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ESE Entertainment Inc. — M&A Activity 2025
Jan 7, 2025
47700_rns_2025-01-07_01e0d57c-07ff-4401-a9e8-97b02bb2dc4e.pdf
M&A Activity
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FORM 51-102F4
BUSINESS ACQUISITION REPORT
Item 1 Identity of Company
1.1 Name and Address of Company
ESE Entertainment Inc. (the "Company")
Suite 1000 – 409 Granville Street
Vancouver, BC
V6C 1T2
1.2 Executive Officer
Konrad Wasiela, CEO
Item 2 Details of Acquisition
2.1 Nature of Business Acquired
On October 21, 2024, the Company acquired all of the issued and outstanding shares (the "Acquisition") of Bombee Global Entertainment Inc. ("Bombee"). Bombee was incorporated under the Business Corporation Act of British Columbia on April 13, 2023. The Company is a global production company specialized in live production, special effects, broadcast and event management for the gaming sector. The registered and records office of the Company is located at 6th Floor – 905 West Pender Street, Vancouver, British Columbia, V6C 1L6.
2.2 Acquisition Date
October 21, 2024
2.3 Consideration
The Acquisition was completed by way of a share purchase agreement (the "SPA") among the Company, Bombee, and the shareholders of Bombee (the "Vendors"). Pursuant to the SPA, ESE acquired all of the outstanding shares of Bombee in exchange for: (i) $750,000 in cash paid on closing, (ii) $375,000 in cash to be paid six (6) months following closing, subject to customary adjustments based on the working capital of Bombee on closing, (iii) $375,000 in cash to be paid twelve (12) months following closing, and (iv) 30,000,000 common shares of ESE (the "Consideration Shares"), issued at a deemed issue price of $0.10 per share.
In connection with the Acquisition, the founders of Bombee have signed three-year service agreements and will continue to run the business following the closing, along with the rest of the personnel of Bombee who will remain in place, ensuring a smooth transition of operations. As part of the Acquisition, the Company has acquired the liabilities of Bombee, mainly consisting of customary current obligations incurred in the ordinary course of business for Bombee, which are not expected to have a material impact on the Company's operations or financial position.
No finder's fees were paid or payable in conjunction with the Acquisition.
2.4 Effect on Financial Position
The effect of the Acquisition on the Company's financial position is that Bombee became a wholly-owned subsidiary of the Company. The business and operations of Bombee remain unchanged and ESE intends to focus on synergies among ESE's subsidiaries with the intention of having a positive effect on the financial performance of the Company. The Company does not have any plans or proposals for material changes in the business affairs of Bombee.
2.5 Prior Valuations
To the knowledge of the Company, there has not been any valuation opinion obtained within the last 12 months.
2.6 Parties to Transaction
The knowledge of the Company, there has not been any valuation opinion obtained within the last 12 months by either the Company or Bombee required by securities legislation or a Canadian exchange to support the consideration paid by the Company in connection with the Acquisition.
2.7 Date of Report
December 31, 2024
Item 3 Financial Statements and Other Information
The audited financial statements of Bombee for the period from incorporation on April 13, 2023 to October 31, 2023 and for the period from November 1, 2023 to October 21, 2024 are attached hereto as Schedule "A".
SCHEDULE A
Financial Statements of Bombee Global Entertainment Inc. for the Period from April 13, 2023 (Date of Incorporation) to October 31, 2023, and for the Period from November 1, 2023 to October 21, 2024.
[See Attached]
Bombee Global Entertainment Ltd.
Consolidated Financial Statements
For the Period from April 13, 2023 (Date of Incorporation) to October 31, 2023, and
for the Period from November 1, 2023, to October 21, 2024
(Expressed in Canadian dollars)
Crowe
Crowe MacKay LLP
1100 - 1177 West Hastings Street
Vancouver, BC V6E 4T5
Main +1 (604) 687-4511
Fax +1 (604) 687-5805
www.crowemackay.ca
Independent Auditor's Report
To the Director of Bombee Global Entertainment Ltd.
Opinion
We have audited the consolidated financial statements of Bombee Global Entertainment Ltd. (the "Group"), which comprise the consolidated statements of financial position as at October 21, 2024 and October 31, 2023 and the consolidated statements of loss and comprehensive loss, changes in shareholders' equity (deficit) and cash flows for the periods then ended, and notes to the consolidated financial statements, including a summary of material accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at October 21, 2024 and October 31, 2023, and its consolidated financial performance and its consolidated cash flows for the periods then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 to the consolidated financial statements which describes the material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Our responsibilities are to plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the group financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Clowe Mackay LLP
Chartered Professional Accountants
Vancouver, Canada
December 31, 2024
Bombee Global Entertainment Ltd.
Consolidated Statements of Financial Position
(Expressed in Canadian dollars)
| As At | Notes | October 21, 2024 | October 31, 2023 |
|---|---|---|---|
| Assets | |||
| Current assets | |||
| Cash | $ 76,800 | $ 65,128 | |
| Trade receivables | 4 | 581,441 | 234,701 |
| Guaranteed investment certificate | 70,115 | 70,621 | |
| Total current assets | 728,356 | 370,450 | |
| Non-current assets | |||
| Equipment | 14,133 | 8,179 | |
| Total assets | $ 742,489 | $ 378,629 | |
| Liabilities and shareholders' equity (deficit) | |||
| Current liabilities | |||
| Accounts payable and accrued liabilities | 5, 7 | $ 859,859 | $ 131,945 |
| Deferred revenue | 11 | 153,482 | 95,000 |
| Loans payable | 6, 7 | 203,000 | 103,000 |
| Total liabilities | 1,216,341 | 329,945 | |
| Shareholders' equity (deficit) | |||
| Share capital | 8 | 310,632 | 140,879 |
| Equity reserve | 8 | – | 31,291 |
| Accumulated deficit | (784,484) | (123,486) | |
| Total shareholders' equity (deficit) | (473,852) | 48,684 | |
| Total liabilities and shareholders' equity (deficit) | $ 742,489 | $ 378,629 |
Nature and continuance of operations (Note 1)
Events after reporting period (Note 14)
Approved and authorized for issuance by the Sole Director on December 31, 2024:
"Tamir Kastiel"
Director
The accompanying notes are an integral part of these consolidated financial statements.
Bombee Global Entertainment Ltd.
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in Canadian dollars)
| Notes | For the period from November 1, 2023, to October 21, 2024 | For the period from April 13, 2023 (date of incorporation) to October 31, 2023 | |
|---|---|---|---|
| Revenue | 11 | $ 6,519,443 | $ 1,627,537 |
| Direct costs | (5,286,729) | (1,276,886) | |
| Gross margin | 1,232,714 | 350,651 | |
| Operating expenses | |||
| Business development | 108,321 | 98,488 | |
| Depreciation | 5,042 | 580 | |
| Foreign exchange loss | 18,385 | 1,708 | |
| Office and administrative | 185,778 | 43,333 | |
| Professional fees | 233,322 | 19,540 | |
| Salaries and wages | 7 | 1,254,171 | 279,538 |
| Share-based compensation | 8 | 89,962 | 31,291 |
| Total operating expenses | 1,894,981 | 474,478 | |
| Net loss before other items | (662,267) | (123,827) | |
| Other items | |||
| Interest expense | (1,017) | (877) | |
| Interest income | 2,286 | 1,218 | |
| Loss and comprehensive loss | $ (660,998) | $ (123,486) | |
| Loss per share - basic and diluted | $ (0.02) | $ (0.00) | |
| Weighted average number of shares outstanding | 31,186,000 | 30,475,000 |
The accompanying notes are an integral part of these consolidated financial statements.
Bombee Global Entertainment Ltd.
Consolidated Statements of Changes in Shareholders' Equity (Deficit)
(Expressed in Canadian dollars)
| | Share capital
Number | Amount | Equity
Reserve | Deficit | Total |
| --- | --- | --- | --- | --- | --- |
| Balance, April 13, 2023 (date of incorporation) | 1 | $ – | $ – | $ – | $ – |
| Common shares issued for cash | 30,999,633 | 150,245 | – | – | 150,245 |
| Cancellation of common share | (1) | – | – | – | – |
| Share issuance cost | – | (9,366) | – | – | (9,366) |
| Share-based compensation | – | – | 31,291 | – | 31,291 |
| Loss for the period | – | – | – | (123,486) | (123,486) |
| Balance, October 31, 2023 | 30,999,633 | 140,879 | 31,291 | (123,486) | 48,684 |
| Common shares issued for cash | 266,667 | 40,000 | – | – | 40,000 |
| Common shares issued upon exercise of stock options | 850,000 | 129,753 | (121,253) | – | 8,500 |
| Share-based compensation | – | – | 89,962 | – | 89,962 |
| Loss for the period | – | – | – | (660,998) | (660,998) |
| Balance, October 21, 2024 | 32,116,300 | $ 310,632 | $ – | $ (784,484) | $ (473,852) |
The accompanying notes are an integral part of these consolidated financial statements.
Bombee Global Entertainment Ltd.
Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)
| For the period from November 1, 2023, to October 31, 2024 | For the period from April 13, 2023 (date of incorporation) to October 31, 2023 | |
|---|---|---|
| Operating activities | ||
| Loss for the period | $ (660,998) | $ (123,486) |
| Items not involving cash: | ||
| Accrued interest on short-term investments | (2,098) | (1,218) |
| Depreciation | 5,042 | 580 |
| Share-based compensation | 89,962 | 31,291 |
| Foreign exchange loss | 18,385 | 1,708 |
| Change in non-cash operating working capital: | ||
| Trade receivables | (346,740) | (234,701) |
| Accounts payable and accrued liabilities | 727,914 | 131,945 |
| Deferred revenue | 58,482 | 95,000 |
| Net cash used in operating activities | (110,051) | (98,881) |
| Investing activities | ||
| Acquisition of equipment | (10,996) | (8,759) |
| Purchase of guaranteed investment certificates, net of redemptions | 2,400 | (67,308) |
| Net cash used in investing activities | (8,596) | (76,067) |
| Financing activities | ||
| Proceeds from loans payable | 100,000 | 103,000 |
| Proceeds from issuance of common shares, net of issuance cost | 40,000 | 140,879 |
| Proceeds from issuance of common shares pursuant to the exercise of stock options | 8,500 | – |
| Net cash provided by financing activities | 148,500 | 243,879 |
| Impact of foreign exchange on cash | (18,181) | (3,803) |
| Change in cash | 11,672 | 65,128 |
| Cash, beginning of period | 65,128 | – |
| Cash, end of period | $ 76,800 | $ 65,128 |
| Supplemental cash flow disclosures: | ||
| Interest paid | $ 1,017 | $ 877 |
| Income taxes paid | $ – | $ – |
The accompanying notes are an integral part of these consolidated financial statements.
7
Bombee Global Entertainment Ltd.
Notes to the Consolidated Financial Statements
For the Period from April 13, 2023 (Date of Incorporation) to October 31, 2023, and
for the Period from November 1, 2023, to October 21, 2024
(Expressed in Canadian dollars)
- Nature and Continuance of Operations
Bombee Global Entertainment Ltd. (the "Company") was incorporated under the Business Corporation Act of British Columbia on April 13, 2023. The Company is a global production company specialized in live production, special effects, broadcast and event management for the gaming sector. The registered and records office of the Company is located at 6th Floor – 905 West Pender Street, Vancouver, British Columbia, V6C 1L6.
These consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different basis of measurement may be appropriate if the Company was not expected to continue operations. As at October 21, 2024, the Company has not achieved profitable operations, has an accumulated deficit of $784,484 and expects to incur further losses in the development of its business. The Company's continuation as a going concern is dependent upon the successful results from its revenue generating activities and its ability to attain profitable operations and generate funds therefrom and/or raise equity capital or borrowings sufficient to meet current and future obligations. These factors indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. While the Company has been successful in securing financings in the past, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be available on acceptable terms. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.
Subsequent to the period ended October 21, 2024, the Company completed a transaction with ESE Entertainment Inc. ("ESE"), whereby ESE acquired all of the outstanding shares of the Company (Note 14).
- Basis of Presentation
Statement of compliance
These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").
Basis of presentation
These consolidated financial statements have been prepared on an accrual basis and are based on historical costs. The presentation currency of the Company is the Canadian dollar. In the opinion of the Company's management, all adjustments considered necessary for a fair presentation have been included.
Basis of consolidation
These consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries Bombee US Corp., incorporated in Delaware on July 9, 2024, and Bombee Entertainment USA Corp., incorporated in Florida on July 30, 2024. All significant inter-company balances and transactions have been eliminated upon consolidation.
The Canadian dollar is the functional currency of Bombee Global Entertainment Ltd. The US dollar is the functional currency of the Company's United States subsidiaries.
Bombee Global Entertainment Ltd.
Notes to the Consolidated Financial Statements
For the Period from April 13, 2023 (Date of Incorporation) to October 31, 2023, and
for the Period from November 1, 2023, to October 21, 2024
(Expressed in Canadian dollars)
2. Basis of Presentation (continued)
Significant estimates and assumptions
The preparation of financial statements in accordance with IFRS requires the Company to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities and contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the period. The Company's management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised. Actual results may differ from these judgements, estimates and assumptions.
Critical judgements
Critical judgement exercised in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements is as follows:
Going concern
These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The assessment of the Company's ability to source future operations and continue as a going concern involves judgment. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. If the going concern assumption were not appropriate for these consolidated financial statements, then adjustments would be necessary in the carrying value of assets and liabilities, the reported revenue and expenses and the statement of financial position classifications used.
Critical estimates
Information on significant areas of uncertainty and critical estimates in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements relate to the following:
Credit loss allowance
The Company evaluates the expected credit losses on financial assets that are measured at amortized cost using a provision matrix based on the historical credit losses, the time value of money and past events, current conditions and forecasts of future economic conditions. The particularities of each debtor are taken into account in this analysis.
Bombee Global Entertainment Ltd.
Notes to the Consolidated Financial Statements
For the Period from April 13, 2023 (Date of Incorporation) to October 31, 2023, and
for the Period from November 1, 2023, to October 21, 2024
(Expressed in Canadian dollars)
3. Material Accounting Policies
Financial instruments
The Company's cash, trade receivables, guaranteed investment certificate ("GIC"), accounts payable and accrued liabilities, and loans payable are measured at amortized cost, initially recognized at fair value, and subsequently measured at amortized cost using the effective interest method.
Impairment of financial assets
The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the credit risk on the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company shall recognize in profit or loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.
Revenue recognition
Revenue is accounted for under IFRS 15 Revenue from Contracts with Customers ("IFRS 15"). IFRS 15 is based on the principle that revenue is recognized when control of a good or service transfers to a customer – so the notion of control replaces the existing notion of risks and rewards. The standard requires companies to follow a five-step model to determine if revenue should be recognized:
- Identify the contracts with customers
- Identify the performance obligations in the contract
- Determine the transaction price
- Allocate the transaction price to the performance obligations in the contract
- Recognize revenue when the entity satisfies a performance obligation
The Company generates revenues through live production, special effects, broadcast and event management services. Revenue is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration receivable in exchange for those goods or services, net of discounts and sales taxes.
The Company's revenues consist of a single performance obligation, and are recognized upon completion of services. Payments received from customers prior to the completion of the performance obligation is recorded as deferred revenue.
Share-based payments
Share-based payments to employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the equity reserve.
10
Bombee Global Entertainment Ltd.
Notes to the Consolidated Financial Statements
For the Period from April 13, 2023 (Date of Incorporation) to October 31, 2023, and
for the Period from November 1, 2023, to October 21, 2024
(Expressed in Canadian dollars)
3. Material Accounting Policies (continued)
Share-based payments (continued)
The fair value of options is determined using a Black-Scholes Option Pricing Model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.
Income taxes
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Company operates and generates taxable income.
Deferred income tax
Deferred income tax is recognized, using the asset and liability method, on temporary differences at the reporting date arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Loss per share
Basic loss per share is calculated by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. For all periods presented, the loss attributable to common shareholders equals the reported loss attributable to owners of the Company. Diluted loss per share is calculated by the treasury stock method. Under the treasury stock method, the weighted average number of common shares outstanding for the calculation of diluted loss per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the period. Diluted loss per share is equal to loss per share.
Accounting standards issued but not yet effective
The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations, except for IFRS 18 "Presentation and Disclosure in Financial Statements".
IFRS 18 includes requirements for all entities applying IFRS for the presentation and disclosure of information in financial statements and has an effective date of January 1, 2027. The effects of the adoption of IFRS 18 on the Company's consolidated financial statements have not yet been determined.
Bombee Global Entertainment Ltd.
Notes to the Consolidated Financial Statements
For the Period from April 13, 2023 (Date of Incorporation) to October 31, 2023, and
for the Period from November 1, 2023, to October 21, 2024
(Expressed in Canadian dollars)
3. Material Accounting Policies (continued)
Accounting standards adopted
Effective November 1, 2023, the Company adopted narrow scope amendments to IAS 1 – Presentation of Financial Statements and IFRS Practice Statement 2 – Disclosure of Accounting Policies, requiring companies to disclose “material” rather than “significant” accounting policies. The amendment reduced the Company’s disclosure of its accounting policies.
4. Trade Receivables
| Current | Over 30 days past due | Over 90 days past due | Total | |
|---|---|---|---|---|
| October 21, 2024 | ||||
| Trade receivables | $ 454,643 | $ 50,334 | $ 76,464 | $ 581,441 |
| $ 454,643 | $ 50,334 | $ 76,464 | $ 581,441 | |
| October 31, 2023 | ||||
| Trade receivables | $ 196,467 | $ 38,234 | $ – | $ 234,701 |
| $ 196,467 | $ 38,234 | $ – | $ 234,701 |
5. Accounts Payable and Accrued Liabilities
| October 21, 2024 | October 31, 2023 | |
|---|---|---|
| Accounts payable | $ 675,698 | $ 117,575 |
| Accrued liabilities | 94,356 | 877 |
| Government remittances payable | 89,805 | 13,493 |
| $ 859,859 | $ 131,945 |
6. Loans Payable
On July 4, 2023, the Company received a loan of $3,000 from an arms-length lender, which was unsecured, non-interest bearing and due on demand. Subsequent to the period ended October 21, 2024, the loan was repaid.
On September 21, 2023, the Company entered into a loan agreement with a former director of the Company for $100,000, which was secured against cash of the Company, bears interest at 8% per annum and was due on or before September 21, 2024. During the period ended October 21, 2024, the former director of the Company agreed to forgive the interest on the loan. Subsequent to the period ended October 21, 2024, the loan was repaid.
On December 1, 2023, the Company entered into a loan agreement with a former director of the Company for $100,000, which was secured against cash of the Company, bears interest at 8% per annum and was due on or before December 1, 2024. During the period ended October 21, 2024, the former director of the Company agreed to forgive the interest on the loan. Subsequent to the period ended October 21, 2024, the loan was repaid.
Bombee Global Entertainment Ltd.
Notes to the Consolidated Financial Statements
For the Period from April 13, 2023 (Date of Incorporation) to October 31, 2023, and
for the Period from November 1, 2023, to October 21, 2024
(Expressed in Canadian dollars)
7. Related Party Transactions
As at October 21, 2024, the Company owed $148,618 (October 31, 2023 – $nil) to the Chief Executive Officer (“CEO”) of the Company, which is included in accounts payable and accrued liabilities. The amount is unsecured, non-interest bearing and due on demand.
During the period from November 1, 2023 to October 21, 2024, the Company incurred wages and salaries of $117,471 (period from April 13, 2023 (date of incorporation) to October 31, 2023 – $nil) with the CEO of the Company.
As at October 21, 2024, the Company owed a total of $200,000 (October 31, 2023 – $100,000) of loans payable to a former director of the Company which were secured against cash of the Company, bears interest at 8% per annum and was due on or before the one year anniversary of the issuance date (Note 6). During the period ended October 21, 2024, the former director of the Company agreed to forgive the interest on the loan.
8. Share Capital
Authorized
Unlimited number of common shares without par value.
Issued
On April 13, 2023, the Company issued 30,000,000 common shares at $0.00001 per share for gross proceeds of $300.
On June 20, 2023, the Company issued a total of 469,500 common shares at $0.15 per share for gross proceeds of $70,425. In connection with the issuance, the Company incurred a finder’s fee of $4,032.
On July 28, 2023, the Company issued a total of 333,133 common shares at $0.15 per share for gross proceeds of $49,970. In connection with the issuance, the Company incurred a finder’s fee of $2,970.
On October 24, 2023, the Company issued a total of 197,000 common shares at $0.15 per share for gross proceeds of $29,550. In connection with the issuance, the Company incurred a finder’s fee of $2,364.
On February 15, 2024, the Company issued a total of 266,667 common shares at $0.15 per share for gross proceeds of $40,000.
On October 21, 2024, the Company issued a total of 850,000 common shares pursuant to the exercise of stock options at $0.01 per share for gross proceeds of $8,500. In connection with the issuance, the Company transferred the original fair value of the stock options of $121,253 from equity reserve to share capital.
Stock options
The Company has adopted a stock option plan, which provides that the Board of Directors of the Company may from time to time, in its discretion, grant to employees, consultants and directors of the Company, non-transferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 10% of the common shares issued and outstanding from time to time. Such options are non-transferable and are exercisable at a price per share fixed by the Board on the grant date for a period of up to ten years.
13
Bombee Global Entertainment Ltd.
Notes to the Consolidated Financial Statements
For the Period from April 13, 2023 (Date of Incorporation) to October 31, 2023, and
for the Period from November 1, 2023, to October 21, 2024
(Expressed in Canadian dollars)
8. Share Capital (continued)
Stock options (continued)
The following table summarizes the continuity of the Company's stock options:
| Number of stock options | Weighted average exercise price | |
|---|---|---|
| Outstanding, April 13, 2023 (date of incorporation) | – | $ – |
| Granted | 1,525,000 | 0.10 |
| Outstanding, October 31, 2023 | 1,525,000 | 0.10 |
| Granted | 3,333,333 | 0.15 |
| Exercised | (850,000) | 0.01 |
| Cancelled | (4,008,333) | 0.15 |
| Outstanding, October 21, 2024 | – | $ – |
| Exercisable, October 21, 2024 | – | $ – |
The fair value for stock options granted, or modified, have been estimated using the Black-Scholes option pricing model assuming no expected dividends or forfeitures and the following weighted average assumptions:
| 2024 | 2023 | |
|---|---|---|
| Risk-free interest rate | 3.08% | 3.51% |
| Expected life (in years) | 1.65 | 4.18 |
| Expected volatility (based on peer companies’ volatilities) | 100% | 100% |
During the period from November 1, 2023 to October 21, 2024, the Company recognized share-based compensation of $89,962 (period from April 13, 2023 (date of incorporation) to October 31, 2023 – $31,291), including an incremental fair value recognized of $15,917 upon modification of stock options whereby the exercise price of 350,000 stock options was amended from $0.15 per share to $0.01 per share. The weighted average fair value of the stock options granted during the period from November 1, 2023 to October 21, 2024 was $nil (period from April 13, 2023 (date of incorporation) to October 31, 2023 – $0.12) per option.
9. Financial Instruments and Financial Risk Management
Determination of fair value
Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
Fair value hierarchy
Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:
a. Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
b. Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
c. Level 3 – Inputs that are not based on observable market data.
Bombee Global Entertainment Ltd.
Notes to the Consolidated Financial Statements
For the Period from April 13, 2023 (Date of Incorporation) to October 31, 2023, and
for the Period from November 1, 2023, to October 21, 2024
(Expressed in Canadian dollars)
9. Financial Instruments and Financial Risk Management (continued)
As at October 21, 2024, the Company believes that the carrying values of cash, trade receivables, GIC, accounts payable and accrued liabilities, and loans payable approximate their fair values because of their nature and relatively short maturity dates or durations.
The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:
Credit risk
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, trade accounts receivable and GIC. The carrying amount of cash, trade receivables and GIC represent the maximum exposure to credit risk.
Trade accounts receivable balances are monitored on an ongoing basis. The Company maintains an allowance for expected credit losses to provide for the estimated amount of doubtful accounts. The allowance for expected credit losses is based on management's assessment of a customer's credit quality as well as subjective factors and trends, including the aging of receivable balances. The Company considers a financial asset not recoverable when the customer is more than 120 days past due and information obtained from the customer and other external factors indicate that the customer is unlikely to pay its creditors in full. Financial assets (and the related allowances) are normally written off, either partially or in full, when there is no realistic prospect of recovery. As at October 21, 2024, the Company determined that there were no doubtful accounts requiring an allowance.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company's normal operating requirements on an ongoing basis. The Company ensures that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and GIC.
Historically, the Company's main funding sources have been the issuance of equity securities and loans payable. The Company requires on-going funding to operate and the continued access to funding is not always guaranteed.
The following is an analysis of the contractual maturities of the Company's non-derivative financial liabilities as at October 21, 2024:
| Within one year | Between one and five years | More than five years | |
|---|---|---|---|
| Accounts payable | $ 859,859 | $ - | $ - |
| Loans payable | 203,000 | - | - |
| $ 1,062,859 | $ - | $ - |
Foreign exchange risk
The Company is exposed to foreign currency risk on fluctuations related to cash, trade receivables, GIC and accounts payable and accrued liabilities that are denominated in US dollars. As at October 21, 2024, a 10% appreciation of the Canadian dollar relative to the US dollar would have increased net financial assets by approximately $5,800 (October 31, 2023 – $8,700). A 10% depreciation of the Canadian dollar relative to the US dollar would have had the equal but opposite effect.
Bombee Global Entertainment Ltd.
Notes to the Consolidated Financial Statements
For the Period from April 13, 2023 (Date of Incorporation) to October 31, 2023, and
for the Period from November 1, 2023, to October 21, 2024
(Expressed in Canadian dollars)
- Financial Instruments and Financial Risk Management (continued)
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk in respect of its GIC. A 1% change in market interest rate is not expected to have a material impact on the Company's consolidated financial statements.
- Capital Management
The Company's objective when managing capital is to safeguard its ability to continue as a going concern. The Company manages its capital structure to maximize its financial flexibility making adjustments to it in response to changes in economic conditions and the risk characteristics of the underlying assets and business opportunities. The Company does not presently utilize any quantitative measures to monitor its capital. In order to pay for general administrative costs, the Company will raise additional amounts as needed.
The Company reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company considers shareholders' equity and working capital as components of its capital base. The Company may access capital through the issuance of shares, debt or the disposition of assets. Management historically funds the Company's expenditures by issuing share capital or debt instruments. The Company is not subject to externally imposed capital requirements. The Company believes it will be able to raise additional equity capital as required, but recognizes the uncertainty attached thereto. There is no change to the Company's approach to capital management during the period ended October 21, 2024.
- Revenue
The components of revenue for the period from November 1, 2023 to October 21, 2024, and for the period from April 13, 2023 (date of incorporation) to October 31, 2023, are as follows:
| 2024 | 2023 | |
|---|---|---|
| Revenue from contracts with customers: | ||
| Live production, special effects, broadcast and event management services | $ 6,519,443 | $ 1,627,537 |
| $ 6,519,443 | $ 1,627,537 |
The change in deferred revenues for the period from November 1, 2023 to October 21, 2024, and for the period from April 13, 2023 (date of incorporation) to October 31, 2023, are as follows:
| 2024 | 2023 | |
|---|---|---|
| Deferred revenue, beginning balance | $ 95,000 | $ - |
| Additions | 78,482 | 95,000 |
| Revenue recognized during the period | (20,000) | - |
| Deferred revenue, ending balance | $ 153,482 | $ 95,000 |
Bombee Global Entertainment Ltd.
Notes to the Consolidated Financial Statements
For the Period from April 13, 2023 (Date of Incorporation) to October 31, 2023, and
for the Period from November 1, 2023, to October 21, 2024
(Expressed in Canadian dollars)
12. Segmented Information
As at October 21, 2024, the Company has one reportable segment, being live production, special effects, broadcast and event management services.
During the period from November 1, 2023 to October 21, 2024, the Company recognized 27% of its revenue from 1 customer. During the period from April 13, 2023 (date of incorporation) to October 31, 2023, the Company recognized 69% of its revenue from 4 customers (Customer A – 22%, Customer B – 18%, Customer C – 17% and Customer D – 12%).
The Company's revenues for the period from November 1, 2023 to October 21, 2024 and for the period from April 13, 2023 (date of incorporation) to October 31, 2023 are attributed to the following countries:
| 2024 | 2023 | |
|---|---|---|
| Canada | $ 4,178,376 | $ 956,370 |
| United States of America | 1,581,361 | 468,996 |
| Germany | 456,045 | - |
| England | 224,020 | - |
| Saudi Arabia | - | 202,171 |
| Others | 79,641 | - |
| $ 6,519,443 | $ 1,627,537 |
The Company's non-current assets as at October 21, 2024 and October 31, 2023 are allocated in the following countries:
| 2024 | 2023 | |
|---|---|---|
| Canada | $ 7,186 | $ 8,179 |
| United States of America | 6,947 | - |
| $ 14,133 | $ 8,179 |
13. Income Taxes
The difference between tax expense or recovery for the period and the expected income taxes based on the statutory tax rate arises as follows:
| October 21, 2024 | October 31, 2023 | |
|---|---|---|
| Loss | $ (660,998) | $ (123,486) |
| Statutory tax rate | 27% | 27% |
| Expected income tax (recovery) | (178,469) | (33,341) |
| Permanent differences and other | 27,851 | 8,242 |
| Change in unrecognized deferred assets | 150,618 | 25,099 |
| Total income tax recovery | $ - | $ - |
Bombee Global Entertainment Ltd.
Notes to the Consolidated Financial Statements
For the Period from April 13, 2023 (Date of Incorporation) to October 31, 2023, and
for the Period from November 1, 2023, to October 21, 2024
(Expressed in Canadian dollars)
13. Income Taxes (continued)
The significant components of the Company's unrecognized deductible temporary differences and unused tax losses are as follows:
| October 21, 2024 | Expiry date | October 31, 2023 | |
|---|---|---|---|
| Non-capital losses | $ 639,000 | 2043 - 2044 | $ 84,000 |
| Share issuance costs | 6,000 | 2025 - 2027 | 8,000 |
| Equipment | 6,000 | None | 1,000 |
| Total | $ 651,000 | $ 93,000 |
14. Events After the Reporting Period
Subsequent to the period ended October 21, 2024, the Company and its shareholders completed a share purchase agreement with ESE Entertainment Inc. ("ESE"), whereby ESE acquired all of the outstanding shares of the Company in exchange for: (i) $750,000 in cash paid on closing, (ii) $375,000 in cash to be paid 6 months following closing, subject to customary adjustments based on the working capital of the Company on closing, (iii) $375,000 in cash to be paid 12 months following closing, and (iv) 30,000,000 common shares of ESE issued at a deemed issue price of $0.10 per share.
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