REG - Brandshield Systems - Final Results
03/07/2023 07:00
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RNS Number : 6522E Brandshield Systems PLC 03 July 2023
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INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.
3 July 2023
BrandShield Systems Plc
("BrandShield" or the "Company")
Final Results for the year ended 31 December 2022
BrandShield Systems plc (AIM: BRSD), a leading provider of cybersecurity
solutions for brand oriented digital risk protection ("DRP"), announces its
final results for the year ended 31 December 2022 ("FY 2022").
BrandShield specialises in the monitoring, detection and removal of online
threats such as phishing attempts, scams, impersonation, fraud, counterfeit
products and trademark infringements. The business was established to
revolutionise the way companies can protect their digital assets outside their
security perimeter. Ever since launch, BrandShield has introduced
ground-breaking innovative technologies for Digital Risk Protection powered by
artificial intelligence ("AI"), machine learning and big data analysis to
provide the most automated and relevant solutions for the 21st century.
Financial highlights
· 55% increase in revenues to $6.39m ($4.13m in 2021)
· 61% increase in ARR to $8.42m ($5.22m in 2021)
· Cash of $2.6m ($1.194m in 2021)
Operational highlights
· 53 new customers signed in 2022 (53 clients in 2021)
· Generated strong new business impetus, expanding its presence in the
financial, healthcare, consumer products, and media spaces via a number of key
customer acquisitions
· Bolstered reputation as a go-to DRP company of choice for brands
operating in the financial services market
· Prioritised the expansion of its market presence globally via
strategic marketing and sales initiatives, and accordingly entered new
geographies in FY 2022
· Gained a number of new clients in the crypto space, including an
online gaming client focused on the crypto gaming sub-sector
· Delivered a strategic partnership with The Sandbox, a leading
decentralised gaming virtual world and a subsidiary of Animoca Brands, to
safeguard the crypto and HFT digital ecosystem
· Secured a new business mandate with one of the world's largest
consumer electronics brands to protect the business from illicit trade and
unauthorised online sales
Post Period End
· Strengthened its collaboration with the Pharmaceutical Security
Institute ("PSI") and subsequently published its findings from its annual
pharma fraud disruption programme:
o From January 2022 to January 2023, BrandShield successfully detected and
removed over 430 rogue pharmacies and 7,500 fraudulent marketplace listings
· Strong growth trend has continued into 2023 with the May 2023 ARR
figure standing at $9.3m, a 47.6% increase in ARR relative to May 2022
Outlook
The Group is focused on expanding BrandShield's market presence and bolstering
its position as a leading provider of cutting-edge DRP solutions through
securing new mandates to diversify its growing portfolio of clients alongside
targeting further ARR growth. At a time when cyber-related threats continue to
grow, the importance of Digital Risk Protection has become a necessity for
businesses as they continue to navigate significant technological and social
changes.
BrandShield is committed to building upon the strong customer traction it
delivered in FY 2022 and the Company believes it is well-placed to meet its
future growth objectives.
Yoav Keren, Chief Executive Officer of BrandShield, commented:
"We are pleased to report a strong performance across 2022, with the Company
making significant financial and operational progress. In addition to
generating strong revenues and expanding our customer base, we also further
strengthened our team with a number of strategic hires as we continue to
explore further commercial opportunities to consolidate our position at the
forefront of the digital risk protection market.
As cyber-related crimes continue to evolve and new threats emerge, demand for
digital risk protection services continues to rise in tandem, and our highly
sophisticated AI-powered solutions have ensured we remain a go-to choice for
brands across the globe looking to safeguard their online reputations.
Looking ahead, BrandShield remains confident in meeting expectations for the
full year 2023 and in the Company's future growth prospects."
For further information please visit https://www.brandshield.com/ or
contact:
BrandShield Systems plc +44 (0)20 3143 8300
Yoav Keren, CEO
Spark Advisory Partners Limited (Nominated Adviser) +44 (0)20 3368 3554
Neil Baldwin / Andrew Emmott / James Keeshan
Shore Capital (Broker) +44 (0)20 7408 4090
Toby Gibbs / James Thomas / Rachel Goldstein (Corporate Advisory)
Henry Willcocks (Corporate Broking)
Vigo Consulting (Financial Public Relations)
Jeremy Garcia / Kendall Hill +44 (0)20 7390 0237
brandshield@vigoconsulting.com
The full Group Annual Report and Financial Statements will be sent to
shareholders later today and is available at www.brandshield.com
(http://www.brandshield.com/) .
Extracts from the Annual Report are set out below:
CHAIRMAN'S STATEMENT
Introduction
BrandShield Systems Plc. ("BrandShield" or the "Company") is a leading
cybersecurity company that provides brand oriented digital risk protection.
The Company specialises in the monitoring, detection and removal of online
threats such as phishing attempts, scams, impersonation, fraud, counterfeit
products and trademark infringements. The business was established to
revolutionise the way companies can protect their digital assets outside their
security perimeter. Ever since launch, BrandShield has introduced
ground-breaking innovative technologies for online brand protection powered by
artificial intelligence ("AI"), machine learning and big data analysis to
provide the most automated and relevant solutions for the 21st century.
The Group delivered a strong performance during the period, generating
revenues of $6.39m, up 55% from $4.13m in 2021, underpinned by solid business
momentum, including multiple customer wins across a diverse range of sectors.
BrandShield strengthened its financial foundations during the period, ending
FY 2022 with available cash reserves of $2.6m, which will facilitate its
continued expansion by enhancing the Group's R&D, marketing, and sales
capabilities.
During the period, BrandShield raised a total of £4.25m in new equity and the
Company has focused on deploying new capital to target profitability by
increasing investment in marketing and sales initiatives and accelerating the
growth of its customer footprint as well as Annual Recurring Revenues ("ARR"),
a key performance indicator. BrandShield delivered on its ARR growth
aspirations during the period, with the ARR as at the end of FY 2022 at
$8.42m, representing a 61% increase from FY 2021 ($5.22m). This, alongside the
significant expansion of its customer base to 183 (FY 2021: 130), demonstrates
the robust operational progress achieved by the Company in FY 2022.
BrandShield hired 20 new employees across key departments in the period,
including sales directors in the US and UK, to accelerate client growth in
those regions. Expansion in the US remains a strategic priority for the Group,
and North America now constitutes c.70% of BrandShield's total client base,
spanning industries including financial services, healthcare, consumer goods
and media and entertainment. Moreover, BrandShield recruited a sales director
with the primary responsibility of developing partnership distribution
channels to scale its client base.
Given a very strong Life Time Value to Customer Acquisition Cost ("LTV to
CAC") ratio, the Board has been clear in its desire for the Company to
continue to grow aggressively whilst ensuring profitability is pursued, and it
remains a key intention to hit cash flow positive within our existing
resources in 2024. BrandShield offers a superior product in a largely
underserved market and, therefore, the priority must be on marketplace
consolidation and achieving a leading position in the online brand protection
competitive environment.
BrandShield has minority interests in assets inherited as a result of the
Reverse Takeover ("RTO") transaction conducted with Two Shields Investments
Plc in December 2020. These include holdings in WeShop Ltd (now renamed
Community Social Investment Ltd) and legacy mining assets, namely Kalahari Key
Mineral Exploitation Company (Pty) Ltd, Leopard Lithium Pty Ltd and
International Geosciences Limited ("IGS"). These assets are considered
non-core and we remain focused on the orderly disposal of these legacy
investments where value can be realised for our shareholders.
BrandShield's core activities
BrandShield is a fast-growing provider of cyber solutions, delivering an
end-to-end brand oriented digital risk protection solution to its global
customer base. Its software protects customers from the financial costs and
reputational damage caused by an increasing number of online threats including
online scams, phishing, impersonation, and sale of counterfeit goods. Unlike
traditional solutions, BrandShield's Software as a Service ("SaaS") operates
outside of an organisation's perimeter and therefore requires no integration.
BrandShield's highly developed software works by detecting potential threats,
analysing them, prioritising them and then taking them down. BrandShield has
developed a suite of proprietary AI-powered software that largely automates
the analysis and prioritisation of fraudulent online cases. The technology
uses big data and algorithms to find networks of fraudulent online activity
and clusters of scammers.
BrandShield's software monitors millions of datapoints across many types of
online platforms including websites, marketplaces, social media, mobile apps
and Pay Per Click ads. The AI and machine learning nature of the software
means that it is continually improving as it adds new datapoints and
identifies new types of threats. In response to customer demand, BrandShield
established its own in-house online hunting and enforcement team, consisting
mostly of qualified lawyers with experience in IP law. The service is
customised to the requirements of BrandShield's customers and experiences high
success rates.
Strategy
Leveraging capital raised during the period, BrandShield is committed to
driving the continued expansion of its offering globally, the keystone of the
Board's overarching growth strategy. BrandShield is prioritising achieving
profitability and cash flow positivity and continues to explore opportunities
to expand its customer base, which already includes SMBs and large enterprises
across five continents, demonstrating that the need for brands to secure
external online brand protection services transcends international borders. As
previously mentioned, the number of clients increased from 130 at year end
2021 to 183 at year end 2022, representing a significant period of growth.
The Company's ARR figure increased from $5.22m for FY 2021 to $8.42m in the
period, a 61% increase year on year, and that upward trajectory has continued
through the start of 2023 with the May 2023 ARR standing at $9.3m.
Cybersecurity is an ever-evolving sector, and this year we witnessed the
emergence of a number of new and highly sophisticated cyberthreats which have
the potential to tarnish the reputation of brands across the globe and disrupt
their day-to-day operations. BrandShield is focused on ensuring it is
positioned at the forefront of innovation in the digital risk protection
services arena by investing in sales promotion, marketing and R&D
activities to stay ahead of market trends, whilst strategically recruiting new
employees with robust sector knowhow and experience.
BrandShield demonstrated the effectiveness of the Company's existing strategy
by delivering significant operational and financial progress across FY 2022.
Funding raised during the period will enable the Company to build on this
momentum as it pursues further commercial opportunities to protect brands
worldwide from a host of digital threats. Alongside this the Company has
delivered significant cost savings as a result of increased efficiencies
delivered through the adoption of the 'BrandShield 3.0' platform by our
clients. This has enhanced automation within the Company's enforcement
processes and allowed a re-structuring to be carried out within the
enforcement function which continues. Cloud based costs have also been
reduced since the period end which has reduced the Company's operational cash
burn significantly.
Across the year, the Company raised a total of £4.25m ($5.45m), which will
enable BrandShield to continue to execute its strategy of aggressively
targeting client growth whilst aiming for profitability in the medium to long
term. Further, this investment will allow BrandShield to expand its marketing
and sales efforts and to continue to drive ARR forwards. Given BrandShield's
highly scalable SaaS platform, the Company is focused on the top line whilst
customer conversion continues to be of paramount importance for 2023. That
said, the Company believes it will get cash flow positive during 2024 without
the need for further funding.
Outlook
As we look to the future, BrandShield is focused on securing new mandates to
diversify its growing multi-sector portfolio of clients alongside targeting
further ARR growth. In a time of rapid technological and social change where
more emphasis is placed on a brand's online identity than ever before, an
increasing number of companies recognise that securing external threat
prevention and elimination assistance, such as that BrandShield offers, is now
a necessity.
From e-commerce and crypto companies to businesses in the fashion and
hospitality spaces, a fast-growing number of brands are trusting BrandShield
to safeguard their reputations by providing comprehensive digital risk
protection from a broad range of prevalent cyberthreats. With ARR and overall
commercial revenue up, in addition to continued strong backing from investors,
BrandShield is well-placed to deliver on our medium to long term growth
aspirations.
Azriel Moscovici
Chairman
2 July 2023
Introduction
We are pleased to report a strong performance across FY 2022, with BrandShield
delivering excellent financial and operational progress. Integral to our
success is the progress the Company has made in delivering ARR of $8.42m as at
year end, a 61% increase from FY 2021 ($5.22m), continuing the very strong
growth trend. Encouragingly, that strong growth trend has continued into 2023
with the May ARR figure standing at $9.3m.
This was underpinned by the acquisition of clients across a number of sectors
and the ongoing investment in, and expansion of, the Company's marketing and
sales functions. The Company now services over 200 clients, adding 53 across
2022, and a further 21 so far in 2023.
Given a very strong LTV to CAC ratio, we have been clear that BrandShield will
continue to focus on aggressive growth within existing resources with a view
to achieving positive cash flow in Q1 2024. Management believes BrandShield
offers a superior product in a largely unserved market and, therefore, the
priority must be on marketplace consolidation and achieving a leading position
in the digital risk protection competitive environment.
Revenues for FY 2022 increased 55% to $6.39m, compared to FY 2021 $4.13m, with
the Group reporting a loss of $7.33m (FY 2021: loss of $6.30m), which was
in-line with management's expectations. $1.7m of the loss (2021 was $1.9m) can
be attributed to share based payments calculations which do not reflect the
actual operating loss of the Company from its operations of $5.77m (2021:
$4.4m).
The Company added 53 new customers in FY 2022, built across a growing list of
sectors and market-leading brands. These have included new or extended
contracts with companies operating in the financial services, pharmaceutical,
crypto, entertainment, fashion, sports, and cosmetics sectors.
BrandShield has delivered significant customer traction during the period, and
whilst confidentiality agreements prevent the Company from disclosing all our
successes, including some of the world's largest and well-known brands, the
Company has been able to announce the following:
· Delivered a strategic partnership with The Sandbox, a leading
decentralised gaming virtual world and a subsidiary of Animoca Brands, to
safeguard the crypto and HFT digital ecosystem
· Secured a new business mandate with one of the world's largest
consumer electronics brands to protect the business from illicit trade and
unauthorised online sales
· Strengthened its collaboration with the Pharmaceutical Security
Institute ("PSI") and subsequently published its findings from its annual
pharma fraud disruption programme:
o From January 2022 to January 2023, BrandShield successfully detected and
removed over 430 rogue pharmacies and 7,500 fraudulent marketplace listings
· Gained a number of new clients in the crypto space, including an
online gaming client focused on the crypto gaming sub-sector
· Generated strong new business impetus, expanding its presence in
the financial, healthcare, consumer products, and media spaces via a number of
key customer acquisitions
· Bolstered reputation as a go-to digital risk protection ("DRP")
company of choice for brands operating in the financial services market
· Prioritised the expansion of its market presence globally via
strategic marketing and sales initiatives, and accordingly entered new
geographies in FY 2022
The value that BrandShield can add to our clients was reinforced by the post
period end publication of the Company's annual pharma fraud report, which was
carried out in cooperation with PSI.
Over the 12-month period, BrandShield took down more than 7,500 fraudulent
pharmaceutical listings across social media platforms, websites, and
marketplaces, accounting for hundreds of thousands of dollars' worth of
counterfeit drugs.
With the majority of fraudulent marketplace listings originating in regions
including Indonesia, China, and India, and removed listings containing
medicines relating to cancer, diabetes, and Covid-19 among others, the report
highlights both BrandShield's global reach and the instrumental role the
Company performs to protect individuals from potentially life-threatening
online scams.
Market dynamics
According to global business consultancy group Frost & Sullivan
("F&S"), the DRP market is on a high growth trajectory as the number of
cyberattacks on organisations' brands, customers, and employees continues to
rise. The DRP market is increasing at a compound annual growth rate of 39.7%
from 2021 to 2026, whilst F&S expects it to reach $917.7 million by 2026.
Against this favourable macroeconomic backdrop, BrandShield's prudent strategy
is designed to ensure the Company is well poised to capitalise on the
projected long-term global demand for reliable DRP services. As evidenced by
the diverse nature of our new customer wins in 2022, this surge in demand is
sector agnostic, and BrandShield intends to proactively explore further
commercial opportunities across a range of industries as digital threat
protection grows in importance for brands.
BrandShield has been recognised as the third best provider of cybersecurity
solutions for brand oriented DRP globally in F&S' 2023 Global Digital Risk
Protection New Product Innovation and Best Practices Award. BrandShield scored
highly for its ability to stay sensitive to emerging trends and challenges in
the technology space, and was also praised for its expansion into new markets
and industry verticals, such as blockchain and gaming. F&S' industry
experts commended BrandShield for its comprehensive brand protection
capabilities, noting the highly adaptable features of the Company's AI-powered
technology.
Our unique proposition
We believe that our technology is well placed to lead this transition as
enterprises increase their online protection and move from focusing on
internal cybersecurity to requiring solutions for external threats, providing
comprehensive brand oriented digital risk protection solutions. BrandShield's
market-leading solutions are underpinned by:
· A mature product, creating higher barriers to entry;
· Ongoing investment in R&D to ensure market leadership is
maintained;
· AI/ML powered technology;
· Strong threat network detection capabilities;
· Unique image recognition and Optical Character Recognition ("OCR")
- focusing on detection of emerging threats on websites, social media and
e-commerce marketplaces; and
· Big data investigation tools with multi-brand and platform
capabilities.
In addition, BrandShield adopts a multi-layered approach to the detection and
mitigation of online threats, which includes Data Detection, Automated
Analysis and Prioritisation, Easy-to-Use Interface and Highly Automated
Takedown Actions.
Strategy
The further expansion of BrandShield's global customer footprint remains a
core growth priority as the Company seeks to increase ARR from clients in a
variety of sectors. This is being primarily achieved through the expansion of
the marketing and sales activities.
Key pillars of the Company's long-term growth plan include the following
strategic priorities:
· Continue to invest in and grow the sales and marketing teams;
· Specific expansion of the sales teams in the US and UK;
· Establishing a broader marketing footprint;
· Expansion of advertising, sales promotion and digital marketing
campaigns; and
· Ongoing Business-to-Business public relations and brand building
activities.
Product development
Throughout 2022, the Company developed capability enhancements to its existing
platform and expanded its AI protection solution to provide security against a
range of new and evolving threats to digital assets.
BrandShield 3.0 version was launched during 2022, providing an enhanced layer
of protection against external digital threats such as web fraud, phishing,
social media scams, impersonations and online-counterfeiting.
BrandShield 3.0 is a completely new version of the BrandShield platform which
was developed in accordance with the latest market requirements and to meet
the most recent digital risk protection and brand protection challenges. The
SaaS technology includes a completely new and robust infrastructure, and its
innovative user interface is both intuitive and enables more ways to detect
threat networks and carry out immediate takedowns whilst covering more threats
in less time.
In addition, the Company launched NFT Shield(TM) in October 2022, a bespoke AI
solution aimed at detecting and removing illegitimate digital assets. With
NFTs now playing a prominent role in the digital economy, the risk of online
asset fraud has become more evident. In turn, BrandShield, in order to help
safeguard an NFT economy currently worth approximately $3 billion, developed
an AI solution to counter the growing number of fake listings, scams, and
impersonations across NFT marketplaces.
Key hires
The US is an important market for BrandShield, where c.70% of the Group's
clients are based. In 2021, the Company established physical sales presences
in the US as well as the UK, and BrandShield continued to build on this
progress during 2022 by recruiting sales directors with considerable
experience in both territories to further accelerate growth.
Outlook
The Company performed strongly throughout 2022, achieving significant
financial and operational growth and augmenting its already strong DRP
capabilities through innovative product launches. Strategic hires have already
enabled the Company to enhance its marketing and sales functions in key
regions, and once fully integrated, will facilitate new business development.
BrandShield's talented employees are the backbone of the business, and I would
like to express my profound thanks to all staff for their continued hard work
and tenacity throughout the year, which has been pivotal in helping the
Company consolidate its position as a leading provider of cutting-edge DRP
solutions.
With a significant and fast-growing global footprint, in addition to clients
across a range of verticals, BrandShield is well positioned to continue to
deploy its highly automated SaaS offering to capitalise on the high demand for
DRP services.
Looking ahead, the Company remains confident in meeting expectations for the
full year 2023 and in the Company's future growth prospects.
Yoav Keren
Chief Executive Officer
2 July 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
As restated
31 December 2022 31 December 2021
Note $ $
Revenue from contracts with customers 4
6,396,157 4,127,247
Cost of sales (2,945,050) (1,864,512)
Gross profit 3,451,107 2,262,735
Research and Development expenses 6 (2,996,276) (2,721,553)
Sales and Marketing expenses 6 (4,150,684) (2,950,617)
Operating expenses 6 (3,266,657) (2,818,102)
(10,413,617) (8,490,272)
Operating loss (6,962,510) (6,227,537)
Depreciation (29,201) (42,464)
Depreciation of the right of use (249,369) -
Impairment loss (46,952) -
Net finance (expense)/ income 10 (51,874) (33,372)
Loss before income tax (7,339,906) (6,303,373)
Income tax expense 11 - -
Loss from continuing operations attributable to owners (7,339,906) (6,303,373)
Other comprehensive income:
Items that will or may be reclassified to profit or loss:
Exchange differences on translation (49,869) (102,319)
Total comprehensive loss attributable to owners (7,389,775) (6,405,692)
Basic and diluted earnings per share attributable to owners 12
(0.04) (0.05)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
As Restated
31 December 2022 31 December 2021
Note $ $
NON-CURRENT ASSETS
Property, plant and equipment 13 180,777 47,839
Right of use asset - office lease 25 1,080,599 -
Financial assets at fair value through profit or loss 14 3,663,072 4,112,107
4,924,448 4,159,946
CURRENT ASSETS
Trade and other receivables 15 2,791,518 825,066
Financial assets at fair value through profit or loss 16 18,220 20,534
Other financial assets 14,447 16,218
Cash and cash equivalents 17 2,605,605 1,194,275
Restricted cash 372,707 191,770
Assets classified as held for sale 18 254,023 337,870
6,056,520 2,585,733
TOTAL ASSETS 10,980,968 6,745,679
CURRENT LIABILITIES
Short term loan and bank overdraft 23 2,278,645 1,626,357
Trade and other payables 24 5,969,822 2,807,924
Lease liability- current 25 321,727 -
8,570,194 4,434,281
NON-CURRENT LIABILITIES
Lease liability- non current 25 795,557 -
Other payables 30,079 32,230
825,636 32,230
TOTAL LIABILITIES 9,395,830 4,466,511
NET ASSETS 1,585,138 2,279,168
EQUITY
Share capital 21 9,929,842 9,299,228
Share premium 21 32,060,989 27,686,289
Reverse acquisition reserve (20,653,597) (20,653,597)
Other reserves 22 4,685,025 3,214,775
Retained earnings (24,437,121) (17,267,527)
TOTAL EQUITY 1,585,138 2,279,168
The Financial Statements were approved and authorised for issue by the Board
of Directors on July 2, 2023 and were signed on its behalf by:
........................................................................ A
Moscovici - Chairman
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
31 December 2022 31 December 2021
Note $ $
ASSETS
NON-CURRENT ASSETS
Financial assets at fair value through profit or loss 14 3,663,072 4,112,107
Investment in subsidiary 19 22,958,375 25,772,709
Loans to related party 20 4,625,778
Property, plant and equipment 13 923 2,072
31,248,148 29,886,888
CURRENT ASSETS
Other receivables and prepayments 15 17,947 215,827
Loans to related parties 20 - 216,240
Financial assets at fair value through profit or loss 16 18,220 20,534
Other financial assets 14,447 16,218
Cash and cash equivalents 17 230,324 68,721
Restricted cash 1,510 -
Assets classified as held for sale 18 254,023 337,870
536,471 875,410
TOTAL ASSETS 31,784,619 30,762,298
EQUITY
Share capital 21 9,929,842 9,299,228
Share premium 21 32,060,989 27,686,289
Other reserves 22 2,003,479 3,863,028
Retained earnings (12,385,406) (10,257,078)
TOTAL EQUITY 31,608,904 30,591,467
CURRENT LIABLILITIES
Trade and other payables 24 175,715 170,831
TOTAL LIABILITIES 175,715 170,831
TOTAL EQUITY AND LIABILITIES 31,784,619 30,762,298
BrandShield Systems PLC has used the exemption granted under s408 of the
Companies Act 2006 that allows for the non-disclosure of the Income Statement
of the parent company. The after-tax loss attributable to BrandShield Systems
PLC for the twelve months 31 December 2022 was $2,298,640 (2021: $2,352,527).
The Financial Statements were approved and authorised for issue by the Board
of Directors on July 2, 2023 and were signed on its behalf by:
................................................... A Moscovici - Chairman
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Share capital Share premium Reverse acquisition reserve Other reserves Retained earnings Total equity
$ $ $ $ $ $
Balance at 1 January 2021 9,246,267 27,353,294 (20,653,597) 3,101,442 (12,646,446) 6,400,960
Loss for the year - - - - (6,303,373) (6,303,373)
Exchange differences on translation - - - 1,023,680 - 1,023,680
Total comprehensive income for the year - - - 1,023,680 (6,303,373) (5,279,693)
Exercise of options - - - (648,132) 648,132 -
Expiry of options - - - (1,034,160) 1,034,160 -
Share based payments - - - 1,897,944 - 1,897,944
Issue of share capital 52,961 332,995 - - - 385,956
Balance at 31 December 2021 9,299,228 27,686,289 (20,653,597) 4,340,774 (18,393,526) 2,279,168
Prior year adjustment - - - (1,125,999) 1,125,999 -
Balance at 31 December 2021 as restated 9,299,228 27,686,289 (20,653,597) 3,214,775 (17,267,527) 2,279,168
Loss for the year - - - - (7,339,906) (7,339,906)
Exchange differences on translation - - - (49,869) - (49,869)
Total comprehensive income for the year - - - (49,869) (7,339,906) (7,389,775)
Share based payments cancellation - - - (170,312) 170,312 -
Share based payments - - - 1,690,431 - 1,690,431
Transaction costs - (111,261) - - - (111,261)
Issue of share capital 630,614 4,485,961 - - - 5,116,575
Balance at 31 December 2022 9,929,842 32,060,989 (20,653,597) 4,685,025 (24,437,121) 1,585,138
Prior year adjustment
-
-
-
(1,125,999)
1,125,999
-
Balance at 31 December 2021 as restated
9,299,228
27,686,289
(20,653,597)
3,214,775
(17,267,527)
2,279,168
Loss for the year
-
-
-
-
(7,339,906)
(7,339,906)
Exchange differences on translation
-
-
-
(49,869)
-
(49,869)
Total comprehensive income for the year
-
-
-
(49,869)
(7,339,906)
(7,389,775)
Share based payments cancellation
-
-
-
(170,312)
170,312
-
Share based payments
-
-
-
1,690,431
-
1,690,431
Transaction costs
-
(111,261)
-
-
-
(111,261)
Issue of share capital
630,614
4,485,961
-
-
-
5,116,575
Balance at 31 December 2022
9,929,842
32,060,989
(20,653,597)
4,685,025
(24,437,121)
1,585,138
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Share capital Share premium Other reserves Retained earnings Total equity
$ $ $ $ $
Balance at 1 January 2021 9,246,267 27,353,294 3,949,949 (9,586,843) 30,962,667
Loss for the year - - - (2,352,527) (2,352,527)
Exchange differences on translation - - (302,573) - (302,573)
Total comprehensive income for the year - - (302,573) (2,352,527) (2,655,100)
Exercise of options - - (648,132) 648,132 -
Expiry of options - - (1,034,160) 1,034,160 -
Issue of share capital 52,961 - - 385,956
332,995
Share based payments - - 1,897,944 - 1,897,944
Balance at 31 December 2021 9,299,228 27,686,289 3,863,028 (10,257,078) 30,591,467
Loss for the year - - - (2,298,640) (2,298,640)
Exchange differences on translation - - (3,379,668) - (3,379,668)
Total comprehensive income for the year - - (3,379,668) (2,298,640) (5,678,308)
Exercise of options - - - - -
Transaction costs - (111,261) - - (111,261)
Issue of share capital 630,614 4,485,961 - - 5,116,575
Share based payments cancellation - - (170,312) 170,312 -
Share based payments - - 1,690,431 - 1,690,431
Balance at 31 December 2022 9,929,842 32,060,989 2,003,479 (12,385,406) 31,608,904
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
Year ended 31 December 2022 Year ended 31 December 2021
Note $ $
Cash flows from operating activities
Loss for the year (7,339,906) (6,303,373)
Adjustments for:
Depreciation 13 29,201 42,464
Depreciation of the right of use 249,369
Fair value adjustment of financial assets 46,952 -
Share based payment expense, net 27 1,690,431 1,897,944
Net finance expense, from lease 10 51,874 -
Foreign exchange on operations 49,770 (56,515)
Increase in trade and other receivables (1,921,486) (550,924)
Increase in trade and other payables 3,204,713 1,006,810
Net cash outflow from operating activities (3,938,982) (3,963,594)
Investing activities
Purchase of property, plant and equipment 13 (197,943) (52,970)
Net cash (outflow) / inflow/ from investing activities (197,943) (52,970)
Financing activities
Proceeds from issue of exercising warrants and options 25 - 385,957
Proceeds from issue of ordinary shares 21 5,116,574 -
Share issue costs (111,261) -
Repayment of right of use lease obligations (246,309) -
Proceeds from loans and borrowings 652,288 1,626,357
Net cash inflow from financing activities 5,411,292 2,012,314
Net (Decrease) / Increase in cash and cash equivalents 1,274,267 (2,004,250)
Cash and cash equivalents at beginning of year 1,194,375 3,198,525
Foreign exchange differences on cash 136,963 -
Cash and cash equivalents at end of year 17 2,605,605 1,194,275
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
Year ended 31 December 2022 Year ended 31 December 2021
Note $ $
Cash flows from operating activities
Loss before income tax (2,298,640) (2,352,527)
Adjustment for:
Depreciation 1,149 -
Fair value adjustment of financial assets 46,952 -
Share based payments 27 1,690,431 1,897,944
Foreign exchange on operations (76,828) 4,768
(Increase) in trade and other receivables 197,880 (203,256)
Increase in trade and other payables 4,884 10,873
Net cash outflow from operating activities (434,172) (642,198)
Cash flows from investing activities
Purchase of property, plant and equipment - (2,072)
Loans to related parties 20 (4,409,538) -
Net cash outflow from investing activities (4,409,538) (2,072)
Cash flows from financing activities
Proceeds from issue of exercising warrants and options 21 - 385,957
Share issue costs (111,261) -
Proceeds from issue ordinary shares 21 5,116,574 -
Net cash inflow from financing activities 5,005,313 385,957
Net decrease in cash and cash equivalents 161,603 (258,313)
Cash and cash equivalents at beginning of year 68,721 327,034
Foreign exchange differences on cash - -
Cash and cash equivalents at end of year 17 230,324 68,721
There were no significant non-cash transactions in the year.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
Year ended 31 December 2022 Year ended 31 December 2021
Note $ $
Cash flows from operating activities
Loss for the year (7,339,906) (6,303,373)
Adjustments for:
Depreciation 13 29,201 42,464
Depreciation of the right of use 249,369
Fair value adjustment of financial assets 46,952 -
Share based payment expense, net 27 1,690,431 1,897,944
Net finance expense, from lease 10 51,874 -
Foreign exchange on operations 49,770 (56,515)
Increase in trade and other receivables (1,921,486) (550,924)
Increase in trade and other payables 3,204,713 1,006,810
Net cash outflow from operating activities (3,938,982) (3,963,594)
Investing activities
Purchase of property, plant and equipment 13 (197,943) (52,970)
Net cash (outflow) / inflow/ from investing activities (197,943) (52,970)
Financing activities
Proceeds from issue of exercising warrants and options 25 - 385,957
Proceeds from issue of ordinary shares 21 5,116,574 -
Share issue costs (111,261) -
Repayment of right of use lease obligations (246,309) -
Proceeds from loans and borrowings 652,288 1,626,357
Net cash inflow from financing activities 5,411,292 2,012,314
Net (Decrease) / Increase in cash and cash equivalents 1,274,267 (2,004,250)
Cash and cash equivalents at beginning of year 1,194,375 3,198,525
Foreign exchange differences on cash 136,963 -
Cash and cash equivalents at end of year 17 2,605,605 1,194,275
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
Year ended 31 December 2022 Year ended 31 December 2021
Note $ $
Cash flows from operating activities
Loss before income tax (2,298,640) (2,352,527)
Adjustment for:
Depreciation 1,149 -
Fair value adjustment of financial assets 46,952 -
Share based payments 27 1,690,431 1,897,944
Foreign exchange on operations (76,828) 4,768
(Increase) in trade and other receivables 197,880 (203,256)
Increase in trade and other payables 4,884 10,873
Net cash outflow from operating activities (434,172) (642,198)
Cash flows from investing activities
Purchase of property, plant and equipment - (2,072)
Loans to related parties 20 (4,409,538) -
Net cash outflow from investing activities (4,409,538) (2,072)
Cash flows from financing activities
Proceeds from issue of exercising warrants and options 21 - 385,957
Share issue costs (111,261) -
Proceeds from issue ordinary shares 21 5,116,574 -
Net cash inflow from financing activities 5,005,313 385,957
Net decrease in cash and cash equivalents 161,603 (258,313)
Cash and cash equivalents at beginning of year 68,721 327,034
Foreign exchange differences on cash - -
Cash and cash equivalents at end of year 17 230,324 68,721
There were no significant non-cash transactions in the year.
Basis of preparation
The consolidated financial statements of BrandShield Systems Plc have been
prepared in accordance with UK-adopted international accounting standards and
in accordance with the requirements of the Companies Act 2006.
The preparation of consolidated financial statements in accordance with UK
adopted international accounting standards requires the use of certain
critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Company's accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements are
disclosed in Note 3.
The consolidated financial statements present the results for the Group and
for the Parent Company for the year ended 31 December 2022. The comparative
period for the Group and for the Parent Company is for the twelve months ended
31 December 2021.
The principal accounting policies are set out below and have, unless otherwise
stated, been applied consistently in the financial statements. The
presentational currency of the consolidated financial statements is US
Dollars. The functional currency of the parent and the subsidiary is Pounds
Sterling and New Israeli Shekel respectively.
Basis of consolidation
Subsidiaries are all entities over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights 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 fully
consolidated from the date on which control is transferred to the Group. They
are deconsolidated from the date that control ceases. Please refer to note 4
for information on the consolidation of BrandShield Limited and the
application of the reverse acquisition under accounting principles IFRS 10.
Under IFRS 10, inter-company transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised losses are
also eliminated. When necessary, amounts reported by subsidiaries have been
adjusted to conform with the Group's accounting policies.
1. ACCOUNTING POLICIES - continued
Going concern
The financial statements have been prepared on the assumption that the Group
will continue as a going concern. Under the going concern assumption, an
entity is ordinarily viewed as continuing in business for the foreseeable
future with neither the intention nor the necessity of liquidation, ceasing
trading or seeking protection from creditors pursuant to laws or regulations.
In assessing whether the going concern assumption is appropriate, the
Directors take into account all available information for the foreseeable
future, in particular for the twelve months from the date of approval of the
financial statements.
Following the review of ongoing performance and cash flows, the Directors have
a reasonable expectation that the Group has adequate resources to continue
operational existence for the foreseeable future.
During 2022 the Company raised a total of £4.25m in new equity. The Company
has focused on deploying new capital to target profitability by increasing
investment in marketing and sales initiatives and accelerating the growth of
its customer footprint as well as Annual Recurring Revenues. However, an
increased emphasis has been placed on achieving a cash flow generative
position in 2024. The operational cash burn has been significantly reduced
through various initiatives including the roll out of the enhanced
'BrandShield 3.0' platform to the Company's clients. This has allowed
greater automation to be achieved leading to wider re-structuring within
certain areas of the Company, particularly within the enforcement division.
Other cost cutting has been achieved including a reduction in cloud based
costs. The Company also holds legacy investment assets that it is seeking to
dispose of in an orderly way. Opportunities may arise to dispose of these
however the Company is not reliant on this in a going concern scenario.
In addition, the directors have undertaken sensitivity reviews of the
forecasts to model the effects of lower than budgeted growth and believe that
cost reductions would be achievable if needed (albeit to the detriment of the
Group's long term strategy) if required to avoid the need for a fundraise
within the next 12 months. These measures would include if required the
Directors deferring an element of their salaries. As such, the Directors
consider that the Group will have access to adequate resources to meet
operational requirements for at least 12 months from the date of approval of
these financial statements. On this basis, the Directors have formed a
judgement, at the time of approving the Financial Statements, that there is a
reasonable expectation that the Group has access to adequate resources to
continue in operational existence for the foreseeable future. For this reason,
the Directors have adopted the going concern basis in preparing the Financial
Statements.
EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year.
Diluted earnings per share is calculated using the weighted average number of
shares adjusted to assume the conversion of all dilutive potential ordinary
shares.
In accordance with IAS 33 the share options and warrants in issue do not have
a dilutive impact on the earnings per share for the year ended 31 December
2022 and the year ended 31 December 2021. The total number of potentially
dilutive securities are 130,550,399 (2021: 36,786,285).
The weighted average number of shares is adjusted for the impact of the
reverse acquisition as follows:
- Prior to the reverse takeover, the number of
shares is based on BrandShield Limited, adjusted using the share exchange
ratio arising on the reverse takeover; and
- From the date of the reverse takeover, the
number of shares is based on the Company
On 4 February 2022, the Company issued 10,714,286 ordinary shares at 1 pence
per share by way of placement raising £1,500,000.
In May 2022, the Company issued 12,500,000
ordinary shares at 1 pence per share by way of placement raising £1,000,000.
In November 2022, the Company issued 29,166,667 ordinary shares at 1 pence per
share by way of placement raising £1,750,000.
Reconciliations are set out below:
31 December 2022
Weighted
average Per-share
Earnings number of amount
$ shares $
Basic and Diluted EPS (7,339,906) 170,331,874 (0.04)
31 December 2021
Weighted
average Per-share
Earnings number of amount
$ shares $
Basic and Diluted EPS (6,303,373) 116,812,529 (0.05)
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