EX-99.2 2 ex-99d2.htm EX-99.2 ospn_Ex99_2

Exhibit 99.2

 

Registered number: 06707232

 

 

 

 

 

DEALFLO LIMITED

 

 

 

 

 

DIRECTORS' REPORT AND FINANCIAL STATEMENTS

 

FOR THE YEAR ENDED 31 DECEMBER 2017

 

 


 

DEALFLO LIMITED

 

 

CONTENTS

 

 

 

 

 

Independent Auditor's Report

 

 

 

 

 

Consolidated Statement of Comprehensive Income

 

 

 

 

 

Consolidated Balance Sheet

 

 

 

 

 

Consolidated Statement of Changes in Equity

 

 

 

 

 

Notes to the Financial Statements

 

 

 

Page 2


 

DEALFLO LIMITED

 

INDEPENDENT AUDITORS’ REPORT

FOR THE YEAR ENDED 31 DECEMBER 2017

 

To the Board of Directors of Dealflo Limited

 

We have audited the accompanying financial statements of Dealflo Limited (the ‘Parent Company’) and its subsidiaries (‘the Group’) which comprise the Group balance sheet as of 31 December 2017 and as of 31 December 2016, the related Group statement of comprehensive income and the Group statement of changes in Equity, and notes to the financial statements for the years then ended.

 

Management’s Responsibility for the Financial Statements

 

Management is responsible for the preparation and fair presentation of financial statements in accordance with the Financial Reporting Standard 102 ‘The Financial Reporting Standard application in UK and Republic of Ireland’ and the Companies Act 2006 (together “United Kingdom Generally Accepted Accounting Practices”); this includes the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

 

Auditor’s Responsibility

 

Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments we consider internal control relevant to the Group’s preparation and fair presentation of the 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 Group’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

Opinion of financial statements

 

In our opinion, the financial statements referred to above:

     give a true and fair view of the state of the Group’s and Parent Company’s affairs as at 31 December 2017 and at 31 December 2016 and of its losses for the years then ended; and

     have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practise, except for non presentation of a Director’s Report, which is not required by the US Securities and Exchange Commission.

 

Emphasis of matter

 

We draw attention to Note 19, which reconciles the results for the period from United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 the accounting standard applicable in UK and Ireland (“FRS 102”) to accounting principles general accepted in the Unites States of America (US GAAP). Significant differences exist between United Kingdom Generally Accepted Accounting Practice and US GAAP. Our opinion is not modified with respect to this matter.

 

Page 3


 

DEALFLO LIMITED

 

INDEPENDENT AUDITORS’ REPORT

FOR THE YEAR ENDED 31 DECEMBER 2017

 

Other matter

 

We draw your attention to the fact that these accounts have not been prepared under section 394 of the Companies Act 2006 and are not the Group’s statutory accounts.

 

 

 

/s/ PKF Littlejohn LLP

 

PKF Littlejohn LLP

Chartered Accountants

Statutory Auditor

1  Westferry Circus

Canary Wharf

London

11 May 2018

 

 

Page 4


 

DEALFLO LIMITED

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

2017

 

2016

 

 

    

Note

    

£

    

£

 

Turnover

 

 

 

5,059,123 

 

3,541,174

 

Cost of sales

 

 

 

(1,142,424)

 

(909,535)

 

Gross profit

 

 

 

3,916,699

 

2,631,639

 

Administrative expenses

 

 

 

(8,374,587)

 

(5,334,545)

 

Operating profit/(loss)

 

4

 

(4,457,888)

 

(2,702,906)

 

Interest payable and expenses

 

 

 

(190,718)

 

(120,663)

 

Profit/(loss) before tax

 

 

 

(4,648,606)

 

(2,823,569)

 

Tax on profit/(loss)

 

7

 

319,436 

 

417,320

 

Profit/(loss) for the financial year

 

 

 

(4,329,170)

 

(2,406,249)

 

Profit/(loss) for the year attributable to:

 

 

 

 

 

 

 

Owners of the parent company

 

 

 

(4,329,170)

 

(2,406,249)

 

 

 

 

 

(4,329,170)

 

(2,406,249)

 

 

Total comprehensive income attributable to:

 

There were no recognised gains and losses for 2017 or 2016 other than those included in the consolidated statement of comprehensive income.

 

The notes on pages 11 to 26 form part of these financial statements.

 

 

Page 5


 

DEALFLO LIMITED

REGISTERED NUMBER: 06707232

 

CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2017

 

 

 

 

 

 

 

 

 

 

    

 

    

2017 

    

2016 

 

 

 

Note

 

£

 

£

 

Fixed assets

 

 

 

 

 

 

 

Intangible fixed assets

 

8

 

517,617 

 

607,164 

 

Tangible fixed assets

 

9

 

104,184 

 

64,744 

 

 

 

 

 

621,801 

 

671,908 

 

Current assets

 

 

 

 

 

 

 

Debtors: amounts falling due within one year

 

11

 

1,482,475 

 

1,208,657 

 

Cash at bank and in hand

 

 

 

6,566,221 

 

1,019,959 

 

 

 

 

 

8,048,696 

 

2,228,616 

 

Creditors: amounts falling due within one year

 

12

 

(3,560,281)

 

(2,867,997)

 

Net current assets/(liabilities)

 

 

 

4,488,415 

 

(639,379)

 

Total assets less current liabilities

 

 

 

5,110,216 

 

32,529 

 

Creditors: amounts falling due after more than one year

 

13

 

(668,869)

 

(1,334,872)

 

 

 

 

 

 

 

 

 

Net assets/(liabilities)

 

 

 

4,441,347 

 

(1,302,344)

 

 

 

 

 

 

 

 

 

Capital and reserves

 

 

 

 

 

 

 

Called up share capital

 

14

 

344 

 

245 

 

Share premium account

 

 

 

13,352,390 

 

3,417,756 

 

Other reserves

 

 

 

252,566 

 

114,439 

 

Profit and loss account

 

 

 

(9,163,953)

 

(4,834,784)

 

 

 

 

 

4,441,347 

 

(1,302,344)

 

 

 

 

 

 

 

 

 

 

The Company's financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

 

The financial statements were approved and authorised for issue by the board and were signed on its behalf on

11th May 2018.

 

 

A Smith

Director

The notes on pages 11 to 26 form part of these financial statements.

 

 

Page 6


 

DEALFLO LIMITED

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Called up
share
capital

    

Share
premium
account

    

Share options
reserve

    

Foreign
exchange
reserve

    

Profit and
loss
account

    

Equity
attributable
to owners of
parent
Company

 

 

 

£

 

£

 

£

 

£

 

£

 

£

 

At 1 January 2017

 

245 

 

3,417,756 

 

94,288 

 

20,151 

 

(4,834,783)

 

(1,302,343)

 

Comprehensive income for the year

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the year

 

 

 

 

 

 

 

 

 

(4,329,170)

 

(4,329,170)

 

Issue of shares

 

99 

 

9,934,634 

 

 

 

 

 

 

 

9,934,733 

 

Foreign exchange gain (losses) on retranslation

 

 

 

 

 

 

 

(9,275)

 

 

 

(9,275)

 

Share based payment

 

— 

 

— 

 

147,402 

 

— 

 

 

 

147,402 

 

At 31 December 2017

 

344 

 

13,352,390 

 

241,690 

 

10,876 

 

(9,163,953)

 

4,441,347 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Called up
share
capital

    

Share
premium
account

    

Share options
reserve

    

Foreign
exchange
reserve

    

Profit and
loss
account

    

Equity
attributable
to owners of
parent
Company

 

 

 

£

 

£

 

£

 

£

 

£

 

£

 

At 1 January 2016

 

245 

 

3,417,756 

 

— 

 

— 

 

(2,528,534)

 

989,467 

 

Comprehensive income for the year

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the year

 

 

 

 

 

 

 

 

 

(2,406,249)

 

(2,406,249)

 

Foreign exchange gain (losses) on retranslation

 

 

 

 

 

 

 

20,151 

 

 

 

20,151 

 

Share based payment

 

— 

 

— 

 

94,288 

 

— 

 

 

 

94,288 

 

At 31 December 2016

 

245 

 

3,417,756 

 

94,288 

 

20,151 

 

(4,834,783)

 

(1,302,343)

 

 

 

Page 7


 

DEALFLO LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2017

 

1.       General information

 

Dealflo Limited ("the Company") is a private Company limited by shares and is incorporated and domiciled in England. The address of the registered office is 20 Bedford Square, London, WC1B 3HH. The Company's registered number is 06707232.

 

2.       Accounting policies

 

2.1   Basis of preparation of financial statements

 

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

 

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).

 

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.

 

US GAAP

 

Significant differences exist between United Kingdom Generally Accepted Accounting Practice applicable to small entities and US Generally Accepted Accounting Principles (US GAAP). The US GAAP results for the period and the effect on total shareholders funds are set out in note 19.

 

The following principal accounting policies have been applied:

 

2.2   Basis of consolidation

 

The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full. The consolidated financial statements present the figures of Dealflo Limited and Dealflo Inc. Dealflo (Beijing) Software Limited was dormant and has not been consolidated.

 

The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.

 

In accordance with the transitional exemption available in FRS 102, the group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 01 January 2015.

 

2.3   Going concern

 

The Directors believe that adequate cash resources will be available to cover the Group's requirements for working capital and capital expenditure for a period of at least 12 months from the approval of the 2017 financial statements. They are not aware of any other factors that they believe could put into jeopardy the Group’s going concern status. The financial statements have therefore been prepared on the going concern basis.

 

Page 8


 

DEALFLO LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2017

 

2.4   Turnover

 

Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Group and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

 

Turnover comprises the following income streams:

 

‑ Support fees and Vaulting fees which are recognised over the duration of the contract.

 

‑ Professional fees which are recognised over the period it takes to set up a contract (generally 6 months).

 

‑ Transaction fees which are invoiced up front and recognised over a period of the contract. Any transaction fees incurred which are over the initial amount are invoiced and recognised on an actual basis.

 

2.5   Intangible assets

 

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

 

All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.

 

Development costs

 

Development costs include a proportion of staff costs incurred which are specific to the development of the software.

 

The Directors believe that the capitalised assets provide an accurate representation of the relevant costs incurred to bring the software into operational existence for use in the day to day trade of the business.

 

Development costs are amortised to the Profit and Loss Account over 10 years, which the Directors consider to be the estimated economic life of these assets.

 

Domain

 

Domain costs are amortised to the Profit and Loss Account of 5 years, which the Directors consider to be the estimated economic life of these assets.

 

Website

 

Website costs are amortised to the Profit and Loss Account of 5 years, which the Directors consider to be the estimated economic life of these assets

 

2.6  Tangible fixed assets

 

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

 

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, on a reducing balance basis.

 

Page 9


 

DEALFLO LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2017

 

Depreciation is provided on the following basis:

 

 

 

 

 

 

 

 

 

Computer equipment

  

  

15

%  

Reducing balance

 

 

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

 

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Consolidated Statement of Comprehensive Income.

 

2.7   Investments

 

Investments in subsidiaries are measured at cost less accumulated impairment.

 

2.8   Debtors

 

Short term debtors are measured at transaction price, less any impairment

 

2.9   Cash

 

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours.

 

2.10 Financial instruments

 

The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in non‑puttable ordinary shares.

 

Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short‑term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in the case of an out‑right short‑term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.

 

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated Statement of Comprehensive Income.

 

2.11 Creditors

 

Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 

Page 10


 

DEALFLO LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2017

 

2.12 Reserves

 

Share premium

 

The share premium account represents the additional amount shareholders paid for their issued shares that was in excess of the par value of those shares.

 

Share options reserve

 

The share option reserve account represents the cumulative fair value of share options at grant date over the vesting periods.

 

Profit and loss account

 

The profit & loss account represents profits and losses which have accumulated year on year since the Group companies began trading, less the distribution of dividends paid. This is a distributable reserve.

 

2.13 Foreign currency translation

 

Functional and presentation currency

 

The Group's functional and presentational currency is GBP.

 

Transactions and balances

 

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

 

At each period end foreign currency monetary items are translated using the closing rate. Non‑monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non‑monetary items measured at fair value are measured using the exchange rate when fair value was determined.

 

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period‑end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Consolidated Statement of Comprehensive Income except when deferred in other comprehensive income as qualifying cash flow hedges.

 

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Consolidated Statement of Comprehensive Income within 'finance income or costs'. All other foreign exchange gains and losses are presented in the Consolidated Statement of Comprehensive Income within 'other operating income'.

 

On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.

 

2.14 Share based payments

 

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the Consolidated Statement of Comprehensive Income over the vesting period.

 

Page 11


 

DEALFLO LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2017

 

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to Consolidated Statement of Comprehensive Income over the remaining vesting period.

 

2.15 Operating leases

 

Rentals paid under operating leases are charged to the Consolidated Statement of Comprehensive Income on a straight line basis over the lease term.

 

2.16 Pensions

 

Defined contribution pension plan

 

The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.

 

The contributions are recognised as an expense in the Consolidated Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Group in independently administered funds.

 

2.17 Borrowing costs

 

All borrowing costs are recognised in the Consolidated Statement of Comprehensive Income in the year in which they are incurred.

 

2.18 Taxation

 

Tax is recognised in the Consolidated Statement of Comprehensive Income, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

 

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company and the Group operate and generate income.

 

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance Sheet date, except that:

·

The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;

·

Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and

·

Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.

 

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

 

Page 12


 

DEALFLO LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2017

 

2.19 Research and development

 

In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives of 10 years.

 

If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.

 

3.       Judgments in applying accounting policies and key sources of estimation uncertainty

 

Estimates and judgements 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:

 

Share based payments

The Group’s employees have been granted share options.  The Directors have assessed the fair value of the share options granted and have used their judgement of recognisable inputs into the valuation model to determine the charge that should be applied to the consolidated statement of comprehensive income over the vesting periods.

 

Useful economic lives of intangible assets

The annual amortisation charge for intangible assets is sensitive to changes in the estimated useful economic lives of the assets.  The useful economic lives are re‑assessed annually.  See note 8 for the carrying amount of the development costs, and note 2.4 for the useful economic lives for each class of asset.

 

4.       Operating profit/(loss)

 

The operating profit/(loss) is stated after charging:

 

 

 

 

 

 

 

 

    

2017 

    

2016 

 

 

 

£

 

£

 

Research & development charged as an expense

 

403,903 

 

377,765 

 

Depreciation of tangible fixed assets

 

43,066 

 

23,064 

 

Amortisation of intangible assets

 

119,226 

 

108,479 

 

Exchange differences

 

319,761 

 

(127,261)

 

Other operating lease rentals

 

461,243 

 

246,277 

 

Defined contribution pension cost

 

44,944 

 

1,800 

 

 

5.       Employees

 

Staff costs, including Directors' remuneration, were as follows:

 

 

 

 

 

 

 

 

    

2017 

    

2016 

 

 

 

£

 

£

 

Wages and salaries

 

5,186,959 

 

3,739,965 

 

Social security costs

 

468,461 

 

324,872 

 

Cost of defined contribution scheme

 

44,944 

 

1,800 

 

 

 

5,720,364 

 

4,066,637 

 

 

Page 13


 

DEALFLO LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2017

 

The average monthly number of employees, including the Directors, during the year was as follows:

 

 

 

 

 

 

 

 

    

2017 

    

2016 

 

 

 

No.

 

No.

 

Employees

 

66 

 

41 

 

 

6.        Directors' remuneration

 

 

 

 

 

 

 

 

    

2017 

    

2016 

 

 

 

£

 

£

 

Directors' emoluments

 

164,800 

 

240,000 

 

 

 

164,800 

 

240,000 

 

 

Key management personnel remuneration during the year was £367,000 (2016 ‑ £390,000).

 

7.      Taxation

 

 

 

 

 

 

 

 

    

2017 

    

2016 

 

 

 

£

 

£

 

Corporation tax :

 

 

 

 

 

Adjustment in respect of previous periods

 

379,436 

 

465,372 

 

Foreign tax

 

(60,000)

 

(48,052)

 

 

 

319,436 

 

417,320 

 

 

Factors affecting the tax charge for the year

As at the year end, the Company has built up taxable losses, some of which qualifies as R&D expenditure. The Company has submitted successful claims in previous years which have resulted in tax credits being received. A claim for the current year has yet to be submitted and as such has not been recognised in the financial statements.

 

8.       Intangible assets

 

Group

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Development

    

 

    

 

 

 

 

Domain

 

costs

 

Website

 

Total

 

 

 

£

 

£

 

£

 

£

 

Cost

 

 

 

 

 

 

 

 

 

At 1 January 2017

 

50,509 

 

960,315 

 

60,021 

 

1,070,845 

 

Additions

 

— 

 

— 

 

29,679 

 

29,679 

 

At 31 December 2017

 

50,509 

 

960,315 

 

89,700 

 

1,100,524 

 

 

 

 

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

 

 

 

At 1 January 2017

 

5,893 

 

451,234 

 

6,554 

 

457,127 

 

Charge for the year

 

10,102 

 

96,032 

 

13,092 

 

119,226 

 

At 31 December 2017

 

15,995 

 

547,266 

 

19,646 

 

582,907 

 

 

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

 

 

At 31 December 2017

 

34,514 

 

413,049 

 

70,054 

 

517,617 

 

At 31 December 2016

 

44,616 

 

509,081 

 

53,467 

 

607,164 

 

 

The Group’s Intangible Fixed Assets are owned by the Company therefore the Group Intangible assets are the same as the Company’s.

 

Page 14


 

DEALFLO LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2017

 

9.       Tangible fixed assets

 

Group

 

 

 

 

 

 

    

Computer equipment

 

 

 

£

 

Cost

 

 

 

At 1 January 2017

 

86,973 

 

Additions

 

84,947 

 

Foreign exchange rate movements

 

(2,422)

 

At 31 December 2017

 

169,298 

 

 

 

 

 

Depreciation

 

 

 

At 1 January 2017

 

22,048 

 

Charge for the year

 

43,066 

 

At 31 December 2017

 

65,114 

 

 

 

 

 

Net book value

 

 

 

At 31 December 2017

 

104,184 

 

At 31 December 2016

 

64,744 

 

 

Company

 

 

 

 

 

 

    

Office

 

 

 

equipment

 

 

 

£

 

Cost or valuation

 

 

 

At 1 January 2017

 

20,777 

 

Additions

 

42,190 

 

At 31 December 2017

 

62,967 

 

 

 

 

 

Depreciation

 

 

 

At 1 January 2017

 

5,765 

 

Charge for the year

 

26,240 

 

At 31 December 2017

 

32,005 

 

 

 

 

 

Net book value

 

 

 

At 31 December 2017

 

30,962 

 

At 31 December 2016

 

15,012 

 

 

Page 15


 

DEALFLO LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2017

 

10.     Fixed asset investments

 

Company

 

 

 

 

 

 

    

Investments

 

 

 

in

 

 

 

subsidiary

 

 

 

companies

 

 

 

£

 

Cost

 

 

 

At 1 January 2017

 

 

Additions

 

 

At 31 December 2017

 

 

 

 

 

 

Net book value

 

 

 

At 31 December 2017

 

 

At 31 December 2016

 

 

 

Subsidiary undertakings

 

The following were subsidiary undertakings of the Company:

 

 

 

 

 

 

 

 

    

Class of

    

 

 

Name

 

shares

 

Holding

 

Dealflo Inc

 

Ordinary

 

100 

%

Dealflo (Beijing) Software Limited

 

Ordinary

 

100 

%

 

The principal business activity of the subsidiaries is that of information technology services.

 

Dealflo Inc was incorporated in Canada. Dealflo (Beijing) Software Limited was incorporated in China.

 

11.     Debtors

 

 

 

 

 

 

 

 

 

 

 

 

    

Group

    

Group

    

Company

    

Company

 

 

 

2017 

 

2016 

 

2017 

 

2016 

 

 

 

£

 

£

 

£

 

£

 

Trade debtors

 

866,882 

 

780,210 

 

866,882 

 

780,210 

 

Amounts owed by group undertakings

 

 

 

 

 

257,001 

 

61,415 

 

Other debtors

 

460,345 

 

330,446 

 

62,255 

 

31,272 

 

Prepayments and accrued income

 

155,247 

 

98,001 

 

118,307 

 

51,400 

 

 

 

1,482,474 

 

1,208,657 

 

1,304,444 

 

924,297 

 

 

12.     Creditors: Amounts falling due within one year

 

 

 

 

 

 

 

 

 

 

 

 

    

Group

    

Group

    

Company

    

Company

 

 

 

2017

 

2016 

 

2017 

 

2016 

 

 

 

£

 

£

 

£

 

£

 

Other loans

 

666,004 

 

544,638 

 

666,004 

 

544,638 

 

Trade creditors

 

585,606 

 

269,733 

 

498,508 

 

235,404 

 

Corporation tax

 

32,365 

 

29,062 

 

— 

 

— 

 

Other taxation and social security

 

157,881 

 

254,226 

 

226,961 

 

267,662 

 

Other creditors

 

24,788 

 

12,068 

 

15,894 

 

6,795 

 

Accruals and deferred income

 

2,093,637 

 

1,758,269 

 

2,093,637 

 

1,722,053 

 

 

 

3,560,281

 

2,867,997

 

3,501,004 

 

2,776,551 

 

 

Page 16


 

DEALFLO LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2017

 

13.     Creditors: Amounts falling due after more than one year

 

 

 

 

 

 

 

 

 

 

 

 

    

Group

    

Group

    

Company

    

Company

 

 

 

2017 

 

2016 

 

2017 

 

2016 

 

 

 

£

 

£

 

£

 

£

 

Other loans

 

668,869 

 

1,334,872 

 

668,869 

 

1,334,872 

 

 

 

668,869 

 

1,334,872 

 

668,869 

 

1,334,872 

 

 

Other loans includes a loan from Industrial Lending 1 who hold a fixed and floating charge over all property or undertaking of the Company. The loan is due for repayment in 2019 and has a market rate of interest applied to it.

 

 

14.     Share capital

 

 

 

 

 

 

 

 

    

2017 

    

2016 

 

 

 

£

 

£

 

Allotted, called up and fully paid

 

 

 

 

 

 

 

 

 

 

 

1,680,970‑ Ordinary shares of £0.0001 each

 

168 

 

168 

 

720,968‑ A Preferred shares of £0.0001 each

 

72 

 

72 

 

50,000‑ B shares of £0.0001 each

 

 

 

989,600- B Preferred shares of £0.0001 each

 

99 

 

 

 

 

 

 

 

 

 

 

344 

 

245 

 

 

Ordinary shares have equal rights as to dividends, distributions on winding up and voting.

A Preferred shares have equal rights as to votes and dividends, however they rank ahead of ordinary and B shares on a distribution on an exit. A Preferred shares are also convertible to ordinary shares in certain circumstances.

B shares have equal rights to dividends and other distributions but have no voting rights.

During the year 989,600 B preferred shares were issued for a total consideration of £9,934,731. B preferred shares have equal rights to votes and dividends, however they rank ahead of ordinary, B and A preferred shares on a distribution on an exit. B Preferred shares are also convertible to ordinary shares in certain circumstances.

 

15.     Pension commitments

 

During the year, the Group has paid into an employees personal defined contribution pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £44,944 (2015 ‑ £1,800). Contributions totalling £7,518 (2015 ‑ £540) were owing to the fund at balance sheet date.

 

16.     Commitments under operating leases and other commitments

 

At 31 December 2017 the Group and the Company had future minimum lease payments under non‑cancellable operating leases as follows:

 

 

 

 

 

 

 

 

 

 

 

 

    

Group

    

Group

    

Company

    

Company

 

 

 

2017 

 

2016 

 

2017 

 

2016 

 

 

 

£

 

£

 

£

 

£

 

Not later than 1 year

 

234,851 

 

231,452 

 

52,598 

 

62,544 

 

Later than 1 year and not later than 5 years

 

574,287 

 

760,086 

 

— 

 

— 

 

 

 

865,896 

 

991,538 

 

52,598 

 

62,544 

 

 

During the year the Parent Company incorporated Dealflo (Beijing) Software Limited and committed £56,000 of investment into the Company as required by Chinese regulations.  The commitment is expected to be paid during 2018.

Page 17


 

DEALFLO LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2017

 

 

17.     Related party transactions

 

Arrk Group Limited

 

JRL Howison is a Director of the Company, and is also a Director of Arrk Group Limited.

 

During the year, Arrk Group Limited provided professional services to Dealflo Limited totalling £142,828 (2016: £317,168).

 

At the year end there was an amount owing to Arrk Group Limited of £nil (2016: £21,316).

 

Notion Transactions

 

Stephen Chandler is a Director of Notion Platform Limited. who provided professional services to Dealflo Limited totalling £7,200 (2016: £6,000).

 

Stephen Chandler is a Director of Dealflo Limited and also Notion Nominees UK Limited.

 

During the year the Notion Nominees UK Limited subscribed to 494,800 (2016 - nil) Preferred B shares at a nominal value of £0.0001 and a fair value of £10.11. During the year Notion Nominees UK Limited provided services to Dealflo Limited totalling £6,000 (2016 - £5,000).

 

18.     Controlling party

 

In the opinion of the Directors, there is no ultimate controlling party of the Company.

 

19.     Reconciliation from UK FRS 102 (Section 1A) to accounting principles generally accepted in the United States of America (“US GAAP”)

 

The accompanying financial statements of Dealflo Limited have been prepared in accordance with Section 1A of Financial Reporting Standard 102 (FRS 102) the Financial Reporting Standard applicable in the UK and the Republic of Ireland as described in Note 1. FRS 102 differs in certain respects from the requirements of US GAAP. The effects of the US GAAP application are detailed below:

 

 

 

 

 

 

 

 

 

 

 

 

    

2017 

    

2017 

    

2016 

    

2016 

 

 

 

Profit & Loss
account

 

Net assets

 

Profit & Loss
account

 

Net assets

 

 

 

£

 

£

 

£

 

£

 

UK FRS 102 results :

 

 

 

 

 

 

 

 

 

Loss for the year

 

(4,329,170)

 

 

 

(2,406,249)

 

 

 

Shareholder net assets

 

 

 

4,441,345 

 

 

 

(1,302,343)

 

 

 

 

 

 

 

 

 

 

 

US GAAP adjustment:

 

 

 

 

 

 

 

 

 

Revenue recognition

 

78,687 

 

78,687 

 

(123,629)

 

(123,629)

 

Share based payments and warrants

 

147,402 

 

— 

 

94,288 

 

— 

 

 

 

 

 

 

 

 

 

 

 

Results under US GAAP

 

(4,103,081)

 

4,520,032 

 

(2,435,590)

 

(1,425,972)

 

 

Revenue Recognition

Under UK FRS 102, revenue in relation to contracts is recognised by reference to the stage of completion at the period end date, where the outcome of the transaction can be estimated reliably. Under US GAAP, in relation to multiple element contracts the contract price should be allocated using Vendor Specific Objective Evidence “VSOE”,

Page 18


 

DEALFLO LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2017

 

if no VSOE exists for an element of the contract, no revenue can be recognised until the VSOE for all the elements of the contract exist or until all elements of the contract are delivered.

 

This net result of this adjustment has resulted in £78,687 of additional revenue being recognised in 2017 (2016: £123,629 derecognised).

 

Share based payments and warrants

Under UK GAAP, share and warrant options can be recognised where there is reasonable certainty that the performance obligation or trigger event will be met.  The trigger event for the options held by the Parent company is on “exit” through a sale or equivalent.  Under US GAAP an “exit” performance obligation is deemed outside of the Parent company’s control and is therefore not recognised until the event occurs. The adjustment reverses the accounting of these under UK GAAP.

 

Cash and cash equivalents

Under UK GAAP, cash is defined as cash in hand and deposits repayable on demand, less overdrafts repayable on demand. Under US GAAP, cash and cash equivalents are defined as cash and investments with original maturities of three months or less.

 

There is no requirement to present a cashflow statement under Section 1A of FRS 102.

 

The following table presents cash flows as classified under US GAAP.

 

Note to the cashflow statement

 

Reconciliation of operating loss to net cash outflow from operating activities

 

 

 

 

 

 

 

 

    

2017 

    

2016 

 

 

 

£

 

£

 

Operating loss

 

(4,233,799)

 

(2,732,347)

 

Depreciation

 

43,066 

 

23,064 

 

Amortisation

 

119,226 

 

108,479 

 

UK Corporation tax credits

 

379,436 

 

465,372 

 

Foreign tax paid

 

(56,697)

 

(29,890)

 

Working capital movements:

 

 

 

 

 

Movement in debtors

 

(273,816)

 

(75,853)

 

Movement in creditors

 

467,018 

 

1,352,752 

 

 

 

 

 

 

 

Cash outflow from operating activities

 

(3,553,567)

 

(888,323)

 

 

Page 19


 

DEALFLO LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2017

 

 

 

 

 

 

 

 

    

2017 

    

2016 

 

 

 

£

 

£

 

Net Cash flows outflows from operating activities

 

(3,553,567)

 

(888,323)

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

Payments to acquire intangible assets

 

(29,679)

 

(44,229)

 

Payments to acquire tangible assets

 

(84,947)

 

(59,371)

 

Interest received

 

18,826 

 

— 

 

Net cash outflow from investing activities

 

(95,800)

 

(103,600)

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

Interest paid

 

(194,468)

 

(138,250)

 

Issue of share capital

 

9,934,731 

 

— 

 

Issue of long term debt

 

— 

 

1,500,000 

 

Repayment of long term debt

 

(544,638)

 

(120,490)

 

Net cash inflow from financing activities

 

9,195,626 

 

1,241,261 

 

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

5,546,259 

 

249,338 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of year

 

1,019,961 

 

770,623 

 

Cash and cash equivalents at the end of year

 

6,566,261 

 

1,019,961 

 

Cash and cash equivalents at the end of year comprise:

 

 

 

 

 

Cash at bank and in hand

 

6,566,261 

 

1,019,961 

 

 

 

6,566,261 

 

1,019,961 

 

 

The following presents customer and supplier concentration as required under US GAAP.

 

Major Customers and Accounts Receivable

 

The Group had certain customers whose revenue individually represented 10% or more of the Group’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Group’s total accounts receivable as follows:

 

For the year ended 31 December 2017 two customers accounted for 28% of revenue (2016 two customers, 33% of revenue).

 

At 31 December 2017 four customers accounted for 50% of the accounts receivable (2016 five customers, 82% of the accounts receivable).

 

Major Suppliers and Accounts Payable

 

The Company had certain suppliers whose purchases individually represented 10% or more of the Company’s total purchases, or whose accounts payable balances individually represented 10% or more of the Company’s total accounts payable as follows:

 

For the year ended 31 December 2017 three suppliers accounted for 44% of purchases (2016 three suppliers, 51% of purchases).

 

At 31 December 2017 two suppliers accounted for 68% of the accounts payable (2016 three suppliers, 66% of the accounts payable).

 

Page 20