Month: July 2017

Jubilee is pleased to announce its metals recovery division, Jubilee Processing’s quarterly update for Q2 2017.

Highlights

HERNIC OPERATIONS

• Operation achieves design throughput in June 2017
• Operation achieves positive earnings in July 2017
• Current PGMs¹produced  1, 697 oz

1 = Platinum Group Metals (6E)

DILOKONG CHROME MINE (DCM)

• Operational earnings attributable to Jubilee of GBP 0, 39 million (ZAR 6, 50 million). (Q1 2017 GBP 0, 41 million (ZAR 6, 67 million))
• Chromite concentrate production up by 18% to 17, 659 tonnes (Q1 14, 973 tonnes)

 

Leon Coetzer, Chief Executive commented:

“The Hernic operation has progressed from commissioning to a fully operational business unit and has demonstrated its capability of achieving the expected design parameters. The numbers below illustrates the operation’s rapid progress with the production for the month of July alone, already similar to the total PGM production for the year.

With commissioning concluded we continue to strive for operational excellence through continued optimisation of operational efficiencies.

The DCM project performed well despite pressures on chrome sale prices. We have been able to mitigate the drop in chrome prices by increasing the production output of the project.  For the second half of the year we aim to further increase production through increased treatment of 3^rd party ore.

I am pleased that shareholders supported us with the first upfront payment of the PlatCro Platinum project.  This payment has secured all future PGM earnings from this project for Jubilee and prevented the Company from incurring further debt while first consolidating its current operations.

We are currently reviewing a number of business opportunities both in South Africa and abroad. A number of these opportunities offer the potential to continue the Company’s transformation process.”

 

Hernic overview

The Hernic project commenced operation during March 2017 with the project achieving design capacities during June 2017.  The quarter 2 data below captures the commissioning and ramp-up phase of the project with the more stable PGM production for July alone matching the total PGM produced for the year.   The numbers provided are limited to production and revenue and is reflective of a project during commissioning and ramp up of operations.  The second half will reflect a more steady state operation with the associated performance data to allow detail scrutiny of the operational and financial performance.

The table below indicates the monthly ramp-up of the Hernic Operation for Q2 2017:

	Tailings  processed Tonnes	PGMs delivered Oz	Project Revenue 3(GBP’000)	Project Revenue 1(ZAR’000) 2
Apr-17	22, 987	56	17	293
May-17	21, 987	123	53	901
Jun-17	35, 854	688	331	5, 456
Total Q2 2017	80, 828	867	401	6, 650
Jul-17 (Projected from month to date)	38, 338	830	386	6,583
Total since project commencement in April 2017  1	119, 166	1,697	787	13,233

1= Revenue from the current project phase – 100% attributable to Jubilee until full capital recovery

2= Average monthly conversion rates used

3= Revenue is stated after the deduction of processing and refining charges.  Revenue is projected based on expected PGM market prices and USD exchange rates

 

 

DCM overview

The DCM earnings show the resilience of the project against decreasing chrome prices.    An increase in chrome production of 18% over the two quarters offset the drop in chrome prices as shown in the Jubilee attributable earnings.

The table below shows the operational performance of the DCM plant for Q1 and Q2 2017:

	Chromite concentrate produced tonnes	Project revenue (GBP’000)	Project revenue (ZAR’000)	Project earnings (GBP’000)	Project earnings (ZAR’000)	Jubilee attributable operational earnings (GBP’000)	Jubilee attributable operational earnings (ZAR’000)	Jubilee working capital loan repayments received (GBP’000)	Jubilee working capital loan repayments received (ZAR’000)
Total Q1 2017 2	14, 973	3, 372	55, 223	2, 407	39, 400	408	6, 664	–	–
Total Q2 2017 2	17, 659	1, 348	22, 731	386	6, 504	386	6, 504	175	3, 334
Total for the financial year ending 30 June 2017 1	72, 804	9, 437	162, 976	6, 103	105, 398	1, 630	28, 159	550	10, 000
Total since project commence-ment in April 2016  2	95, 487	10, 562	182, 113	6, 921	119, 601	2, 506	35, 868	550	10, 000

1= Annual average conversion rate used for the year ending 30 June 2017

2=Average monthly conversion rates used

General

A thorough due diligence of the Australian-based copper project identified certain risks that the Company did not consider in the best interest of shareholders.  The project remains of interest if approached with a different financial structure.  Jubilee continues to discuss further with the key shareholders of the project the best way to interrelate on the project to the benefit of both parties.

 

 

Technical Sign-Off

Andrew Sarosi, Director of Jubilee, who holds a B.Sc. Metallurgy and M.Sc. Engineering, University of Witwatersrand and is a member of the Institute of Materials, Minerals and Mining, is a “qualified person” as defined under the AIM Rules for Companies and a competent person under the reporting standards. The technical parts of this announcement have been prepared under Andrew’s supervision and he has approved the release of this announcement.

 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

 

The financial information in this announcement is unaudited.

 

United Kingdom

31 July 2017

 

Contacts

Jubilee Platinum plc

Colin Bird/Leon Coetzer
Tel +44 (0) 20 7584 2155 / Tel +27 (0) 11 465 1913
Andrew Sarosi
Tel +44 (0)1752 221937

JSE Sponsor

Sasfin Capital, (a member of the Sasfin Group)

Sharon Owens
Tel +27 (0)11 809 7500

Nominated Adviser

SPARK Advisory Partners Limited
Sean Wyndham-Quin/Mark Brady
Tel: +44 (0) 203 368 3555

Broker

Beaufort Securities Limited
Jon Belliss
Tel: +44 (0) 20 7382 8300

 

 

This information is provided by RNS

The company news service from the London Stock Exchange

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

 

Overview

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

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

• Focused on positioning proprietary Q-Flow software as the must-have technology powering the OTT industry and building own Teevee brand
• Memorandum of Understanding (the ‘MoU’) signed with leading global network solutions provider Tata Communications (‘Tata’) with regards to embedding Q-Flow into its existing OTT video service and technology platform to deliver an industry-defining offering
• Partnership secured with Verimatrix, the world leading specialist in securing and enhancing revenue for multi-network, multi-screen digital TV services around the globe, to deliver the first secure OTT services in West Africa
• Partnership and MOU signed with Tata to acquire connectivity, hosting and operational media workflow services that power the Group’s Teevee Direct-to-Consumer (‘D2C’) brand
• Launch of a dedicated sports OTT service with The Eastern College Athletic Conference (‘ECAC’) the largest US east coast collegiate athletic college conference comprising approximately 250 schools –  offers sports fans, families and friends the chance to live stream more than 30 men’s and women’s college sports
• Expansion of global reach with MoUs signed with Media Nucleus to target Southeast Asia and Africa OTT and Broadcast Markets and with LaserNet Group to Target OTT opportunities across Africa, offering an industry leading OTT service to millions of users internationally

 

Chairman’s Statement

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

 

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

 

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

 

The size of the OTT prize

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

 

The OTT problem and the Falcon solution

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

 

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

 

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

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

 

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

 

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

 

 

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

 

Falcon: an integrated OTT business

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

 

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

 

Falcon: a team to deliver

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

 

Gert Rieder

Executive Chairman

28 July 2017

 

Consolidated Statement of Financial Position

 

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

		As at 31 March 2017	As at 31 December 2015
	Note	£’000	£’000
Assets
Current Assets
Cash and cash equivalents	6	3,232	139
Prepayments	7	105	10
Other receivables	7	60	–
Total Current Assets		3,397	149
Non-Current Assets
Financial Assets	9	29	–
Fixed Assets	8	16	–
Intangible Assets	10	9,137	–
Total Non-Current Assets		9,182	–
Total Assets		12,579	149

 

Consolidated Statement of Financial Position (continued)

 

		As at 31 March 2017	As at 31 December 2015
	Note	£’000	£’000
Equity and Liabilities
Capital and Reserves
Share Capital	5	791	44
Share Premium	5	13,889	137
Accumulated Deficit		(3,707)	(169)
Translation Reserve		(33)	–
Total Equity attributable to Equity Holders		10,940	12
Current liabilities
Other Short-term Payables	11	748	8
Trade and other Payables	11	481	93
Accrued Expenses	11	50	36
Total Current Liabilities		1,279	137
Long-term Payables	11	360	–
Total Non-Current Liabilities		360	–
Total equity and liabilities		12,579	149

 

 

 

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

Gert Rieder

Executive Chairman

Consolidated Statement of Comprehensive Income

 

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

 

		Period ended 31 March 2017	Period ended 31 December 2015
	Note	£’000	£’000
Revenue		–	–
Personnel expenses	13	(405)	–
Administrative expenses		(3,059)	(169)
Amortisation	10	(80)	–
Operating loss		(3,544)	(169)
Finance income	16	48	–
Finance cost	16	(42)	–
Financial income, net		6	–
Loss before income taxes		(3,538)	(169)
Income tax expense	17	–	–
Loss after taxation		(3,538)	(169)
Loss for the period		(3,538)	(169)
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Currency translation differences		(33)	–
Total comprehensive loss attributable to owners of the parent		(3,571)	(169)
Loss per share
Basic and diluted	18	(0.09)	(0.07)

Consolidated Statement of Changes in Equity

 

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

 

		Share capital	Share Premium	Translation reserve	Accumulated deficit	Total
		£’000	£’000	£’000	£’000	£’000
On incorporation on 29 January 2015		–	–	–	–	–
Loss and total comprehensive loss for the period		–	–	–	(169)	(169)
Transaction with owners		44	137	–	–	181
Total transaction with owners		44	137	–	–	181
As at 31 December 2015 and 1 January 2016		44	137	–	(169)	12
Loss for the period		–	–	–	(3,538)	(3,538)
Translation reserve		–	–	(33)	–	(33)
Total comprehensive loss		–	–	(33)	(3,538)	(3,571)
Issue of Ordinary Shares (net of expenses)		510	8,547	–	–	9,057
Issue of Preferred Shares (net of expenses)		237	5,205	–		5,442
As at 31 March 2017		791	13,889	(33)	(3,707)	10,940

 

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

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

 

Consolidated Statement of Cash Flows

 

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

	Period ended 31 March 2017	Period ended 31 December 2015
	£’000	£’000
Cash flows from operating activities
Loss for the period before taxation	(3,538)	(169)
Depreciation / amortisation	80	–
Interest expenditure	42	–
Operating cash flows before movements in working capital	(3,416)	(169)
Increase in prepayments and other receivables	(95)	(10)
Increase in trade and other payables	532	137
Increase in rental deposits	(29)	–
Net cash used in operating activities	(3,008)	(42)
Loans advanced	(1,182)
Cash received from acquisitions	98	–
Net cash inflow from investing activities	(1,084)	–
Issue of Shares	7,763	350
Expenses in relation to issue of shares	(611)	(169)
Net cash generated from financing activities	7,152	181
Net increase in cash and cash equivalents	3,060	139
Cash and cash equivalent at beginning of period	139	–
Foreign exchange differences	33	–
Cash and cash equivalent at end of period	3,232	139

 

Notes to the Annual Report

 

1. GENERAL INFORMATION

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

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

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

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

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

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

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

 

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

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

 

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

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 3.

 

Comparative figures

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

 

Going concern

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Standards and interpretations issued but not yet applied

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

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

 

Principles of consolidation

Subsidiaries

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

 

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

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

 

Foreign Currency Translation

Functional and presentation currency

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

 

Transactions and balances

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

 

Group companies

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

 

• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet
• income and expenses for each statement of profit or loss and statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and
• all resulting exchange differences are recognised in other comprehensive income.

 

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

 

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

 

Receivables

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

 

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

 

Fixed Assets

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

 

Intangible assets

Software

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

 

• it is technically feasible to complete the software so that it will be available for use
• management intends to complete the software and use or sell it
• there is an ability to use or sell the software
• it can be demonstrated how the software will generate probable future economic benefits
• adequate technical, financial and other resources to complete the development and to use or sell the software are available, and
• the expenditure attributable to the software during its development can be reliably measured.

 

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

 

Trademarks and Licenses

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

 

Samples, Models, Plans

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

 

Amortisation methods and useful lives

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

 

• Software:                                                            3-5 years
• Licenses, advertising rights, brands:       duration of contract or 5 years
• Content samples produced:                       duration of contract/production or 5 years

 

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

 

Financial assets

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

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

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

 

Financial liabilities

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

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

 

Share capital

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

 

Share-based payments

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

 

– including any market performance conditions

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

– including the impact of any non-vesting conditions.

 

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

 

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

 

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

 

3.        CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

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

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

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

 

4.        BUSINESS SEGMENTS

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

 

5. SHARE CAPITAL

	31 March 2017	31 December 2015
Number of Founder Shares	1	1
Share Capital (£)	0	0
Share Premium (£)	8	8
Number of Ordinary Shares	55,410,266	4,375,100
Share Capital (£)	554,103	43,751
Share Premium (£)*	8,683,543	136,983
Number of Preferred Shares	23,722,685	–
Share Capital (£)	237,227	–
Share Premium (£)	5,205,000	–
Total share capital (£)	14,679,881	180,734

*Note: including reduction of issue-related expenses

 

Ordinary Shares

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

 

Preferred Shares

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

 

Movements in share capital

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

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

 

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

 

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

 

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

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

 

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

 

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

 

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

 

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

 

6. CASH AND CASH EQUIVALENTS

£’000	31 March 2017	31 December 2015
Cash at bank and in hand	3,232	139
Total cash and cash equivalents	3,232	139

 

7. PREPAYMENTS AND OTHER RECEIVABLES

£’000	31 March 2017	31 December 2015
Prepayments	105	10
Other receivables	60	–
Total prepayments and other receivables	165	10

 

Prepayments consist of prepaid expenses for management and accounting fees.

 

8.         FIXED ASSETS

£’000	Furniture	Office Equipment	Total
Cost
At 31 December 2015	–	–	–
Additions	2	14	16
At 31 March 2017	2	14	16
Accumulated depreciation
At 31 December 2015	–	–	–
Depreciation for the period	–	–	–
At 31 March 2017	–	–	–
Net book value:
At 1 January 2015 At 31 March 2017	– 2	– 14	– 16

 

9. 9.         FINANCIAL ASSETS

£’000	31 March 2017	31 December 2015
Rental Deposits	29	–
Total Financial Assets	29	–

 

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

 

10. INTANGIBLE ASSETS

£’000	Software	Licenses	Advertising rights	Brands	Goodwill	Total
Cost
At 31 December 2015	–	–	–	–	–	–
Additions	6,655	800	800		495	9,220
Foreign Exchange		(3)	–		–	(3)
At 31 March 2017	6,655	797	880		485	9,217
Accumulated amortization
At 31 December 2015		–	–		–	–
Amortisation for the period		(80)	–		–	(80)
At 31 March 2017		(80)	–		–	(80)
Carrying amount
At 31 Match 2017	6,655	717	880		495	9,137

 

Software

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

Licenses

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

Advertising rights

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

Brands

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

 

Goodwill

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

 

11. TRADE AND OTHER PAYABLES

£’000	31 March 2017	31 December 2015
Current
Other Short-term Payables	748	8
Trade and other Payables	481	93
Accrued expenses	50	36
Total Current	1,279	137
Non-Current
Long-term contractual obligations	360	–
Total Non-Current	360	–
Total trade and other payables	1,639	137

 

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

 

The Quiptel Management Incentive Plan is a cash incentive plan for the key employees in Quiptel, which was taken over as a liability with the acquisition of the Quiptel Group. The Incentive Plan foresees cash payments at defined dates. Parts of this cash obligation has been settled in Ordinary as agreed with some of the key employees (please see note 5).
As at 31 March 2017, the trade and other payables were classified as financial liabilities measured at amortised cost. A maturity analysis of the Group’s trade payables due in less than one year is as follows:

		As at 31 March 2017	As at 31 December 2015
£’000
0 to 3 months		1,135	101
3 to 6 months		100	–
6 months +		404	–
Total		1,639	101

 

12. OPERATING LEASE COMMITMENTS

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

£’000	31 March 2017	31 December 2015
Within 1 year	53	–
Between 1 year and 5 years	–	–
After 5 years	–	–
Total	53	–

 

13.       EMPLOYEE BENEFITS AND EXPENSES

£’000	31 March 2017	31 December 2015
Wages and salaries	229	–
Work services provided by a third party	29	–
Bonus paid to directors	80	–
Director Fees	38
Social insurance expense	25	–
Other personnel expenses	4	–
	405	–

 

14. RELATED PARTY TRANSACTIONS

The following transactions were carried out with related parties:

 

Key Management Compensation

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

 

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

 

£’000	31 March 2017	31 December 2015
Salaries and other short-term employee benefits	524	–
Termination benefits	–	–
Post-Employment benefits	–	–
Other long-term benefits	–	–
Share-based payments	–	–
Total	524	–

 

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

 

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

 

Purchase of Services

£’000	31 March 2017	31 December 2015
Purchase of Services
– Entities controlled by key personnel	1,482	43
Total	1,482	43

 

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

 

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

 

Year-end balances arising from services

£’000	31 March 2017	31 December 2015
Payables
– Entities controlled by key personnel	130	–
Total	130	–

   

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

 

15.       SHARE BASED PAYMENTS

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

 

The options are exercisable on the following vesting dates:

–     16^th of March 2018:                          33 % of the option shares

–     16^th of March 2019:                          66 % of the option shares

–     16^th of March 2020:                          100% of the option shares

 

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

 

	31 March 2017		31 December 2015
	Average exercise price in FMH per share option	Options (thousands)	Average exercise price in FMH per share option	Options (thousands)
At 1 January	–	–	–	–
Granted	0.25	11,161	–	–
Forfeited	–		–	–
Exercised	–		–	–
Expired	–		–	–
At. 31 March	0.25	11,161	–	–

 

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

 

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

Grant	Expiry date – 16 March	exercise price in FMH per share option	Share options (thousands)
			31 March 2017	31 December 2015
2017-03	2022	0.25	11,161	–
			11,161	–

 

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

 

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

 

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

 

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

 

16. FINANCE INCOME AND COST

£’000	31 March 2017	31 December 2015
Exchange differences	10	–
Interest income	38
Finance income	48	–
Bank charges	(8)	–
Exchange differences	(32)	–
Other finance costs	(2)	–
Finance costs	(42)	–

 

17.       TAXATION

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

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

 

18. LOSS PER SHARE

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

 

Loss attributable to equity shareholders (£)	(3,538,231)
Weighted average number of ordinary shares	38,299,769
Loss per ordinary share (£)	(0.09)

 

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

 

19. FINANCIAL INSTRUMENTS – RISK MANAGEMENT

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

 

Financial instruments

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

 

	measurement	Amount in £’000
Cash and Cash Equivalents	Amortised Cost	3,232
Loans and receivables	Amortised Cost	225
Financial Assets	Amortised Cost	29
Other payables	Amortised Cost	(1,639)

 

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

 

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

 

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

 

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

 

General objectives, policies and processes

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

 

Credit risk

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

 

Liquidity risk

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

 

20. CAPITAL RISK MANAGEMENT

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

 

21. SUBSEQUENT EVENTS

Subsequent to the period end the following events occurred:

 

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

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

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

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

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

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

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

 

 

22. GROUP STRUCTURE AND ACQUISITIONS

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

 

The Quiptel Group acquisition

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

 

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

 

Consideration	Fair Value
	£’000
Equity instruments (10,785,713 ordinary shares and 13,499,997 preferred shares)	5,343
Total consideration	5,343
Recognised amounts of identifiable assets acquired and liabilities assumed, at fair value
Cash and cash equivalents	98
Property, plant and equipment	16
Intangible assets / software	6,655
Trade and other receivables	60
Trade and other payables	(510)
Loan	(1,471)
Total identifiable net assets	4,848
Goodwill	495
Total	5,343

 

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

 

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

 

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

 

The Teevee Networks Limited Acquisition

 

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

 

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

 

Consideration	Fair Value
	£’000
Equity instruments (1,428,571 preferred shares)	314
Total consideration	314
Recognised amounts of identifiable assets acquired and liabilities assumed
Cash and cash equivalents	–
Property, plant and equipment	–
Intangible assets / brands	314
Trade and other receivables	–
Trade and other payables	–
Total identifiable net assets	314
Goodwill	–
Total	314

 

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

 

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

 

 

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

 

Name	Country of incorporation and place of business	Nature of business	Proportion of ordinary shares held directly by parent (%)	Portion of ordinary shares held by the group (%)
Teevee Markers Inc., (former Teevee Media and Production Ltd.)	USA	Media production company	100	100
Teevee Networks Ltd.	UK	Media content company	100	100
Orbital Multi Media Holdings Ltd	British Virgin Islands	Holding company	100	100
Quiptel Hong Kong Ltd	Hong Kong	OTT operations	–	100
Quiptel Shenzhen Co. Ltd	China	IT research and development center	–	100

 

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

Name	Country of incorporation and place of business	Nature of business	Proportion of ordinary shares held directly by parent (%)	Portion of ordinary shares held by the group (%)
Quiptel UK Ltd	UK	IT Sales and operations	–	100

 

Quiptel UK commenced business during May 2017.

 

23. ULTIMATE CONTROLLING PARTY

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

 

Market Abuse Regulation (MAR) Disclosure

 

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

 

For more information please contact:

 

Falcon Gert Rieder	info@falconmediahouse.com
St Brides Partners Ltd (PR) Frank Buhagiar / Olivia Vita	+44 (0) 20 7236 1177
Nuovo Capital LLP (Financial Adviser and Joint Broker) Simon Leathers / Anthony Rowland	+44 (0) 20 3515 0230
Shard Capital Partners LLP Damon Heath   Erik Woolgar	+44 (0) 20 7186 9952    damon.heath@shardcapital.com +44 (0) 20 7186 9964    erik.woolgar@shardcapital.com

 

 

This information is provided by RNS

The company news service from the London Stock Exchange

Major Contract Wins and Global Enterprise Data Management Partnership

 

Rosslyn Data Technologies selected for Spend Analytics by Major International Corporations

 

The Company is pleased to report that it has won three contracts worth, in aggregate, in excess of £1 million over a 3 year period, one of which is with one of the large enterprises the Company has previously reported it has been in contract negotiations with.

 

The largest of the contracts is with a world leading enterprise data management company which will involve white labelling and the client reselling Rosslyn’s RAPid cloud based analytics The Board believes the signing of this contract validates the Group’s partnership strategy, demonstrating the ability to monetise these partner relationships as they recognise the scalability and utility of the RAPid platform. Partners  integrate RAPid to form part of their own product suite. This contract enables the Partner to sell the RAPid platform in its own name to a world-wide client base via a salesforce in excess of 200 people.

 

The other two contracts are with a blue chip leisure and hospitality company and one of the largest privately owned FMCG groups in Central Eastern Europe Middle East & Africa. Both of these clients will be utilizing the Group’s RAPid Spend Analytics suite of applications to identify and mitigate an increasing number of strategic risks that they face as a result of their global  operations and market reach. The value of the RAPid platform will enable the clients to effectively bring together data from multiple disparate sources both internally and externally, enabling them to achieve their business objectives. At the same time, this rich foundation of information empowers the various teams to improve the quality of their data, visualize issues and identify opportunities that otherwise may have remained hidden.

 

The Group’s sales pipeline remains healthy and the Directors continue to be in contract negotiations with a number of the large enterprises previously referred to and continue to expect these opportunities to be converted into contract wins.

 

 

Integration of the recently announced acquisition of Integritie is progressing well and the cost savings previously identified are being implemented.

 

The acquisition of Integritie has added further to Rosslyn’s product suite and the Board is pleased with the pipeline of sales and cross sell opportunities that are being generated.  Additionally sales leads are being generated for the RAPid analytics platform from the Integritie client base and we look forward to updating the market on our continued progress in due course.

 

Roger Bullen, said:

 

“I am thrilled that Rosslyn has won these high profile clients in competitive and demanding processes.  Our focus on developing innovative spend analytics solutions continues to deliver a number of business opportunities for us. These wins demonstrate the demand for our services in the market.  Being selected by the country’s largest brands and a leading enterprise data management company shows that our RAPid Cloud Platform is the technology of choice for companies serious about leveraging the value of their data in order to improve business performance.

 

Furthermore, I am delighted with our acquisition of Integritie and we are seeing it add to our critical scale and mass.  I look forward to reporting on our progress in this regard in due course as we move towards profitability, away from reliance on the sale of cumbersome revenue items and increase our recurring revenues.”

 

 

Rosslyn Data Technologies plc	Roger Bullen, Chief Executive Officer	+44(0)20 7138 3203 +44(0)77 7162 3345
	Lance Mercereau Marketing Director	+44(0)7788 183273
Cenkos Securities – Nominated Adviser, Broker	Stephen Keys	+44(0)20 7397 8924

 

 

Notes to Editors

Rosslyn Data Technologies plc, (AIM: RDT), a leading provider of a Cloud-based enterprise data analytics platform, was founded in 2005 by Charles Clark and Hugh Cox. Business Intelligence was ranked first in the top ten technology priorities for Chief Information Officers in 2012 by Gartner. The Company provides analytical services by combining four key technologies: data extraction; cleansing; enrichment; and visualisation, through a single cloud platform enabling users with detailed data to make more informed decisions. Rosslyn’s RAPid platform is the Group’s primary product available to its multinational customers, including Aberdeen Asset Management plc, Babcock Corporate Services plc, Xerox Business Services and Coca-Cola Enterprises, Inc. Rosslyn Data Technologies plc is the ultimate holding company of the Group and owns 100 percent of Rosslyn Analytics Limited.

Further information can also be found on the Company’s website at:  www.rosslynanalytics.com

 

 

 
This information is provided by RNS

The company news service from the London Stock Exchange

Keras Resources plc, the AIM listed mineral resource company, is pleased that Calidus Resources Limited (‘Calidus’), in which Keras holds a 31% interest, has announced further consolidation of the Warrawoona Gold Project located in the Pilbara of Western Australia in line with its strategy to expand its land position to control the entire greenstone belt and maximise gold resources for potential development in the near term.

 

Calidus has acquired a 50% interest in exploration licences E45/4555 and E45/4843 located in the Warrawoona Gold Belt under the terms of the Epminex Agreement previously disclosed in the Calidus Resources Ltd Prospectus dated 8 May 2017.

 

This acquisition increases Calidus’ ground position along strike of existing tenements on the known shear zones that host the current Klondyke Mineral Resource. The tenements contain numerous high-grade historic gold mines.

 

Consideration for the acquisition is $18,000 and the issue of 30,000 shares Calidus shares to Epminex. Calidus retains an option to purchase the remaining 50% of these tenements. After the issue of the shares, Keras will still hold 31% of the issued capital of Calidus and 525m^[1]Performance Shares.

 

Managing Director, Dave Reeves commented, “The Epminex tenements add a number of exciting brownfields exploration targets to Calidus’ portfolio.

 

“No modern exploration has been undertaken on the Epminex tenements to date, but the outcropping nature of mineralisation in the region lends itself to rapid evaluation of the potential of this area.

 

“The exercise of the option on these tenements is a clear demonstration of our strategy of controlling the entire greenstone belt to maximise gold resources for a potential development in the near term.”

 

Epminex Agreement

Under the terms of the agreement with Epminex, on granting of each individual tenement application, Calidus will pay $2,000 and issue 10,000 shares per graticular block. Calidus may purchase the remaining 50% anytime in the following two years by paying a further $5,000 and issuing 20,000 shares per graticular block. The two recently granted licences total nine graticular blocks resulting in a total cash payment of $18,000 and issuance of 45,000 shares, 15,000 of which were issued previously. There is now only one Epminex tenement application (E45/4556) outstanding that covers the majority of the Marble Bar goldfield that produced 170,000oz of gold from 196,500t of ore processed.

 

To view a full version of the Calidus announcement, which includes figures and maps, please click here: https://www.investi.com.au/api/announcements/cai/71e52ee4-87d.pdf.

 

 

Quarterly Report

Calidus Resources has also release its Quarterly Activities Report which can be found here:

https://www.investi.com.au/api/announcements/cai/b4c14557-b95.pdf.

 

 

For further information please visit www.kerasplc.com, follow us on Twitter @kerasplc or contact the following:

 

Dave Reeves	Keras Resources plc	dave@kerasplc.com
Nominated Adviser
Gerry Beaney/David Hignell	Northland Capital Partners Limited	+44 (0) 20 3861 6625
Broker
Damon Heath/Erik Woolgar	Shard Capital Partners LLP	+44 (0) 20 7186 9952
Tom Curran/Ben Tadd	SVS Securities Plc	+44 (0) 203 700 0093
Financial PR
Susie Geliher/Charlotte Page	St Brides Partners Limited	+44 (0) 20 7236 1177

 

 

^[1] Keras will pay a fee of 3.5% of the 525m shares as per the Notice of Meeting April 2017

This information is provided by RNS

The company news service from the London Stock Exchange

Diversified Gas & Oil PLC, a US based gas and oil producer, provides the following trading update ahead of its Annual General Meeting to be held at 10.00 am today.

 

Highlights

 

• Integration of recently acquired producing wells progressing smoothly and on schedule
• Production anticipated to be 11,000 boepd net following transference of final assets associated with Titan acquisition, expected on or before 30 September 2017
• Targeting operating cost of below $6 per flowing barrel of oil equivalent (BOE) once the integration of Titan assets is fully completed
• Board reorganisation with Executive Chairman Robert Post becoming Non-Executive Chairman with immediate effect
• Senior appointments to our operating and corporate functions to enhance operating oversight and execution

Since completing the acquisition of assets from Titan Energy (Titan) in June, DGO has made considerable progress in integrating the assets into the enlarged group and made the necessary structural adjustments to the team to ensure that DGO maximises the value of the acquisition.  Bob Cayton, who joined from Titan, has been appointed Senior Vice President of Operations with responsibility for the management of all DGO’s Appalachian field operations. Bob and his team will oversee implementation of new management processes and reporting frameworks to further improve performance management, drive operating efficiencies and increase output across our portfolio.

 

The Company has created the role of Senior Vice President of Environment, Health & Safety (EH&S), a role commensurate with operations the scale of DGO’s. John (Jack) Crooks has been appointed to the role to oversee a team of five experienced professionals that will continue to deliver on DGO’s commitment to safety, regulatory compliance and environmental stewardship.

 

The management team also welcomes Eric M. Williams CPA as Chief Financial Officer, whose appointment was announced on 7 July.  Eric will support Finance Director, Brad Gray, in his responsibilities for accounting operations, financial reporting and investor relations communications. Eric joins DGO from Callon Petroleum (NYSE: CPE), where he spent the last seven years enhancing the finance and investor relations functions of the company through a period of intense growth. Eric qualified as an accountant from PWC.

 

To ensure the smooth integration of the entire portfolio, DGO has engaged the consulting expertise of Opportune, an energy industry consulting firm based in Houston, who are working with the DGO management through the duration of the process. Their invaluable experience in integration events is adding rigour and guidance to deliver a timely transition into the new enlarged business.

 

As previously guided, certain assets associated with the Titan Acquisition that are held within a public partnership structure, are anticipated to be transferred to the Company after on or before 30 September.  Completion of these assets remains on track and will take DGO’s gross production to circa 18,300 boepd (11,000 boepd net).

 

Pleasingly, the underlying business has continued to perform in line with expectations. DGO continues to deliver on the Company’s strategic objective to further reduce its already low production costs through well optimisation, as well as the improvement of well assessment and maintenance programmes.  DGO achieved an operating cost per flowing barrel of oil equivalent (BOE) of $8.26 in the fourth quarter of FY16 and anticipates operating costs to fall below $6 per BOE once the integration of Titan assets is fully completed.  As the industry experiences significant and continued downward pricing pressure across the value chain, the DGO business model and strategy for extracting additional value from its assets provides robust protection in a challenging market.

 

The Company also announces today that Mr Robert Post will become Non-Executive Chairman of DGO, relinquishing his executive director responsibilities, with effect from 1 August 2017.  Mr Post joined DGO in 2005 and has overseen the Company’s significant growth, culminating in the successful admission to trading on AIM in February 2017 and the transformational acquisition of assets from Titan Energy.  Following the completion of the recent acquisition and strengthening of the executive management team, Mr Post now intends to take a less prominent role in the Company’s day to day activities.  He will remain available to assist the management team as required and he remains the joint largest shareholder, alongside founder and CEO Rusty Hutson Jr, with an interest of approximately 13.8% of the Company’s issued share capital.

 

Commenting on his decision to become Non-executive Chairman, Mr. Post said:

 

“I am immensely proud of what we have achieved with DGO since I joined the company in 2005.  DGO has established itself as one of the largest conventional players in the Appalachian Basin and, subsequent to our admission to AIM in February, we have become one of the largest and one of the lowest cost producers on AIM. Under the leadership of Rusty Hutson, the Company is extremely well managed by a team with the requisite strength, depth and skills to maintain this impressive momentum along the growth path.  As such, I have decided that it is the appropriate time to relinquish my executive duties and I look forward to working alongside the Board in my new capacity as Non-executive Chairman.”

 

DGO’s CEO Rusty Hutson Jr. added:

 

“Robert has been truly instrumental in our success and we look forward to leveraging his ongoing leadership, business experience and industry knowledge as he assumes the new role of Non-executive Chairman.

 

We are pleased with the progress that we have made in terms of integrating the assets that we acquired from Titan.  The new assets are highly complementary to our portfolio in terms of operational and strategic synergies and we are already benefiting from lower operating costs.  We have identified areas for cost savings and expect to be able to drive down our operating costs further as we streamline our operations and increase our production.”

 

This announcement is inside information for the purposes of Article 7 of EU Regulation 596/2014.

 

Diversified Gas & Oil PLC Rusty Hutson Jr., Chief Executive Officer Brad Gray, Finance Director www.diversifiedgasandoil.com	+ 1 (205) 408 0909
Smith & Williamson Corporate Finance Limited (Nominated Adviser & Joint Broker) Russell Cook Katy Birkin	+44 20 7131 4000
Mirabaud Securities LLP (Joint Broker) Peter Krens Edward Haig-Thomas	+44 20 3167 7221
Buchanan (Financial Public Relations) Ben Romney Chris Judd Henry Wilson	+44 20 7466 5000

 

About Diversified Gas & Oil

Diversified Gas & Oil PLC (“DGO”) owns and operates gas and oil producing wells in the Appalachian Basin, one of the largest oil and gas fields in the US.  The Company was founded in 2001 and has grown rapidly in recent years, capitalising upon opportunities to acquire conventional, low risk gas and oil producing assets.  After the completion of its most recent acquisition, DGO will have a total, gross daily production of approximately 18,300 boepd.  DGO was admitted to trading on AIM in February 2017.

 

This information is provided by RNS

The company news service from the London Stock Exchange

Eco (Atlantic) Oil & Gas Ltd. (AIM: ECO, TSX-V:EOG), the oil and gas exploration company with licences in highly prospective regions in South America and Africa, is pleased to announce its preliminary results for the year ended 31 March 2017.

 

Operational Highlights:

• Together with its Operating Partner, Tullow Oil plc (“Tullow”), the Company is commencing a circa 2,550 km²3D seismic survey on the 1,800 km² Orinduik Block, offshore Guyana, almost two years ahead of schedule, thereby seeking to de-risk the existing defined targets located up dip and in close proximity to Exxon Mobil Corporation’s (“Exxon”) recent Liza, Snoek, and Payara discoveries on the Stabroek block estimated to contain oil recoverable resources of between 2.25 and 2.75 billion oil-equivalent barrels
• Extension of the Cooper, Sharon and Guy Licenses into the first renewal period, until March 2018 – the second renewal phase under the petroleum agreement for each license is until March 2020
• Advancement of the 3D interpretation on Cooper and Guy blocks offshore Namibia and application for drilling permits and pre and post drilling EIA surveys underway
• Sale of the Company’s Ghana subsidiary in order to significantly reduce potential financial liabilities
• Strengthened the Board following the appointment of Mr. Derek Linfield as Non-Executive Director and Mr. Gadi Levin as Chief Financial Officer

 

Financial Highlights:

• Successful admission to AIM in February 2017, following an oversubscribed placing and financing of £5.09 million (c.C$8.4m)
• Healthy balance sheet end of the period with over C$6m in cash
• Continued reduction in general and administration costs, compensation costs, and professional fees

o  General and administrative expenses down 22% to C$385,568 (2016: C$497,009)

o  Compensation down 25% to C$483,458 (2016: C$642,035)

o  Professional fees down 12% to C$286,717 (2016: C$325,338)

o  Travel expenses down 26% to C$132,348 (2016: 178,802)

o  Occupancy and office expenses down 72% to C$82,332 (2016: 295,438)

o  Operating costs up 5% to C$2,169,940 (2016: C$2,508,497)

 

Gil Holzman, President and Chief Executive Officer of Eco Atlantic, commented:

“We are pleased to present yet another successful and extremely busy financial year-end report. The highlights speak for themselves, where on one hand we made progress on all of our licenses, and on the other managed to significantly reduce non-operational expenses. The concurrent AIM listing and financing coupled with the significant developments on our core assets in Guyana and Namibia are compelling.  Our strong balance sheet now enables us to execute on our critical short-term milestones, which we believe we will be able to achieve in the coming year, in preparation for hopefully high impact drilling campaigns in both Namibia and Guyana towards the fiscal year 2018.”

 

The Company’s financial results for the year ended 31 March 2017, together with Management’s Discussion and Analysis [and Annual Information Form?] as at 31 March 2017, are available to download on the Company’s website at www.ecooilandgas.com and on Sedar at www.sedar.com.

 

CEO’s Statement

2017 was a transformational year for Eco Atlantic, which saw the business successfully list on AIM in February having raised £5.09 million (C$8.4 million) in an oversubscribed placing. Our dual TSX-V and AIM listing means that we now have access to two key capital markets, providing wider access to capital to accelerate work programmes on our licence blocks located offshore Guyana and Namibia, both of which are prospective regions where significant oil discoveries have been made.

 

In Guyana, we note with interest the continuous flow of discoveries in the Guyana-Suriname basin that have been announced over the last few months by oil and gas majors in the region.  Following the world-class Liza oil discovery in 2015, where Exxon reported that recoverable resources could hold as much as 1.4 Billion barrels; a second significant discovery was made in January 2017. Exxon reported this second oil discovery, from the Payara-1 well, indicated 95 feet of high quality oil bearing sandstone reservoirs. Later on, in March 2017, ExxonMobil announced a further new oil discovery on its Snoek Oil Prospect, which consists of 82 feet of high quality oil-bearing sandstone reservoir on the Stabroek Block, just five miles southeast of the Liza 1 discovery and in very close proximity to our 1,800 km² Orinduik Block.  Exxon and its partners recently reported over 2.5 billion barrels of recoverable oil on the Stabroek Block and announced that first production is expected at the beginning of 2020, at a rate of 100,000 BOD.

 

On the heels of these close-proximity discoveries, we, together with the operating partner, Tullow, completed the first phase of exploration on our Orinduik Block, which included evaluating all existing and regional 2D data. Following the results of this study and the ongoing regional success, we agreed to accelerate and significantly increase the originally proposed 1,000km² 3D survey commitment on the block to circa 2,550km², thus covering the entire block area, fully overlapping current prospective 2D leads and downdip trends. As part of our agreement with Tullow, Tullow will carry our share of the originally proposed 1,000 km² of the survey, at a cap of US$1.25mm, with the balance of the programme being funded by both parties on a pro-rata basis for which the Group is already funded from its existing cash reserves.

 

In Namibia, we have secured the required extensions on our three licenses, Guy, Cooper and Sharon, and we are encouraged by the recent news that Tullow, our partner on our Cooper license, has farmed down a 30% Working Interest of PEL 037 to Oil and Natural Gas Corporation Limited (“ONGC”) of India. It is highly probable that an exploration well will be drilled at PEL 037 in first quarter of 2018, which is located immediately south of the Cooper license (in which we currently own a 32.5% interest). This news supports our long-time belief of the oil potential in the Walvis Basin, Namibia.

 

We have completed the 3D seismic surveys on our Cooper and Guy license interests in Namibia. On Cooper, the interpretation will remain underway until we and the Block partners will decide on our first exploration well in the first half of 2018. We are currently in the process of filing drilling permits and conducting pre and post drilling EIA surveys. On the Guy licence, processing and interpretation is underway and is likely to be completed the end of the calendar year 2018.

Conclusion

I would like to thank our Chairman, our fellow members of the board of directors, the executive management team and the partners on our licenses for the continued hard work and support, which has contributed to the success of the Company. I look forward to reporting on the developments and progress we make in Guyana and Namibia in due course.

 

Gil Holzman,

Chief Executive Office

27 July 2017

 

 

Independent Auditors’ Report

 

To the Shareholders of Eco (Atlantic) Oil & Gas Ltd.:

 

Report on the Consolidated Financial Statements

 

We have audited the accompanying consolidated financial statements of Eco (Atlantic) Oil & Gas Ltd., which comprise the consolidated statements of financial position as at March 31, 2017 and 2016, and the consolidated statements of operations and comprehensive loss, equity, and cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information.

 

Management’s Responsibility for the Consolidated Financial Statements

 

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the consolidated financial statements 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

 

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements.

 

Opinion

 

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Eco (Atlantic) Oil & Gas Ltd. as at March 31, 2017 and 2016, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.

 

Emphasis of Matter

 

Without modifying our opinion, we draw attention to Note 2 to the consolidated financial statements which describes a material uncertainty that raises significant doubt about the Company’s ability to continue as a going concern.

 

 

Consolidated Statements of Financial Position

 

	March 31,		March 31,
	2017		2016
Assets
Current assets
Cash and cash equivalents	$6,088,567		$3,463,178
Short-term investments (Note 5)	49,818		100,000
Government receivable	26,609		23,284
Accounts receivable and prepaid expenses (Note 19)	1,100,491		622,858
	7,265,485		4,209,320
Petroleum and natural gas licenses (Note 6)	1,489,971		3,102,353
Equipment (Note 7)	–		1,101
Total Assets	$8,755,456		$7,312,774
Liabilities
Current liabilities
Accounts payable and accrued liabilities (Note 8)	$630,761		$2,027,876
Advances from and amounts owing to license partners (Note 6)	169,868		510,703
	800,629		2,538,579
Equity
Share capital (Note 9)	26,961,675		20,838,056
Shares to be issued (Note 9)	184,029		392,694
Warrants (Note 10)	237,267		–
Stock options (Note 11)	2,985,732		2,400,735
Non-controlling interest	(76,288)		(68,323)
Accumulated deficit	(22,337,588)		(18,788,967)
Total Equity	7,954,827		4,774,195
Total Liabilities and Equity	$8,755,456		$7,312,774

 

Consolidated Statements of Operations and Comprehensive Loss

 

		Year Ended
		March 31,
		2017		2016
Revenue
Income from farm-out agreements		$-		$554,400
Interest income		15,820		11,801
		15,820		566,201
Operating expenses:
Compensation costs (Note 8)		483,458		642,035
Professional fees		286,717		325,338
Operating costs (Notes 8 and 17)		2,169,940		2,058,497
General and administrative costs (Note 18)		385,568		497,009
Share-based compensation (Notes 8, 9(iii) and 11)		730,171		251,475
Foreign exchange loss (gain)		5,025		(629,687)
Total expenses		4,060,879		3,144,667
Loss before loss on revaluation on warrant liability and write-down of license		(4,045,059)		(2,578,466)
Write-down of license (Note 6)		–		(1,195,684)
Net loss and comprehensive loss from continuing operations		(4,045,059)		(3,774,150)
Discontinued operations income (loss) (Note 19)		488,473		(1,333,346)
Net loss and comprehensive loss		$(3,556,586)		$(5,107,496)
Net comprehensive loss attributed to:
Equity holders of the parent		$(3,548,621)		$(5,105,810)
Non-controlling interests		(7,965)		(1,686)
		$(3,556,586)		$(5,107,496)
Basic and diluted net loss per share form continuing operations		$(0.05)		$(0.04)
Basic and diluted net profit (loss) per share from discontinuing operations		$0.01		$(0.02)
Basic and diluted net loss per share attributable to equity holders of the parent		$(0.04)		$(0.06)
Weighted average number of ordinary shares used in computing basic and diluted net loss per share		87,906,110		88,601,681
Consolidated Statements of Equity

 

	Number $	Capital $	Shares to be issued $	Warrants $	Stock Options $	Deficit $	Non-controlling Interest $	Equity $
Balance, March 31, 2015	91,162,025	20,636,597	200,183	965,000	2,343,619	(13,683,157)	(66,637)	10,395,605
Shares issued on vesting of Restricted Share Units (Note 9(i))	250,000	23,602	192,511	–		–	–	216,113
Stock options expensed	–	–	–	–	57,116	–	–	57,116
Share repurchase	–	(787,143)	–	–	–	–	–	(787,143)
Expiry of options	–	965,000	–	(965,000)	–	–	–	–
Cancellation of shares	(6,368,000)	–	–	–	–	–	–	–
Net loss for the year	–	–	–	–	–	(5,105,810)	(1,686)	(5,107,496)
Balance, March 31, 2016	85,044,025	20,838,056	392,694	–	2,400,735	(18,788,967)	(68,323)	4,774,195
Cancellation of shares (Note 9(ii))	(1,823,500)	–	–	–	–	–	–	–
Shares repurchase (Note 9(ii))	–	(338,257)	–	–	–	–	–	(338,257)
Shares issued on vesting of Restricted Share Units (Note 9(iii)(a))	708,700	136,079	(136,079)	–	–	–	–	–
Shares issued on vesting of Restricted Share Units (Note 9(iii)(b))	216,736	41,180	3,420	–	–	–	–	44,600
Non-vested Restricted Share Units (Note 9(iii)(c))	–	–	100,574	–	–	–	–	100,574
Proceeds from shares issued on listing on AIM, net (Note 9(iv))(*)	32,900,498	6,108,037	–	237,267	–	–	–	6,345,304
Extension of Stock options (Note 11(i))	–	–	–	–	416,324	–	–	416,324
Stock options expensed (Note 11(ii))	–	–	–	–	168,673	–	–	168,673
Shares issued from Pan African Oil Amalgamation (Note 9)	1,203,374	176,580	(176,580)	–	–	–	–	–
Net loss for the year	–	–	–	–	–	(3,548,621)	(7,965)	(3,556,586)
Balance, March 31, 2017	118,249,833	26,961,675	184,029	237,267	2,985,732	(22,337,588)	(76,288)	7,954,827

 

 

Consolidated Statements of Cash Flows

 

	Year Ended
	March 31,
	2017		2016
Cash flow from operating activities
Net loss from continued operations	$(4,045,059)		$(3,774,150)
Net loss from discontinued operations	488,473		(1,333,346)
Items not affecting cash:
Write-down of license	–		1,195,684
Share-based compensation	730,171		247,939
Depreciation	1,101		6,471
Changes in non‑cash working capital:
Government receivable	(3,325)		1,168,560
Accounts payable and accrued liabilities	(2,730,542)		(1,526,148)
Accounts receivable and prepaid expenses	(477,633)		(509,854)
Advance from and amounts owing to license partners	(340,835)		(1,444,168)
	(6,377,649)		(5,969,012)

 

Net change in non-cash working capital items relating to discontinued operations	1,333,427		1,340,897
Cash flow from investing activities
Short-term investments	50,182		–
	50,182		–
Net change in investment activities relating to discontinued operations	1,612,382		(1,612,382)
Cash flow from financing activities
Proceeds from AIM Listing	8,390,250		–
Costs incurred on AIM Listing	(2,044,946)		–
Share repurchases	(338,257)		(787,143)
	6,007,047		(787,143)
Increase (decrease) in cash and cash equivalents	2,625,389		(7,027,640)
Cash and cash equivalents, beginning of year	3,463,178		10,490,818
Cash and cash equivalents, end of year	$6,088,567		$3,463,178

 

1. Nature of Operations

The Company’s business is to identify, acquire, explore and develop petroleum, natural gas, and shale gas properties. The Company primarily operates in the Co-Operative Republic of Guyana (“Guyana”) and the Republic of Namibia (“Namibia”).  The head office of the Company is located at 181 Bay Street, Suite 320, Toronto, ON, Canada, M5J 2T3.

As used herein, the term “Company” means individually and collectively, as the context may require, Eco (Atlantic) Oil and Gas Ltd. and its subsidiaries.

These consolidated financial statements were approved by the Board of Directors of the Company on July 26, 2017.

 

2. Basis of Preparation and Going Concern

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) on a going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of business. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results in accordance with IFRS have been included.

The ability of the Company to continue as a going concern depends upon the discovery of economically recoverable petroleum and natural gas licenses, the ability of the Company to obtain financing to complete development, and upon future profitable operations from the licenses or profitable proceeds from their disposition. These consolidated financial statements do not reflect any adjustments to the carrying value of assets and liabilities that would be necessary if the Company were unable to achieve profitable operations or obtain adequate financing.

There can be no assurance that the Company will be able to raise funds in the future, in which case the Company may be unable to meet its future obligations. These matters raise significant doubt about the Company’s ability to continue as a going concern. In the event the Company is unable to continue as a going concern, the net realizable value of its assets may be materially less than the amounts recorded on its consolidated statements of financial position.

The Company has accumulated a deficit of $22,337,588 since its inception and expects to incur further losses in the development of its business.

 

3. Summary of Significant Accounting Policies          

Statement of compliance

The Company applies International Financial Reporting Standards as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the IFRS Interpretations Committee (“IFRIC”).

The policies applied in these consolidated financial statements are based on IFRS issued and outstanding as of March 31, 2017.

The significant accounting policies followed by the Company are summarized as follows:

 

Basis of consolidation

These consolidated financial statements include the accounts of the Company and its directly and indirectly owned subsidiaries, as follows:

Subsidiary	Ownership
Eco (BVI) Oil & Gas Ltd. (“EBVI”)	100%
Eco (Barbados) Oil & Gas Holdings Ltd. (“EBARB”)	100%
Eco Namibia Oil & Gas (Barbados) Ltd. (“ENBARB”)	100%
Eco Oil and Gas (Namibia) (Pty) Ltd. (“EOGN”)	100%
Eco Oil and Gas Services (Pty) Ltd. (“EOGS”)	100%
Eco Atlantic Holdings Ltd.	100%
Pan African Oil Namibia Holdings (Pty) Ltd. (“PAO Holdings”)	100%
Pan African Oil Namibia (Pty) Ltd. (“PAO Namibia”)	90%
Eco Atlantic Guyana Offshore Inc.	100%
Eco (Atlantic) Guyana Inc.	94%

 

On October 21, 2016, the Company sold its wholly owned subsidiary, Eco Atlantic (Ghana) Ltd. (Note 19).

 

Foreign currencies

The functional and presentation currency of the Company and its subsidiaries is the Canadian dollar.

Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing at the dates of transactions. At the end of each reporting period, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at that time. Non‑monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange gains and losses are recognized in profit or loss.

 

Financial instruments

Financial instruments are required to be classified as one of the following: held-to-maturity; loans and receivables; fair value through profit or loss; available-for-sale or other financial liabilities.

The Company’s financial instruments include cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued liabilities and advances from and amounts owing to license partners. The Company designated its cash and cash equivalents and short-term investments as fair value through profit or loss. The Company designated its accounts receivable as loans and receivables, accounts payable and accrued liabilities and advances from and amounts owing to license partners as other financial liabilities, all of which are measured at amortized cost.

Fair value through profit or loss financial assets are measured at fair value, with gains and losses recognized in operations.  Financial assets held-to-maturity, loans and receivables and other financial liabilities are measured at amortized cost. Available-for-sale financial assets are measured at fair value with unrealized gains and losses recognized in other comprehensive loss.

The fair value of a financial instrument is the amount of consideration that would be agreed upon in an arm’s length transaction between knowledgeable, willing parties who are under no compulsion to act. The fair value of a financial instrument on initial recognition is the transaction price, which is the fair value of the consideration given or received. Subsequent to initial recognition, the fair value of a financial instrument that is quoted in active markets is based on the bid price for a financial asset held and the offer price for a financial liability. When an independent price is not available, fair value is determined by using a valuation which refers to observable market data. Such a valuation technique includes comparisons with a similar financial instrument where an observable market price, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants exist.

 

Exploration and evaluation assets and expenditures

1. i)    Expenditures

For oil and gas prospects not commercially viable and financially feasible, the Company expenses exploration and evaluation expenditures as incurred. Exploration and evaluation expenditures include acquisition costs of oil and gas prospects, property option payments and evaluation activities.  Exploration and evaluation expenditures are capitalized only when associated with a business combination or asset acquisition or the Company can demonstrate that these expenditures meet the criteria of an identifiable intangible asset.

Once a project has been established as commercially viable and technically feasible, related development expenditures are capitalized. This includes costs incurred in preparing the site for production operations. Capitalization ceases when the oil and natural gas reserves are capable of commercial production, with the exception of development costs that give rise to a future benefit.

1. ii)    Depletion and depreciation

Capitalized costs related to each cost center from which there is production will be depleted using the unit‑of‑production method based on proven petroleum and natural gas reserves, as determined by independent consulting engineers.

iii)    Farm-out arrangements

The Company, as farmor, accounts for the farm-out arrangements as follows; the farmor does not record any expenditure made by the farmee on its behalf, and recognizes its expenditures under farm-out arrangements in respect of its own interest when the costs are incurred. Any cash consideration received as reimbursements of expenditures incurred in prior years and is recorded as income from farm-out agreements in profit or loss. Any cash consideration received as reimbursements of expenditures incurred in the current year is offset against related expenditures in operating costs and general and administrative costs in profit or loss. Any cash consideration received in advance of underlying expenditures is capitalized to advance from license partners until the applicable expenditures have been incurred, at which point the recovery is transferred to income from farm-out agreements in profit or loss. Any cash received without an underlying commitment to incur expenditures is recorded as income from farm-out agreements in profit or loss.

(iv) Impairment

At the end of each reporting period, the Company reviews the carrying amounts of its non‑financial assets with finite lives, to determine whether there are facts and circumstances suggest that the carrying amount exceeds the recoverable amount. Where such an indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. The recoverable amount is the higher of an asset’s fair value, less cost to sell or its value in use. In addition, long‑lived assets that are not amortized are subject to an annual impairment assessment.

(v)   Asset retirement obligations

Asset retirement obligations are measured at the present value of the expenditure expected to be incurred using a risk‑free discount rate. The associated asset retirement cost is capitalized as part of the cost of the related long‑lived asset. Changes in the estimated obligation resulting from revisions to estimated timing, amount of cash flows, or changes in the discount rate are recognized as a change in the asset retirement obligation and the related asset retirement cost. Increases in asset retirement obligations resulting from the passage of time are recorded as accretion of asset retirement obligation in the consolidated statement of operations as a financial cost. Actual expenditures incurred are charged against the accumulated asset retirement obligation as incurred.

The Company currently does not have any asset retirement obligations.

Income taxes

Income tax expense consists of current and deferred tax expense.  Current and deferred tax are recognized in profit or loss except to the extent that they related to items recognized in equity or other comprehensive income.

Current tax is recognized and measured at the amount expected to be recovered from or payable to the taxation authorities based on the income tax rates enacted or substantively enacted at the end of the reporting period and includes any adjustment to taxes payable in respect of previous years.

Deferred tax is recognized on any temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable earnings.  Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized and liability is settled.  The effect of a change in the enacted or substantively enacted tax rates is recognized in net earnings and comprehensive income or in equity depending on the item to which the adjustment relates.

Deferred tax assets are recognized to the extent future recovery is probable.  At each reporting period end, deferred tax assets are reduced to the extent that it is no longer probable that sufficient taxable earnings will be available to allow all or part of the asset to be recovered.

Revenue recognition

Revenue from the sale of petroleum and natural gas is recognized when the risks and rewards of ownership pass to the purchaser, including delivery of the product, the selling price is fixed or determinable and collection is reasonably assured. Oil and natural gas royalty revenue is recognized when received.

Loss per share

Basic loss per share is computed based on the weighted average number of common shares outstanding during the year. In calculating the diluted loss per share, the weighted average number of common shares outstanding 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 year.

Segment reporting

The Company operates in one segment, the oil and gas business and conducts its operations in Namibia and Guyana with its head office in Canada. Substantially all the Company’s oil and gas assets are located in Namibia and Guyana.

Significant accounting judgments and estimates          

The preparation of the consolidated financial statements using accounting policies consistent with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, the reported amounts of revenues and expenses and to exercise judgment in the process of applying the accounting policies.

Critical accounting estimates

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively from the period in which the estimates are revised. The following are the key estimate and assumption uncertainties, considered by management.

1. i)     Impairment of assets

When there are indications that an asset may be impaired, the Company is required to estimate the asset’s recoverable amount. The recoverable amount is the greater of value in use and fair value less costs to sell. Determining the value in use requires the Company to estimate expected future cash flows associated with the assets and a suitable discount rate in order to calculate present value. During the year ended March 31, 2017, an impairment write-down of a petroleum and natural gas license in the amount of $Nil (March 31, 2016 – $1,195,684) was reflected in the consolidated statements of operations and comprehensive loss (Note 6).

4. Future Accounting and Reporting Changes

The IASB issued new standards and amendments not yet effective.

IFRS 9, Financial Instruments (“IFRS 9”) was initially issued by the IASB on November 12, 2009 and issued in its completed version in July 2014, and will replace IAS 39, “Financial Instruments: Recognition and Measurement” (“IAS 39”).  IFRS 9 replaces the multiple rules in IAS 39 with a single approach to determine whether a financial asset is measured at amortized cost or fair value and a new mixed measurement model for debt instruments having only two categories: amortized cost and fair value.  The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39.  IFRS 9 is effective for financial years beginning on or after January 1, 2018. The Company is currently assessing the effects of IFRS 9 and intends to adopt on its effective date.

IFRS 15, Revenue from Contracts with Customers (“IFRS 15”) was issued by the IASB in May 2014 and clarifies the principles for recognizing revenue from contracts with customers.  IFRS 15 will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (i.e. service revenue and contract modifications) and improve guidance for multiple-element arrangements.  IFRS 15 is effective for periods beginning on or after January 1, 2018 and is to be applied retrospectively. The Company’s preliminary assessment of IFRS 15 has determined there will not be a significant impact to the consolidated financial statements as a result of the adoption of this standard.

IFRS 16, Leases (“IFRS 16”) was issued by the IASB in January 2016 and specifies how an IFRS reporter will recognize, measure, present and disclose leases.  The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value.  Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17.  An entity applies IFRS 16 for annual periods beginning on or after January 1, 2019.  Earlier application is permitted if IFRS 15 Revenue from Contracts with Customers has also been applied.  A lessee shall either apply IFRS 16 with full retrospective effect or alternatively not restate comparative information but recognize the cumulative effect of initially applying IFRS 16 as an adjustment to opening equity at the date of initial application. The Company is currently assessing the effects of IFRS 16 and intends to adopt on its effective date.

 

5. Short-term Investments

 

The Company’s short-term investments comprise interest bearing deposits with its primary bank of $49,818 (March 31, 2016 – $100,000), which are held as collateral for credit-card lines of credit.

 

6. Petroleum and Natural Gas Licenses

 

 

                                                                         Balance                                  Impairment, Sale                   Balance
April 1,                                                               and               March 31,
2016              Additions       Abandonment                          2017

 

          Licenses                                                 $     3,102,353      $                         ^–      $ ^(*) (1,612,382)   $           1,489,971

 

 

                                                                         Balance                                   Impairment, Sale                   Balance
April 1,                                                               and                March 31,
2015              Additions       Abandonment                          2016

 

Licenses                                                $     2,685,655        $       1,612,382       $ (1,195,684)            $    3,102,353

(*)     see Note 19

 

The oil and gas interests of the Company are located both offshore in Guyana and offshore in Namibia.

 

(ii)        Guyana

1. The Guyana License is located in the Orinduik block, offshore Guyana. The Orinduik block is situated in shallow water, 175 kilometers offshore Guyana in the Suriname Guyana basin.
2. In January 2016, the Company and Tullow Oil plc (“Tullow”) signed a Petroleum Agreement (“Guyana Petroleum Agreement”) and became party to an Offshore Petroleum License with the Government of Guyana, Tullow Oil plc. and for the Orinduik Block offshore Guyana. Orinduik, is situated in shallow water, 170 kilometers offshore Guyana in the Suriname Guyana basin, and is located very close up to the recent Exxon Lisa and Payara discoveries.

iii.   In accordance with the Guyana Petroleum Agreement, the Company holds a 40% working interest in the Guyana Licenses and Tullow holds the balance 60% interest. Under the Guyana Petroleum Agreement, Tullow will act as operator. Tullow will also carry the Company’s share of costs of 1,000 square kilometers 3D survey as required under the work program for the Guyana License (and up to US$1,250,000). Subsequent to the year end, on June 8, 2017, the Company and Tullow approved 2,550 square kilometers 3D survey.

As at March 31, 2017, the outstanding Exploration Activities and the aggregate expenditure as estimated by management based on current costs for the Guyana License for is as follows:

Exploration Activities(1)	Expenditure   (US$)	Company’s share of Expenditure (US$)
By January 2020 ·   Review existing regional 2D data – completed ·   Complete 3D survey and interpret 1,000 square kilometer 3D seismic survey(2)	3,000,000	–
By January 2023 ·    1st renewal period – Drill one exploration well (contingent)	35,000,000	14,000,000
By January 2026 ·   2nd renewal period – Drill one exploration well (contingent)	–	–
Total	38,000,000	14,000,000

(1)   Exploration Activities are not currently committed and cost estimates are based on management estimates for the costs if the relevant Exploration Activity was to be undertaken as at the date of this document.

(2)   Subsequent to the year end, on June 8, 2017 the Company and Tullow approved a 2,550 square kilometers 3D survey and therefore, the Company’s expected shares of the 3D Seismic program is expected to be $2,000,000.

 

(iii)         Namibia

1. The Company holds four offshore petroleum licenses in the Republic of Namibia being petroleum exploration license number 0030 (the “Cooper License”), petroleum exploration license number 0033 (the “Sharon License”), petroleum exploration license number 0034 (the “Guy License”, together with the Sharon License and the Cooper License, the “ECO Offshore Licenses”), and petroleum exploration license number 0050 (the “Tamar License”).
2. The terms of the Eco Offshore Licenses are governed by a petroleum agreement for each of those licenses (each, an “Eco Petroleum Agreement”), dated March 7, 2011, as amended from time to time, between the Company and the Namibian Ministry of Mines and Energy (the “Ministry”). The terms of the Tamar License are governed by the Tamar Petroleum Agreement (“Tamar Petroleum Agreement”), dated October 28, 2011, between the Company and the Ministry. Pursuant to the Eco Petroleum Agreement and the Tamar Petroleum Agreement, the Company is required to undertake specific exploration activities on each of the Licenses during each phase of development (each, an “Exploration Activity”).

iii.   In the Eco Petroleum Agreements and the Tamar Petroleum Agreement, monetary values have been allocated to each Exploration Activity based on information available at the time of their execution. In the Eco Petroleum Agreements, the Company will be relieved of quoted expenditures for a given Exploration Activity if the Company completes the Exploration Activity at a lower cost. Based on recent exploration activity in Namibia and the current oil services market, management expects the actual expenditures on the Exploration Activities to be less than that provided in the Eco Petroleum Agreements.

All Licenses are initially issued for four years with two renewal options of two years each, after which time the licenses revert back to the government, unless a production license is granted at any time within the eight year period. Production licenses are generally granted for a 25-year term. The Licenses are subject to license agreements entered between the Company and the Ministry.

 

1. The exploration activity on the ECO Offshore Licenses is performed in the framework of joint operating agreements (“JOAs”), pursuant to which the Company is designated the operator. Under the JOAs covering the Guy License and the Sharon License (the “Guy and Sharon JOAs”) entered into between Azimuth, the National Petroleum Corporation of Namibia (“NAMCOR”) and the Company effective January 28, 2013 and the amended and restated joint operating agreement covering the Cooper License, (the “Cooper JOA”) entered into between Tullow, Azimuth, NAMCOR and the Company effective September 24, 2014, certain operating, general and administrative expenses and compensation and professional fees incurred by the Company are recoverable from Tullow and Azimuth.

 

(iv)         The Cooper License

32. The Cooper License covers approximately 5,000 square kilometers (March 31, 2016 – 5,800 square kilometers) (gross area = 1,433,000 acres; net area = 1,003,100acres) and is located in license area 2012A offshore in the economical waters of Namibia (the “Cooper Block”). The Company holds a 32.5% working interest in the Cooper License, NAMCOR holds a 10% working interest (carried by the Company and Tullow collectively), AziNam Ltd. (“AziNam”), holds a 32.5% working interest, and Tullow Namibia Limited, a wholly owned subsidiary of Tullow Oil plc (“Tullow”), holds a 25% working interest.
33. Pursuant to the AziNam Farm-out Agreement, AziNam funded 40% of the Company’s share cost for the first 500 square kilometer of a 1,000 square kilometer 3D seismic survey on the Cooper Block (capped at US$2,080,000).

iii.   On July 17, 2014, the Company entered into a farm-out agreement with a wholly owned subsidiary of Tullow, pursuant to which Tullow acquired a 25% working interest in the Cooper License in return for a carry (capped at US$4,103,000), of the Company’s share of costs to execute and process a 1,097 square kilometers 3D seismic survey and the reimbursement of 25% of the Company’s past costs to March 31, 2014 (the “First Tullow Transfer”).

18. Tullow has an option to acquire an additional 15% working interest in the Cooper License in return for a carry of the Company’s share of costs to drill an exploration well on the Cooper Block (capped at $18.17 million) and the reimbursement of 17.14% of the Company’s past costs (the “Tullow Option”). There is no guarantee that Tullow will exercise the Tullow Option.
19. In connection with the completion of the First Tullow Transfer, the Company’s work commitments on the Cooper License were further amended.
20. Pursuant to the Company’s farmout agreement with Tullow Namibia Limited (“Tullow”), as amended on February 1, 2017 (the “Tullow Amended Farmout Agreement”), if Tullow elects to proceed into the second renewal exploration period or commits to drill an exploration well on the Cooper License before such time, Tullow will acquire from the Company an additional up to 15% working interest in the Cooper License and become the Operator of the Cooper License. In addition, subject to a minimum contribution of US $2.25 million by the Company, Tullow will carry the Company in respect of the Company’s share of any drilling costs in relation to the first exploration well  (if proposed and drilled by Tullow) up to a total well cost of US $35 million.

vii.     In addition, Tullow will reimburse the Company for 17.14% of all past costs incurred and paid for by the Company in respect of the Cooper License. If Tullow elects not to proceed into the second renewal exploration period, then it will be deemed to have transferred back to the Company its entire 25% working interest and will remain obliged to carry the Company in respect of: (i) the Company’s working interest share of the costs, which the Company has agreed to participate in and which were approved by the operating committee and the parties to the Cooper JOA (as hereinafter defined); and (ii) the seismic carry (to the same extent Tullow would have been liable for had it not elected to transfer its working interest).

viii.    On April 15, 2016, the Ministry approved the entering the next phase of the Cooper License which has been extended into the first Renewal Phase until March 14, 2018. The Second Renewal phase is until March 2020.  The Ministry also waived the relinquishment requirement (as stipulated in the Petroleum Agreement), and the partners will continue the exploration work on the entire block area.

1. As of March 31, 2017, the outstanding Exploration Activities and the aggregate expenditure as estimated by management based on current costs for the Cooper License is as follows:

Exploration Activities(1)	Expenditure   (US$)	Company’s share of Expenditure (US$)(2)
By March 31, 2018 ·    Resource assessment and production assessment – completed	–	–
By March 31, 2020 ·   After interpretation of 3D survey, drill exploratory well ·    Offtake/production engineering	35,000,000 500,000	2,250,000 125,000
By March 31, 2021 ·   Complete and interpret a 500 square kilometers 3D seismic survey	1,400,000	350,000
Total	35,750,000	2,725,000
Notes: (1)   Exploration Activities are not currently committed and cost estimates are based on management estimates for the costs if the relevant Exploration Activity was to be undertaken as at the date of this document. (2)   These numbers assume that the Second Transfer will be completed and the Company’s working interest will be 25%. There is no guarantee that the Second Transfer will be completed. If the Second Transfer is not completed, the Company’s share of the Expenditure will be 63.9%.

 

(v) The Sharon License

1. The Sharon License covers 5,000 square kilometers and is located in license area 2213A and 2213B offshore in the economical waters of Namibia (the “Sharon Blocks”). The Company holds a 60% working interest in the Sharon License, NAMCOR holds a 10% carried interest (by the Company), and AziNam holds a 30% interest.
2. On April 15, 2016, the Ministry approved the entering the next phase of the Sharon License, which has been extended into the first Renewal Phase until March 14, 2018. The Second Renewal phase is until March 2020.  The Ministry further approved the Company’s request to terminate 50% of its licensing obligation corresponding with the relinquishment of 50% of the acreage in the license which was a requirement of the Petroleum Agreement. This relinquishment pertains to the eastern half of the Sharon Block. The Company considers this shallow section non-prospective.

iii.   Pursuant to the Azimuth Farm-out Agreement, Azimuth funded 100% of the 3,000 kilometer 2D seismic survey recently acquired for the Sharon Block. Furthermore, Azimuth will fund 55% of a 1,000 kilometer square 3D seismic survey on the Sharon Block.

1. As of of March 31, 2017, the outstanding Exploration Activities and the aggregate expenditure as estimated by management based on current costs for the Sharon License is as follows:

 

Exploration Activities(1)	Expenditure   (US$)	Company’s share of Expenditure   (US$)
By March 31, 2018 ·   Complete and interpret a 500 square kilometers 3D seismic survey ·   Resource assessment and production assessment – completed	3,500,000	1,575,000
By March 31, 2019 and 2020 ·   Assuming a target has been defined after interpretation of 3D survey, drill exploratory well ·   Offtake/production engineering	30,000,000   500,000	20,010,000   333,500
By March 31, 2021 ·   Complete and interpret a 500 square kilometers 3D seismic survey	1,400,000	933,800
Total	34,500,000	22,852,300

 

(1) Exploration Activities are not currently committed and cost estimates are based on management estimates for the costs if the relevant Exploration Activity was to be undertaken as at the date of this document.

 

(vi) The Guy License

1. The Guy License covers 5,000 square kilometers and is located in license area 2111B and 2211A offshore in the economical waters of Namibia (the “Guy Block”). The Company holds a 50% working interest in the Guy License, NAMCOR holds a 10% carried interest (by the Company) and AziNam holds a 40% interest. The Company and AziNam proportionally carries NAMCOR’s working interest during the exploration period. As of July 1, 2015, AziNam assumed the role of operator with respect to the Guy License.
2. On May 12, 2016, the Ministry approved the entering the next phase of the Guy License, which has been extended into the first Renewal Phase until March 14, 2018. The Second Renewal phase is until March 2020. The Ministry further approved the Company’s request to terminate 50% of its licensing obligation corresponding with the relinquishment of 50% of the acreage in the license which was a requirement of the Petroleum Act. This relinquishment pertains to the western portion of the Guy block in the ultra-deep section that the Company and its operating partner, AziNam, consider non-prospective.

iii.   Pursuant to the Azimuth Farm-out Agreement, Azimuth funded 100% of the cost for the shooting and processing of the completed 1,000 kilometer 2D seismic survey on the Guy Block. Additionally, Azimuth funded 66.44% of the costs of an 8,700 square kilometer 3D seismic survey on the Guy Block.

The execution of the 3D seismic survey is complete and processing and interpretation of the Guy Survey is due to be completed during the fourth calendar quarter of 2017.

 

1. As of March 31, 2017, the outstanding Exploration Activities and the aggregate expenditure as estimated by management based on current costs for the Guy License is as follows:

Exploration Activities(1)	Expenditure  (US$)	Company’s share of Expenditure   (US$)
By March 31, 2018 ·    Resource assessment and production assessment – completed	–	–
By March 31, 2019 and 2020 ·   Assuming a target has been defined after interpretation of 3D survey, drill exploratory well ·   Offtake/production engineering	35,000,000   500,000	19,460,000   278,000
By March 31, 2021 ·   Complete and interpret a 500 square kilometers 3D seismic survey	1,400,000	778,400
Total	36,900,000	20,516,400

 

(1) Exploration Activities are not currently committed and cost estimates are based on management estimates for the costs if the relevant Exploration Activity was to be undertaken as at the date of this document.

 

(vii) The Tamar License

 

1. The Tamar License covers approximately 7,500 square kilometres and is located in license areas 2211B and 2311A offshore in the economical waters of the Republic of Namibia. PAO Namibia holds an 80% working interest in the Tamar License (the Company’s net interest is 72% due to its 90% ownership of PAO Namibia), Spectrum Geo Ltd. holds a 10% working interest, and NAMCOR holds a 10% working interest.

 

The first exploration period for the Tamar Licence expired in March 2016 and has not yet been formally extended, however, the Directors believe that the Group still retains the Tamar Licence and it has received a letter from the Petroleum Commissioner of Namibia confirming that all work required the first exploration period on the Tamar Licence was completed.

 

1. As of March 31, 2017, the outstanding Exploration Activities and the aggregate expenditure as estimated by management based on current costs for the Tamar License is as follows:

 

Exploration Activities(1)	Expenditure  (US$)	Company’s share of Expenditure   (US$)
By March 31. 2018 ·   Complete and interpret 500 kilometers2 3D seismic survey ·    Evaluation of farm-out and relinquishment of part (original 25%) or all of the Tamar Block	1,400,000	1,400,000
By October 31, 2019 ·    Drill exploratory well (subject to the availability of adequate drilling rigs)	35,000,000	35,000,000
Total	36,400,000	36,400,000

 

(1) Exploration Activities are not currently committed and cost estimates are based on management estimates for the costs if the relevant Exploration Activity was to be undertaken as at the date of this document.

 

(viii)     The PAO 51 License

 

1. The PAO 51 License covers approximately 4,867 square kilometers and was located in license area 2612A offshore in the economical water of the Republic of Namibia.  PAO held a 90% working interest in the PAO 51 License and NAMCOR held a 10% working interest.

 

1. On September 15, 2015, the Company advised the Ministry of its intension to relinquish the PAO 51 Licenses and on March 1, 2016, the Company received approval for such relinquishment.

 

(ix)        Daniel License

 

1. The Daniel License covers approximately 23,000 square kilometers and was located in license area 2013B, 2014B and 2114 in Namibia.  The Company held a 90% working interest in the Daniel License and NAMCOR held a 10% carried interest.

 

1. On September 15, 2015, the Company advised the Ministry of its intention to relinquish the Daniel License and on March 1, 2016, the Company received approval for such relinquishment.  During the year ended March 31, 2016, an impairment write-down of the Daniel License in the amount of $1,195,684 was reflected in the consolidated statements of operations and comprehensive loss.

 

(x)         As of March 31, 2017, the Company has recorded $169,868 (March 31, 2016 – $510,703) as advance from license partners related to funds received in advance of the Company incurring applicable operating costs to which the advances can be applied.

 

7. Equipment    

			Year Ended
			March 31,
			2017		2016
	Cost		$34,307		$34,307
	Accumulated Depreciation		$34,307		$33,206
			–		$1,101
	Net Book Value

 

8. Related Party Transactions and Balances

 

The following are the expenses incurred with related parties for the years ended March 31, 2017 and 2016 and the balances owing as of March 31, 2017 and 2016:

			Year Ended
			March 31,
			2017		2016
	Salaries, operating and consulting fees and benefits		789,610		$668,811
	Stock-based compensation		485,548		87,387
			1,275,159		$756,198
	Number of people		7		6

 

Remuneration of the Company’s executive directors and its Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and its Executive Vice President was as follows:

			March 31,
			2017		2016
	Amount paid for exploration services to a company controlled by the COO of the Company		$475,538		$700,489
	Amount outstanding at the end of the year		$32,000		$97,286
	Fees for management services paid to a company controlled by the President and CEO of the Company		$320,948		$352,606
	Amount outstanding at the end of the year		$24,840		$8,020
	Fees paid to a company controlled by the CFO of the Company		$18,000		$25,850
	Amount outstanding at the end of the year		$1,500		–
	Fees for management services paid to a company controlled by the Executive Vice President of the Company		$120,000		$120,000
	Amount outstanding at the end of the year		$10,000		$3,390
	Fees paid to a company controlled by the Chairman of Company		$90,664		$66,980
	Amount outstanding at the end of the year		$21,981		–

 

9. Share Capital     

 

Authorized: Unlimited Common Shares
		Common Shares	Amount	Shares to be issued
Issued			$	$
Balance, April 1, 2015		91,162,025	20,636,597	200,183
Shares issued on vesting of Restricted Share Units	(i)	250,000	23,602	192,511
Expiry of Warrants	Note 11	–	965,000	–
Repurchase and cancellation of shares	(ii)	(6,368,000)	(787,143)	–
Balance, March 31, 2016		85,044,025	20,838,056	392,694
Repurchase and cancellation of Shares	(ii)	(1,823,500)	(338,257)	–
Shares issued on vesting of Restricted Share Units From March 23, 2016 From August 5, 2016 From November 28, 2016	(iii)(a) (iii)(b) (iii)(c)	708,700 216,736 –	136,079 41,180 –	(136,079) 3,420 100,574
Shares issued in AIM listing	(iv)	32,900,498	6,108,037
Pan African Oil Amalgamation shares issued	(v)	1,203,374	176,580	(176,580)
Balance, March 31, 2017		118,249,833	26,961,675	184,029

 

(i)       On January 28, 2015, 500,000 RSU’s were granted to an officer of the Company. The RSU’s vested immediately on the grant date. These RSU’s had a fair value of $0.09 per unit based on the volume weighted average market price of the Common Shares for the five preceding days before the grant date. As at March 31, 2015, 250,000 shares were issued with the remaining 250,000 recorded as shares to be issued. During the year ended March 31, 2016, the remaining 250,000 shares were issued and $23,602 was reclassified from shares to be issued to share capital.

(ii)      On February 20, 2015, the Company’s Board of Directors authorized a share repurchase program (the “2015 Issuer Bid”) of up to 10 percent of the Company’s outstanding common shares through a normal course issuer bid (up to 6,171,724 common shares) (“ECO Share Repurchase Program”). Shares could be repurchased from time to time on the open market commencing March 2, 2015 through March 1, 2016, or such earlier time as the Issuer Bid is completed or terminated at the option of the Company, at prevailing market prices. The timing and amount of purchases under the program are dependent upon the availability and alternative uses of capital, market conditions, and applicable Canadian regulations and other factors. On March 10, 2016, the Company announced that it had received an additional Exchange approval for its intended normal course issuer bid (the “2016 Issuer Bid”). Under the terms of the 2016 Issuer Bid, the Company may acquire up to 6,491,870 Common Shares from time to time in accordance with Exchange procedures, representing approximately 10% of the total number of the Common Shares held by public shareholders as at the date of the Exchange approval.

(iii)     As at March 31, 2017, the Company repurchased a total of 8,454,000, of which 8,191,500 have been cancelled. The Company held shares, as of March 31, 2017, valued at $52,805 (March 31, 2016 – $29,937) in treasury.

(iv)     During the year ended March 31, 2017, the Company issued the following RSU’s:

1. 708,700 of the 1,002,600 RSU’s, granted on March 23, 2016 were issued, and the fair value of those RSU’s ($136,079) were released from Shares to be Issued in the Statement of Equity to Contributed Surplus.
2. On August 5, 2016, 234,736 RSU’s were granted to certain directors, officers and consultants of the Company. The RSU’s vested immediately on the grant date. These RSU’s had a fair value of $0.19 per unit based on the volume weighted average market price of the Common Shares for the five preceding days before the grant date. The total fair value of the RSU’s amounted to $44,600. As 18,000 underlying shares, have not yet been issued, $41,180 was recognized as share-based compensation expense for the year ended March 31, 2017 and $3,420 has been recorded as shares to be issued the Statement of Equity as at March 31, 2017.
3. On November 28, 2016, 833,600 RSU’s were granted to certain officers and consultants of the Company. These RSU’s had a fair value of $0.22 per unit based on the volume weighted average market price of the Common Shares for the five preceding days before the grant date. The total fair value of the RSU’s amounted to $183,392.
4. 433,600 RSU’s vested immediately on the grant date, however, as of March 31, 2017, these shares have not been issued. As such, $95,392 was recognized as share-based compensation expense for the year ended March 31, 2017 with a corresponding credit to Shares to be issued in the Statement of Equity.
5. 400,000 RSU’s will vest upon the achievement of certain milestones and expire on November 27, 2026. Management estimates that there is currently a 100% probability that the milestone will be achieved, and as such, the fair value of the RSU’s was charged to share-based compensation over the vesting period of the RSU. $5,182 was recognized as share-based compensation expense for the year ended March 31, 2017 with a corresponding credit to Shares to be issued in the Statement of Equity.

(v)      On February 8, 2017, the Company completed an admission and listing on the AIM market of the London Stock Exchange (“AIM”). The Company raised $8,390,250 (£5,085,000) before expenses by placing 31,781,250 new Common Shares (the “UK Placing”) with investors at a placing price of £0.16 per share ($0.265 per share (the “Placing Price”) (the “Placing”). AIM listing expenses including, cash expenses, comprising primarily commissions and professional fees in the amount of $2,044,946 and the fair value of warrants issued to brokers’ (see Note 11) in the amount of $237,267.

In addition to securities issued pursuant to the UK Placing, common shares and warrants were issued to the UK advisors in relation to the Company’s Admission to AIM in the aggregate amount of 812,500 common shares and 3,702,935 warrants and one Canadian service provider subscribed for 306,748 common shares at CDN$0.26 per share for total cash consideration of $79,754.  The exercise period for the warrants includes 12, 24, and 30 months and the related exercise prices are 17.6, 19.2 and 16 pence per share, respectively ($0.29, $0.32 and $0.27 per share, respectively) (“Broker Warrants”).

The fair value of the warrants was $237,267 (Note 10).

Gross proceeds, less issuance costs paid in cash (including payments to the UK Advisors of £215,000 ($356,126) and cash commissions of £256,950 ($425,612)) and less the total fair value of the Broker Warrants were charged against share capital in the statement of equity.

All common shares being issued by the Company pursuant to this offering will be freely transferable outside of Canada, however these shares are subject to a four-month restricted hold period in Canada which will prevent such common shares from being resold in Canada, through a Canadian exchange or otherwise, during the restricted period without an exemption from the Canadian prospectus requirement.

(v)  In connection with the Amalgamation completed on January 28, 2015, the Company authorized for issuance 18,830,738 Common Shares.  In order to obtain their Common Shares in the Company, former shareholders of Pan African Oil (“PAO”) were required to surrender for cancellation the certificates representing their PAO shares (the “Certificates”).  As at March 31, 2017, 17,972,764 shares were issued to former PAO shareholders.

 

10. Warrants

 

A summary of warrants outstanding at March 31, 2017 was as follows:

		Number of Warrants	Weighted Average Exercise Price ($)
Balance, April 1, 2015		4,937,341	1.00
Expiry of warrants (i)		(4,937,341)	1.00
Balance, March 31, 2016		–	–
Granted during the AIM listing (Note 9 (iv)))		3,702,935	0.29
Balance, March 31, 2017		3,702,935	0.29

(i)   The 4,937,341 warrants were originally due to expire on July 6, 2013.  On July 5, 2015, their term was extended for 12 months and on June 24, 2014, the Company received consent from the TSX Venture Exchange to extend the expiry date of the 4,937,341 warrants for a further 12 months.  The warrants expired on July 6, 2016.

On February 8, 2017, the Company issued 3,702,935 warrants to three brokers as part of the Placing (Note 9 (iv)). The warrants were valued at $237,267 at the time of issuance.  The Black-Scholes option pricing model was used to measure the warrant with the following assumptions:

 

			Brandon Hill		Strand Hanson			Peterhouse
Number of Warrants			975,750		1,164,685			1,562,500
Exercise price (£)(*)			£ 0.192		£ 0.160			£ 0.176
Exercise price CDN			$ 0.32		$ 0.27			$ 0.29
Expected life			2 years		2.5 years			1 years
Risk-free interest rate			0.75%		0.75%			0.75%
Dividend yield			0.00%		0.00%			0.00%
Foreign exchange rate (GBP/CAD)			1.649		1.649			1.649
Expected volatility			54.50%		54.61%			51.83%

(*)   The exercise price of these warrants is denominated in British Pounds and was translated to Canadian Dollars in the table above using the exchange rate as of March 31, 2017.

 

11. Stock Options

 

The Company maintains a stock option plan (the “Plan”) for the directors, officers, consultants and employees of the Company and its subsidiary companies. The maximum number of options issuable under the Plan shall be equal to ten percent (10%) of the outstanding shares of the Company less the aggregate number of shares reserved for issuance or issuable under any other security based compensation arrangement of the Company.

A summary of the status of the Plan as at March 31, 2017 and changes during the year is as follows:

		Number of stock options	Weighted average exercise price $	Remaining contractual life – years
Balance, April 1, 2015		8,473,400	0.54	2.51
Granted (i)		650,000	0.30	–
Balance, March 31, 2016		9,123,400	0.53	1.76
Cancelled (iv)		(1,098,000)	1.21	–
Expired (iv)		(155,400)	0.59	–
Balance, March 31, 2017		7,870,000	0.30	4.15

 

(i)   On March 23, 2016, 650,000 options were issued to officers, directors and consultants of the Company.  These options are exercisable for a maximum period of five years from the date of the grant and vest as to one third on grant date and one third on each anniversary date of the grant for the following two years.  The fair value of the options granted was estimated at $67,175 using the Black-Scholes option pricing model, using the following assumptions:

 

Expected option life 5 years

Volatility 65.36%

Risk-free interest rate 0.64%

Dividend yield 0%

 

(ii)  On October 11, 2016, the Company approved amendments of the expiry date of 5,670,000 incentive stock options granted to directors and officers (the “Options”). The Options were originally set to expire on January 12, 2017, May 16, 2017 and December 24, 2017. Following the amendments, the Options are set to expire on January 12, 2022, May 16, 2022 and December 24, 2022 respectively. The fair value of the options at the amendment date was estimated at $416,324 using the Black-Scholes option pricing model, using the following assumptions: Expected option life 5 years and 3 months, 5 years and 8 months and 5 years and 6 years and 2 months, Volatility 65.36%, Risk-free interest rate 0.64%, Dividend yield 0%. During the year ended March 31, 2017, $416,324 was recognized in share-based compensation in the consolidated statements of operations and comprehensive loss.

 

(iii) Share-based compensation expense is recognized over the vesting period of options. During the year ended March 31, 2017, share-based compensation of $168,673 (March 31, 2016 – $57,116) was recognized based on options vesting during the year.

 

(iv) During the year ended March 31, 2017, 155,400 (March 31, 2016 – Nil) options expired and 1,098,000 (March 31, 2016- Nil) stock options were cancelled due to various directors, consultants and employees terminating services and/or employment.

 

(v)  As at March 31, 2017, 7,653,333 options were exercisable (March 31, 2016 – 8,516,733).

 

12. Income Taxes

The reconciliation of the combined Canadian federal and provincial statutory income tax rate of 26.5% (2016 – 26.5%) to the effective rate is as follows:

 

	March 31,	March 31,
	2017	2016
	$	$
Net loss before recovery of income taxes	3,556,585	5,107,496
Expected income tax recovery	(942,495)	(1,353,490)
Difference in foreign tax rates	(177,188)	202,000
Tax rate changes and other adjustments	(828,782)	(57,470)
Non-deductible expenses	(331,862)	70,270
Discontinued operations	653,122	–
Unrealized foreign exchange	–	72,290
Change in tax benefits not recognized	1,627,205	1,066,400
Income tax recovery reflected in the statements of operations and comprehensive loss	–	–

 

Unrecognized Deferred Tax Assets

Deferred taxes are provided as a result of temporary differences that arise due to the differences between the income tax values and the carrying amount of assets and liabilities. Deferred tax assets have not been recognized in respect of the following deductible temporary differences:

	March 31, 2017 $	March 31, 2016 $
Deferred Tax Assets
Non-capital losses – Canada	4,507,823	3,811,317
Non-capital losses – Ghana	–	1,849,218
Non-capital losses – Namibia	7,682,221	3,642,423
Non-capital loses – Guyana	199,621	114,261
Share issue and financing costs	1,635,957	–
Resource pools – Petroleum, natural gas and shale gas property	848,464	–
Other deductible temporary difference	257,518	318,077

 

The Canadian non-capital loss carry forwards expire as noted in the table below. The remaining deductible temporary differences may be carried forward indefinitely.  Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the group can utilize the benefit therefrom.

 

The Company’s Canadian non-capital loss carry forwards expire as follows:

 

2031		96,680
2032		845,268
2033		1,471,522
2034		1,265,509
2037		828,844
	$	4,507,823

 

13. Asset Retirement Obligations (“ARO”)

 

The Company is legally required to restore its properties to their original condition. Estimated future site restoration costs will be based upon engineering estimates of the anticipated method and the extent of site restoration required in accordance with current legislation and industry practices in the various locations in which the Company has properties.

As of March 31, 2017 and 2016, the Company did not operate any properties, accordingly, no ARO was required.

 

14. Capital Management    

 

The Company considers its capital structure to consist of share capital, deficit and reserves. The Company manages its capital structure and makes adjustments to it, in order to have the funds available to support the acquisition, exploration and development of its licenses. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business.

The Company is a development stage entity; as such the Company is dependent on external equity financing to fund its activities. In order to carry out the planned exploration and pay for administrative costs, the Company will spend its existing working capital and raise additional amounts as needed.  Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

There were no changes in the Company’s approach to capital management during the year ended March 31, 2017. Neither the Company nor its subsidiaries are subject to externally imposed capital requirements.

The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going concern. The Company’s ability to raise future capital is subject to uncertainty and the inability to raise such capital may have an adverse impact over the Company’s ability to continue as a going concern (Note 2).

 

15. Risk Management                                                                                                                     

 

1. a)  Credit risk

The Company’s credit risk is primarily attributable to short-term investments and amounts receivable. The Company has no significant concentration of credit risk arising from operations. Short-term investments consist of deposits with Schedule 1 banks, from which management believes the risk of loss to be remote. Amounts receivable consist of advances to suppliers and harmonized sales tax due from the Federal Government of Canada. Government receivable consists of value added tax due from the Namibian government which has been collected subsequent to year end. Management believes that the credit risk concentration with respect to amounts receivable is remote. The Company does not hold any non-bank asset backed commercial paper.

1. b)  Interest rate risk

The Company has cash balances, cash on deposit and no interest bearing debt. It does not have a material exposure to this risk.

1. c)   Liquidity risk

The Company ensures, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, without incurring unacceptable losses or harm to the Company’s reputation.

As at March 31, 2017, the Company had cash and cash equivalents and on deposit of $6,088,567. (March 31, 2016 – $3,463,178) and short-term investments of $49,818 (March 31, 2016 – $100,000) to settle current liabilities of $800,629 (March 31, 2016 – $2,538,579).

The Company utilizes authorization for expenditures to further manage capital expenditures and attempts to match its payment cycle with available cash resources. Accounts payable and accrued liabilities at March 31, 2017 all have contractual maturities of less than 90 days and are subject to normal trade terms.

1. d)  Foreign currency risk

The Company is exposed to foreign currency fluctuations on its operations in Namibia, which are denominated in Namibian dollars. Sensitivity to a plus or minus 10% change in rates would not have a significant effect on the net income (loss) of the Company, given the Company’s minimal assets and liabilities designated in Namibian dollars as at March 31, 2017.

 

16. Commitments           

 

Licenses

The Company is committed to meeting all of the conditions of its licenses including annual lease renewal or extension fees as needed.

The Company submitted work plans for the development of the Namibian licenses, see Note 6 for details.

 

17. Operating Costs

Operating costs consist of the following:

 

			Year Ended
			March 31,
			2017		2016
	Exploration data acquisition and interpretation and technical consulting		$2,281,364		$4,273,189
	Exploration license fees		173,817		364,404
	Travel		232,615		124,219
	Recovered under JOAs		(517,856)		(2,703,315)
			$  2,169,940		$ 2,058,497

 

18. General and Administrative Costs

 

General and administrative costs consist of the following:

 

			Year Ended
			March 31,
			2017		2016
	Occupancy and office expenses		$82,332		$295,438
	Travel expenses		132,348		178,802
	Public company costs		113,103		47,796
	Insurance		59,566		52,471
	Financial services		10,875		14,102
	Advertising and communication		8,515		3,509
	Depreciation		1,101		2,565
	Recovered under JOAs		(22,272)		(97,674)
			$  385,568		$  497,009

 

19. Discontinued Operations

 

50. a)    On July 29, 2014, the Company, through its wholly-owned subsidiary, Eco Atlantic (Ghana) Ltd. (“Eco Ghana”), acquired a 50.51% interest in the Deepwater Cape Three Points West Block, located in the Tano Cape Three Points Basin, offshore Ghana (the “Ghana Block”). The parties to the GPA include the Company, the Ghana National Petroleum Company (“GNPC”), GNPC Exploration and Production Company Limited (“GNPCEPCL”), A-Z Petroleum Products Ghana Limited (“A-Z”), and PetroGulf Limited (“PetroGulf”).

 

1. b)    On November 21, 2016, the Company received the necessary approvals from GNPC and GNPC Exploration and Production Company to execute a Share Purchase and Sale Agreement (the “Ghana Agreement”) to which the Company sold its total interest in Eco Ghana to PetroGulf for proceeds of $1 USD. Pursuant to the Ghana Agreement, the Company is entitled to receive US$576,580 as reimbursement for past operating expenditures owed to the company on the Ghana Block (“Ghana Reimbursement”). As a result of the Ghana Agreement, the Company will have no remaining obligations in Ghana, and in the Ghana Block, specifically, as PetroGulf has fully assumed all obligations of Eco Ghana. As of the date hereof, the Ghana Reimbursement has not been received.

 

361. c)    The carrying value of Eco Ghana was $853,362 at the date of sale.  Proceeds on the sale were $1 USD ($1 CDN) resulting in a gain on disposition of $853,361.

 

1. d)    The Company’s operating results from discontinued operations in Eco Atlantic (Ghana) Ltd.are summarized as follows:

			Year Ended
			March 31,
			2017		2016
	Revenues
	Operator Fees		$11,804		$7,551
	Expenses
	Professional Fees		131,517		66,783
	Operating costs		225,781		1,265,387
	General and administrative costs		19,708		12,263
	Foreign exchange		(314)		(3,536)
	Pre-tax operating loss from discontinued operations		$(364,888)		$(1,333,346)
	Income tax on operations		–		–
	Operating loss from discontinued operations		$(364,888)		$(1,333,346)
	Gain of sale of operations		853,361		–
	Profit (loss) on sale of discontinued operations		$488,473		$(1,333,346)

 

20. Earnings per Share

 

The Company’s 7,870,000 (March 31, 2016 – 9,123,400) options and 3,702,935 (March 31, 2016 – Nil) warrants have been excluded from the calculation of dilutive earnings per share as their inclusion would be antidilutive.

 

21. Comparative Figures

 

The comparative figures have been adjusted to reflect the current year’s presentation.

 

22. Subsequent Events

 

1. On June 8, 2017, the Company granted a total of 250,000 stock options (the “Options”) to a Non-Executive Director of the Company as part of his compensation package for his services to the Company. Terms of the Options include an exercise price of $0.36 per common share in the Company (“Common Share”), and a vesting schedule allowing for the vesting of the Options in three equal installments, with 1/3 vesting June 8, 2017; 1/3 vesting June 8, 2018 and 1/3 vesting June 8, 2019. The Options expire on June 7, 2022.

 

1. The Company has also granted 3,500,000 Restricted Shares Units (the “RSUs”) pursuant to the Company’s Restricted Share Units Plan of which 3,350,000 RSUs were granted to Directors of the Company as compensation and success fees in relation with the AIM admission and Company’s portfolio and operational developments.

 

iii.   On April 4, 2017, the Company issued 433,600 shares in respect of the RSU’s granted On November 28, 2016 (Note 9 (iii)(c)(i)). Following the issuance of these shares, the company has 118,683,433 shares outstanding.

 

For more information, please visit www.ecooilandgas.com or contact the following:

Eco Atlantic Oil and Gas	+1 (416) 250 1955
Gil Holzman, CEO Colin Kinley, COO Alan Friedman, VP Finlay Thomson, UK and IR manager	+44 (0) 7976 248471
Strand Hanson Limited (Financial & Nominated Adviser)	+44 (0) 20 7409 3494
James Harris Rory Murphy James Bellman
Brandon Hill Capital Limited (Joint Broker)	+44 (0) 20 3463 5000
Alex Walker Jonathan Evans Robert Beenstock
Peterhouse Corporate Finance (Joint Broker)	+44 (0) 20 7469 0930
Eran Zucker Duncan Vasey Lucy Williams
Yellow Jersey PR	+44 (0) 7768 537 739
Felicity Winkles Harriet Jackson

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.

 

Notes to editors

Eco Atlantic is a TSX-V and AIM listed Oil & Gas exploration and production Company with interests in Guyana and Namibia where significant oil discoveries have been made.

 

The Group aims to deliver material value for its stakeholders through oil exploration, appraisal and development activities in stable emerging markets, in partnership with major oil companies, including Tullow and AziNam.

 

In Guyana, Eco Guyana holds a 40% working interest alongside Tullow Oil (60%) in the 1,800 km² Orinduik Block in the shallow water of the prospective Suriname Guyana basin. The Orinduik Block is adjacent and updip to the deep-water Liza Field, recently discovered by ExxonMobil and Hess, which is estimated to contain as much as 1.4 billion barrels of oil equivalent, making it one of a handful of billion-barrel discoveries in the last half-decade.

 

In Namibia, the Company holds interests in four offshore petroleum licences totaling approximately 25,000 km² with over 2.3 billion barrels of prospective P50 resources in the Wallis and Lüderitz Basins.  These four licences, Cooper, Guy, Sharon and Tamar are being developed alongside partners, which include Tullow Oil, AziNam and NAMCOR.  Significant 3D and 2D surveys and interpretation have been completed with drilling preparations expected to begin in 2018.

 

This information is provided by RNS

The company news service from the London Stock Exchange

 

Georgian Mining Corporation is pleased to announce a 41% tonnage increase in the global In-Pit Optimised constrained copper-gold sulphide Mineral Resource for the Kvemo Bolnisi Project (‘KB’) to 1.7Mt @ 1.05% Cu from 1.2Mt @ 1.03% Cu.

 

This upgrade was based upon the recently discovered breccia pipe situated beneath the base of the gold oxide mineralisation at Gold Zone 2 (‘GZ2’), one of three zones currently being developed at KB which may form one large epithermal copper-gold system.  A three phase programme is underway to deliver a total resource in excess of 50Mt at KB, which is located in an established copper-gold region in Georgia along the highly prospective Tethyan Belt.

 

• Increased In-Pit optimised constrained copper-gold sulphide Mineral Resource of 1.7Mt @ 1.05% Cu (from 1.2Mt @ 1.03%) comprises:

 

	Tonnage (kt)	Average Grade (% Cu)	Copper (t)	Average Grade (g/t Au)	Gold (oz)
Indicated	101	0.45		0.50
Inferred	1,607	1.09		0.13
Total (Indicated & Inferred)	1,708	1.05	17,934	0.20	11,100

 

• The In-Pit constrained Mineral Resource has been derived from a global Mineral Resource estimated in accordance with the guidelines of the JORC Code (2012) of 3.154Mt @ 0.82% Cu & 0.14g/t Au (from 2.22Mt @ 0.8% Cu and 0.1 g/t Au )comprises:

 

	Tonnage (kt)	Average Grade (% Cu)	Copper (t)	Average Grade (g/t Au)	Gold (oz)
Indicated	101	0.50		0.50
Inferred	3,053	0.83		0.13
Total (Indicated & Inferred)	3,154	0.82	25,860	0.14	14,430

 

• The In-pit parameters to constrain the optimised Mineral Resource were produced in-house and are based on mining, haulage and processing costs provided by the Company’s local partner, a 5% dilution factor, a production rate of 60Kt per month, a 10% discount rate and a long-term copper price of $6,000 per tonne of copper metal. The cut-off grades used are 0.3% Cu and 0.3g/t Au

 

• Upgraded Mineral Resource now includes two separate high-grade copper-gold breccia pipes at Copper Zone 1 (“CZ1”) and GZ2 – See Image 1

 

•    Significant scope for further upgrades to the Mineral Resource as the GZ2 pipe is close to surface, extends to a depth of 200m and remains open at depth – additional drilling to commence in the coming weeks. The CZ1 breccia pipe also remains open at depth.

 

GEO Managing Director Greg Kuenzel said, “Together with the initial Mineral Resource estimate of 2.29Mt @ 0.85g/t  Au, including an optimised In-Pit Mineral Resource of 1.14Mt @ 1.10g/t Au, we recently announced for the gold oxide deposit at GZ2, the discovery of the new breccia pipe at GZ2 has pushed us closer to the Phase 2 target of a 5Mt optimised in-pit combined gold-copper Mineral Resource within the KB project area during 2017. The copper mineralisation is augmented by a gold ‘kicker’ that in some cases is as high as 0.5g/t Au which will also report to the final copper-gold concentrate as a credit and add significant value.

 

“The Company has allocated funds to test the depth extension of the two breccia pipes at GZ2 and CZ1, as the low to intermediate sulfidation epithermal environment that characterises Kvemo Bolnisi has the potential to “blow-out” at depth and contribute to a more substantial bulk tonnage copper-gold resource in line with the 50Mt being targeted by the Company.  Further gold oxide and copper-gold sulphide targets are regularly being generated and, as previously announced, additional anomalies and drill targets have already been defined.  These will be drilled during the current programme as we continue to expand the Kvemo Bolnisi Mineral Resource development strategy.”

 

To view the press release with the illustrative diagram please use the following link:

http://www.rns-pdf.londonstockexchange.com/rns/2202M_-2017-7-26.pdf

 

 

Global Mineral Resource Estimate for Cu-Au Sulphide Mineralisation

(Estimated In accordance with the guidelines of the JORC Code (2012)

 

		Indicated			Inferred			Indicated & Inferred
Zone	Cut-off	Tonnes (Kt)	Cu (%)	Au (g/t)	Tonnes (Kt)	Cu (%)	Au (g/t)	Tonnes (Kt)	Cu (%)	Au (g/t)
CZ1	0.3% Cu	–	–	–	2,226	0.77	0.10	2,226	0.77	0.10
GZ2	0.3% Cu	101	0.50	0.45	827	0.99	0.22	928	0.94	0.25

 

In-Pit Constrained Optimised Mineral Resources – Cu-Au Sulphide Mineralisation (In-house)

 

		Indicated			Inferred			Indicated & Inferred
Zone	Cut-off	Tonnes (Kt)	Cu (%)	Au (g/t)	Tonnes (Kt)	Cu (%)	Au (g/t)	Tonnes (Kt)	Cu (%)	Au (g/t)
CZ1	0.3% Cu	–	–	–	956	1.17	0.13	956	1.17	0.13
GZ2	0.3% Cu	101	0.50	0.45	651	0.97	0.26	752	0.91	0.28

 

The optimised in-house input parameters are based on up to date unit costs provided to the Company relating to mining and haulage using recognised local contractors and both heap leach and flotation ore processing based on actual costs incurred in local plants. It has therefore been assumed that there will be no major capital items required in the budget. The detail of the unit costs and other parameters used in optimisation cannot be provided in detail as these remain confidential and the property of third parties. Other Input parameters include cut-offs of 0.3% Cu and 0.3g/t Au, long-term gold price of US$1,250 per oz Au, long-term copper price of US$6,000 per tonne metal, discount factor of 10% and an assumed production rate of 60ktpm. A conservative 45 degree pit slope angle has been used in all optimisation of pits.

 

Market Abuse Regulation (MAR) Disclosure

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

 

Competent Person Statement

 

The information in this announcement that relates to Exploration Results is based on information compiled by James Royall, who is a Member of the Australian Institute of Geoscientists. James Royall has sufficient experience, relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking, to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ and as a qualified person as defined in the Note for Mining and Oil & Gas Companies which form part of the AIM Rules for Companies. James Royall has reviewed this announcement and consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.

 

The information in this announcement that relates to Mineral Resources or Ore Reserves is based on information compiled by Adam Wheeler, who is a fellow (FIMMM) of the Institute of Materials, Minerals and Mining and a registered Chartered Engineer (C. Eng and Eur. Ing) with the Engineering Council (UK) and reviewed by Mark Owen, BSc, MSc, MCSM, Chartered Geologist, a member of the European Federation of Geologists and a Fellow of the Geological Society. Both Mr Wheeler and Mr Owen have sufficient experience, relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking, to qualify as Competent Persons as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mark Owen and Adam Wheelerhave reviewed this announcement and consent to the inclusion in the announcement of the matters based on their information in the form and context in which it appears.

For further information please visit www.georgianmining.com  or contact:

 

Greg Kuenzel	Georgian Mining Corporation	Company	Tel: 020 7907 9327
Ewan Leggat	S. P. Angel Corporate Finance LLP	Nomad & Broker	Tel: 020 3470 0470
Damon Heath	Shard Capital Partners LLP	Joint Broker	Tel: 0207 186 9950
Frank Buhagiar	St Brides Partners Ltd	PR	Tel: 020 7236 1177
Susie Geliher	St Brides Partners Ltd	PR	Tel: 020 7236 1177

 

About Georgian Mining Corporation

Georgian Mining Corporation has 50% ownership and operational control of the Bolnisi Copper and Gold Project in Georgia, situated on the prolific Tethyan Belt, a well-known geological region and host to many high-grade copper-gold deposits and producing mines.  The Bolnisi licence covers an area of over 860 sq km and has a 30-year mining licence with two advanced exploration projects; Kvemo Bolnisi and Tsitel Sopeli.  These projects are nearby existing mining operations owned by the Company’s supportive joint venture partner.  Georgia has an established mining code and is a jurisdiction open to direct foreign investment.

 

The Company is developing the project in three phases:

• Phase 1: H1 2017 target to delineate a minimum of 1-2 Mt to support initial spare capacity (now achieved and exceeded)
• Phase 2: 2017 target to delineate a 3-5 Mt resource of combined copper-gold sulphide and gold oxide mineralisation (on target)
• Phase 3: Long term target – to delineate a resource of 50Mt+

 

Quality Assurance and Quality Control

Drill hole sampling consists of half core ranging from 0.5m to 1.5m in length that are prepared at an onsite preparation lab operated by the company’s partner. Samples were analysed at ALS Global laboratory in Loughrea, Ireland.  Gold concentrations determined by 50gm Fire assay (Au-AA26) and multi-element data by 4 acid digest ICP (ME-MS61) Over grade samples are analysed using ICP AES (OG-62).  Field duplicates are collected and blanks and CRMs are routinely inserted to all batches at a suitable frequency.

 

 

This information is provided by RNS

The company news service from the London Stock Exchange

 

Path Investments Plc, the energy investment company, announces that on 25 July 2017, Andrew Yeo, a director of the Company, transferred 2,250,625 ordinary shares of 0.1p each in the capital of the Company (“Ordinary Shares”) from his own name, at a price of 0.725p per Ordinary Share, to his Self Invested Personal Pension (“SIPP”).

There is no change in beneficial interest and Mr Yeo’s holding remains at 4,750,625 Ordinary Shares (2.42% of the Issued share capital of the Company).

 

Enquiries:

Path Investments plc Christopher Theis Andy Yeo	020 3053 8671
Shard Capital (Broker and Financial Adviser)Simon Leathers Damon Heath	0207 186 9900
IFC Advisory (Financial PR & IR) Tim Metcalfe Heather Armstrong Miles Nolan	020 3053 8671

 

This information is provided by RNS

The company news service from the London Stock Exchange