TEKCAPITAL PLC

Earnings Release • Apr 29, 2016

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RNS Number : 7488W

Tekcapital plc

29 April 2016

Tekcapital plc

("Tekcapital", "the Company" or "the Group")

Preliminary Results for the year-ended 30 November 2015

Tekcapital plc (AIM:TEK), an international provider of technology and intellectual property services, announces its preliminary results for the year-ended 30 November 2015.

Operational Highlights

·     Acquired the exclusive license rights to 50 patents to date.

·     Continued to expand the InventionEvaluator® service with the addition of a direct sales team in the US and the recent upgrade to enhance both the content and marketability of the reports.

Post-period end highlights

·     Acquisition of the business of the Vortechs Group, a leading technology transfer placement firm in North America.

·     Acquisition of the exclusive licenses to manufacture and sell three proprietary medical devices from Stryker Corporation into Belluscura Ltd, a newly formed company set up by Tekcapital to commercialise these products.

Commenting on the results, Dr. Clifford Gross, Executive Chairman of Tekcapital plc said:

"We are pleased to announce we have continued to develop the business during 2015, which now holds license rights to a total of 50 patents. We remain confident that meaningful near-term revenues will arise from commercialising our IP portfolio."

"As the market opportunity for the Company continues to expand and large enterprises increasingly take advantage of exogenous innovations, the Company will continue to invest in its IP portfolio while evaluating further commercial opportunities for its existing licenses."

Copies of the Company's Annual Report and Accounts will be posted to shareholders next week, together with a notice of the Annual General Meeting to be held at 2.00 p.m. on 27 May 2016 at the offices of Charles Russell Speechlys LLP, 5 Fleet Place, London EC4M 7RD.

For further information, please contact:

Tekcapital plc		+1 305 200 3450 Ext 305
	Clifford M. Gross	info@tekcapital.com
Allenby Capital Limited (Nominated Adviser & Joint Broker)		+44 (0)20 3328 5656
Jeremy Porter / Alex Brearley
Optiva Securities Limited (Joint Broker)		+44 (0) 20 3137 1904
Jeremy King / Vishal Balasingham		jeremy.king@optivasecurities.com
Walbrook PR Ltd		+44 (0) 20 7933 8780
Paul Cornelius / Helen Cresswell / Sam Allen		tekcapital@walbrookpr.com

Tekcapital plc - The World's Largest University Network for Open Innovation

Tekcapital helps clients profit from new, university-developed intellectual properties. With our proprietary discovery search engine, linked to 4,000+ universities in 160 countries, coupled with expert scientific review, we provide a turn-key service to make it easy for clients to find and acquire the IP, analytics and technology transfer professionals they need to create a competitive advantage. Tekcapital plc is listed on the AIM market of the London Stock Exchange (AIM: symbol TEK) and is headquartered in Oxford, in the UK. For more information, please visit www.tekcapital.com 

Chairman's statement

Review of the Business

The Tekcapital group is engaged in helping its clients to profit from university intellectual property (IP). Since last year we have made considerable progress.

We continue to provide technology sourcing services for our corporate clients but also provide three important additional services:

·   Acquiring the exclusive license to potentially disruptive technologies for our own portfolio for subsequent development and commercialisation. Since we began this service in January 2015, to-date we have acquired the exclusive rights to 50 patents.

·   In 2014 we announced the acquisition of InventionEvaluator, the turn-key service that assesses the commercial potential of new technologies. We continue to expand the client base for the service and have added a direct sales team in our US office. Additionally, we have recently up-graded the format of the reports to enhance both their information content and marketability.

·   Post end of period we were very pleased to have announced the acquisition of the business and certain assets of the Vortechs Group, a leading technology transfer placement firm in North America. For operating the Vortechs Group's business on behalf of Tekcapital and for covering all related business expenditures going forward, Tekcapital will pay Vortechs Group a management and service fee, based on revenue achieved, for a minimum period of five years. This expands our business offerings and enables us to provide technology transfer professionals as well as new technologies to both our clients and university suppliers.

Additionally, post end of period we are pleased to have also announced the acquisition of the exclusive licences to manufacture and sell three proprietary medical devices from Stryker Corporation into Belluscura Ltd, a newly formed company set up by Tekcapital to commercialise these products. Belluscura Ltd's mission is to address the marketplace need for premium medical devices at affordable prices. The devices have been developed by and exclusively licensed from Stryker Corporation, a leading medical technology company. The devices have achieved regulatory clearances where necessary and have already achieved commercial sales under Stryker.

The medical devices are:

·   "SlydeTM", a non-ambulatory patient evacuation sled.

·   "Passport", a trocar for use with the Da Vinci® Surgical System (keyhole surgery).

·   "SNAP II", a level of consciousness monitor for use during surgical procedures requiring general anaesthesia.

The products are protected by a portfolio of 19 issued and pending patents and industrial designs. Belluscura has been established in order to commercialise these products, for which a new management team is being put in place. It is intended that Belluscura will market and expand the sales of the devices, initially in the US and Western Europe, using third party manufacturing and will look to acquire additional medical devices to sell in the future. Tekcapital is exploring the possibility of Belluscura raising funds via an IPO on AIM to accelerate its growth strategy. Tekcapital owns 95% of the share capital of Belluscura and Stryker Corporation owns the remaining 5%. 

Divisional Review

Demand for the Group's Invention Evaluator service remains strong with customers consisting of universities, research centres and corporations world-wide. The service has been successfully integrated with our existing offering and has attracted significant interest.

The Group's technology out-licensing service leverages its competencies to identify and acquire particularly promising new IP which management believes can be readily out-licensed to corporations. This service extends the Group's impact by directly commercialising innovative university and corporate developed technologies and also has the potential to capture for the Group's own benefit more of the value realised when innovative ideas are successfully commercialised. Since inception a year ago, this new effort has grown rapidly. As of the date of this report we have secured exclusive licenses to 50 patents, applications and industrial designs. We have a number of on-going commercialisation opportunities that we hope to progress in the near future. We are making solid progress on our commercialisation programmes for a number of our licensed properties and believe that we will be in a position to update the market in due course. The Directors believe that the post period announcements of the acquisition of the Vortechs Group business and the establishment of Belluscura Ltd should make a significant contribution to our Group's financial performance in future reporting periods.

Current Trading and Outlook

Having continued to develop its existing business, the Board is confident that continued investment in growth is the right policy. We believe this strategy is likely to lead to increased revenue in 2016 as we continue to seize additional opportunities with the potential for adding considerable shareholder value.

The Directors remain confident that meaningful revenues will arise from our service offerings combined with the near-term sub-licensing or external funding of licenses held in its IP portfolio. With an increasing number of companies making ever faster and more disruptive use of innovative ideas sourced exogenously, and with patented university and corporate technologies an increasingly valued currency, the market opportunity for the Group is both large and continuing to grow.

Financial review

The Group is still in its early stages of development. Funds raised from investors are being applied, along with revenues generated, to pursuing our strategic objectives. These are principally to grow the customer base for our technology transfer services and to acquire and sell on licences for certain university and corporate intellectual properties.

Group sales for the period to 30 November 2015 were US $407,420 (as compared with sales of US $210,337 in 2014) with losses of US $1,460,815 as compared with losses of US $994,869 in 2014.

The Group's assets grew from US $1,818,352 to US $3,961,698 during the period mainly thanks to shareholder investment during the year, augmented by technology acquisitions. The Group's liabilities are very low at the end of the period because its costs have been settled without delay, using funds from the cash reserves invested since our IPO and subsequent capital raise in May of 2015.

Clifford M Gross

Chairman and CEO

28 April 2016

Consolidated Statement of comprehensive income

For the year ended 30 November 2015

Group	Note		Year ended 30 November 2015	Year end 30 November 2014
			US $	US $
Continuing Operations
Revenue	3		407,420	210,337
Gross Profit			407,420	210,337
Administrative expenses			(1,868,124)	(1,123,936)
Foreign exchange movements			-	(80,112)
Operating Loss			(1,460,704)	(993,711)
Finance income			709	142
Loss on ordinary activities before income tax			(1,459,995)	(993,569)
Income tax expense	4		(820)	(1,300)
Loss after tax			(1,460,815)	(994,869)
Loss for the year attributable to owners of the parent company			(1,460,815)	(994,869)
Other comprehensive income
Foreign exchange gain			47,851	-
Total other comprehensive income			47,851	-
Total comprehensive income for the year attributable to owners of the parent company			(1,412,964)	(994,869)

Loss per share

Basic and diluted earnings per share
Loss per share	5		(0.049)	(0.050)

The Group has used the exemption under S408 CA 2006 not to disclose the company income statement. Items in the statement above are disclosed net of tax.

Consolidated Statement of financial position

At 30 November 2015

Group	Note		As at  30 November 2015	As at 30 November 2014
			US $	US $
Assets
Non-current assets
Intangible assets	7		708,577	350,251
Property, plant and equipment			7,920	6,628
			716,497	356,879
Current assets
Trade and other receivables			105,955	90,568
Cash and cash equivalents			3,139,246	1,370,905
			3,245,201	1,461,473
Total assets			3,961,698	1,818,352
Current liabilities
Trade and other payables			241,181	100,052
Current income tax liabilities			1,300	1,300
			242,481	101,352
Total liabilities			242,481	101,352
Net assets			3,719,217	1,717,000
Equity attributable to the owners of the parent
Ordinary shares			224,684	154,842
Share premium			5,980,751	2,673,905
Retained earnings			(2,461,900)	(1,039,578)
Translation reserve			47,851	-
Merger reserves			(72,169)	(72,169)
Total equity			3,719,217	1,717,000

Statement of financial position

At 30 November 2015

Company	Note		As at  30 November 2015	As at 30 November 2014
			US $	US $
Assets
Non-current assets
Intangible assets	7		19,081	29,701
Investment in subsidiaries	6		2,371,820	2,371,820
			2,390,901	2,401,521
Current assets
Trade and other receivables			3,128,780	-
Cash and cash equivalents			37,256	-
			3,166,036	-
Total assets			5,556,937	2,401,521
Current liabilities
Trade and other payables			412,568	8,009
			412,568	8,009
Total liabilities			412,568	8,009
Net assets			5,144,369	2,393,512
Equity attributable to the owners of the parent
Ordinary shares			224,684	154,842
Share premium			5,980,751	2,673,905
Retained earnings			(1,028,925)	(435,235)
Translation reserve			(32,141)	-
Total equity			5,144,369	2,393,512

Statements of changes in equity

For the year ended 30 November 2015

Group	Note	Ordinary Shares US $	Share Premium US $	Translation Reserve US $	Merger reserve US $	Retained earnings US $	Total Equity US $
Balance at 30 November 2013		94,953	-	-	(72,159)	(44,709)	(21,915)
Loss for the year		-	-	-	-	(994,869)	(994,869)
Acquired with new subsidiary		-	-	-	(10)	-	(10)
Share capital issued on initial public offering		59,889	3,598,553	-	-	-	3,658,442
Costs of share issue		-	(924,648)	-	-	-	(924,648)
Balance at 30 November 2014		154,842	2,673,905	-	(72,169)	(1,039,578)	1,717,000
Loss for the year		-	-	-	-	(1,460,815)	(1,460,815)
Other comprehensive income				47,851		-	47,851
Share based payments		-	-	-	-	38,493	38,493
Issue of Ordinary shares net of costs		69,270	3,436,126	-	-	-	3,505,396
Costs of share issue		-	(164,456)	-	-	-	(164,456)
Warrants exercised		572	35,176	-	-	-	35,748
Balance at 30 November 2015		224,684	5,980,751	47,851	(72,169)	(2,461,900)	3,719,217

Company	Note	Ordinary Shares US $	Share Premium US $	Translation Reserve US $	Retained earnings US $	Total Equity US $
Balance at 30 November 2013		-	-	-	-	-
Loss for the year		-	-	-	(435,235)	(435,235)
Proceeds from shares issued		154,842	3,598,553	-	-	3,753,395
Costs of share issue		-	(924,648)	-	-	(924,648)
Balance at 30 November 2014		154,842	2,673,905	-	(435,235)	2,393,512
Loss for the year		-	-	-	(632,183)	(632,183)
Other comprehensive income		-	-	(32,141)	-	(32,141)
Share based payments		-	-	-	38,493	38,493
Issue of Ordinary shares net of costs		69,270	3,436,126	-	-	3,505,396
Costs of share issue		-	(164,456)	-	-	(164,456)
Warrants exercised		572	35,176	-	-	35,748
Balance at 30 November 2015		224,684	5,980,751	(32,141)	(1,028,925)	5,144,369

Consolidated Statement of cash flows

For the year ended 30 November 2015

Group	Note		For the year ended  30 November 2015	For the year ended  30 November 2014
			US $	US $
Cash flows from operating activities
Cash generated from operations	9		(1,222,474)	(1,014,434)
Taxation paid			(820)	-
Net cash generated from operating activities			(1,223,294)	(1,014,434)
Cash flows from investing activities
Purchases of property, plant and equipment			(4,349)	(8,631)
Purchases of intangible assets			(162,080)	(33,306)
Interest received			709	142
Net cash used in investing activities			(165,720)	(41,795)
Cash flows from financing activities
Proceeds from issuance of ordinary shares			3,286,060	3,337,882
Costs of raising finance			(164,456)	(924,648)
Proceeds from the exercise of warrants			35,751	-
Net cash used in financing activities			3,157,355	2,413,234
Net increase in cash and cash equivalents			1,768,341	1,357,005
Cash and cash equivalents at beginning of year			1,370,905	13,900
Cash and cash equivalents at end of year			3,139,246	1,370,905

Selected Notes to the accounts

For the year ended 30 November 2015

1.         General Information

Tekcapital PLC is a company incorporated in England and Wales and domiciled in the UK. The address of the registered office is detailed on page 1 of these financial statements. The Company is a public limited company, which is listed on the AIM market of the London Stock Exchange.

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

2.1          Statement of compliance

The financial statements of Tekcapital PLC have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It requires management to exercise its judgement in the process of applying the group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 4.

2.1.1      Going concern

The Group meets its day to day working capital requirements through its bank facilities and monies raised by an initial public offering made April 2014 and an equity fundraise in May 2015. The Group's forecasts and projections indicate that the Group has sufficient cash reserves to operate within the level of its current facilities. After making enquiries, the Directors have a reasonable expectation that the Group had adequate resources to continue in operational existence for the foreseeable future.

The Group delivered an operating loss of US$1,460,704 before tax. Cash inflow from financing activities was strong due to the equity fund raise in May 2015.

The Company therefore continues to adopt the going concern basis in preparing both its consolidated financial statements and for its own financial statements. 

3.         Segmental reporting

The Directors consider the business to have two segments for reporting purposes under IFRS 8 which are:

· professional services, including the provision of reports and any services provided to locate and transfer technologies to customers

· licensing activities, including acquiring licenses for technologies and their subsequent out licensing

Segmental revenues and results

2015 Consolidated income statement	Professional Services US $	Licensing Activities US $	Other US $	Total US $
Revenue	407,420	-	-	407,420
Administrative expenses	(328,862)	(35,000)	(1,478,118)	(1,841,980)
Depreciation and amortisation	-	(12,467)	(13,677)	(26,144)
Group operating income/(loss)	78,558	(47,467)	(1,491,795)	(1,460,704)
Finance income	-	-	709	709
Income/(Loss) on ordinary activities before income tax	78,558	(47,467)	(1,491,086)	(1,459,995)
Income tax expense	-	-	(820)	(820)
Income/(Loss) after tax	78,558	(47,467)	(1,491,906)	(1,460,815)

2014 Consolidated income statement	Professional Services US $	Licensing Activities US $	Other US $	Total US $
Revenue	210,337	-	-	210,337
Administrative expenses	(240,106)	-	(878,222)	(1,118,328)
Depreciation and amortisation	-	-	(5,608)	(5,608)
Foreign exchange movements	-	-	(80,112)	(80,112)
Group operating loss	(29,769)	-	(963,942)	(993,711)
Finance income	-	-	142	142
Loss on ordinary activities before income tax	(29,769)	-	(963,800)	(993,569)
Income tax expense			(1,300)	(1,300)
Loss after tax	(29,769)	-	(965,100)	(994,869)

Segment assets and liabilities

2015 Consolidated statement of financial position	Professional Services US $	Licensing Activities US $	Other US $	Total US $
Assets	378,917	365,761	3,217,020	3,961,698
Liabilities	-	-	(242,481)	(242,481)
Net assets	378,917	365,761	2,974,539	3,719,217

2014 Consolidated statement of financial position	Professional Services US $	Licensing Activities US $	Other US $	Total US $
Assets	369,335	-	1,449,017	1,818,352
Liabilities	-	-	(101,352)	(101,352)
Net assets	369,335	-	1,347,665	1,717,000

Geographical information

Disclosure of Group revenues by geographic location.

			2015 US $	2014 US $
United Kingdom			4,598	32,576
United States			402,822	177,761
Total revenue			407,420	210,337

4.            Income tax expense

Group		2015 US $	2014 US $
Current tax
Current tax on profits for the year		820	1,300
Adjustments in respect of prior year		-	-
Total current tax		820	1,300
Income tax expense		820	1,300

Group		2015 US $	2014 US $
(Loss) before tax		(1,459,995)	(993,569)
Tax calculated at domestic tax rates applicable to profits in the respective countries		(291,999)	(198,714)
Tax effects of:
-     Unrecognised and unused tax losses carried		-	-
-     Expenses not deductible for tax purposes		9,118	-
-     Income not taxable for tax purposes		-	(11,204)
-     Capital allowances in excess of depreciation		1,865	(9,612)
-     Unrelieved tax losses and other deductions		281,836	220,830
Total income tax charge		820	1,300

The tax on the Group's loss before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to losses.

The weighted average applicable tax rate was 20%. The increase is caused by a standard amount of tax payable in those States in the USA which a subsidiary company operates from and is not attributable to the level of profits or losses incurred.

Unused tax losses for which no deferred tax assets have been recognised is attributable to the uncertainty over the recoverability of those losses through future profits.

5.            Loss per share

		2015 US $	2014 US $
Loss from continuing operations attributable to owners of the parent		(1,460,815)	(994,869)
Total		(1,460,815)	(994,869)
Basic and diluted earnings per share
Weighted average number of ordinary shares in issue (000's)		29,902	20,078
Loss per share		(0.049)	(0.050)

Any options and warrants do not have a dilutive effect on the EPS as the Group is loss-making.

6.         Investments in subsidiaries

Company			Shares in subsidiaries		Loans to subsidiaries	Total US $
Cost and net book value
At 1 December 2013			-		-	-
Additions during the year			94,954		2,276,866	2,371,820
Balance at 30 November 2014			94,954		2,276,866	2,371,820
Additions during the year			-		-	-
Balance at 30 November 2015			94,954		2,276,866	2,371,820
Principal subsidiaries name	Country of Incorporation and place of business	Proportion of ordinary shares directly held		Nature of business
Tekcapital Europe Limited	England and Wales	100%		Provision of Intellectual property research services
Tekcapital LLC	USA	100%		Provision of Intellectual property research services
Non Invasive Glucose Tek Limited (*)	England and Wales	100%		Commercialising Intellectual property
Ocutek Limited (*)	England and Wales	100%		Commercialising Intellectual property
Smart Food Tek Limited (*)	England and Wales	100%		Commercialising Intellectual property
eGravitas Limited (*)	England and Wales	100%		Commercialising Intellectual property
Frigidus Limited (*)	England and Wales	100%		Commercialising Intellectual property
eSoma Limited (*)	England and Wales	100%		Commercialising Intellectual property

* 100% subsidiary of Tekcapital Europe Limited

The Group owns 100% of the above subsidiaries and consequently has full control over them. As at the year end, the Group has no interest in the ownership of any other entities, or exerts any significant influence over or provides funding which constitutes an "unconsolidated structured entity".

All UK subsidiaries are exempt from the requirement to file audited accounts by virtue of section 479A of the Companies Act 2006. As part of this process, the Company has provided statutory guarantees to these subsidiaries.

The Company's loss before tax for the year ended 30 November 2015 was $632,183.

7.            Intangible assets

	Purchased intangible assets
Group	Licenses US $	Website development US $	Invention Evaluator US $	Total US $
At 1 December 2013	-	-	-	-
Additions during the year	-	33,306	320,550	353,856
At 30 November 2014	-	33,306	320,550	353,856
Additions during the year	378,228	-	3,185	381,413
At 30 November 2015	378,228	33,306	323,735	735,269
Accumulated amortisation and impairment
At 1 December 2013	-	-	-	-
Amortisation charge for the year	-	(3,605)	-	(3,605)
At 30 November 2014	-	(3,605)	-	(3,605)
Amortisation charge for the year	(12,467)	(10,620)		(23,087)
At 30 November 2015	(12,467)	(14,225)	-	(26,692)
Net book value
At 30 November 2014	-	29,701	320,550	350,251
At 30 November 2015	365,761	19,081	323,735	708,577

Under IAS38, the Group's Invention Evaluator is regarded by the Directors as being an intangible asset with an indefinite useful life. The Directors believe that the asset is unique in that no competitor offering currently exists, the service is already proven to have appeal globally to many types of clients including Fortune 100 companies, there is no expectation of obsolescence in the foreseeable future, and the service generates sufficient on-going revenue streams. The Directors have carried out an impairment review and believe that the value in use is significantly greater than book value.

	Purchased intangible assets
Company		Website development US $	Total US $
At 1 December 2013		-	-
Additions during the year		33,306	33,306
At 30 November 2014		33,306	33,306
Additions during the year		-	-
At 30 November 2015		33,306	33,306
Accumulated amortisation and impairment
At 1 December 2013		-	-
Amortisation charge for the year		(3,605)	(3,605)
At 30 November 2014		(3,605)	(3,605)
Amortisation charge for the year		(10,620)	(10,620)
At 30 November 2015		(14,225)	(14,225)
Net book value
At 30 November 2014		29,701	29,701
At 30 November 2015		19,081	19,081

8.            Dividends

No dividend has been declared for the year ended 30 November 2015 (2014: Nil) and no dividend was paid during the year.

9.            Cash generated from operations

Group		2015 US $	2014 US $
Loss before income tax		(1,459,995)	(993,569)
Adjustments for
-     Depreciation		3,057	2,003
-     Amortisation		23,087	3,605
-     Finance costs - net		(709)	(142)
-     Share based payments expense		38,493	-
-     Movement in foreign exchange		47,851	-
Movement in trade and other receivables		(15,387)	(78,658)
Movement in trade and other payables		141,129	52,354
Cash generated		(1,222,474)	(1,014,434)

10.       Events after the reporting period

At the time of signing these accounts, the Directors had completed the acquisition of the business of the Vortechs Groups Inc. ("Vortechs Group"). Consideration for the acquisition was by way of $100,000 cash and the issue of 577,868 new ordinary share of 0.4 pence to Vortechs Group at an issue price of £0.475 per share.

The acquisition has been structured so that Tekcapital acquires the intellectual capital assets of Vortechs Group and certain other assets of the business. Tekcapital will not acquire the Vortechs Group corporate entity and certain of its fixed assets. Additionally, Tekcapital will not acquire or assume any of Vortechs Group's liabilities.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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