O U, with a par value of USD 0.00002 per share, for cash considerati on of USD 50, for which total cash consideration amounting to USD 100 was received in February 2021. The differ ence between the nominal amount and the consideration received was recogni zed in the supplementary capital in the statement of changes in equity . HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 45 ● Initial public offering On January 27, 2021 Huuuge Inc. published its prospectus and launched its initial public offering. The offering comprised a public subscription for 11,300,100 newly issued shares. The ﬁnal share price for off ering shares was determined as PLN 50 per share (approx. USD 13.53 per share). Difference between the nominal amount of newly issued shares and the cash consideration r eceived was in the supplementary capital in the statement of changes in equity . Proce eds from issue of common shares for public subscription amounted to USD 152,929 thousand. Net pr oceeds from the issuance of the newly issued shar es amounted to USD 101.434 thousand after deduction costs and expenses associated with the offering, and after execution of the stabilization process as described below . Funds obtained from issuance of shares ar e planned to be spent on acquisition of entities and assets to expand the Group’ s offer and competences. Prior to the offering, Huuuge, Inc. has enter ed into foreign exchang e forward contract contingent upon the event of initial public offering. In accor dance with the agreement, upon the occurrence of the initial public offering ev ent, the amount of PLN 379,000 thousand (out of net proc eeds from the newly issued shares) will be converted to the USD at a ﬁx ed rate at the date of settlement of the contract. The Company recogniz ed the ﬁnance costs resulting from this transaction in the amount of 2,662 thousand USD . Please ref er to Note 10 Finance expense for details. On April 6, 2021 current Report 11/2021 was issued about the information on the costs of the offering and stabilization actions incurred by Huuuge Inc. The t otal costs incurred in connection with the offe ring amounted to USD 7,372 thousand. The total cost of the public offering has been accounted for by: - a charge to current period expenses of USD 1,651 thousand of which USD 1,526 thousand was r ecorded in the year 2020 and USD 125 thousand was record ed in the year 2021, and - a decrease in equity of USD 5,721 thousand of which USD 864 thousand decreased equity in the year 2020, and USD 4,857 thousand decreased equity in the year 2021, which reﬂects the portion of costs associated with obtaining a funding form new issuance. ● Execution of stabilization option In relation to the initial public offeri ng, on February 5, 2021 the Company and IPOPEMA Securities S.A. (“Stabilization Manager”) signed Stabilization Agreement. The purpose of the Stabilization Agr eement was to stabilize the price of the Huuuge Inc. s hares at a level higher than the lev el which would otherwise have prev ailed. In accordance with the Stabilization Agreement, the Stabilization Manager withhold a portion of the proceeds fr om the Huuuge, Inc. IPO ., i.e. PLN 166,583 thousand (calculated as 3,331,668 shares x PLN 50/ per share). At the same time, based on the Stabilisation Agreement the Company was obliged to buy from the Stabilization Manager the shares purchased by the Stabilization Manager as a result of the conducting the Stabilization transactions. In addit ion, the par ties agreed on sp lit of the proﬁt in respect of the Stabilization tr ansactions (resulted from the difference between the off er price per share and the price actually paid by the Stabilization Manager for each shar e, after deducting the transaction costs). For the purpose of accounting for the stabilisation transac tion, the Company treated the entire stabilisation agreement as a ﬁnancing transaction, i.e. r epurchase of own shares from the mar ket in the scope of IAS 32 and IFRS 9. Accordingly , at inception of the stabilisation transactions, the Company re corded a prepayment to reﬂect the fact that the stabilisation activities wer e funded from the proceeds from the off ering. The prepayment represented a ﬁnancial asset in the scope of IFRS 9 because it could be settled either in cash or in a variable number of own shares, at discretion of the Stabilisation Manager . At the same time, when the Company entered the contract, the liability was r ecognised in correspondence with equity resulted from the obligation to repur chase own shares (the put option) at the amount that is the pr esent value of the redemption amount. The liability and the assets were measur ed at fair value through proﬁt or los s until the stabilisation transactions were completed. As such, these transactions had no net impact on proﬁt or loss. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 46 On February 26, 2021 the Company ended the stabilization process, and the above-mentioned liability and asset ha ve been derecognized. The Company repur chased via Stabilization Manager its own shares in the total number of 3,331,6 68 in the price range PLN 38.4000 – 49.98 50 (USD 10.35 – USD 13.51). The remunerat ion of the Stabilization Manager was treated as a share-based payment in accordance with IFRS 2 because the amount of the remuner ation was based on the value of the shares. Nevertheless, the remuneration incurr ed was directly attributable and incremental t o repurchase of own shares (a capital tr ansaction); therefore, i t was recorded directly in equity . As a result of the Stabilization Agreement, the repur chased shares were recogniz ed as a decrease in equity (treasury shares) in the total amount of USD 43,976 thousand, calculated as the number of shares repurchased, multipli ed by the price per share plus the remuneration paid t o Stabilization Manager representing tra nsaction cost of this capital transaction. The transaction did not have impact on pr oﬁt and loss. ● The issuance of common shares for options ex ercised In the year ended December 31, 2021, before shar e split 6,411 share options (equivalent of 32,055 options afte r share split) held by the employees under the shar e-based payment progr am were exercised, r esulting in the issuance of common shares with the difference between the exe rcise price paid by the employee and the nominal amount of shares recognized as shar e premium (presented within “Supplementary capital”) of USD 3 thousand (USD 202 thousand in the year ended December 31, 2020). The exercise price was paid b y the employees in cash. ● Delivery of the treasury shares for options ex ercised In the year ended December 31, 2021, after share split 1,851,622 share options held by the employees under the shar e-based payment progr am were exercised, out of which for 1,775,320 options exer cised treasury shares were delivered t o employees before December 31, 2021 (the differ ence is due to cashless exercises). The delivery of treasury shares was presented as a movement from tr easury shares to common shares. The movement resulted in an incr ease in share capital in the amount of nominal value of the shares delivered, and diff erence between the value of tre asury shares and the cash consideration r eceived in the amount of USD 22,672 thousand was recognized in supplementary capital. At the same time, the movement decr eased the number of shares (not issued) allocated for the existing share-based payment progr ams. Holders of the 2 preference shar es series A and series B, which may be converted for a ﬁxed number of common shares, have sever al rights additional to the ones of the common sharehold ers which may vary for series A and B). These rights are stipulated in the corporate documents of Huuuge Inc., in par ticular in the Fifth Amended and Restated Certiﬁcate of Incorporation. Essentially , the rights ref er to: ● protective pro visions in case of liquidation, dissolution, winding up, certain mergers, consolidations and sale of assets of Huuuge Inc. or conversion to common shares – the holders of series A or B pref erence shares shall be entitled t o be paid out of the assets of the Company available for distribution to its shar eholders before the holders of common shares, ● election of a director for every separ ate class of preference shares 1 per each series of pr eference shares (series A, B); 2 by the holders of common shares . As at December 31, 2021 and December 31, 2020 no shareholder owned over 50% of Company’ s equity or had more than 50% of voting rights. Company’ s major shareholder is Mr Anton Gauﬃn, CEO and the Founder , who par ticipates in the Company’ s ordinary shares indirectly (t hrough shares of Big Bets OU). The supplementary capital derives mainly from the shar e premium gained on issuance of shares, or re-issue of treasury shares. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 47 19. Share-based pa yment arrangements As at December 31, 2021 and as at December 31, 2020 the Company had an equity incentive plan, i.e. ESOP . The ﬁrst stock option progra m (the employee stock option plan or “ESOP 2015”) was established by the Compa ny’ s Board of Directors on April 3, 2015, the second one on October 19, 2019 (“ESOP 2019”), the grant dates were determined at the d ates when the contracts with eligible employees were signed. Additionally , during the period ended December 31, 2021 stock option plan was gr anted to Mr . Anton Gauﬃn as described below in this note. Th e program entitles emplo yees and some consultants to purchase shar es in the Company . Each option stands for one common or tr easury share of the Company . The vesting condition of both ESOP 2015 and 2019 progr ams is to provide the service continuously for at least 4 years from the grant date and the following vesting schedule is applicable depending on the particular grant: ● about 25% of the shares options vest and become exercisable on a 12-month anniversary of the vesting commencement date and then after end of each consecutive month 1/36 of the remaining shares options vest and become exercisable; or ● the options vest and become exercisable with respect to 1/48th of the total option shares when the optionee completes each full month of continuous service after the gr ant date. For such share-based paym ents staged vesting applies i.e. each instalment with differ ent vesting period is treated as a separ ate award with a differ ent vesting period. As of December 31, 2020 there were 1,675,513 shares rese rved for the ESOP , out of which 239,929 were not yet allocated to speciﬁc employee and 1,435,584 attribute d to speciﬁc option holders. This is at the Company discretion w hether the unallocated shares will be allocated within the share-based progr am to the employees or unused or withdr aw from the progr am. As of December 31, 2021 there were 12,467,461 shares reserved for the ESOP that wer e not yet allocated to speciﬁc employ ees. In 2021 the Company’ s Board of Directors gr anted 4,111,765 options to its employees and consultants (738,024 in 2020). Each option can be exercised at a weighted exer cise price of USD 9.70 (not in thousand). Shares option expense for year 2021 amounts to USD 11,830 thousand (USD 3,469 thousand in 2020) and was booked against equity (employee beneﬁt r eserve) which amounted to USD 19,813 thousand as of De cember 31, 2021 (USD 8,052 thousand as of December 31, 2020). HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 48 Details of the grants ar e presented in the table below: Grant date Number of instruments granted Expiry date Granted in 2015 293,292 June 1, 2025 Granted in 2016 175,058 June 1, 2026 – December 1, 2026 Granted in 2017 386,310 February 1, 2027 – December 1, 2027 Granted in 2018 131,000 December 1, 2024 Granted in 2019 243,525 December 1, 2024 – November 6, 2025 Granted in 2020 738,024 April 1, 2027 – November 11, 2027 February 2, 2021 235,000 February 2, 2028 August 9, 2021 3,376,765 August 9, 2028 September 10, 2021 500,000 September 10, 2028 Subtotal gr anted in 2021 4,111,765 T otal 6,078,974 Movements in share options since the ﬁrst grant date were a s follows:  Y ear ended December 31, 2021  Number of options Weighted av erage exercise price Balance as at January 1 1,435,584 12.01 Exercised during the period (6,411) 0.45 Forfeited during the period (2,056) 4.15 All options before share split 1,427,117 All options after share split 7,135,585 Granted during the period 4,111,765 9.70 Forfeited during the period (518,371) 7.44 Exercised during the period (1,851,622) 1.02 Expired during the period (38,260) 2.03 Balance as at December 31 8,839,097 5.80 HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 49 Y ear ended December 31, 2020 All options before share split Number of options Weighted av erage exercise price Balance as at January 1 919,010 6.21 Granted during the period 738,024 16.75 Forfeited during the period (25,066) 9.81 Exercised during the period (176,009) 1.15 Expired during the period (20,375) 5.83 Balance as at December 31 1,435,584 12.01 The weighted aver age exercise prices ar e presented in USD , not in thousand USD . As at December 31, 2021 2,836,827 share options w ere exercisable, with weighted a verage exer cise price of USD 2.89 per share. As at December 31, 2020 565,508 share options we re exercisable, with weighted a verage exer cise price of USD 6.33 per share. The below table presents a summary of share pric es at the exercise dates: Exercise date Grant date Exercise price Fair Market Value on exercise date Number of stock options exercised Exercised in 2020 May 29, 2015 – November 6, 2019 $0.0002 – $13.500 $15.0300 – $18.6200 176,009 Exercised in 2021 (befor e share split) May 29, 2015 – December 1, 2016 $0.0002 – $0.79 $54.53 6,411 Exercised in 2021 (after share split) May 29, 2015 – Novemb er 20, 2020 $0.00004 – $3.72402 $6.2348 – $12.0319 1,851,622 For share options outstanding at the end of the reporting periods, the range of ex ercise prices and weighted-aver age remaining contractual lif e was as follows: As at December 31, 2021: Exercise price in USD Number of outstanding stock options Weighted av erage remaining contr actual life (in years) 0.00004 - 0.83 495,579 4.18 2.7 - 3.72 4,776,838 2.85 9.55 - 13.51 3,566,680 6.18 T otal: 8,839,097 4.27 HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 50 As at December 31, 2020: Exercise price in USD Number of outstanding stock options Weighted av erage remaining contr actual life (in years) 0.0002 – 0.79 196,744 5.27 4.15 184,160 6.91 13.5 – 18.62 1,054,680 5.86 T otal: 1,435,584 5.91 The fair value of the employee share options has been measu red using the Black-Scholes formula by an independent appr aiser , assuming no dividends and using the valuation assump tions summarized below . The underlying price of the comm on stock was determined using the fair value as of the option gr ant dates. The exercise prices of the options wer e determined by the Board of Directors of the Company in the contr act with the employee. The risk-free r ate is based on the U.S. T reasury yield curve in effect at the time of each grant date and corresponding to expir ation. In assessing the appropriate time to expir ation, the appraiser examined the expiration per iod, the vesting period and the option grant date s. Expected volatility was based on historic volatility of a similar industry sector . Based on the analysis and the factors speciﬁc to the Company , an equity volatility of 55.4% - 80.0% (60.0% – 80.0% for the year ended 31 December , 2020) was used in option pricing model. The inputs used in the measurement of the fair values at grant date of the equity-settled shar e-based payment plan are as follows:  Y ear ended December 31, 2021 Y ear ended December 31, 2020 Fair value at gr ant date 0.00002 – 8.66 0.0001 – 31.64 Share price at gr ant date 0.00004 – 10.91 0.0002 – 44.26 Exercise price 0.00004 – 13.5146 0.0002 – 18.62 Expected volatility (weighted av erage) 55.4% – 80% 60% – 80% Expected life (weighted av erage) 3.00 – 7.30 3.00 – 7.30 Risk-free interest r ate 0.21% – 2.80% 0.27% – 2.80% The effect of the fair value measurement of options gr anted to employees of the Company is reﬂected in 2021 in the proﬁ t and loss in the amount of USD 565 thousand (USD 180 thousand in 2020). This expense includes USD 381 thousand of Mr Anton Gauﬃn ESOP that explained in detail further below . These costs were included in the line “General and other administr ative expenses” line in statement of compr ehensive income. For details on the related em ployee beneﬁt expenses please ref er to Note 8 Operating expenses and t o the statement of changes in shareholders’ equity . Earn-out consideration in th e amount of USD 70 thousand was recognized as a decr ease in the line “Investments in subsidiaries” in the statement of ﬁnancial position as at December 31, 2021 and as a decrease in the employee beneﬁt reserve. Earn-out consideration in the amount of USD 289 thousand was r ecognized as an increase in the line “Investme nts in subsidiaries” in the statement of ﬁnancial position as at December 31, 2020 and as an incr ease in the employee beneﬁt reserve. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 51 The effect of the fair value measurement of options gr anted to employees of the C ompany’ s subsidiaries is reﬂected in 2021 in the Company’ s assets as investment in subsidiaries in the amount of USD 11,266 thousand (USD 3,289 tho usand in 2020) – for details on the increase of an investm ents in subsidiaries please refer to N ote 12 Investment in subsidiaries. During the year ended December 31, 2021, before shar e split, 6,411 common shares were issued (equiv alent of 32,055 common shares after share split) and 1,775,320 treasury shares wer e delivered from the share-based paym ent program as described in Note 18 Share capital . During the year ended Decemb er 31, 2021, the Company received cash payments for t he shares that were delivered to em ployees as of December 31, 2021. During the year ended December 31, 2020, i.e. before share split – 176,009 common shares wer e issued resulting from the equity-settled stock option pr ogram. Other than the share-based payment arr angements described above, as a result of the acquisition that took place on July 16, 2020, the Company accounts for the earn-out consideration pay able in shares dependent on performance condition and the continuing employment condition as a shar e-based payment for the sellers of Double Star Oy . As at December 31, 2020 t he total number of shares to be vested during the period of 3 years after the transaction was estimated at 46,213 shares. As at December 31, 2021 the total number of shares to be vested during the period of 3 years after the tr ansaction is estimated at 23,046 shares as at December 31, 2021. After December 31, 2021, 23,046 treasury shares were deliver ed to former owners of Double Star Oy , as described in the Note 30 Subsequent e vents. The sensitivity of the total numbers of shar es to be transf erred to the sellers, during the period of 3 y ears after the transaction, to the change of the fair value of the share price in future or estimated amount of earn-out consideration is pr esented below (all other inputs remain constant): Input Assumptions Rational change +10%/(-10%) Share price The estimated future fair value of the share price (calculated based on the Sale and Purchase Agr eement and referring to the USD value of Huuuge Inc.) which will be used as a basis for calculation of the number of shares t o be vested. As at December 31, 2021 share price of USD 9.52 is used as a basis for calculation of the number of shares t o be vested. +10% = (2,096) shares – decre ase in number -10% = 2,562 shares – increas e in number Estimated amount of earn-out consideration Based on the estimation as at December 31, 2021 the futur e earn-out consideration is es timated at USD 219 thousand. +10% = 2,304 shares – increa se in number -10% = (2,304) shares – decrease in number In addition, on March 19, 2021 the Board of Directors adopted recommendation from the Nomination and Remuner ation Committee on executive and non-ex ecutive compensation (“Proposal”). This date is the date when Mr . Gauﬃn started rendering the services in respect of that grant (“ service commencement date”), thus relevant costs ha ve been recognized starting from March 19,2021. The ﬁnal executive compensation agreement between Mr . Gauﬃn and the Company was approved b y the Board of Directors on September 9, 2021 and was executed b y the par ties on September 10, 2021. In accordance with the adopted Proposal and the compensation agreement, the r emuneration of Mr Anton Ga uﬃn, holding the positions of the President, Chief Executive Oﬃc er and Secretary of the Company , will consist solely of share options. All options can be exercised at a price o f PLN 50, i.e., the price of the Company’ s shares in the initial public off ering. The vesting conditions for the options is the following: ● 50,000 options with a vesting condition to provide the service continuously for about 4 years from service commencement date. The C ompany’ s management expects Mr Anton Gauﬃn to fulﬁl the service condition. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 52 ● 75,000 options with a vesting condition to provide the service continuously for about 4 years from service commencement date and to meet 2021 EBITD A target. The Company’ s management expects Mr Anton Gauﬃn to fulﬁl the service condition, and the estimated cost reﬂects the 2021 EBI TDA target r ealisation. ● 375,000 options with a variable vesting period due to the marke t condition, i.e., condition to meet the Company’ s market capitalization milestones. The Company’ s management estimates that 6 years of continuous ser vice will be required for options t o vest. Similar to other share-based payments in the Company , for this program staged v esting applies, i.e., each instalment has different v esting period and is treated as a separat e award with a different v esting period. 20. Conversion of series C pr eference s hares The series C preference shar es were classiﬁed as liability and presented in the separate line item in the statement of ﬁ nancial position within non-current liabilities as of December 31, 2020. Changes in ﬁnancial liability arising from pr eference shares, including both changes arising from cash ﬂows and non-cash changes, presented as a r econciliation between the opening and closing balances in the statement of ﬁnancial position: As at January 1, 2020 48,354 Repurchase of series C pref erence shares (1,444) Finance expense recognized on r epurchase of series C pref erence shares 481 Reissue of series C pref erence shares 1,447 Remeasurement recogniz ed in statement of proﬁt or loss during the period in (ﬁnance income)/ﬁnance expense 127,768 As at December 31, 2020 176,606 Further information about the classiﬁcation and the measurement of this liability is provided in Note 2 Basis for prepar ation of the ﬁnancial statements , point (d) Key judgements and estimates – pr eference shares and Note 15 Accounting classiﬁcat ion of ﬁnancial instruments and fair values. On January 29, 2020, RP II HGE LLC (Raine) purchased fr om Huuuge Inc. 73,265 series C prefer ence shares for total amount of USD 1,447 thousand. These shares had been earlier purchased and not redeemed b y Huuuge Inc. from the Korean funds in December 2019 by the same price USD 19.75. On July 2, 2020 Huuuge Inc. entered into an agreement to r epurchase shares from the Kiwoom Cultur al Ventur e Fund 1 for the cash consideration of USD 1,444 thousand (USD 27.91 per shar e). Under the agreement Huuuge Inc. repur chased 51,739 series C prefer ence shares. As at January 1, 2021 176,606 Remeasurement recogniz ed in statement of proﬁt or loss during the period in (ﬁnance income)/ﬁnance expense 38,997 As at February 5, 2021 before conv ersion 215,603 Conversion of pref erence shares into common shar es (215,603) As at December 31, 2021 - On February 5, 2021 all preference shar es series C were converted into common shares with the price per share of 13.31 USD (share price for initial public offering as PLN 50 per share). For mor e information, please refer to Note 18 Share capital . As a HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 53 result of the conversion, ﬁnancial liability arising from preference shares decreased with the corresponding increase in supplementary capital as presented in the statement of changes in equi ty . 21. T r ade and other payables  As of December 31, 2021 As of December 31, 2020 T rade accounts pay able including: 533 2,822 - trade accounts pa yable to third parties 5 2,820 - trade accounts pa yable to related parties 528 2 Accrued expenses 2,187 4,441 Accounts payable r elated to acquisition of subsidiary - 558 T ax payables other than from corporate income tax es 182 28 Other accounts payable 1 1 T rade and other payables 2,903 7,850 22. Leases In 2020 the Company have entered int o oﬃce rent agreement, accor ding to which lease payments need to be m ade over 3 years period. The table below presents the carrying amounts of recognized right-of-use assets and the movemen ts over the years 2021 and 2020.  Y ear ended December 31, 2021 Y ear ended December 31, 2020 as at January 1 211 - Remeasurement due to index ation and other - - additions (new leases) - 230 lease modiﬁcations - - Depreciation (74) (19) as at December 31 137 211 HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 54 The table below presents the book v alues of lease liabilities and movements ov er the year 2021 and 2020.  Y ear ended December 31, 2021 Y ear ended December 31, 2020 as at January 1 218 - additions (new leases) - 230 lease modiﬁcations - - Remeasurement due to index ation and other - - interest expense on lease liabilities 1 1 lease payments (75) (13) as at December 31 144 218 long-term 66 142 short-term 78 76 The Company classiﬁes in statements of cash ﬂows cash payments of the capital component of lease liabilities in 2021 amounting USD 75 thousand (USD 12 thousand in 2020) and cash payments of interest on a lease liability in 2021 amounting USD 1 thousand (USD 1 thousand in 2020) as part of ﬁnancing activities (Lease repayment) . The table below presents the amounts of income, costs, gains and losses resulting from leases which are r ecognized in the statement of comprehensive income for year 2021 and 2020.  Y ear ended December 31, 2021 Y ear ended December 31, 2020 Depreciation expense of right-of-use assets 74 18 Interest expense on lease liabilities 1 1 Foreign ex change differences - - T otal amount recognized in the statement of comprehensive income 75 19 23. Cash Flow reconciliation T ransaction costs of an issuance of equity instruments which amounted to US D 7,097 thousand as presented in the cash ﬂows from ﬁnancing activities in the statement of cash ﬂows for the year ended December 31, 2021 comprise USD 4,857 thousand deducted from equity , and USD 2,240 thousand recogniz ed in statements of other comprehensive income for the year ended December 31,2020. Difference between the change of tr ade payables in the statement of ﬁnancial position and the change of trade and other pay ables presented in the statement of cash ﬂows for the year end ed December 31, 2021 and 2020 is due to the deferred payme nt related to acquisition of subsidiary . In addition, the differ ence for the year ended December 31, 2020 includes the transaction costs incurred in issuance of equity instruments, but not yet paid, which amounted t o USD 589 thousand and have been recogniz ed as decrease in equity . HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 55 24. Contingencies T ax contingent liabilities T ax settlements are subject to r eview and investigation by tax authorities, which are entitled to impose sever e ﬁnes, penalties and interest charges. T ax regulations in the United States have been changing recently , which may lead to lack of their clarity and integrity . Furthermore, frequent contradictions in tax interpretations, both within government bodies and between companies and government bodies cr eate uncertainties and conﬂicts. T ax authorities may examine accounting recor ds retrospectively: for 3 years in the United States (and up to 6 years in case of substantial errors). Consequently , the Company may be subject to additional tax liabilities, which may arise as a result of tax audits. The Board of Directors of the Company believes that there was no need to r ecord any provisions for known and quantiﬁable risks in this regard as in their assessment there are no suc h uncer tain tax positions for which it would be pr obable that the taxation authority will not accept the tax tre atment applied by the Company . 25. Pledges and collater als During the reporting periods and till the date of issuing these ﬁnancial statements the Company did not enter in a pledge or collateral agr eement on its assets. HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 56 26. Related par ty tr ansactions The table below presents tr ansactions with related parties during the reporting and comparative periods. related parties  Sales to a related par ty Other operating income Purchase fr om a related party Interest income on loans granted Huuuge Global Ltd 2021 32,259 - - - 2020 33,303 6,500 - 69 Huuuge Digital Ltd 2021 - - - 40 2020 - - - 43 Huuuge Games Sp. z o.o. 2021 - - 486 - 2020 - - 1 - Huuuge T ap T ap Games Ltd 2021 - - - - 2020 - - - - Huuuge Labs Gmbh 2021 - - - - 2020 - - - - Coffee Break Games Ltd 2021 - - - - 2020 - - - - Coffee Break Games Un ited Ltd 2021 - - 396 - 2020 - - - - Huuuge UK 2021 - - 100 - 2020 - - - - 2021  32,259 - 982 40 2020  33,303 6,500 1 112 HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 57 The table below presents aggr egated balances of transactions with rela ted par ties during the reporting and compar ative periods. related parties  T rade receivables fr om a related party T rade liabilities to a r elated par ty Loans granted to related parties      Huuuge Global Ltd 31-Dec-21 3,893 - -  31-Dec-20 15,071 - - Huuuge Digital Ltd 31-Dec-21 - - -  31-Dec-20 - - 1,487 Huuuge Games Sp. z o.o. 31-Dec-21 - 458 -  31-Dec-20 - - - Huuuge T ap T ap Games Ltd 31-Dec-21 - 1 -  31-Dec-20 - 1 - Huuuge Labs Gmbh 31-Dec-21 - - -  31-Dec-20 - 1 - Coffee Break Games Ltd 31-Dec-21 - - -  31-Dec-20 - - - Huuuge UK 31-Dec-21 - 100 -  31-Dec-20 - - - Coffee Break Games Un ited Ltd 31-Dec-21 - (31) - 31-Dec-20 - - - T otal as of December 31, 2021  3,893 528 - T otal as of December 31, 2020  15,071 2 1,487 The Company is the ultimate parent t o its Group. Information regarding main shareholders are disclose d in Note 18 Share capital . T ransactions between r elated par ties took place on terms equivalent to those that apply to tr ansactions concluded on market terms. Info rmation regarding loans gr anted were disclosed in Note 13 Loans gr anted . HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 58 The Company purchases certain adver tisement services from third parties (mostly Facebook), which are subsequently recharged to Huuuge Global Limited. For more information please refer to Note 2 Basis for preparation of the ﬁnancial statements , point (d) Key jud gements and estimates – Model of revenue r ecognition . The Company recognizes re venue when services are transf erred to the customer , at a value that reﬂects the price expected by the entity , in exchange for the tr ansfer of those goods and services. Therefore, total gr oss revenue in years ended December 31, 2021 and December 31, 2020 amounted to USD 32,259 thousand and USD 33,303 thousand respective ly . Cost of re-invoiced sales and marketing services in years ended December 31, 2021 and December 31 , 2020 amounted to USD 28,435 thousand and USD 30,486 thousand respectively , fully netted in the statement of comprehensive income. For more details regarding re venue generated by game design, stewar dship and legal services in the total amount of USD 3,824 thousand in the year ended December 31, 2021 (USD 2,817 thousandin the year ended December 31, 2020) please ref er to Note 6 Revenue. The Company is also rendering legal services to Huuuge Global Limited. Due t o the international scope of the Group’ s activities, the Group’ s legal depar tment operating in the organiz ational structure of the Company seeks highly qualiﬁed people with high competences in this area, and the costs of legal services pr ovided by the Company are char ged to Huuuge Global Limited. The amount of USD 6,500 thousand during 2020 results from co vering costs related to court case. For more information pl ease refer t o Note 2 Basis for preparation of the ﬁnancial statements, point (d) Key judgements and estimates. In addition, related parties’ transactions include transactions with the management of the Company . For more details, please refer to Note 27 T r ansactions with management of the Company to the ﬁnancial statements for the period ended December 31,2021. 27. T r ansactions with management of the Company T ransactions with management of the Company for the years ended December 31, 2021 and December 31, 2020 was as follows: Y ear ended December 31, 2021 Y ear ended December 31, 2020 Base salaries 366 55 Bonuses and compensation based on the Group ’ s ﬁnancial result for the pre vious year 49 43 Share-based payment 399 108 T otal 814 206 28. Audit f ees Y ear ended December 31, 2021 Y ear ended December 31, 2020 Audit of ﬁnancial statements 225 184 Voluntary audit of ﬁnancial statements 130 195 Remuneration for additiona l services - 289 T otal 385 668 HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 59 For the year ended December 31, 2021 and December 31,2020 audit of ﬁnancial statements relates to the audit of separ ate ﬁnancial statements of the Company and the audit of the Group’ s consolidated ﬁnancial statements prepared in accordance with IFRS. The voluntary audit of ﬁnancial statements relates to the audit of the Group ’ s consolidated ﬁnancial statements prepared in accordance with Gener ally Accepted Accounting Principles in the United States. 29. Employment structur e Av erage Company’ s number of employ ees for the years ended December 31, 2021 and December 31, 2020 was as follows: Y ear ended December 31, 2021 Y ear ended December 31, 2020 Board of direct ors and Company’ s key management - - Administration - 1 Games development 8 5 T otal 8 6 30. Subsequent events After December 31, 2021 and up to the date of approv al of these ﬁnancial statements for issue no signiﬁcant events ex cept the following have occurr ed. Notiﬁcation on Share Buyback Scheme (“SBB”) On February 15, 2022 the Company`s Board of Directors adopted a r esolution for the Company to repurchase its common shares listed for trading on the W arsaw Stock Exchange. The purpose of the SBB is to satisfy the Company' s needs related to the exercise of options under its Employee St ock Option Plans in the foreseeable future. T otal number of the Company’ s shares to be repur chased under the SBB will be up to 2,500,000 shares. There were no shar es repurchased yet as of date of appr oval of these ﬁnancial statements for issue. Delivery of the treasury shares t o former owners of Double Star Oy As of 31 December 2021, 23,046 shares vested under earn-out conside ration payable in shar es to former owners of Double Star Oy based on the Share Sale and Purchase Agr eement, corrected by the First Amendment dated Oct ober 19, 2021. Consequently , on February 21, 2022, 23,046 treasury shares w ere delivered to former own ers of Double Star Oy . War in Ukr aine On February 24, 2022, Russian troops crossed the eastern, southern and northern borders of Ukraine, attacking Ukr aine. In connection with the hostilities of Russia, the repr esentatives of the European Union impos ed sanctions on Russia. The Company had also made a decision to stop distribution of new games in Russia and Belarus. Russia and Belarus markets were responsible for less than 1% of total rev enue generated by Huuuge Group in 2021 which means the currently ongoing war in Ukraine should not have a material impact on Huuuge' s performance and operations. Huuuge Group has analyz ed and is continuously monitoring the impact of the political and economic situation in Ukraine on its and the Grou p' s operations and HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 60 ﬁnancial results. The Company is not able to reliably determine the impact which the situation in Uk raine will have on the state of the European economy and, consequently , on the activity of the Group. As of March 10, 2022 Google Play due to payment system disruption informed about pausing Google Play' s billing system for users in Russia. This means users will not be able to purchase apps and games, make subscription payments or conduct an y in-app purchases of digital goods using Google Pla y in Russia. Electronically signed Anton Gauﬃn President of Huuuge Inc., CEO March 28, 2022 HUUUGE INC. Separate ﬁnancial statements as of and for the year ended December 31, 2021 (all amounts in tables presented in thousand USD , except where stated otherwise) 61

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