As
filed with the Securities and Exchange Commission on September 20, 2024.
Registration
Statement No. 333-281938
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
AMENDMENT NO. 1
TO
FORM
F-1
REGISTRATION
STATEMENT Under The Securities Act of 1933
ALTA
GLOBAL GROUP LIMITED
(Exact
name of Registrant as specified in its charter)
| Australia |
|
7380 |
|
Not
applicable |
(State
or other jurisdiction of
incorporation or organization) |
|
(Primary
Standard Industrial
Classification Code Number) |
|
(I.R.S.
Employer
Identification
Number) |
Level
1, Suite 1, 29-33 The Corso
Manly,
New South Wales 2095
+61
1800 151 865
(Address,
including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Wimp
2 Warrior LLC
8
The Green, Ste R
Dover,
DE 19901
(302)
288-0670
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
Copy
of all communications including communications sent to agent for service, should be sent to:
Jeffrey
J. Fessler, Esq.
Seth
A. Lemings, Esq.
Sheppard,
Mullin, Richter & Hampton LLP
30
Rockefeller Plaza
New
York, NY 10112
Telephone:
(212) 653-8700
Facsimile:
(212) 653-8701 |
|
Mitchell
S. Nussbaum, Esq.
Norwood
P. Beveridge, Esq.
Lili
Taheri, Esq.
Loeb
& Loeb LLP
345
Park Avenue
New
York, NY 10154
Telephone:
(212) 407-4000
Facsimile:
(212) 407-4990 |
Approximate
date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging
growth company ☒
If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided
pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
| † |
The
term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5, 2012. |
The
Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act, or until this registration statement shall become effective on such date as the
Securities and Exchange Commission, acting pursuant to said Section 8(a) may determine.
The
information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration
statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
| PRELIMINARY PROSPECTUS |
|
SUBJECT
TO COMPLETION |
|
DATED
SEPTEMBER 20, 2024 |
Up
to 1,529,052 Ordinary Shares
Up
to 1,529,052 Pre-Funded Warrants to Purchase up to 1,529,052 Ordinary Shares
Up
to 1,529,052 Ordinary Shares underlying such Pre-Funded Warrants
Alta
Global Group Limited
This
is a firm commitment public offering in the United States of ordinary shares, no par value (“Ordinary Shares”), of Alta Global
Group Limited, an Australian public company limited by shares.
Our
Ordinary Shares are listed on the NYSE American LLC (the “NYSE American”) under the symbol “MMA.” We have assumed
a public offering price of $3.27, which represents the last reported sale price of our Ordinary Shares as reported on the NYSE
American on September 17, 2024. The final public offering price will be determined through negotiation between us and the underwriters
in the offering and the assumed public offering price used throughout this prospectus may not be indicative of the actual offering price.
We
are also offering pre-funded warrants (the “Pre-Funded Warrants”) to purchase Ordinary Shares to those purchasers whose purchase
of Ordinary Shares in this offering would result in the purchaser, together with its affiliates and certain related parties, beneficially
owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding Ordinary Shares immediately following the consummation
of this offering, in lieu of Ordinary Shares. Each Pre-Funded Warrant is exercisable for one Ordinary Share and has an exercise price
of $0.001 per share. The assumed offering price per Pre-Funded Warrant is $3.27 less $0.001. Each Pre-Funded Warrant will be exercisable
immediately upon issuance and will expire when exercised in full. This offering also relates to the Ordinary Shares issuable upon exercise
of the Pre-Funded Warrants sold in this offering.
There
is no established public trading market for the Pre-Funded Warrants, and we do not expect a market to develop. We do not intend to apply
for listing of the Pre-Funded Warrants on any securities exchange or other nationally recognized trading system. Without an active trading
market, the liquidity of the Pre-Funded Warrants will be limited.
We
are an “emerging growth company” under the federal securities laws and have elected to comply with certain reduced public
company reporting requirements.
Investing
in our securities involves a high degree of risk. See “Risk Factors” beginning on page 12. Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
| | |
Per
Ordinary Share | | |
Per
Pre-Funded
Warrant | | |
Total | |
| Public offering price | |
US$ | | | |
US$ | | | |
US$ | | |
| Underwriting discounts and
commissions(1) | |
US$ | | | |
US$ | | | |
US$ | | |
| Proceeds to us, before expenses | |
US$ | | | |
US$ | | | |
US$ | | |
| (1) |
Underwriting
discounts and commissions do not include a non-accountable expense allowance equal to 1.0% of the public offering price payable to
the underwriters. We refer you to “Underwriting” beginning on page 104 for additional information regarding underwriters’
compensation. |
We
have granted a 45-day option to the representative of the underwriters to purchase up to 229,358 additional Ordinary Shares and/or
Pre-Funded Warrants solely to cover over-allotments, if any.
The
underwriters expect to deliver the Ordinary Shares and any Pre-Funded Warrants to purchasers against payment in U.S. dollars in New York,
New York, on or about , 2024.
ThinkEquity
The
date of this prospectus is , 2024
TABLE
OF CONTENTS
We
are incorporated under the laws of Australia. Certain of our directors and officers and certain other persons named in this prospectus
are citizens and residents of countries other than the United States, and all or a significant portion of the assets of the certain directors,
officers and other persons named in this prospectus are outside the United States. As a result, it may not be possible for you to effect
service of process within the United States upon such persons or to enforce against them or against us in U.S. courts any judgments predicated
upon the civil liability provisions of the federal securities laws of the United States. There is doubt as to the enforceability in Australia,
either in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities predicated on U.S. federal
securities laws.
You
should rely only on the information contained in this prospectus or contained in any free writing prospectus filed with the SEC. Neither
we nor the underwriters have authorized anyone to provide any information or make any representation other than those contained in this
prospectus or in any free writing prospectus we have prepared. When you make a decision about whether to invest in the Ordinary Shares
or Pre-Funded Warrants, you should not rely upon any information other than the information in this prospectus. The information contained
in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any
sale of the Ordinary Shares or Pre-Funded Warrants. Our business, financial condition, operating results and prospects may have changed
since that date. This prospectus is not an offer to sell or solicitation of an offer to buy the Ordinary Shares or Pre-Funded Warrants
in any circumstances under which any such offer or solicitation is unlawful.
For
investors outside of the United States, we have not taken any action to permit this offering or to permit the possession or distribution
of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the
United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to the offering
of the Ordinary Shares and Pre-Funded Warrants and the distribution of this prospectus outside of the United States.
CONVENTIONS
THAT APPLY TO THIS PROSPECTUS
Unless
otherwise indicated or the context implies otherwise, any reference in this prospectus to:
| |
● |
“Alta”
refers to Alta Global Group Limited, an Australian public company limited by shares; |
| |
|
|
| |
● |
“the
Company,” “we,” “us,” or “our” refer to Alta and its consolidated subsidiaries, through
which it conducts its business; |
| |
|
|
| |
● |
“Shares”
or “Ordinary Shares” refers to Ordinary Shares of Alta; and |
| |
|
|
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● |
“Corporations
Act” means the Australian Corporations Act 2001 (Cth). |
PRESENTATION
OF FINANCIAL INFORMATION
Our
reporting and functional currency is the Australian dollar, and our financial statements included elsewhere in this prospectus are presented
in Australian dollars. The consolidated financial statements and related notes included elsewhere in this prospectus have been prepared
in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (the “IASB”)
and interpretations (collectively “IFRS”), differ in certain significant respects from generally accepted accounting principles
in the United States (“U.S. GAAP”). As a result, our financial statements may not be comparable to the financial statements
of U.S. companies. Because the U.S. Securities and Exchange Commission (the “SEC”) has adopted rules to accept financial
statements prepared in accordance with IFRS as issued by the IASB without reconciliation to U.S. GAAP from foreign private issuers such
as us, we are not providing a description of the principal differences between U.S. GAAP and IFRS.
All
references in this prospectus to “US$,” “U.S. dollars,” and “dollars” mean U.S. dollars and all references
to “A$” mean Australian dollars, unless otherwise noted.
Our
reporting and functional currency is the Australian dollar. As a result, except as otherwise stated, all amounts presented in this prospectus
will be in Australian dollars. No representation is made that the Australian dollar amounts referred to in this prospectus could have
been or could be converted into U.S. dollars at a particular rate.
INDUSTRY
AND MARKET DATA
This
prospectus includes information with respect to market and industry conditions and market share from third-party sources or that is based
upon estimates using such sources when available. We believe that such information and estimates are reasonable and reliable. We also
believe the information extracted from publications of third-party sources has been accurately reproduced. However, we have not independently
verified any of the data from third party sources. Similarly, our internal research is based upon the understanding of industry conditions,
and such information has not been verified by any independent sources. In addition, assumptions and estimates of our and our industry’s
future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described
under the caption “Risk Factors” of this prospectus. These and other factors could cause our future performance to differ
materially from our assumptions and estimates. See “Cautionary Note Regarding Forward-Looking Statements.”
TRADEMARKS,
SERVICE MARKS AND TRADENAMES
We
use our registered and unregistered trademarks in this prospectus. This prospectus also includes trademarks, tradenames and service marks
that are the property of other organizations. Solely for convenience, trademarks and tradenames referred to in this prospectus may appear
without the ® and ™ symbols, but those references are not intended to indicate in any way that we will
not assert, to the fullest extent under applicable law, our rights or that the applicable owner will not assert its rights, to these
trademarks and tradenames.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our
control. All statements, other than statements of historical fact included in this prospectus, regarding our strategy, future operations,
financial position, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this
prospectus, the words “could,” “believe,” “anticipate,” “intend,” “estimate,”
“expect,” “may,” “continue,” “predict,” “potential,” “project”
or the negative of these terms or other similar expressions are intended to identify forward-looking statements, although not all forward-looking
statements contain such identifying words.
Forward-looking
statements contained in this prospectus include, but are not limited to, statements with respect to:
| |
● |
our
goals and strategies, including with respect to the development and expansion of our business; |
| |
|
|
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● |
our
capital commitments and/or intentions with respect to our business, including the sufficiency of our liquidity and capital resources; |
| |
|
|
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● |
the
nature and extent of future competition in our industry and in the markets in which we operate or plan to operate; |
| |
|
|
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● |
the
price of, and our ability to successfully integrate, any acquired businesses; |
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|
|
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● |
the
expected cash flows from our business; |
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|
|
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● |
our
planned capital expenditures; and |
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|
|
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● |
our
intended use of proceeds from this offering. |
All
forward-looking statements speak only as of the date of this prospectus. You should not place undue reliance on these forward-looking
statements. Although we believe that our plans, objectives, expectations and intentions reflected in or suggested by the forward-looking
statements we make in this prospectus are reasonable, we cannot assure you that these plans, objectives, expectations or intentions will
be achieved. We disclose important factors that could cause our actual results to differ materially from our expectations under “Risk
Factors” and elsewhere in this prospectus. This prospectus also contains estimates and other statistical data made by independent
parties and by us relating to market size and growth and other data about our industry. These data involve a number of assumptions and
limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates of
our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty
and risk. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or
quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future
events. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not
possible for management to predict all risk factors and uncertainties.
The
forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made
in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements,
whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the
occurrence of unanticipated events.
PROSPECTUS
SUMMARY
This
summary provides a brief overview of information contained elsewhere in this prospectus and is qualified in its entirety by the more
detailed information and consolidated financial statements included elsewhere in this prospectus. Because it is abbreviated, this summary
does not contain all of the information that you should consider before investing in our securities. You should read the entire prospectus
carefully before making an investment decision, including the information presented under the headings “Risk Factors,” “Cautionary
Note Regarding Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” and the historical consolidated financial statements and the related notes to those financial statements included
elsewhere in this prospectus.
Our
Mission
Our
mission is to empower community driven growth in the global martial arts and combat sports sector, leveraging technology to bridge the
gap between passion and participation.
Company
Overview
We
are a technology company that is enabling the global martial arts and combat sports industry to maximize the monetization opportunities
available to the sector by increasing consumer participation in the sport and building upon existing community offerings within the sector.
While we believe martial arts and combat sport gyms have a superb in-gym product, they are ripe for transformation when it comes to building
sales channels, enhancing customer onboarding, optimizing engagement and driving the growth and retention of members and membership revenues
within their gym communities.
We
believe that our platform represents a considerable opportunity to aggregate the vast global community ecosystem for martial arts and
combat sports, via a single platform solution that will define the sector’s digital transformation, converting one of the world’s
largest fan bases into participants. The Alta Platform serves as a comprehensive solution for martial arts and combat sports, offering
a blend of four core products: the Warrior Training Program, UFC Fight Fit Program, Alta Academy, and the Alta Community. To date, the
Warrior Training Program has been the core product we have monetized globally, which has been integral in enabling us to partner with
some of the best gyms and coaches globally, while building a passionate following from our participants and customers.
Mixed
martial arts (“MMA”) is one of the world’s fastest growing sports for participation and audience growth, with hundreds
of millions of passionate fans engaging in various levels of digital and physical participation every day. According to IBISWorld statistics,
there are currently over 45,597 martial arts and combat sports gyms in the US alone that are expected to generate over US$12.6 billion
in annual revenue in 2023. Additionally, according to Sports & Fitness Industry Association’s Single Sport Reports for Martial
Arts and Boxing Fitness, it is expected that more than 11.8 million people will engage in various martial arts and combat sports disciplines
in 2023.
There
are significant sector tailwinds which we benefit from, created by the large professional MMA leagues, including the UFC, Professional
Fighters League (“PFL”), ONE Championship and Bellator, whose marketing budgets and broadcast reach play a pivotal role in
growing the sport’s fan base. As a participant in the MMA sector, we target fan and consumer interest and aim to convert that interest
into engagement with our premium and immersive online and “in-gym” fitness and training experiences.
We
have successfully activated globally recognized coaches, athletes and influencers as ambassadors who continue to promote our vison and
the growth in adoption of our platform and its benefits. We believe the continuing engagement of our ambassadors will be a key element
to drive our expansion. Our network of partner gym communities includes some of the most renowned names in the combat sports sector,
including one of our cofounders, John Kavanagh, an MMA coach who is widely recognized for coaching UFC champion, Conor McGregor. Mr.
Kavanagh has assisted in the development of the training programs available exclusively on our platform and offers these programs at
his prominent gym, SBG Ireland, in Dublin. Mr. Kavanagh has also assisted us in engaging other globally recognized partner gym communities.
In addition, we have also secured key talent in the MMA sector by engaging ambassadors such as former UFC champion Daniel Cormier, UFC
broadcaster Laura Sanko and owner and head coach of City Kickboxing in Auckland, New Zealand, Eugene Bareman.
Since
our inception, we have accumulated deep sector knowledge of how martial arts and combat sports operate globally, enabling us to recognize
the unique preferences and needs of the gyms, coaches and consumers within this market. We have leveraged the extensive information in
our gym inventory and community database to create an optimal pathway to attract consumers to participate in our proprietary training
programs as well as training via the weekly timetable of our partner gyms. We have built a database containing over 4,000 records of
martial arts and combat sports gyms globally and have over 550 gyms on the Alta Platform. Our partner gym communities include martial
arts and combat sports gym operations that span a range of training disciplines including, but not limited to, jiu jitsu, boxing, wrestling,
MMA, Muay Thai, kickboxing, judo, karate, and Tae Kwon Do.
Since
2018, we have run over 206 Warrior Training Programs globally, and over 5,107 participants have subscribed to our Warrior Training Program,
an average of 25 participants per program. In fiscal year 2021, we ran 34 Warrior Training Programs with a total of 886 participants.
In fiscal year 2022, we ran 50 Warrior Training Programs with a total of 1,163 participants. In fiscal year 2023, we ran 36 Warrior Training
Programs with a total of 865 participants. Over the last three years, the average gross revenue per participant who subscribed to our
Warrior Training Program was A$1,496. The Warrior Training Program is a 100 lesson, 20-week syllabus that provides participants with
a comprehensive introduction to the foundations of the sport of mixed martial arts. Participants who complete the 20-week Warrior Training
Program have the opportunity to compete in a sanctioned amateur mixed martial arts contest against a fellow participant in their class
cohort. The Warrior Training Program thereby acts as an “on ramp” to learning the fundamentals of all disciplines of mixed
martial arts, including wrestling, Brazilian Jiu Jitsu, boxing, Thai boxing, Judo and other disciplines. At the conclusion of the Warrior
Training Program, participants may elect to continue their training subscription and specialize in a particular martial art they enjoyed
during their Warrior Training Program.
As
a result, our partner gyms have experienced incremental revenue growth because of increased participation within their community. Our
community development approach to acquiring participants has redefined the participation demographics for martial arts worldwide. Specifically,
we have strong female participation rates, and the average age of our members is mid to late 30s, with our oldest participants being
in their 60s. Additionally, participants can become valuable, long-standing members of our and their gym community after completing their
first Alta program.
We
have also entered into a Partner Referral Agreement with U Gym, LLC (“UFC Gym Group”). We have collaborated with UFC
Gym Group to design and launch a new 10-week Alta training program, called the UFC Fight Fit Program (“UFC Fight Fit Program”).
UFC Gym Group has the option to introduce the 10 week program across its network of over 150 global locations.
A
further opportunity to aggregate the sector is through our Alta Community product, which is an extension of our existing product offerings
and represents the first global, cloud-based community-led growth and management software for martial arts and combat sports. The Alta
Community is designed for participants, coaches, and operators who are collectively referred to as “members” of the Alta
Community. The Alta Community enables the creation of individual communities and also promotes connections among these communities and
their members, thus fostering a single global community. This solution is deliberately designed to optimize the management, growth, and
monetization of martial arts and combat sports communities. It strives to enhance the digital and in-gym experiences of Alta members,
making it easier for them to discover, participate in, contribute to, coach, and operate the best martial arts and combat sports communities
on a single platform. Importantly, this entire process is facilitated through a simple monthly subscription.
In
summary, by combining our proprietary training programs with the insights and connection driven approach of the Alta Community, we have
created a commercial environment that drives efficiency, growth, and is designed to deliver partner gyms and coaches a distinct competitive
advantage. The combination of Alta’s core products positions the business strongly as a first mover in the race to aggregate such
a vast and attractive sector by creating a personalized, inclusive and attractive “on ramp” for martial arts participation,
regardless of location.
Our
Footprint - Trainalta.com, Mixedmartialarts.com and Steppen
Each
day we strive to:
| |
● |
Increase
the number of published and active gyms. |
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● |
Activate
recurring revenue through each active gym by running Alta Programs, selling in-gym training subscriptions and enrolling customers
in our Alta Academy and Alta Community platform. Our mantra ‘increasing earnings at your gym’ enables us to increase
our ‘share of wallet’ and drive growth. |
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● |
Establish
a model that generates a steady stream of leads and prospects for our products. The user generated content available on mixedmartialarts.com,
Alta content available on the Alta Academy and testimonials endorsing our programs are enabling the creation of a self-sustaining
customer acquisition model. |
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● |
Build
a scalable technology stack that solves customer needs and is capable of being rolled out to other sports with community attributes
similar to martial arts and combat sports. |
This
focus has enabled us to achieve the following:
| Metrics |
|
March
31, 2024 (Actual) |
| Curated
Gym Network |
|
|
| Database |
|
4,299
gyms with global inventory accessible |
| Published |
|
3,028
gyms (1,025 in Oceania, 1,699 in the United States, 172 in the United Kingdom & Ireland and 132 in other locations) with global
inventory available |
| Active |
|
552
gyms registered on trainalta.com, gym profile claimed or created, and accepted terms and conditions for the Alta platform or Hype
platform and/or accepted previous license agreement to run the Warrior Training Program |
| Ambassadors |
|
5
globally recognized influencers |
| Athlete
Profiles/Talent |
|
Over
9,878 professional and amateur fighters |
| Participants/User
Accounts |
|
Over
543,518 monthly users of three Alta platforms |
| Website
Sessions |
|
Over
580,000 combined monthly website sessions of three Alta platforms |
| Monthly
User Engagements |
|
Over
600,000 monthly average user engagements (posts and reactions) |
| Follower
base |
|
Over
5,000,000 total social media followers (Meta, X and TikTok) |
| Page
Views |
|
Over
14,000,000 combined monthly pageviews of three Alta platforms |
| Coaching
Tutorial Videos |
|
Over
3,500 tutorial videos available on Alta platforms |
| |
|
|
| Enterprise |
|
|
| Enterprise |
|
UFC
Fit partnership expansion from pilot at San Jose |
Business
Progress
Since
July 1, 2023, we have increased our gym footprint, expanding into new territories including Illinois, Arizona and Hawaii. We have also
engaged major martial arts academies including Renzo Gracie, American Top Team and American Kickboxing Academy.
In
July 2023, we launched our first online offering, the Alta Academy, to complement and further leverage our in-gym training experiences
for our customers. This activates our multi-year exclusive content agreements with our key global talent, which is a critical element
of our top of funnel marketing systems to drive in-gym participation.
Since
launch of the Alta Academy, we have expanded our digital content, including the digital syllabus for the Warrior Training Program, and
extended our online training into other disciplines beyond MMA, including jiu jitsu, boxing, wrestling, and Muay Thai, among others,
with new masterclasses delivered by our elite coaching talent, including Rafael Cordeiro, Mike Angove, Nikki Lloyd-Griffiths.
In
September 2023, we launched four new membership tiers for Alta members, including an In-Gym Training membership tier, which leverages
underutilized capacity within our gym partner network and allows Alta members to train in our partner gyms.
In
September 2023, we launched the first iteration of the Alta Community platform, which we believe will drive the growth of the gym and
coaching communities though the provision of new content and channels. This included the launch of gym channels. The gym channels feature
is used to house multimedia content that pertains to a specific gym’s profile on the Alta Community. This currently includes multimedia
content such as gym walkthrough videos (point of view videos demonstrating the gym’s facility) as well as interviews with gym owners
and coaches.
In
September 2023, we successfully completed our pilot UFC Fit program with UFC Gym in San Jose. We are currently negotiating the roll-out
the UFC Fit program across the UFC Gym network.
In
September 2023, we completed the acquisition of the assets of Steppen Pty Ltd, a fitness technology company based in Australia (“Steppen”).
Steppen is a dynamic fitness app designed to inspire, guide, and support users on their fitness journey. The Steppen platform quickly
resonated with young fitness enthusiasts around the globe, particularly in the U.S., accumulating a large following quickly after its
global launch in mid-2021. The Steppen App has seen success with over 395,000 downloads, predominantly from the U.S., reaching over 1.8
million impressions on the Apple App Store. With a robust database of over 270,000 accounts, we believe that the Steppen App has established
a substantial user base. We plan to continue Steppen App’s operations and integrate key aspects of its proprietary Apple mobile
application technology, while exploring ways to optimize content and services for users, leveraging the acquired expertise and technology.
We believe the synergy from this acquisition is poised to drive growth, diversification, and market expansion for Alta in the burgeoning
health and wellness sector. As consideration for the asset acquisition, we issued Steppen an unsecured and non-redeemable convertible
promissory note (on the same terms as the private placement completed in June 2023 (the “Private Placement”)), with a principal
amount of US$ 64,977.
In
October 2023, we completed the acquisition of the assets of Mixed Martials Arts LLC, an independent
MMA media company, based in the U.S. Mixed Martial Arts LLC represents a valuable opportunity to us, as it is one of the last
independent MMA media companies not acquired by a major corporation, making it a novel asset in the digital MMA landscape. With a substantial
digital presence, the platform boasts more than 260,000 forum accounts, more than 350,000 monthly engaged sessions, and a significant
social media footprint, including over 5 million followers across Facebook pages. Mixed Martial Arts LLC has previously initiated effective
monetization strategies, generating peak annual revenues of up to US$600,000. With the right investment in technology and user engagement,
we believe there is considerable potential for revitalizing and growing the platform’s user base and revenue streams. As
consideration for the asset acquisition, we issued Mixed Martials Arts LLC an unsecured
and non-redeemable convertible promissory note (on the same terms as the recently completed Private Placement), with a principal amount
of US$250,000 and paid US$25,000 in cash.
In
October 2023, we launched ticketing services for live Alta events and seminars, including the Warrior Training Program finale events.
Since launching to March 31, 2024, we have generated ticketing revenue of A$144,817.
On
April 2, 2024, we completed our initial public offering, raising $6,500,000 by selling 1,300,000 shares at $5.00 per share. All previously
issued convertible notes were converted or redeemed. As of March 31, 2024, there are no convertible notes, host, or derivative liabilities
on the Consolidated Statement of Financial Position. Remaining interest and final fair value movement in derivative liability are reflected
in the Consolidated Statement of Profit or Loss.
Throughout
April 2024, we partnered with renowned combat sports figures, including Rafael Cordeiro (Mike Tyson’s coach) for online Muay Thai
training and former UFC champion Daniel Cormier for wrestling instructional videos, targeting both beginners and seasoned athletes.
In
May 2024, we celebrated success in expanding the global MMA community. The Warrior Training Program at SBG Ireland has historically attracted
over 700 new members, boosting gym memberships and revenue. MMA superstar Conor McGregor, an Alta investor, endorsed the program to help
drive global combat sports participation. We also announced a strategic partnership with Upper Management in Mexico to launch the Warrior
Training Program in multiple gyms and create content for the burgeoning Mexican MMA fanbase. Further, we also showcased our partnership
with City Kickboxing in New Zealand, transforming over 800 beginners into cage-ready athletes through the Warrior Training Program, significantly
boosting gym memberships and community engagement.
In
May 2024, we completed the acquisition of the assets of Hype Kit, Inc. (“Hype”) for USD$100,000, an all-in-one digital marketing
platform, designed to help small businesses grow in today’s age of social media. Hype’s software platform strengthens the
Company’s vision to convert 640 million MMA fans to participants by providing invaluable tools to our gym owner, coach, and athlete
partners to not only grow their revenues, but also operate more efficiently, save costs and enhance the offerings to their members and
community. This acquisition is expected to accelerate Alta’s technology roadmap, bringing forward new subscription revenue opportunities
for us, whilst creating cost synergies by materially reducing product development overhead and bringing valuable technology expertise,
skills and talent into the business.
In
June 2024, we partnered with legendary MMA coach Eric Nicksick and former UFC fighters Jessica-Rose Clark and Gilbert Melendez to help
strengthen our connection to 640 million global MMA fans.
In
September 2024, we announced a revenue share agreement with UFC Gym Group in relation to the intention of rolling out the Warrior
Training Program and Hype across UFC Gym Group’s global network of gyms, consisting of both corporate-owned and franchise
locations (with over 150 locations in 40 countries, including 80 in the United States). In addition, UFC Gym Group has hundreds of gyms
in development. In the initial phase, these programs are expected to be introduced in locations across the United States, the Middle
East, the UK, Germany, Mexico, India and Central Asia. Any revenue from the Warrior Training Program will be shared, with the UFC Gym Group
receiving 70% and the Company receiving 30%. The agreement is effective for three years and either party may terminate the agreement
upon written notice to the other of a breach of the agreement if such breach is not cured within 10 days following receipt of written
notice of the breach. In addition, UFC Gym Group can terminate the agreement upon 60 days written notice to us. While we can
provide no assurances, we believe, based on historical operating data, that this partnership has the potential to produce gross revenue
of over $7 million per annum, with the ability to grow with UFC Gym Group as they develop additional locations.
In
September 2024, Conor McGregor was appointed as a global ambassador (“Ambassador Agreement”) and will provide services
customarily associated with such roles for a company in the mixed martial arts and technology sector (“Services”).
The term of the Ambassador Agreement shall be effective for three years and either party may terminate the agreement upon 10 days
prior written notice if the other party breaches the agreement and does not cure such breach within such time period. In consideration
for providing these Services under the Ambassador Agreement, and pursuant to the exemption from registration provided for in Regulation
S promulgated under the Securities Act, Mr. McGregor received 700,000 performance share rights that will vest once the 30-day volume-weighted
average price (VWAP) achieves the following trigger: 150,000 shares on execution of the Ambassador Agreement; 100,000 shares when the
share price reaches $7.50; 150,000 shares when the share price reaches $10.00; 150,000 shares when the share price reaches $15.00 and
150,000 shares when the share price reaches $20.00. Aligned with the three (3) year term of the Ambassador Agreement, Mr. McGregor is
restricted from selling shares within three (3) years of issuance unless specific conditions are met, such as the Company’s written consent,
a sale or liquidation of the Company, or if the Company breaches the agreement.
Our
Next Growth Engines
The
growth engine of the Alta Platform is conceived as a dynamic, adaptable model, intentionally designed to reflect the ever-evolving landscape
of martial arts, ongoing technological advancements, and the shifting preferences within the global martial arts community. Rather than
being static, this strategy is crafted to be agile, accommodating new insights and market shifts.
Having
established product market fit across our operating territories with the Warrior Training Program, we expect that the next phase of our
growth will be driven by expanding our product set to meet the demand of the martial arts and combat sports community. Our extended subscription
based product suite aims to increase member engagement and lifetime value of each of our members (participants, gyms and coaches) in
the martial arts training ecosystem. For example, where a subscription to the Warrior Training Program historically had a start date
and an end date, our new product range and technology stack enables the Warrior Training Program to also be sold alongside an ongoing
in-gym training subscription (both before and after completion of the Warrior Training Program).
Central
to this strategy is the utilization of technology to catalyze growth that is primarily community-led. It establishes a digital-to-physical
bridge that enhances engagement and participation within physical gym settings. We believe our platforms are poised to become the primary
destination for passionate martial artists and commercial practitioners, presenting avenues for content consumption and active, personalized
involvement within the sport.
Our
platforms equip users with an array of options to navigate and tailor their martial arts experience. Our services are inclusive, reaching
out to a broad spectrum of users from beginners to seasoned fighters, and also provide resources for coaches and gym owners to grow their
businesses. These services are refined to match users’ progression within martial arts, ensuring that our platforms evolve concurrently
with technology and community input.
Most
recently, we delivered a bespoke product solution for a new enterprise partner, UFC Gym, which will allow us to refine our enterprise
offerings to other large fitness chains and provide us with valuable content and user led reviews and feedback. Our ability to grow is
further bolstered by a dedicated team of experts in the field that enhance our technology, ensuring that our platforms remain at the
forefront of user engagement.
We
monetize our product offerings through our membership tiers that are customized for different degrees of engagement, enabling users to
modify their level of participation as their relationship with martial arts deepens, or reduces. This modular approach guarantees accessibility
and flexibility, presenting a variety of interaction points for every segment of the martial arts community.
The
expansion of our platforms is engineered to boost user engagement, revenue generation and lifetime value of each Alta member, embodying
a growth-centric model that anticipates and meets the needs of our users while expanding their interaction with martial arts. This blueprint
is devised to position our platforms as a central, influential force within the martial arts community that fosters a robust, interconnected
global community.
Member
Acquisition Approach for the Alta Platform
Member
Acquisition Overview for the Alta Platform
We
are dedicated to expanding our member community by strategically acquiring new members who have a passion for martial arts or combat
sports and fitness. Our approach is data-driven and designed to align with the interests and behaviors of potential platform members.
Relationship/Platform:
| |
● |
By
offering practical solutions to improve the in-gym experience and pathways to participate in martial arts and combat sports, our
sales function combines with the utility of our platform to become an effective co-operative marketing acquisition strategy. We empower
gym owners with the knowledge and tools required to increase their revenue. This empowerment demonstrates that our platform is not
merely a product but an evolving business growth partnership. |
Direct
Targeted Marketing and Advertising:
| |
● |
Precision
Analytics: By leveraging our comprehensive data analytics and expansive member databases, we identify potential participants that
may be interested in MMA. These individuals are segmented and approached with personalized advertising campaigns across major digital
platforms, including Google, Meta, and TikTok, ensuring a high degree of relevancy and engagement. |
| |
|
|
| |
● |
Engagement-Driven
Campaigns: We create and disseminate high-impact marketing campaigns that tell evocative stories, incorporate user-generated content,
and feature interactive elements to captivate and involve MMA fans. Capitalizing on seasonal movements, major fight events, and the
inherent virality of the sport, we craft advertisements designed to resonate profoundly with our target audience, stimulating engagement
and fostering conversions. |
Cross-Promotional
Activities:
| |
● |
Alliances
with Marquee Brands: The Alta platform actively seeks and secures strategic alliances with premier brands such as UFC Fit. Through
these partnerships and data sharing protocols, we can reach a broader yet highly targeted audience, offering them an immersive experience
in the MMA lifestyle. |
| |
|
|
| |
● |
Custom-Tailored
Offers: We create exclusive promotional opportunities specifically for the members and customers of our partner brands. By providing
special incentives such as unique experiences during pinnacle events in the MMA calendar, we attract an audience already primed for
our offerings. |
Optimization
and Visibility:
| |
● |
Content
Optimization: We continuously refine the content on our digital properties, including Trainalta.com and MixedMartialArts.com, to
align with the search behaviors of MMA enthusiasts. Through keyword targeting and content strategies, we enhance our visibility,
particularly during periods of peak interest. |
| |
|
|
| |
● |
Technical
Readiness: Our platforms are optimized for high performance to accommodate increased traffic flow during major campaigns and high-interest
seasons, ensuring that new visitors encounter a seamless user experience, conducive to member conversion. |
Targeted
Seasonal Initiatives:
| |
● |
Seasonal
Marketing Initiatives: Our campaigns are also timed to coincide with key fitness milestones throughout the year, recognizing patterns
such as New Year’s fitness resolutions, spring training upticks, and summer readiness regimens. These initiatives are crafted
to appeal to fitness consumers, integrating lifestyle aspirations with the rigors and discipline of MMA training. |
| |
|
|
| |
● |
Experiential
Engagements: We design promotions that tie in with significant events and holidays, catering to the consumers’ desire for unique
and exclusive experiences augmented by MMA training and fitness regimens. |
By
integrating deep database insights and aligning with seasonal consumer behaviors, we believe our member acquisition strategy is fine-tuned
for effectiveness, ensuring we captivate a diverse audience ranging from the core MMA fan to the lifestyle-driven fitness enthusiast.
Our strategic approach positions us to expand our member base meaningfully and sustainably, driving the growth, monetization and vitality
of the Alta Community.
B2B
and Enterprise Sales Partnership Approach
We
understand the local nature of the martial arts and combat sports gym industry, where trust and personal relationships are paramount.
Our strategy is to access local markets through:
| |
● |
Industry
Experts: Our sales personnel are not just representatives; they are coaching and gym operation consultants who understand the benefits
of leveraging our platform, providing personalized solutions and fostering trust through demonstrating our platforms capability as
a complimentary tool in our partner gyms’ sales, marketing and community management approach. |
| |
|
|
| |
● |
Localized
Marketing: Implement targeted marketing campaigns that resonate with the local MMA culture and interests, utilizing local media,
community events, and regional online media destinations and communities. |
| |
|
|
| |
● |
Community
Engagement: Participate in and sponsor local competitive events, strengthen partnerships with our gym partners, and engage in community
service, reinforcing our commitment to our gym partners and their communities. |
| |
|
|
| |
● |
Referral
Programs: Leverage our platforms referral program that incentivizes our existing participants and gym partners to bring in their
network, leveraging their satisfaction and trust in our platforms brand. |
| |
|
|
| |
● |
Testimonials
and Success Stories: Showcase business growth stories from our current gym partners and endorsements from our high-profile coaches
to demonstrate the impact of our Warrior Training Program. |
| |
|
|
| |
● |
Search
Engine Optimization and Online Presence: Optimize our online presence to capture interest from potential gym partners searching for
options to grow their profile in their local area. |
| |
|
|
| |
● |
Social
Media Engagement: Actively engage with the local MMA and combat sports community on social media platforms to build a passionate
following and drive awareness. |
Our
commitment to evolution and adaptability is paramount. We maintain a feedback-informed approach to our offerings, ensuring that they
align with the evolving demands of the MMA and combat sports community. This adaptive strategy reflects our commitment to staying at
the forefront of combat sports training.
Our
Future Growth Strategy
We
believe there are significant opportunities to grow our business, and we intend to do this in established markets to take advantage of
the unique position we have created in the martial arts and combat sports sector. Since inception we have grown through positive customer
reviews, amplified through social media to attract new customers. In addition, we have partnered with globally respected martial arts
figures who greatly expand our organic reach through their social channels and networks.
We
will continue to invest in our product platform and further develop our partner eco-system. As our product offerings expand, we believe
there will be the opportunity to cross-sell our products into our gym partner network and increase adoption of our full product suite.
We
intend to continue to invest in technology to enhance the experience for all participants on the Alta Platform, namely customers, coaches
and gym owners, in order to drive lifetime value and expand sales channels through referrals and organic promotion.
While
we are currently focused on the martial arts and combat sports sector, over time, we believe that our technology and community platform
could be expanded to support many other sports which exhibit attributes similar to martial arts and combat sports. Once proven in the
vast addressable market of martial arts and combat sports, we feel many new sector opportunities will present themselves for similar
rollouts and monetization.
Risk
Factors Summary
Investing
in our securities involves significant risks. You should carefully consider the risks described in “Risk Factors” before
making a decision to invest in our securities. If we are unable to successfully address these risks and challenges, our business, financial
condition, results of operations, or prospects could be materially and adversely affected. In such case, the trading price of our Ordinary
Shares would likely decline, and you may lose all or part of your investment. Below is a summary of some of the risks we face:
| ● |
we
will require substantial capital to finance our operations, which may not be available to us on acceptable terms, or at all; |
| |
|
| ● |
we
have incurred operating losses in the past, may incur operating losses in the future, and may not achieve or maintain profitability
in the future; |
| |
|
| ● |
we
have disclosed that there is substantial doubt about our ability to continue as a going concern. We may require additional capital
in order to execute our business plan and continue the operation of our business. Any capital-raising transaction we are able to
complete may result in substantial dilution to our existing shareholders. Our auditors have issued an audit report that contains
an explanatory paragraph regarding the Company’s ability to continue as a going concern and their opinion is not modified with
respect to this matter; |
| |
|
| ● |
changes
in public and consumer tastes and preferences and industry trends could reduce demand for our services and content offerings and
adversely affect our business; |
| |
|
| ● |
our
in-gym programming has been and may in the future be materially impacted by the ongoing COVID-19 pandemic, and could be impacted
by similar events in the future; |
| |
|
| ● |
our
ability to generate revenue, is subject to many factors, including many that are beyond our control, such as general macroeconomic
conditions; |
| |
|
| ● |
we
rely on technology, such as our information systems, to conduct our business. Failure to protect our technology against breakdowns
and security breaches could adversely affect our business; |
| |
|
| ● |
the
unauthorized disclosure of sensitive or confidential client or customer information could harm our business and standing with our
clients and customers; |
| |
|
| ● |
exchange
rates may cause fluctuations in our results of operations; |
| |
|
| ● |
our
partner gyms could take actions that harm our business; |
| |
|
| ● |
our
success depends substantially on the value of our brand; |
| ● |
we
rely on contracts and relationships and a termination of any such contract or relationship may have a material adverse effect on
our business; |
| |
|
| ● |
our
planned growth could place strains on our management, employees, information systems and internal controls, which may adversely impact
our business; |
| |
|
| ● |
our
partner gyms may be unable to attract and retain members, which may materially and adversely affect our business, results of operations
and financial condition; |
| |
|
| ● |
if
we are unable to identify and secure suitable partner gyms, our revenue growth rate and profits may be negatively impacted; |
| |
|
| ● |
if
we are unable to retain our key employees, we may not be able to successfully manager our business and pursue our strategic objectives; |
| |
|
| ● |
use
of social media may adversely impact our reputation or subject us to fines or other penalties; |
| |
|
| ● |
we
may be unsuccessful in any strategic acquisitions and investments, and we may pursue acquisitions or investments for their strategic
value in spite of the risk of lack of profitability; |
| |
|
| ● |
we
are subject to risks associated with operating in international markets; |
| |
|
| ● |
we
may not be able to attract and retain key professional fighters or coaches; |
| |
|
| ● |
our
expansion into new markets may present increased risks due to our unfamiliarity with the area, different rules and regulations and
challenging operating environments; |
| |
|
| ● |
risks
related to government regulation; |
| |
|
| ● |
we
are an “emerging growth company,” and our election to comply with the reduced disclosure requirements as a public company
may make our securities less attractive to investors; |
| |
|
| ● |
if
we fail to establish and maintain proper internal controls, our ability to produce accurate financial statements or comply with applicable
regulations could be impaired; |
| |
|
| ● |
we
may issue additional Ordinary Shares in the future, which may dilute our existing shareholders, and we may also issue securities
that have rights and privileges that are more favorable than the rights and privileges accorded to our existing shareholders; |
| |
|
| ● |
as
a foreign private issuer, we are permitted and expect to follow certain home country corporate governance practices in lieu of certain
NYSE American requirements applicable to domestic issuers; |
| |
|
| ● |
as
a foreign private issuer, we are permitted to file less information with the SEC than a domestic issuer; |
| |
|
| ● |
we
may lose our foreign private issuer status, which would then require us to comply with the Exchange Act’s domestic reporting
regime and cause us to incur additional legal, accounting and other expenses; |
| |
|
| ● |
the
NYSE American may delist our Ordinary Shares from trading on its exchange, which could limit investors’ ability to make transactions
in our Ordinary Shares and subject us to additional trading restrictions; and |
| |
|
| ● |
anti-takeover
provisions in our Constitution and our right to issue preference shares could make a third-party acquisition of us difficult. |
Reverse
Share Split
On
January 24, 2024, we effectuated a four-for-five (4:5) reverse share split (the “Reverse Share Split”) of our Ordinary Shares.
No fractional shares were issued in connection with the Reverse Share Split as all fractional shares were rounded up to the next whole
share.
Corporate
Information
We
were incorporated on March 27, 2013 under the laws of Australia under the name Wimp 2 Warrior Limited and changed our name to Alta Global
Group Limited on February 2, 2022.
Our
principal executive offices are located at Level 1, Suite 1, 29-33 The Corso, Manly, New South Wales 2095, and our telephone number there
is +61 1800 151 865. Our website address is https://www.trainalta.com. The information contained on our website is not incorporated
by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website
as part of this prospectus or in deciding whether to purchase our securities.
Implications
of Being an Emerging Growth Company
As
a company with less than US$1.235 billion in revenues during our last fiscal year, we qualify as an emerging growth company as defined
in the Jumpstart Our Business Startups Act (“JOBS Act”) enacted in 2012. As an emerging growth company, we expect to take
advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not
limited to:
| |
● |
being
permitted to present only two years of audited financial statements, in addition to any required unaudited interim financial statements,
with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
disclosure in this prospectus; |
| |
|
|
| |
● |
not
being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley
Act”); |
| |
|
|
| |
● |
reduced
disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and |
| |
|
|
| |
● |
exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved. |
We
may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the completion of our initial public
offering, or June 30, 2029. However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated
filer,” our annual gross revenues exceed US$1.235 billion or we issue more than US$1.0 billion of non-convertible debt in any three-year
period, we will cease to be an emerging growth company prior to the end of such five-year period.
The
JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised
accounting standards. As an emerging growth company, we intend to take advantage of an extended transition period for complying with
new or revised accounting standards as permitted by the JOBS Act. We have elected to take advantage of certain of the reduced disclosure
obligations in this prospectus and in the registration statement of which this prospectus is a part and may elect to take advantage of
other reduced reporting requirements in future filings. As a result, the information in this prospectus and that we provide to our shareholders
in the future may be different than what you might receive from other public reporting companies in which you hold equity interests.
Implications
of Being a Foreign Private Issuer
Upon
effectiveness of this registration statement, we will be considered a “foreign private issuer” as defined in Rule 405 under
the Securities Act of 1933, as amended (the “Securities Act”). In our capacity as a foreign private issuer, we are exempt
from certain rules under the Exchange Act that impose certain disclosure obligations and procedural requirements for proxy solicitations
under Section 14 of the Exchange Act. In addition, our officers, directors and principal shareholders are exempt from the reporting and
“short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect
to their purchases and sales of our Ordinary Shares. Moreover, we are not required to file periodic reports and financial statements
with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. In addition, we are
not required to comply with Regulation FD, which restricts the selective disclosure of material information.
We
may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We would cease to be a foreign private
issuer at such time as more than 50% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances
applies: (1) the majority of our executive officers or directors are U.S. citizens or residents, (2) more than 50% of our assets are
located in the United States or (3) our business is administered principally in the United States.
As
a foreign private issuer, we have taken advantage of certain reduced disclosure and other requirements in this prospectus and may elect
to take advantage of other reduced reporting requirements in future filings. Accordingly, the information contained herein or that we
provide shareholders may be different than the information you receive from other public companies in which you hold equity securities.
THE
OFFERING
| Ordinary
Shares offered by us |
|
1,529,052
Ordinary Shares (or 1,758,410 Ordinary
Shares if the underwriters exercise their option to purchase additional Ordinary Shares and/or Pre-Funded Warrants in full). |
| |
|
|
| Pre-Funded
Warrants offered by us |
|
We
are also offering up 1,529,052 Pre-Funded Warrants to purchase up to up to 1,529,052 Ordinary Shares in lieu of Ordinary
Shares to any purchaser whose purchase of Ordinary Shares in this offering would otherwise result in such purchaser, together with
its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the purchaser’s election, 9.99%) of
our outstanding Ordinary Shares immediately following the consummation of this offering. The exercise price of each Pre-Funded Warrant
will equal $0.001 per share. The Pre-Funded Warrants are immediately exercisable and will expire when exercised in full. This prospectus
also relates to the offering of the Ordinary Shares issuable upon exercise of the Pre-Funded Warrants. |
| |
|
|
| Ordinary
Shares to be outstanding immediately after this offering(1) |
|
12,007,738 Ordinary Shares (or 12,237,096
Ordinary Shares if the underwriters exercise their option to purchase additional Ordinary Shares and/or Pre-Funded Warrants in full),
assuming that we only sell Ordinary Shares and no Pre-Funded Warrants, subject to certain exclusions noted in the table below. |
| |
|
|
| Option
to purchase additional Ordinary Shares and/or Pre-Funded Warrants |
|
We
have granted the underwriters an option for a period of 45 days from the date of this prospectus, to purchase up to an additional
229,358 Ordinary Shares and/or Pre-Funded Warrants, representing fifteen percent (15%) of the aggregate number of Ordinary
Shares and Pre-Funded Warrants sold in this offering. The purchase price of such additional Ordinary Shares is equal to the public
offering price for Ordinary Shares sold in the offering less the underwriting discount, if any, and the purchase price for such additional
Pre-Funded Warrants is equal to the public offering price for Pre-Funded Warrants, less the underwriting discount, if any. |
| |
|
|
| Use
of proceeds |
|
We
estimate that the net proceeds from this offering will be approximately US$4,140,000
(or approximately US$4,826,250 if the underwriters exercise their over-allotment option
in full), at an assumed public offering price of US$3.27 per Ordinary Share, after
deducting the underwriting discounts and commissions and estimated offering expenses payable
by us.
We
intend to use the net proceeds from this offering for product development; to scale up our sales and marketing efforts; to redeem
an outstanding convertible note facility; and for general working capital and corporate purposes. We may also use a portion of the
net proceeds to acquire or invest in complementary businesses or technologies; however, we have no current commitments or obligations
to do so. See “Use of Proceeds” for a more complete description of the intended use of proceeds from this offering. |
| |
|
|
| Lock
Up |
|
In connection with our initial public offering in March 2024, our directors
and officers agreed with the underwriters, subject to certain exceptions, not to sell, transfer or dispose of, directly or indirectly,
any of our Ordinary Shares or securities convertible into or exercisable or exchangeable for our Ordinary Shares until March 27, 2025.
In addition, in respect of this offering, our directors and officers will agree with the underwriters, subject to certain exceptions,
not to sell, transfer or dispose of, directly or indirectly, any of our Ordinary Shares or securities convertible into or exercisable
or exchangeable for our Ordinary Shares for a period of three months after the date of this prospectus if the offering is consummated
after December 27, 2024. See “Shares Eligible for Future Sale” and “Underwriting” for more information. |
| |
|
|
| Risk
Factors |
|
An
investment in our securities involves significant risks. See “Risk Factors” on page 12 and other information included
in this prospectus for a discussion of factors to consider carefully before deciding to invest in our securities. |
| |
|
|
| Listing |
|
Our
Ordinary Shares are listed on the NYSE American under the symbol “MMA”. |
(1)
The number of Ordinary Shares that will be outstanding after this offering is based on 10,478,686 Ordinary Shares outstanding
as of the date of this prospectus, and excludes:
| |
● |
1,532,641
Ordinary Shares issuable upon the exercise of options outstanding as of the date of this prospectus at a weighted average exercise
price of USD$2.82; |
| |
|
|
| |
● |
65,000
Ordinary Shares issuable upon the exercise of warrants outstanding as of the date of this prospectus at an exercise price of
USD$6.25; |
| |
|
|
| |
● |
730,229
Ordinary Shares issuable upon the vesting of Restricted Units outstanding as of the date of this prospectus; and |
| |
|
|
| |
● |
550,000 Ordinary Shares issuable upon the vesting of
performance share rights outstanding as of the date of this prospectus. |
Except
as otherwise indicated herein, all information in this prospectus assumes:
| |
● |
that we only sell Ordinary Shares and no Pre-Funded Warrants in this offering; |
| |
|
|
| |
● |
no exercise by the underwriters
of their option to purchase additional Ordinary Shares and/or Pre-Funded Warrants in this offering; and |
| |
|
|
| |
● |
no
exercise of the Representative’s warrants to purchase 76,453 Ordinary Shares
(5% of the Ordinary Shares and Pre-Funded Warrants sold in this offering) issuable to the
representative of the underwriters in connection with this offering. |
SUMMARY
CONSOLIDATED FINANCIAL DATA
The
following summary consolidated financial data presented below as of and for the years ended June 30, 2023 and 2022 have been derived
from our audited consolidated financial statements as of and for the years ended June 30, 2023 and 2022 and related notes included elsewhere
in this prospectus.
The
following summary consolidated financial data presented below as of and for the nine months ended March 31, 2024 have been derived from
our unaudited interim condensed consolidated financial statements for the nine months ended March 31, 2024 and 2023 and related notes
included elsewhere in this prospectus.
Historical
results are not necessarily indicative of results to be expected in the future and the results for the year ended June 30, 2023 or nine
months ended March 31, 2024 are not necessarily indicative of the results that may be expected for any other period.
In
connection with the initial public offering of our Ordinary Shares in March 2024, all convertible notes that were on issue prior to the
initial public offering have either been converted into Ordinary Shares or redeemed. At March 31, 2024 there is no convertible note debt,
host or derivative liability, on the Consolidated Statement of Financial Position. The remaining interest on convertible notes and the
final fair value movement in derivative liability is reflected in the Consolidated Statement of Profit or Loss.
The
summary consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and our consolidated financial statements and related notes thereto included elsewhere in
this prospectus.
Our
financial statements are presented in U.S. or Australian dollars, as indicated, and have been prepared in accordance with IFRS.
| | |
Year Ended June 30, | | |
Nine Months Ended March 31, | |
| | |
2023 (A$) | | |
2023 (US$) | | |
2022 (A$) | | |
2024 (A$) (unaudited) | | |
2024 (US$) (unaudited) | | |
2023 (A$) (unaudited) | |
| Consolidated Income Statement Data: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Revenue: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Revenue from Program Fees | |
$ | 937,415 | | |
$ | 630,974 | | |
$ | 2,050,044 | | |
$ | 954,621 | | |
$ | 622,795 | | |
$ | 766,499 | |
| Less: Contractual payments to gyms | |
| (574,025 | ) | |
| (386,376 | ) | |
| (1,215,191 | ) | |
| (556,098 | ) | |
| (362,798 | ) | |
| (462,026 | ) |
| Net Revenue from Program Fees | |
| 363,390 | | |
| 244,598 | | |
| 834,853 | | |
| 398,523 | | |
| 259,996 | | |
| 304,473 | |
| Other income | |
| 1,173,421 | | |
| 789,830 | | |
| 105,950 | | |
| 172,760 | | |
| 112,709 | | |
| 1,173,278 | |
| Total revenue | |
| 1,536,811 | | |
| 1,034,427 | | |
| 940,803 | | |
| 571,283 | | |
| 372,705 | | |
| 1,477,751 | |
| Expenses: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Program expenses | |
| 229,848 | | |
| 154,711 | | |
| 342,600 | | |
| 124,190 | | |
| 81,022 | | |
| 189,304 | |
| Employee salaries and benefits | |
| 4,219,655 | | |
| 2,840,250 | | |
| 4,664,013 | | |
| 3,908,674 | | |
| 2,550,019 | | |
| 3,292,873 | |
| Share Based Payments | |
| 2,365,384 | | |
| 1,592,140 | | |
| 1,546,983 | | |
| 3,650,976 | | |
| 2,381,897 | | |
| 1,774,037 | |
| Advertising fees | |
| 721,713 | | |
| 485,785 | | |
| 3,615,399 | | |
| 419,912 | | |
| 273,951 | | |
| 515,197 | |
| Professional fees | |
| 864,419 | | |
| 581,840 | | |
| 685,870 | | |
| 1,505,745 | | |
| 982,348 | | |
| 421,546 | |
| Rent | |
| 11,793 | | |
| 7,938 | | |
| 2,366 | | |
| 7,245 | | |
| 4,727 | | |
| 10,158 | |
| IT costs | |
| 633,220 | | |
| 426,220 | | |
| 640,403 | | |
| 416,340 | | |
| 271,620 | | |
| 477,121 | |
| Depreciation and amortization | |
| 360,021 | | |
| 242,330 | | |
| 260,651 | | |
| 483,338 | | |
| 315,330 | | |
| 312,293 | |
| Net foreign exchange gain | |
| (47,359 | ) | |
| (31,877 | ) | |
| (26,079 | ) | |
| (59,191 | ) | |
| (38,616 | ) | |
| (15,961 | ) |
| Finance costs | |
| 4,472,730 | | |
| 3,010,595 | | |
| 2,191,803 | | |
| 3,219,591 | | |
| 2,100,461 | | |
| 2,614,281 | |
| Other expenses | |
| 1,432,094 | | |
| 963,942 | | |
| 965,808 | | |
| 1,198,176 | | |
| 781,690 | | |
| 464,569 | |
| Fair value movement in derivative liability | |
| 6,870,729 | | |
| 4,624,688 | | |
| (2,751,564 | ) | |
| (3,400,685 | ) | |
| (2,218,607 | ) | |
| 4,666,982 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total Expenses | |
| 22,134,247 | | |
| 14,898,562 | | |
| 12,138,253 | | |
| 11,474,311 | | |
| 7,485,840 | | |
| 14,722,400 | |
| Loss before income tax expense | |
| (20,597,436 | ) | |
| (13,864,134 | ) | |
| (11,197,450 | ) | |
| (10,903,028 | ) | |
| (7,113,135 | ) | |
| (13,244,649 | ) |
| Income tax expense | |
| - | | |
| - | | |
| - | | |
| | | |
| | | |
| | |
| Loss after income tax expense for the year | |
| (20,597,436 | ) | |
| (13,864,134 | ) | |
| (11,197,450 | ) | |
| (10,903,028 | ) | |
| (7,113,135 | ) | |
| (13,244,649 | ) |
| Other comprehensive loss, net of tax | |
| (36,465 | ) | |
| (24,545 | ) | |
| (31,312 | ) | |
| (98,128 | ) | |
| (64,019 | ) | |
| (21,072 | ) |
| Total comprehensive loss for the year attributable to the members of Alta Global Group Limited | |
$ | (20,633,901 | ) | |
$ | (13,888,679 | ) | |
$ | (11,228,762 | ) | |
$ | (11,001,156 | ) | |
$ | (7,177,154 | ) | |
$ | (13,265,721 | ) |
| Basic loss per share | |
$ | (5.26 | )(1) | |
$ | (3.54 | )(1) | |
$ | (2.86 | )(1) | |
$ | (1.07 | )(2) | |
$ | (0.72 | )(2) | |
$ | (3.38 | )(2) |
| Diluted loss per share | |
$ | (5.26 | )(1) | |
$ | (3.54 | )(1) | |
$ | (2.86 | )(1) | |
$ | (1.07 | )(2) | |
$ | (0.72 | )(2) | |
$ | (3.38 | )(2) |
| |
(1) |
Please
refer to Note 27 to our audited consolidated financial statements included elsewhere in this prospectus for a calculation of basic
and diluted losses per share. |
| |
(2) |
Please
refer to Note 19 to our unaudited interim financial statements included elsewhere in this prospectus for a calculation of basic and
diluted losses per share. |
| | |
As
of March 31, 2024 (unaudited) | |
| | |
Actual (unaudited) | | |
Pro
forma(1) | | |
Pro
forma as adjusted
(2) (A$) | | |
Pro
forma as adjusted
(2) (US$) | |
| Consolidated
Balance Sheet Data: | |
| | | |
| | | |
| | | |
| | |
| Cash and cash
equivalents | |
A$ | 98,790 | | |
A$ | 8,941,250 | | |
A$ | 6,443,005 | | |
US$ | 4,203,417 | |
| Total current assets | |
| 9,486,186 | | |
| 9,486,186 | | |
| 15,830,401 | | |
| 10,327,754 | |
| Total assets | |
| 11,023,911 | | |
| 11,023,911 | | |
| 17,368,126 | | |
| 11,330,966 | |
| Total current liabilities | |
| 5,565,591 | | |
| 5,565,591 | | |
| 5,565,591 | | |
| 3,630,992 | |
| Total liabilities | |
| 5,799,276 | | |
| 5,799,276 | | |
| 5,799,276 | | |
| 3,783,448 | |
| Total equity | |
A$ | 5,224,635 | | |
A$ | 5,224,635 | | |
A$ | 11,568,850 | | |
US$ | 7,547,518 | |
| |
(1) |
On
a pro forma basis after giving effect to the Company receiving A$8,842,460 from Initial Public Offering proceeds on April 2, 2024. |
| |
(2) |
On
a pro forma as adjusted basis after giving further effect to the sale of 1,529,052 Ordinary Shares by us in this offering
based on an assumed offering price of $3.27, which represents the last reported sale price of our Ordinary Shares as reported
on the NYSE American on September 17, 2024, after deducting underwriting discounts and commissions and estimated offering
expenses payable by us, and assuming no sale of Pre-Funded Warrants. |
RISK
FACTORS
You
should carefully consider the risks described below, together with all of the other information in this prospectus. If any of the following
risks occur, our business, financial condition and results of operations could be seriously harmed, and you could lose all or part of
your investment. Further, if we fail to meet the expectations of the public market in any given period, the market price of our Ordinary
Shares could decline. Our business involves significant risks and uncertainties, some of which are outside of our control. If any of
these risks occur, our business and financial condition could suffer, and the price of our Ordinary Shares could decline.
Risks
Related to Our Financial Position and Need for Additional Capital
We
will require substantial capital to finance our operations, which may not be available to us on acceptable terms, or at all.
We
may require further funding to support our ongoing activities and operations. There can be no assurance that such funding will be available
on satisfactory terms or at all. Any inability to obtain funding will adversely affect our business and financial condition and consequently
our performance. We may seek to raise further funds through equity or debt financing, joint ventures or other means. There can be no
assurance that additional financing will be available when needed or, if available, that the terms of such financing will be favorable
to us, which may result in substantial dilution to our shareholders.
We
have incurred operating losses in the past, may incur operating losses in the future, and may not achieve or maintain profitability in
the future.
We
have incurred loss after tax of A$10,903,028 and A$13,244,649 for nine months ending March 31, 2024 and 2023, respectively, and have
incurred operating losses of A$20,597,436 and A$11,197,450 for fiscal year 2023 and fiscal year 2022, respectively, and may continue
to incur net losses in the future. Our historical operating losses were reflective of non cash operating expenses including the interest
component of the convertible notes and the fair value movement in the derivative liability of our convertible notes. The interest component
of the convertible notes for March 31, 2024 and 2023 were $3,207,498 and $2,571,044 respectively, and $4,420,224 and $2,162,646 for fiscal
year 2023 and 2022 respectively. The fair value movement in the derivative liability of our convertible notes for March 31, 2024 and
2023 were ($3,400,685) and 4,666,982 respectively, and $6,870,729 and ($2,751,564) for fiscal year 2023 and 2022 respectively. All convertible
notes were redeemed or converted for the period ended March 31, 2024 and looking forward into future financial years will not be a component
of operating losses. We expect our operating expenses to increase in the future as we grow our business, continue our sales and marketing
efforts related to our products, platform and programs, invest in research and development, expand our operating infrastructure, add
content and features to our platform, expand into new geographies, and develop new products. We will also incur operating expenses in
connection with legal, accounting, and other fees related to operating as a public company listed on a U.S. exchange. These efforts and
additional expenses may be more costly than we expect, and we cannot guarantee that we will be able to increase our revenue to offset
our operating expenses. Our revenue growth may slow or our revenue may decline for a number of other reasons, including reduced demand
of our product and services, increased competition, a decrease in the growth or reduction in size of our overall market, the impacts
to our business from the COVID-19 pandemic, or if we cannot capitalize on growth opportunities. If our revenue does not grow at a greater
rate than our operating expenses, we will not be able to achieve and maintain profitability, which may have a material adverse effect
on the trading price of our Ordinary Shares.
We
have disclosed that there is substantial doubt about our ability to continue as a going concern. We may require additional capital in
order to execute our business plan and continue the operation of our business. Any capital-raising transaction we are able to complete
may result in substantial dilution to our existing shareholders. Our auditors have issued an audit report that contains an explanatory
paragraph regarding the Company’s ability to continue as a going concern and their opinion is not modified with respect to this
matter.
As
a result of our loss after tax, net cash outflows from operating activities, net liability and net current liability position, our independent
registered public accounting firm included an explanatory paragraph in its report on our financial statements as of, and for the year
ended June 30, 2023 that raises substantial doubt about our ability to continue as a going concern. The conditions giving rise to this
uncertainty and our plan with respect to this uncertainty are disclosed in Note 3 to our consolidated financial statements appearing
at the end of this prospectus. If we are unable to obtain sufficient funding, we could be forced to delay, reduce or eliminate our product
development programs or future research and development efforts, our financial condition and results of operations will be materially
and adversely affected, and we may be unable to continue as a going concern. After the completion of this offering, future financial
statements may continue to disclose substantial doubt about our ability to continue as a going concern, which could cause investors or
other financing sources to be unwilling to provide additional funding to us on commercially reasonable terms or at all. Any capital raising
transaction we are able to complete may result in substantial dilution to our existing shareholders, require us to relinquish significant
rights, or restrict our operations.
Risks
Related to Our Business
Changes
in public and consumer tastes and preferences and industry trends could reduce demand for our services and content offerings and adversely
affect our business.
Our
ability to generate revenues is highly sensitive to rapidly changing consumer preferences and industry trends, as well as the popularity
of martial arts and combat sports. Our success depends on our ability to offer premium in-gym products and services and content through
popular channels of distribution that meet the changing preferences of the broad consumer market and respond to competition from an expanding
array of services facilitated by technological developments in the delivery of martial arts and combat sports instruction and content.
Changes in consumers’ tastes or a change in the perception of our brands and business partners could adversely affect our operating
results. Our failure to avoid a negative perception among consumers or anticipate and respond to changes in consumer preferences, including
in the form of in-gym products and services and content creation or distribution, could result in reduced demand for our services and
content offerings or those of our clients, which could have an adverse effect on our business, financial condition and results of operations.
Our
in-gym programming has been and may in the future be materially impacted by the ongoing COVID-19 pandemic and could be impacted by similar
events in the future.
The
COVID-19 pandemic continues to impact worldwide consumer behavior and economic activity. A public health pandemic such as the COVID-19
pandemic poses the risk that we or our employees, in-gym partner gyms, in- gym members, suppliers and other business partners may be
prevented from conducting business activities for an indefinite period of time, including due to shutdowns, travel restrictions, social
distancing requirements, stay at home orders and advisories and other restrictions that may be suggested or mandated by governmental
authorities. The COVID-19 pandemic may also have the effect of heightening many of the other risks described elsewhere in this prospectus,
such as those relating to our growth strategy, international operations, our ability to attract and retain members, our supply chain,
health and safety risks to participants in our in-gym programs, loss of key employees and changes in consumer preferences, as well as
risks related to our ability to generate sufficient cash to operate as a going concern.
The
duration of the COVID-19 pandemic and the extent of its impact remains highly uncertain and difficult to predict. However, the continued
spread of the virus and the measures taken in response to it, particularly in Australia and New Zealand, have disrupted our operations
and have adversely impacted our in-gym membership programming, resulting in the cancellation of a significant number of pre-filled programs,
creating a need to re-adjust our fiscal year 2021 revenue. In response, in 2020 we embarked on a stringent project of cost control and
retention of core talent that were able to create a six month operating runway during a period in which we recognized zero revenues.
Our partner gyms began reopening in 2021 as local guidelines allowed, and as of June 30, 2023 all of our in-gym partner gyms were open
and operating. As the COVID-19 pandemic continues to impact areas in which we and our in-gym partners operate, certain of our licensees
have had to re-close, and additional in-gym partner gyms may have to re-close, pursuant to local guidelines. In-gym members have generally
not and will not be charged membership dues while their gyms are temporarily closed and are typically credited for any membership dues
paid for periods when their gym is closed due to the COVID-19 pandemic. Compared to the periods prior to the COVID-19 pandemic, we have
experienced and may in the future experience decreased new licensee enrollments, in part as a result of the COVID-19 pandemic. In addition,
as a result of the COVID-19 pandemic, we experienced, and may in the future experience, a decrease in our net in-gym membership base
compared to in-gym membership levels in March 2020, and the COVID-19 pandemic may have an ongoing impact on consumer behavior.
Further,
the constantly evolving nature of the COVID-19 pandemic and the emergence of new variants of coronavirus have negatively impacted, and
may in the future negatively impact, our operating results. The significance of the ultimate operational and financial impact to us will
depend on how long and widespread the disruptions caused by the COVID-19 pandemic, and the corresponding response to contain the virus
and treat those affected by it, prove to be.
Our
ability to generate revenue is subject to many factors, including many that are beyond our control, such as general macroeconomic conditions.
Our
business depends on discretionary consumer spending. Many factors related to discretionary consumer spending, including economic conditions
affecting disposable consumer income such as unemployment levels, fuel prices, interest rates, changes in tax rates, and tax laws that
impact individuals and inflation can significantly impact our operating results. While consumer spending may decline at any time for
reasons beyond our control, the risks associated with our businesses become more acute in periods of a slowing economy or recessions.
There can be no assurance that consumers will not be adversely impacted by current economic conditions, or by any future deterioration
in economic conditions, thereby possibly impacting on our operating results and growth. A prolonged period of reduced consumer spending
could have an adverse effect on our business, financial condition, and results of operations.
We
rely on technology, such as our information systems, to conduct our business. Failure to protect our technology against breakdowns and
security breaches could adversely affect our business.
We
rely on technology, such as our information systems, content distribution systems and payment processing systems, to conduct our business.
This technology is vulnerable to service interruptions and security breaches from inadvertent or intentional actions by our employees,
partners, and vendors, or from attacks by malicious third parties. Such attacks are of ever-increasing levels of sophistication and are
made by groups and individuals with a wide range of motives and expertise, including organized criminal groups, “hacktivists,”
nation states, and others. The techniques used to breach security safeguards evolve rapidly, and they may be difficult to detect for
an extended period of time, and the measures we take to safeguard our technology may not adequately prevent such incidents.
While
we have taken steps to protect our confidential and personal information and that of our clients and other business relationships and
have invested in information technology, there can be no assurance that our efforts will prevent service interruptions or security breaches
in our systems or the unauthorized or inadvertent wrongful use or disclosure of such confidential information. Such incidents could adversely
affect our business operations, reputation, and client relationships. Any such breach may require us to expend significant resources
to mitigate the breach of security and to address matters related to any such breach, including, but not limited to, the payment of fines.
Although we are in the process of obtaining an insurance policy that covers data security, privacy liability, and cyber-attacks, our
insurance may not be adequate to cover losses arising from breaches or attacks on our systems. We also may be required to notify regulators
about any actual or perceived personal data breach as well as the individuals who are affected by the incident within strict time periods.
In
addition, our use of technology systems presents the potential for further vulnerabilities. For instance, we may be subject to boycotts,
spam, spyware, ransomware, phishing and social engineering, viruses, worms, malware, distributed denial-of-service attacks, password
attacks, man-in-the-middle attacks, cybersquatting, impersonation of employees or officers, abuse of comments and message boards, fake
reviews, doxing, and swatting. While we have internal policies in place to protect against these vulnerabilities, we can make no assurances
that we will not be adversely affected should one of these events occur.
Unauthorized
disclosure of sensitive or confidential client or customer information could harm our business and standing with our clients and customers.
The
protection of our client, customer, employee, and other Company data is critical to us. We collect, store, transmit, and use personal
information relating to, among others, our clients, employees, consumers, and event participants. We rely on commercially available systems,
software, tools, and monitoring to provide security for processing, transmission, and storage of confidential client and customer information.
Our facilities and systems, and those of our third-party service providers, may be vulnerable to security breaches, acts of vandalism,
payment card terminal tampering, computer viruses, misplaced, lost or stolen data, programming or human errors, or other similar events.
Any security breach involving the misappropriation, loss or other unauthorized disclosure of client or customer information, whether
by us or our third-party service providers, could damage our reputation, result in the loss of clients and customers, expose us to risk
of litigation and liability or regulatory investigations or actions, disrupt our operations, and harm our business. In addition, as a
result of recent security breaches, the media and public scrutiny of information security and privacy has become more intense. As a result,
we may incur significant costs to change our business practices or modify our service offerings in connection with the protection of
personally identifiable information.
We
may be unable to protect our trademarks and other intellectual property rights, and others may allege that we infringe upon their intellectual
property rights.
We
have invested significant resources in brands associated with our business in an attempt to obtain and protect our public recognition.
These brands are essential to our success and competitive position. We have also invested significant resources in the premium content
that we produce.
Our
trademarks, tradenames and other intellectual property rights are critical to our success and our competitive position. Our intellectual
property rights may be challenged and invalidated by third parties. Further, policing unauthorized use and other violations of our intellectual
property is difficult, particularly given our global scope, so we are susceptible to others infringing, diluting or misappropriating
our intellectual property rights. If we are unable to maintain and protect our intellectual property rights adequately, we may lose an
important advantage in the markets in which we compete. In particular, the laws of certain foreign countries do not protect intellectual
property rights in the same manner as do the laws of the United States and, accordingly, our intellectual property is at greater risk
in those countries even where we take steps to protect such intellectual property. While we believe we have taken, and take in the ordinary
course of business, appropriate available legal steps to reasonably protect our intellectual property, we cannot predict whether these
steps will be adequate to prevent infringement or misappropriation of these rights.
From
time to time, in the ordinary course of our business, we may become involved in opposition and cancellation proceedings with respect
to some of our intellectual property or third-party intellectual property. Any opposition and cancellation proceedings or other litigation
or dispute involving the scope or enforceability of our intellectual property rights or any allegation that we infringe, misappropriate
or dilute upon the intellectual property rights of others, regardless of the merit of these claims, could be costly, time-consuming and
may damage our reputation. If any infringement or other intellectual property claim made against us by any third party is successful,
if we are required to indemnify a third party with respect to a claim, or if we are required to, or decide to, cease use of a brand,
rebrand or obtain non-infringing intellectual property (such as through a license which may not be available to us on commercially reasonable
terms, or at all), it may adversely affect our business and financial condition.
Exchange
rates may cause fluctuations in our results of operations.
Because
we derive revenues from our international operations, we may incur currency translation losses or gains due to changes in the values
of foreign currencies relative to the Australian dollar. We cannot, however, predict the effect of exchange rate fluctuations upon future
operating results.
Our
partner gyms could take actions that harm our business.
Our
partner gyms are contractually obligated to operate their gyms in accordance with the operational, safety and health standards set forth
in our agreements with them. However, partner gyms are independent third parties and their actions are outside of our control. In addition,
we cannot be certain that our partner gyms will have the business acumen or financial resources necessary to operate successful gyms
in their approved locations. Our partner gyms own, operate and oversee the daily operations of their gyms. As a result, the ultimate
success and quality of any partner gym rests with the partner gym itself. If our partner gyms do not successfully operate gyms in a manner
consistent with required standards and comply with local laws and regulations, our brand image and reputation could be harmed, which
in turn could adversely affect our results of operations and financial condition.
Moreover,
although we believe we generally maintain positive working relationships with our partner gyms, disputes with partner gyms could damage
our brand image and reputation and our relationships with our partner gyms, generally.
Our
success depends substantially on the value of our brand.
Our
success is dependent in large part upon our ability to maintain and enhance the value of our brand, our partner gyms’ connection
to our brand and maintaining a positive relationship with our partner gyms. Brand value can be severely damaged even by isolated incidents,
particularly if the incidents receive considerable negative publicity or result in litigation. Some of these incidents may relate to
the way we manage our relationships with our partner gyms, our growth strategies, our development efforts or the ordinary course of our,
or our partners’, businesses. Other incidents that could be damaging to our brand may arise from events that are or may be beyond
our ability to control, such as:
| |
● |
actions
taken (or not taken) by one or more of our partner gyms or their employees relating to health, safety, welfare or otherwise; |
| |
|
|
| |
● |
data
security breaches or fraudulent activities; |
| |
|
|
| |
● |
litigation
and legal claims; |
| |
|
|
| |
● |
third-party
misappropriation, dilution or infringement of our intellectual property; and |
| |
|
|
| |
● |
illegal
activity targeted at us or others. |
Consumer
demand for our products and services and our brand’s value could diminish significantly if any such incidents or other matters
erode consumer confidence in us or our business, which may result in fewer memberships and, which, in turn, could materially and adversely
affect our results of operations and financial condition.
We
rely on contracts and relationships and a termination of any such contract or relationship may have a material adverse effect on our
business.
We
rely on business relationships with our partner gyms, including UFC Gym, our coaches, and Alta ambassadors. A principal component of
our marketing program has been to partner with high-profile marketing partners to help us extend the reach of our brand. Although we
have partnered with several well-known partners, we may not be able to attract and partner with new marketing partners in the future.
In addition, if the actions of our partners damage their reputation, our partnerships may be less attractive to our current or prospective
members. Any of these failures by us or our partners could adversely affect our business and revenues. In addition, the termination,
variation and non-renewal of contracts may have a material adverse effect on our financial performance, financial position and/or reputation.
While
some of our long-standing customer relationships are governed by a license agreement, most of our customer relationships are governed
through the acceptance of our terms and conditions at the trainalta.com website.
Our
existing form of license agreement, in which we act as a principal, is a revenue share arrangement, such that both parties share in each
other’s success. There are no exclusivity provisions contained in our license agreement and our partner gyms have no right to reduce
or limit their performance under the agreement. Either party may terminate the license upon written notice to the other party. If the
agreement is terminated in this manner, the termination will take effect after the completion of the relevant series and the series finale,
but prior to a new series beginning. Additionally, we may terminate the agreement upon written notice, with immediate effect, upon certain
conduct by the partner gym. If the license is not terminated, it will expire ten years from the commencement date of the agreement. For
more information relating to the key terms of each of our product offerings, please refer to the Business section.
New
consumers subscribing for the 20-week Warrior Training Program or UFC Fit must accept our terms and conditions, which do not contain
exclusivity provisions and provide no right for the consumer to reduce or limit performance under the agreement. The consumer can terminate
the agreement prior to the start of the program but not once the program has commenced. Similarly, partner gyms that provide the 20-week
Warrior Training Program or UFC Fit must accept our terms and conditions, which do not contain exclusivity provisions and provide no
right for the partner gym to reduce or limit performance under the agreement. Either party may terminate this agreement upon written
notice to the other party. If the agreement is terminated in this manner, the termination will take effect after the completion of the
relevant series and the series finale, but prior to a new series beginning.
For
gym academy memberships, there are no exclusivity provisions and no rights for the consumer or the partner gym to reduce or limit performance
under the agreement. Either party may terminate this Agreement upon written notice to the other party.
Our
planned growth could place strains on our management, employees, information systems and internal controls, which may adversely impact
our business.
Over
the past several years, we have experienced growth in our business activities and operations, including an increase in the number of
partner gyms. Our past expansion has placed, and our planned future expansion may place, significant demands on our administrative, operational,
financial and other resources. Any failure to manage our growth effectively may harm our business. To be successful, we will need to
continue to implement management information systems and improve our operating, administrative, financial and accounting systems and
controls. We will also need to train new employees and maintain close coordination among our executive, accounting, finance, legal, human
resources, risk management, marketing, technology, sales and operations functions. These processes are time-consuming and expensive,
increase management responsibilities and divert management’s attention, and we may not realize a return on our investment. In addition,
we believe the culture we foster at our and our partner gyms is an important contributor to our success. However, as we expand, we may
have difficulty maintaining our culture or adapting it sufficiently to meet the needs of our operations. These risks may be heightened
as we continue to grow our business. Our failure to successfully execute on our planned expansion of partner gyms could materially and
adversely affect our results of operations and financial condition.
We
are subject to a number of risks related to automated clearing house, or ACH, credit card and debit card payments we accept.
We
accept payments through ACH, credit card and debit card transactions. For ACH, credit card and debit card payments, we pay interchange
and other fees, which may increase over time. An increase in those fees would require us to either increase the prices we charge for
our memberships, which could cause us to lose members, or suffer an increase in our operating expenses, either of which could harm our
operating results.
If
we or any of our processing vendors have problems with our billing software, or the billing software malfunctions, it could have an adverse
effect on our member satisfaction and could cause one or more of the major credit card companies to disallow our continued use of their
payment products. In addition, if our billing software fails to work properly and, as a result, we do not automatically charge our members’
credit cards, debit cards or bank accounts on a timely basis or at all, we could lose membership revenue, which may materially harm our
operating results.
If
we fail to adequately control fraudulent ACH, credit card and debit card transactions, we may face civil liability, diminished public
perception of our security measures and significantly higher ACH, credit card and debit card related costs, each of which could adversely
affect our business, financial condition and results of operations. The termination of our ability to process payments through ACH transactions
or on any major credit or debit card may significantly impair our ability to operate our business.
Our
partner gyms may be unable to attract and retain members, which may materially and adversely affect our business, results of operations
and financial condition.
Our
target market consists of those seeking regular exercise and those new to martial arts and combat sports. The success of our business
depends on our and our partners’ ability to attract and retain members. Our and our partner gyms’ marketing efforts may not
be successful in attracting members and membership levels may materially decline over time, especially at partner gyms in operation for
an extended period of time. Members may cancel their memberships at any time after giving proper advance written notice, subject to an
initial minimum term applicable to certain memberships. We may also cancel or suspend memberships if a member fails to provide payment
for an extended period of time. In addition, we experience attrition and must continually engage existing members and attract new members
in order to maintain membership levels. Some of the factors that could lead to a decline in membership levels include changing desires
and behaviors of consumers or their perception of our brand, changes in discretionary spending trends and general economic conditions,
market maturity or saturation, a decline in our ability to deliver quality services at competitive prices, direct and indirect competition
in our industry, and a decline in the public’s interest in health and fitness, among other factors. In order to increase membership
levels, we may from time to time offer promotions. If we and our partner gyms are not successful in optimizing price or in adding new
memberships, our business may suffer. Any decrease in our average dues or fees or higher membership costs may adversely impact our results
of operation and financial condition.
If
we are unable to identify and secure suitable partner gyms, our revenue growth rate and profits may be negatively impacted.
To
successfully expand our business, we must continue to identify and secure gyms to partner with to offer our products and services. In
addition to finding gyms with the right demographic and other measures we employ in our selection process, we also need to evaluate the
penetration of our competitors in the market. Our competitors could copy our format, or we could be forced to pay significantly higher
costs to partner gyms. As we increase our number of partner gyms, we may also partner with gyms in higher-cost geographies, which could
entail greater costs. We may require higher operating margins to produce the level of return we expect. Failure to provide our anticipated
level of return could adversely affect our results of operations and financial condition.
We
and our partner gyms could be subject to claims related to health and safety risks.
Use
of our partner gyms may pose potential health and safety risks to members through the use of our products and services and our partner
gyms’ facilities, including exercise and martial arts and combat sports equipment. Although participants sign waivers prior to
using our products and services, and though our partner gyms carry insurance for the risks associated with our products and services,
claims might be asserted against us and our partner gyms for injuries suffered by or death of members or guests while exercising and
using the facilities at our partner gyms. We may not be able to successfully defend such claims. We also may not be able to maintain
our general liability insurance on acceptable terms in the future or maintain a level of insurance that would provide adequate coverage
against potential claims. Depending upon the outcome, these matters may have a material adverse effect on our results of operations,
financial condition and cash flows.
If
we are unable to retain our key employees and/or hire additional qualified employees, we may not be able to successfully manage our businesses
and pursue our strategic objectives.
We
are highly dependent on the services of our senior management team, including our Chief Executive Officer, and other key employees at
our corporate headquarters. Competition for such employees can be intense, and the inability to attract and retain the additional qualified
employees required to expand our activities, or the loss of current key employees, could adversely affect our operating efficiency and
financial condition.
Use
of social media may adversely impact our reputation or subject us to fines or other penalties.
There
has been a substantial increase in the use of social media platforms, including blogs, social media websites and other forms of internet-based
communication, which allow individuals access to a broad audience of consumers and other interested persons. Negative commentary about
us may be posted on social media platforms at any time and may harm our reputation or business. Consumers value readily available information
about gyms and often act on such information without further investigation and without regard to its accuracy. The harm may be immediate
without affording us an opportunity for redress or correction. In addition, social media platforms provide users with access to such
a broad audience that collective action against our brand or business, such as boycotts, can be more easily organized. If such actions
were organized, we could suffer reputational damage as well as physical damage to our partner gym locations. We also use social medial
platforms as marketing tools, such as Facebook and Instagram accounts. As laws and regulations rapidly evolve to govern the use of these
platforms and devices, the failure by us, our employees, our partners or third parties acting at our direction to abide by applicable
laws and regulations in the use of these platforms and devices could adversely impact our and our partners’ business, financial
condition and results of operations or subject us to fines or other penalties.
We
are subject to international tax regulations.
It
is expected that a substantial amount of our future revenues will be derived from sales activities in foreign jurisdictions. Recent changes
in the global tax environment focusing on the prevention of tax leakage will require us to have sophisticated systems in place to identify
the jurisdictions in which we will be subject to tax and the correct allocation of taxable income across those jurisdictions. As we have
operations and employees in foreign jurisdictions, there is a risk that we may have a permanent establishment or, depending on the structure
used, controlled foreign subsidiaries. Accordingly, our foreign operations may give rise to foreign tax liabilities including employment
tax obligations which may require registrations with the local tax authorities, payment of income tax and withholding obligations. In
some cases, there may be an attribution of the income from the foreign jurisdiction to the Australian entity which could give rise to
Australian tax liabilities. In addition, our foreign operations may give rise to a transfer pricing risk if we have foreign related entities
and any dealings between the Australian entities and the foreign entities are not at arm’s length.
We
may not be able to adapt to or manage new content distribution platforms or changes in consumer behavior resulting from new technologies.
We
must successfully adapt to and manage technological advances in our industry, including the emergence of alternative distribution platforms.
If we are unable to adopt or are late in adopting technological changes and innovations that other martial arts and combat sports providers
offer, it may lead to a loss of clients subscribing for our content. If we fail to adapt our distribution methods and content to emerging
technologies and new distribution platforms, while also effectively preventing digital piracy, our ability to generate revenue from our
targeted audiences may decline and could result in an adverse effect on our business, financial condition, and results of operations.
The
markets in which we operate are highly competitive.
We
face competition from studio fitness concepts, full-service health clubs; racquet, tennis, country and other athletic clubs, value focused
health clubs, at-home fitness offerings, including digital fitness content and from other forms of entertainment and leisure activities
in a rapidly changing and increasingly fragmented environment. Any increased competition, which may not be foreseeable, or our failure
to adequately address any competitive factors, could result in reduced demand for our business which could have an adverse effect on
our business, financial condition, and results of operations.
We
may be unsuccessful in any strategic acquisitions and investments, and we may pursue acquisitions or investments for their strategic
value in spite of the risk of lack of profitability.
We
may face uncertainty in connection with acquisitions and investments. To the extent we choose to pursue certain investment or acquisition
strategies, we may be unable to identify suitable targets for these deals, or to make these deals on favorable terms. If we identify
suitable acquisition candidates or investments our ability to realize a return on the resources expended pursuing such deals, and to
successfully implement or enter into them will depend on a variety of factors. Additionally, we may decide to make or enter into acquisitions
or investments with the understanding that such acquisitions or investments may not be profitable, but may be of strategic value to us.
We cannot provide assurances that the anticipated strategic benefits of these deals will be realized in the long-term or at all.
We
are subject to risks associated with operating in international markets.
We
are subject to risks associated with operating in international markets including, but not limited to:
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political
instability, adverse changes in diplomatic relations and unfavorable economic conditions in the markets in which we have international
operations or into which we may expand; |
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limitations
on the enforcement of intellectual property rights; |
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adverse
tax consequences; |
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less
sophisticated legal systems in some foreign countries, which could impair our ability to enforce our contractual rights in those
countries; and |
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difficulties
in managing operations due to distance, language and cultural differences. |
We
may not be able to attract and retain key professional fighters or coaches.
Our
business is dependent upon identifying, recruiting and retaining highly regarded professional fighters and coaches to develop, promote
and teach our products and services. We may not be able to attract and retain key professional fighters or coaches due to, among other
things, competition for the same fighters or coaches. Our inability to recruit and retain professional fighters or coaches could adversely
affect our operating results and have a material adverse effect on our business.
Our
expansion into new markets may present increased risks due to our unfamiliarity with the area, different rules and regulations and challenging
operating environments.
We
may expand our operations to geographic areas where we have little or no meaningful experience. Those markets may have different competitive
conditions, consumer tastes and discretionary spending patterns than our existing markets, which may cause our services to be less successful
than in existing markets. Expanded operations into new markets may not generate the same level of revenues and may result in higher operating
expenses. There is no guarantee that we will be successful in further expanding our operations and our inability to do so may result
in a material adverse effect on our business, financial condition and results of operations.
Our
MMA Final Fight Night events are subject to governmental and state athletic commission regulation.
Our
MMA Final Fight Night events are subject to regulation by governmental entities and state athletic commissions within the jurisdiction
of such events. If we operate an MMA Final Fight Night event, we will be responsible for adhering to all government sanctioning requirements
and safety protocols that apply to such an event. If our partner gyms operate an MMA Final Fight Night event, they will have the same
responsibility. If we or our partner gyms fail to adhere to all regulations and protocols, we may be subject to disciplinary action from
the relevant governing body, which may include cancellation of registration, suspension of registration or a written warning. For example,
in Sydney NSW, the Combat Sports Authority of NSW regulates combat sports in accordance with the Combat Sports Act 2013 (the “Act”),
the Combat Sports Regulation 2014 and the rules made under section 107 of the Act. The objectives of the Act are to promote the health
and safety of combat sport contestants, promote the integrity of combat sport contests, regulate combat sport contests on a harm minimization
basis and promote the development of the combat sport industry. Persons engaging or participating in combat sports must be registered
under the Act in the appropriate Combatant, Promoter or Industry Participant registration class.
Risks
Related to Government Regulation
We
provide services in various jurisdictions abroad, and we expect to continue to expand our international presence. We face, and expect
to continue to face, additional risks in the case of our existing and future international operations, including:
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political
instability, adverse changes in diplomatic relations and unfavorable economic conditions in the markets in which we have international
operations or into which we may expand; |
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more
restrictive or otherwise unfavorable government regulation of the entertainment and sports industry, which could result in increased
compliance costs or otherwise restrict the manner in which we provide services and the amount of related fees charged for such services; |
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limitations
on the enforcement of intellectual property rights; |
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enhanced
difficulties of integrating any foreign acquisitions; |
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limitations
on the ability of foreign subsidiaries to repatriate profits or otherwise remit earnings; |
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adverse
tax consequences; |
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less
sophisticated legal systems in some foreign countries, which could impair our ability to enforce our contractual rights in those
countries; |
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limitations
on technology infrastructure; |
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variability
in venue security standards and accepted practices; and |
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difficulties
in managing operations due to distance, language and cultural differences, including issues associated with (i) business practices
and customs that are common in certain foreign countries but might be prohibited by U.S. law and our internal policies and procedures
and (ii) management and operational systems and infrastructures, including internal financial control and reporting systems and functions,
staffing and managing of foreign operations, which we might not be able to do effectively or on a cost—efficient basis. |
We
and our partner gyms are also subject to the U.S. Fair Labor Standards Act of 1938, as amended, and various other laws in Australia,
the United States and Europe governing such matters as minimum-wage requirements, overtime and other working conditions. A significant
number of our and our partners’ employees are paid at rates related to the U.S. federal minimum wage, and past increases in the
U.S. federal minimum wage have increased labor costs, as would future increases.
Our
partner gyms are responsible for compliance with state laws that regulate the relationship between martial arts and combat sports clubs
and their members. Nearly all states have consumer protection regulations that limit the collection of monthly membership dues prior
to opening, require certain disclosures of pricing information, mandate the maximum length of contracts and “cooling off”
periods for members (after the purchase of a membership), set escrow and bond requirements for health clubs, govern member rights in
the event of a member relocation or disability, provide for specific member rights when a club closes or relocates, or preclude automatic
membership renewals.
Many
of the states where our partner gyms operate have health and safety regulations that apply to martial arts and combat sports clubs.
Additionally,
the collection, maintenance, use, disclosure and disposal of individually identifiable data by our, or our partners’, businesses
are regulated at the federal, state and provincial levels as well as by certain financial industry groups, such as the Payment Card Industry
Organization and the NACHA. Federal, state and financial industry groups may also consider from time to time new privacy and security
requirements that may apply to our businesses and may impose further restrictions on our collection, disclosure and use of individually
identifiable information that are housed in one or more of our databases.
Regulators
may impose significant fines for privacy and data protection violations. Our business operations involve the collection, transfer, use,
disclosure, security, and disposal of personal or sensitive information in various locations around the world, including the E.U. In
Australia, the collection, use, storage and disclosure of personal and sensitive information is governed by the Privacy Act 1988 (Cth)
(“Privacy Act”) and the Australian Privacy Principles contained at Schedule 1 of the Privacy Act (“Australian Privacy
Principles”). Failures or breaches of data protection systems can result in reputational damage, regulatory impositions (such as
for breaches of the Privacy Act or Australian Privacy Principles) and financial loss, including claims for compensation by customers
or penalties by the Australian telecommunications regulators or other authorities. As a result, our business is subject to complex and
evolving Australian, U.S. and international laws and regulations regarding privacy and data protection. Many of these laws and regulations
are subject to change and uncertain interpretation and could result in claims, changes to our business practices, penalties, increased
cost of operations, or otherwise harm our business.
In
the United States and certain foreign jurisdictions, we may have direct and indirect interactions with government agencies and state-affiliated
entities in the ordinary course of our business. In particular, athletic commissions and other applicable regulatory agencies require
us to obtain licenses for promoters, medical clearances, licenses for athletes, or permits for events in order for us to promote and
conduct our live events and productions. In the event that we fail to comply with the regulations of a particular jurisdiction, whether
through our acts or omissions or those of third parties, we may be prohibited from promoting and conducting our live events and productions
in that jurisdiction. The inability to present our live events and productions in jurisdictions could lead to a decline in various revenue
streams in such jurisdictions, which could have an adverse effect on our business, financial condition, and results of operations.
We
are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), and other anti-bribery and
anti-money laundering laws in countries outside of the United States in which we conduct our activities. The FCPA generally prohibits
companies and their intermediaries from making, promising, authorizing or offering improper payments or other things of value to foreign
government officials for the purpose of obtaining or retaining business, directing business to any person, or securing any improper business
advantage. The FCPA also requires U.S. issuers to make and keep books and records that accurately and fairly reflect the transactions
of the corporation and to devise and maintain an adequate system of internal accounting controls. Other countries in which we operate
also have anti-bribery laws, some of which prohibit improper payments to government and non-government persons and entities. We operate
in a number of countries which are considered to be at a heightened risk for corruption. Additionally, we operate adjacent to industry
segments, such as sports marketing, that have been the subject of past anti-corruption enforcement efforts. As a global company, a risk
exists that our employees, contractors, agents, managers, or other business partners or representatives could engage in business practices
prohibited by applicable U.S. laws and regulations, such as the FCPA, as well as the laws and regulations of other countries prohibiting
corrupt payments to government officials and others, such as the Bribery Act. There can be no guarantee that our compliance programs
will prevent corrupt business practices by one or more of our employees, contractors, agents, managers, or vendors, or that regulators
in the U.S. or in other markets will view our program as adequate should any such issue arise. Any actual or alleged violation of the
FCPA or other applicable anti-corruption laws could result in whistleblower complaints, sanctions, settlements, prosecution, enforcement
actions, fines, damages, adverse media coverage, investigations, severe criminal or civil sanctions, any of which could have a material
adverse effect on our reputation, as well as our business, financial condition, results of operations and prospects. Responding to any
investigation or action would also likely result in a materially significant diversion of management’s attention and resources
and significant defense costs and other professional fees. In addition, the U.S. government may seek to hold us liable for successor
liability for FCPA violations committed by companies in which we invest or that we acquire.
We
are also required to comply with economic sanctions laws imposed by the United States or by other jurisdictions where we do business,
which may restrict our transactions in certain markets, and with certain customers, business partners, and other persons and entities.
As a result, we may be prohibited from, directly or indirectly (including through a third-party intermediary), procuring goods, services,
or technology from, or engaging in transactions with, individuals and entities subject to sanctions, including sanctions arising from
the conflict involving Russia and Ukraine. We cannot guarantee that our efforts to remain in compliance with sanctions requirements will
be successful. Any violation of sanctions laws could result in fines, civil and criminal sanctions against us or our employees, prohibitions
on the conduct of our business (e.g., debarment from doing business with International Development Banks and similar organizations),
and damage to our reputation, which could have an adverse effect on our business, financial condition, and results of operations.
The
various regulations set out above have not materially impacted or affected the offering of our four core products: the Warrior Training
Program, UFC Fit Program, Alta Academy and the Alta Community.
Risks
Related to Our Securities and this Offering
We
are an “emerging growth company,” and our election to comply with the reduced disclosure requirements as a public company
may make our Ordinary Shares less attractive to investors.
We
are an “emerging growth company,” as defined in the JOBS Act. For as long as we continue to be an emerging growth company,
we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging
growth companies, including exemption from compliance with the auditor attestation requirements of Section 404, reduced disclosure obligations
regarding executive compensation and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation
and stockholder approval of any golden parachute payments not previously approved. We will remain an emerging growth company until the
earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of this offering, (b) in which we have
total annual gross revenue of at least US$1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the
market value of our Ordinary Shares held by non-affiliates exceeds US$700 million as of the end of our prior second fiscal quarter, and
(2) the date on which we have issued more than US$1.0 billion in non-convertible debt during the prior three-year period.
In
addition, under the JOBS Act, emerging growth companies may delay adopting new or revised accounting standards until such time as those
standards apply to private companies. We may, in the future, elect not to avail ourselves of this exemption from new or revised accounting
standards and, therefore, may be subject to the same new or revised accounting standards as other public companies that are not emerging
growth companies.
We
cannot predict if investors will find our Ordinary Shares less attractive because we may rely on these exemptions. If some investors
find our Ordinary Shares less attractive as a result, there may be a less active trading market for our Ordinary Shares and our share
price may be more volatile.
If
we fail to establish and maintain proper internal controls, our ability to produce accurate financial statements or comply with applicable
regulations could be impaired.
Section
404(a) of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires that, beginning with our annual report for the year ending
June 30, 2024, our management assess and report annually on the effectiveness of our internal controls over financial reporting and identify
any material weaknesses in our internal controls over financial reporting. Although Section 404(b) of the Sarbanes-Oxley Act requires
our independent registered public accounting firm to issue an annual report that addresses the effectiveness of our internal controls
over financial reporting, we have opted to rely on the exemptions provided to us by virtue of being a foreign private issuer and emerging
growth company, and consequently will not be required to comply with SEC rules that implement Section 404(b) of the Sarbanes-Oxley Act
until we lose our emerging growth company status.
In
order to maintain and improve the effectiveness of our disclosure controls and procedures and internal controls over financial reporting,
we will need to expend significant resources and provide significant management oversight. We have commenced the process of reviewing
and improving our internal controls over financial reporting for compliance with Section 404(a) of the Sarbanes Oxley Act. Implementing
any appropriate changes to our internal controls may require specific compliance training for our directors and employees, entail substantial
costs in order to modify our existing accounting systems, take significant periods of time to complete, and divert management’s
attention from other business concerns. These changes may not, however, be effective in maintaining the adequacy of our internal controls.
As
of the date of this filing, we have identified deficiencies in our internal controls that are deemed to be a material weakness. The matters
involving internal controls and procedures that our management considered to be a material weakness under the standards of the United
States Public Company Accounting Oversight Board (“PCAOB”) were (1) the lack of a formally implemented system of internal
control over financial reporting and limited or no associated written documentation of our internal control policies and procedures,
and (2) the lack of sufficient resources and key accounting personnel with sufficient knowledge and experience in reporting and compliance
with the SEC and PCAOB. Consequently, we have determined there is a material weakness in our internal control over financial reporting.
Although
this material weakness did not result in material adjustments to the financial statements, there is a reasonable possibility that a material
misstatement of the annual financial statements would not have been prevented or detected on a timely basis due to the failure to design
and implement appropriate segregation of duty controls. We are still in the process of remediating these control weaknesses.
In
order to remediate the identified material weaknesses, we have hired a new Chief Financial Officer, new accounting personnel and engaged
external temporary resources. Additionally, we have formed an Audit and Risk Committee, whose primary purpose is to assist the Board
in overseeing the integrity of the Company’s financial statements, compliance with legal and regulatory requirements, the Company’s
independent registered auditors’ qualifications and independence, and the performance of the Company’s independent registered
auditors, and the design and implementation of the Company’s internal audit function.
In
addition, we plan to further remediate the identified material weaknesses by implementing the following controls:
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Delegation
of authority, documenting stringent controls throughout the business. This will be reviewed by the Board on an annual basis, or more
frequently if there are significant changes in the business. |
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Upgrading
our financial reporting close process. This process will include a monthly review process performed by both the CFO and CEO, and
formal reporting to the Board. |
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Documenting
our internal control policies and procedures and designing an education process for the entire Company to ensure policies and procedures
are understood and adhered to by all. |
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Establishing
effective monitoring and oversight controls for non-recurring and complex transactions to ensure the accuracy and completeness of
our company’s consolidated financial statements and related disclosures. |
In
support of the above, we intend to enhance the finance and accounting function with additional key hires with relevant skills and continuing
professional education of all staff.
If
we are unable to conclude that we have effective internal controls over financial reporting or, at the appropriate time, our independent
auditors are unwilling or unable to provide us with an unqualified report on the effectiveness of our internal controls over financial
reporting as required by Section 404(b) of the Sarbanes-Oxley Act, investors may lose confidence in our operating results, the price
of our Ordinary Shares could decline and we may be subject to litigation or regulatory enforcement actions. In addition, if we are unable
to meet the requirements of Section 404 of the Sarbanes-Oxley Act, we may not be able to remain listed on the NYSE American.
We
will incur increased costs as a result of having become a listed public company.
As
a listed public company, we incur legal, accounting, insurance and other expenses that would not be incurred by a private company, including
costs associated with public company reporting requirements. We are an Australian public company and will incur costs in order to comply
with the Corporations Act requirements for financial reporting. The Corporations Act reporting standards differ in certain significant
respects from generally accepted accounting principles in the United States.
We
also have incurred and will incur costs associated the Exchange Act, the Sarbanes-Oxley Act, the related rules implemented by the SEC
and the rules and regulations of the applicable listing standards of the NYSE American. We expect these rules and regulations to increase
our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable
to estimate these costs with any degree of certainty. These and other laws and regulations could also make it more difficult or costly
for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced
policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These and other laws and regulations
could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees
or as our senior management. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting
of our Ordinary Shares, fines, sanctions and other regulatory action and potentially civil litigation.
The
market price of our Ordinary Shares could fluctuate significantly, and you could lose all or part of your investment.
The
market price of our Ordinary Shares could fluctuate significantly as a result of a number of factors, including:
| ● |
fluctuations
in our financial performance; |
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economic
and stock market conditions generally and specifically as they may impact us, participants in our industry or comparable companies; |
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changes
in financial estimates and recommendations by securities analysts following our Ordinary Shares or comparable companies; |
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earnings
and other announcements by, and changes in market evaluations of, us, participants in our industry or comparable companies; |
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our
ability to meet or exceed any future earnings guidance we may issue; |
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changes
in business or regulatory conditions affecting us, participants in our industry or comparable companies; |
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changes
in accounting standards, policies, guidance, interpretations or principles; |
| ● |
announcements
or implementation by our competitors or us of acquisitions, technological innovations, or other strategic actions by our competitors;
or |
| ● |
trading
volume of our Ordinary Shares or sales of shares by our management team, directors or principal shareholders. |
These
and other factors could limit or prevent investors from readily selling their Ordinary Shares or otherwise negatively affect the liquidity
of our Ordinary Shares, and you could lose all or part of your investment.
The
market price of our Ordinary Shares could be adversely affected by future sales and distributions of our Ordinary Shares or the perception
that such sales and distributions may occur.
Sales,
distributions or issuances of a substantial number of our Ordinary Shares following this offering or the perception that such sales or
distributions might occur, could cause a decline in the market price of our Ordinary Shares or could impair our ability to obtain capital
through a subsequent offering of our equity securities or securities convertible into equity securities.
The
Ordinary Shares sold in this offering will be freely transferable without restriction or further registration under the Securities Act
of 1933, or the Securities Act, except for any Ordinary Shares held by our affiliates as defined in Rule 144 under the Securities Act.
Such shareholders will be subject to the lock up agreement described in “Underwriting.”
If
securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business,
our share price and trading volume could decline.
The
trading market for our Ordinary Shares will depend, in part, upon the research and reports that securities or industry analysts publish
about us or our businesses. We do not have any control over analysts as to whether they will cover us, and if they do, whether such coverage
will continue. If analysts do not commence coverage of us, or if one or more of these analysts cease coverage of us or fail to regularly
publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
In addition, if one or more of the analysts who cover us downgrade our Ordinary Shares or change their opinion of our Ordinary Shares,
our share price may likely decline.
We
may issue additional Ordinary Shares in the future, which may dilute our existing shareholders. We may also issue securities that have
rights and privileges that are more favorable than the rights and privileges accorded to our existing shareholders.
We
may issue additional securities in the future, including Ordinary Shares, and options, rights, warrants and other convertible securities
for any purpose and for such consideration and on such terms and conditions we may determine appropriate or necessary, including in connection
with equity awards, financings or other strategic transactions. Subject to the requirements of the Corporations Act, our board of directors
will be able to determine the class, designations, preferences, rights and powers of any additional shares, including any rights to share
in our profits, losses and dividends or other distributions, any rights to receive assets upon our dissolution or liquidation and any
redemption, conversion and exchange rights.
We
are not likely to issue dividends for the foreseeable future.
We
cannot assure you that our proposed operations will result in sufficient revenues to enable profitable operations or to generate positive
cash flow. For the foreseeable future, we anticipate that we will use any funds available to finance our growth and that we will not
pay cash dividends to shareholders. Unless we pay dividends, our shareholders will not be able to receive a return on their shares unless
they sell them. There is no assurance that shareholders will be able to sell shares when desired.
As
a foreign private issuer, we are permitted and expect to follow certain home country corporate governance practices in lieu of certain
NYSE American requirements applicable to domestic issuers.
As
a foreign private issuer listed on the NYSE American, we are permitted to follow certain home country corporate governance practices
in lieu of certain NYSE American practices. Following our home country corporate governance practices, as opposed to the requirements
that would otherwise apply to a U.S. company listed on the NYSE American, may provide less protection than is afforded to investors under
the NYSE American rules applicable to domestic issuers.
In
particular, we follow home country law instead of the NYSE American practice regarding:
| |
● |
the
NYSE American’s requirement to have a compensation committee and a nominating and corporate governance committee composed solely
of independent members of the board of directors. |
| |
|
|
| |
● |
the
NYSE American’s requirement that our independent directors meet in regularly scheduled executive sessions. The Corporations
Act does not require the independent directors of an Australian company to have such regularly scheduled executive sessions and,
accordingly, we have claimed this exemption. |
| |
|
|
| |
● |
the
NYSE American’s corporate governance listing standards applicable to domestic issuers requiring disclosure within four business
days of any determination to grant a waiver of the code of business conduct and ethics to directors and officers. Although we will
require board approval of any such waiver, we may choose not to disclose the waiver in the manner set forth in the NYSE American
corporate governance listing standards, as permitted by the foreign private issuer exemption. |
| |
|
|
| |
● |
the
NYSE American’s requirement that an issuer provide for a quorum as specified in its bylaws for any meeting of the holders of
ordinary shares, which quorum may not be less than 33 1/3% of the outstanding shares of an issuer’s voting ordinary shares.
In compliance with Australian law, our Constitution provides that two shareholders present shall constitute a quorum for a general
meeting. |
| |
|
|
| |
● |
we
seek exemption from the NYSE American requirement that issuers obtain shareholder approval prior to the issuance of securities in
connection with certain acquisitions, private placements of securities, the establishment or amendment of certain stock option, purchase
or other compensation plans. Applicable Australian laws differ to NYSE American requirements, with the former requiring prior shareholder
approval in numerous circumstances, including (i) issuance of equity securities to related parties, e.g. directors or their associates
other than (generally speaking), in their sole capacity as an existing security holder (where the benefit is provided on the same
terms to all other security holders), or in certain circumstances where the benefit provided through the issuance is on arms’
length terms, or (ii) the issuance results in a shareholder or their associates obtaining a relevant interest (as that term is defined
in Australian law) increasing to more than 20%, or increasing from a starting point that is above 20% and below 90%. |
We
intend to take all actions necessary for us to maintain compliance as a foreign private issuer under the applicable corporate governance
requirements of the Sarbanes-Oxley Act, the rules adopted by the SEC and the NYSE American corporate governance rules and listing standards.
Because
we are a foreign private issuer, our officers, directors and principal shareholders are not subject to short-swing profit and insider
trading reporting obligations under Section 16 of the Exchange Act. They will, however, be subject to the obligations to report changes
in share ownership under Section 13 of the Exchange Act and related SEC rules.
As
a foreign private issuer, we are permitted to file less information with the SEC than a domestic issuer.
As
a foreign private issuer, we are exempt from certain rules under the Exchange Act that impose requirements for proxy solicitations under
Section 14 of the Exchange Act. In addition, our officers, directors and principal shareholders are exempt from the reporting and “short-swing”
profit recovery provisions of Section 16 of the Exchange Act. Moreover, we are not required to file periodic reports and financial statements
with the SEC as frequently or as promptly as a domestic issuer, nor are we generally required to comply with the SEC’s Regulation
FD, which restricts the selective disclosure of material non-public information. Under Australian law, we prepare financial statements
on an annual and semi-annual basis, we are not required to prepare or file quarterly financial information. For as long as we are a “foreign
private issuer,” we intend to file our annual financial statements on Form 20-F and furnish our semi-annual financial statements
on Form 6-K to the SEC as long as we are subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act. However, the
information we file or furnish is not the same as the information that is required in annual on Form 10-K or Form 10-Q for U.S. domestic
issuers. Accordingly, there may be less information publicly available concerning us then there is for a company that files as a domestic
issuer.
We
may lose our foreign private issuer status, which would then require us to comply with the Exchange Act’s domestic reporting regime
and cause us to incur additional legal, accounting and other expenses.
We
are required to determine our status as a foreign private issuer on an annual basis at the end of our second fiscal quarter. In order
to maintain our current status as a foreign private issuer, either (1) a majority of our Ordinary Shares must be either directly or indirectly
owned of record by non-residents of the United States or (2) (a) a majority of our executive officers or directors must not be U.S. citizens
or residents, (b) more than 50% of our assets cannot be located in the United States and (c) our business must be administered principally
outside the United States. If we lost this status, we would be required to comply with the Exchange Act reporting and other requirements
applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may
also be required to make changes in our corporate governance practices and to comply with United States generally accepted accounting
principles, as opposed to IFRS. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with
the reporting requirements applicable to a U.S. domestic issuer may be higher than the cost we would incur as a foreign private issuer.
As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs.
Our
Constitution and Australian laws and regulations applicable to us may adversely affect our ability to take actions that could be beneficial
to our shareholders.
As
an Australian company we are subject to different corporate requirements than a corporation organized under the laws of the United States.
Our Constitution, as well as the Australian Corporations Act, set forth various rights and obligations that are unique to us as an Australian
company. These requirements may operate differently than those of many U.S. companies. You should carefully review the summary of these
matters set forth under the section entitled “Description of Share Capital”, and the copy of our Constitution (which is included
as an exhibit to the registration statement to which this prospectus forms a part), prior to investing in the Ordinary Shares.
The
NYSE American may delist our Ordinary Shares from trading on its exchange, which could limit investors’ ability to make transactions
in our Ordinary Shares and subject us to additional trading restrictions.
We
cannot assure you that our Ordinary Shares will continue to be listed on the NYSE American in the future. In order to continue listing
our Ordinary Shares on the NYSE American, we must maintain certain financial, distribution and share price levels and must maintain a
minimum number of holders of our Ordinary Shares.
If
the NYSE American delists our Ordinary Shares and we are not able to list our Ordinary Shares on another national securities exchange,
a reduction in some or all of the following may occur, each of which could have a material adverse effect on our shareholders:
| ● |
the
liquidity of our Ordinary Shares; |
| |
|
| ● |
the
market price of our Ordinary Shares; |
| |
|
| ● |
our
ability to obtain financing for the continuation of our operations; |
| |
|
| ● |
the
number of investors that will consider investing in our Ordinary Shares; |
| |
|
| ● |
the
number of market makers in our Ordinary Shares; |
| |
|
| ● |
the
availability of information concerning the trading prices and volume of our Ordinary Shares; and |
| |
|
| ● |
the
number of broker-dealers willing to execute trades in our Ordinary Shares. |
Australian
companies may not be able to initiate shareholder derivative actions, thereby depriving shareholders of the ability to protect their
interests.
We
are a public company limited by shares, registered and operating under the Corporations Act in Australia. Australian companies may not
have standing to initiate a shareholder derivative action in a federal court of the United States. The circumstances in which any such
action may be brought, and the procedures and defenses that may be available in respect to any such action, may result in the rights
of shareholders of an Australian company being more limited than those of shareholders of a company organized in the United States. Accordingly,
shareholders may have fewer alternatives available to them if they believe that corporate wrongdoing has occurred. Unless certain narrowly
identified principles exist, Australian courts are also unlikely to recognize or enforce against us judgments of courts in the United
States based on certain liability provisions of U.S. securities law and to impose liabilities against us, in original actions brought
in Australia, based on certain liability provisions of U.S. securities laws that are penal in nature. There is no statutory recognition
in Australia of judgments obtained in the United States, although the courts of Australia may recognize and enforce the non-penal judgment
of a foreign court of competent jurisdiction without retrial on the merits, upon being satisfied about all the relevant circumstances
in which that judgment was obtained.
Anti-takeover
provisions in our Constitution and our right to issue preference shares could make a third-party acquisition of us difficult.
Some
provisions of our Constitution may discourage, delay or prevent a change in control or management that shareholders may consider favorable,
including power to issue preference shares and the proportional takeover approval provisions.
Under
the Constitution, any proportional takeover scheme must be approved by those shareholders holding shares included in the class of shares
in respect of which the offer to acquire those shares was first made. The registration of the transfer of any shares following the acceptance
of an offer made under a scheme is prohibited until that scheme is approved by the relevant shareholder class.
We
are also subject to the relevant takeover laws contained in Chapter 6 of the Corporations Act. Subject to a range of exceptions, the
Corporations Act prohibits the acquisition of a direct or indirect interest in issued voting shares of a company, if the acquisition
of that interest will lead to a person’s voting power (either alone or in combination with their “associates” as that
term is defined in the Corporations Act) in that company increasing to more than 20%, or increasing from a starting point that is above
20% and below 90% which may discourage takeover offers being made for us or may discourage the acquisition of a significant position
in our Ordinary Shares. This may have the ancillary effect of entrenching our board of directors and may deprive or limit our shareholders
the opportunity to sell their Ordinary Shares and may further restrict the ability of our shareholders to obtain a premium from such
transactions. See “Description of Share Capital.”
You
will have limited ability to bring an action against us or against our directors and officers, or to enforce a judgment against us or
them, because we are incorporated in Australia and certain of our directors and officers reside outside the United States.
We
are incorporated in Australia, certain of our directors and officers reside outside the United States and substantially all of the assets
of those persons are located outside the United States. As a result, it may be impracticable or at least more expensive for you to bring
an action against us or against these individuals in Australia in the event that you believe that your rights have been infringed under
the applicable securities laws or otherwise. There is doubt as to the enforceability in the Commonwealth of Australia, in original actions
or in actions for enforcement of judgments of U.S. courts, of civil liabilities predicated solely upon federal or state securities laws
of the U.S., especially in the case of enforcement of judgments of U.S. courts where the defendant has not been properly served in Australia.
Future
sales of our Ordinary Shares or the perception that such sales may occur could depress the trading price of our Ordinary Shares.
After
the completion of this offering, based on an assumed offering price of US$3.27 per share, which represents the last reported sale
price of our Ordinary Shares as reported on the NYSE American on September 17, 2024, we expect to have 12,007,738 Ordinary
Shares (or 12,237,096 Ordinary Shares if the underwriters exercise their option to purchase additional Ordinary Shares in full,
and assuming no sale of Pre-Funded Warrants) outstanding, which may be resold in the public market in the future. We, and all of our
directors and executive officers, have signed lock-up agreements for a period of (i) three months after the date of this prospectus in
the case of our directors and officers if the offering is consummated after December 27, 2024, and (ii) three months after the date of
this prospectus in the case of our Company without the prior written consent of the representative of the underwriters subject to specified
exceptions. See “Underwriting.”
The
underwriters may, in their sole discretion and without notice, release all or any portion of the Ordinary Shares subject to lock-up agreements.
As restrictions on resale end, the market price of our Ordinary Shares could drop significantly if the holders of these Ordinary Shares
sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional
funds through future offerings of our securities.
Investors
purchasing the Ordinary Shares will suffer immediate and substantial dilution.
The
public offering price for our Ordinary Shares will be substantially higher than the net tangible book value per Ordinary Share immediately
after this offering. If you purchase Ordinary Shares in this offering, you will incur substantial and immediate dilution in the net tangible
book value of your investment. Net tangible book value per Ordinary Share represents the amount of total tangible assets less total liabilities,
divided by the number of Ordinary Shares then outstanding. To the extent that options or any convertible securities that are currently
outstanding are exercised or converted, there will be further dilution to your investment. We may also issue additional Ordinary Shares,
options and other securities in the future that may result in further dilution of your Ordinary Shares. See “Dilution” for
a calculation of the extent to which your investment will be diluted.
There
is no public market for the Pre-Funded Warrants being offered by us in this offering.
There
is no established public trading market for the Pre-Funded Warrants, and we do not expect a market to develop. In addition, we do not
intend to apply to list the Pre-Funded Warrants on any national securities exchange or other nationally recognized trading system. Without
an active market, the liquidity of the Pre-Funded Warrants will be limited.
The
Pre-Funded Warrants are speculative in nature.
The
Pre-Funded Warrants offered hereby do not confer any rights of Ordinary Share ownership on their holders, such as voting rights or the
right to receive dividends, but rather merely represent the right to acquire Ordinary Shares at a fixed price. Holders of the Pre-Funded
Warrants may acquire the Ordinary Shares issuable upon exercise of such warrants at an exercise price of $0.001 per Ordinary Share. Following
this offering, the market value of the Pre-Funded Warrants is uncertain and there can be no assurance that the market value of the Pre-Funded
Warrants will equal or exceed its public offering price.
USE
OF PROCEEDS
We
estimate that the net proceeds from our issuance and sale of 1,529,052 Ordinary Shares in this offering will be approximately
US$4,140,000, or approximately US$4,826,250 if the underwriters exercise their over-allotment option in full, based on
an assumed public offering price of US$3.27 per share, which represents the last reported sale price of our Ordinary Shares as
reported on the NYSE American on September 17, 2024, after deducting underwriting discounts and commissions and estimated offering
expenses payable by us, assuming no sale of Pre-Funded Warrants.
Each
US$1.00 increase (decrease) in the assumed public offering price of US$3.27 per share would increase (decrease) the net proceeds
to us from this offering by approximately US$1,529,052, assuming that the number of Ordinary Shares offered by us, as set forth
on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts and commissions and estimated
offering expenses payable by us, and assuming no sale of Pre-Funded Warrants. An increase (decrease) of 1.0 million in the number of
Ordinary Shares we are offering would increase (decrease) the net proceeds to us from this offering by approximately US$3,270,000,
assuming the assumed public offering price remains the same, and after deducting the underwriting discounts and commissions and estimated
offering expenses payable by us, assuming no sale of Pre-Funded Warrants.
We
intend to use the net proceeds we receive from this offering as follows:
| |
● |
Approximately
US$745,014 for further product development, to continue to deliver sector specific solutions to the global martial arts and
combat sports community; |
| |
|
|
| |
● |
Approximately
US$2,276,431 to scale up the platform growth and marketing functions of our business, as we look to gain further traction
in North America and expand into new parts of Asia and Europe; and |
| |
|
|
| |
● |
The
remainder to be used as general working capital for general corporate purposes, including, without limitation, assessing potential
investments in or acquisitions of businesses or technologies that are synergistic with or complimentary to our business and technologies,
although we have no current commitments or obligations to do so. |
The
foregoing is set forth based on the order of priority for each purpose and represents our intentions based upon our current plans and
business conditions, which could change in the future as our plans and business conditions evolve. The amounts and timing of our actual
expenditures may vary significantly depending on numerous factors, including the progress of our development, the status of and results
of our sales, marketing and product development, any collaborations that we may enter into with third parties for our products and any
unforeseen cash needs. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering.
We
believe opportunities may exist from time to time to expand our current business through the acquisition or license or partnership. As
of the date hereof, we have not identified any specific acquisition candidates nor entered into any acquisition agreements. While we
have no current agreements or commitments for any specific acquisitions or license agreement or partnership arrangement at this time,
we may use a portion of the net proceeds for these purposes.
Pending
any use described above, we plan to invest the net proceeds in short-term, interest-bearing, debt instruments.
EXCHANGE
RATE INFORMATION
The
Australian dollar is convertible into U.S. dollars at freely floating rates. There are no legal restrictions on the flow of Australian
dollars between Australia and the United States. Any remittance of dividends or other payments by us to persons in the United States
are not and will not be subject to any exchange controls.
The
table below sets forth, for the periods identified, the number of U.S. dollars per Australian dollar as quoted by the Federal Reserve
Bank of New York. These rates are provided solely for your convenience and are not necessarily the exchange rates that we used in the
prospectus or will use in the preparation of our periodic reports or any other information to be provided to you. We make no representation
that any Australian dollar or U.S. dollar amounts could have been or could be converted into U.S. dollars or Australian dollars, as the
case may be, at any particular rate, the rates stated below, or at all. For information on the effect of currency fluctuations on our
results of operations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
| Period |
|
Period
End |
|
|
Average |
|
|
High |
|
|
Low |
|
| |
|
|
(U.S.
dollars per Australian dollar) |
|
| Year
Ended: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| June
30, 2022 |
|
|
0.6905 |
|
|
|
0.7256 |
|
|
|
0.7598 |
|
|
|
0.6852 |
|
| June
30, 2023 |
|
|
0.6663 |
|
|
|
0.6731 |
|
|
|
0.7119 |
|
|
|
0.6219 |
|
| Nine Months Ended: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| March
31, 2023 |
|
|
0.6704 |
|
|
|
0.6704 |
|
|
|
0.6768 |
|
|
|
0.6600 |
|
| March
31, 2024 |
|
|
0.6524 |
|
|
|
0.6524 |
|
|
|
0.6627 |
|
|
|
0.6507 |
|
DIVIDENDS
AND DIVIDEND POLICY
Since
our inception, we have not declared or paid any dividends on our shares. We intend to retain any earnings for use in our business and
do not currently intend to pay cash dividends on our Ordinary Shares. Dividends, if any, on our outstanding Ordinary Shares will be declared
by and subject to the discretion of our board of directors, and subject to Australian law.
Any
dividend we declare on our Ordinary Shares will be paid in Australian dollars. Cash dividends on our Ordinary Shares, if any, will be
paid in Australian dollars. See “Description of Share Capital.”
CAPITALIZATION
The
following table sets forth our cash and cash equivalents and capitalization as of March 31, 2024:
| |
● |
on
an actual basis; |
| |
|
|
| |
● |
on
a pro forma basis after giving effect to the Company receiving A$8,842,460 from Initial Public Offering proceeds on April 2, 2024;
and |
| |
|
|
| |
● |
on
a pro forma as adjusted basis to giving further effect to the issuance and sale of 1,529,052 Ordinary Shares in this offering
at an assumed offering price of US$3.27 per share, which represents the last reported sale price of our Ordinary Shares as
reported on the NYSE American on September 17, 2024, after deducting estimated underwriting discounts and commissions and
estimated offering expenses payable by us, and assuming no sale of Pre-Funded Warrants. |
| | |
March
31, 2024 (unaudited) | |
| | |
Actual
(unaudited) | | |
Pro
Forma | | |
Pro
Forma As Adjusted | |
| Cash
and cash equivalents | |
A$ | 98,790 | | |
| 8,941,250 | | |
| 6,443,005 | |
| Non-current
debt | |
A$ | 233,685 | | |
| 233,685 | | |
| 233,685 | |
| Equity | |
| | | |
| | | |
| | |
| Contributed
equity | |
A$ | 49,521,160 | | |
| 49,521,160 | | |
| 55,865,375 | |
| Reserves | |
A$ | 4,863,812 | | |
| 4,863,812 | | |
| 4,863,812 | |
| Accumulated
losses | |
A$ | (49,160,337 | ) | |
| (49,160,337 | ) | |
| (49,160,337 | ) |
| Total
equity | |
A$ | 5,224,635 | | |
| 5,224,635 | | |
| 11,568,850 | |
| | |
| | | |
| | | |
| | |
| Total
capitalization | |
A$ | 5,458,320 | | |
| 5,458,320 | | |
| 11,802,535 | |
An
increase or decrease of US$1.00 in the assumed public offering price per Ordinary Share would increase or decrease our total equity and
total capitalization, on an as adjusted basis, by approximately US$2,144,113, after deducting the underwriting discounts, commissions
and estimated offering expenses payable by us, assuming no sale of any Pre-Funded Warrants.
The
pro forma as adjusted information set forth above is illustrative only and our capitalization following the completion of this offering
will be adjusted based on the actual public offering price and other terms of our public offering determined at pricing. You should read
this information in conjunction with our financial statements and the related notes included in this prospectus and the “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” section and other financial information contained in
this prospectus.
The
number of Ordinary Shares that will be outstanding after this offering is based on 10,478,686 Ordinary Shares outstanding as of
the date of this prospectus, and the sale of 1,529,052 Ordinary Shares in this offering (at an assumed public offering price of
US$3.27 per Ordinary Share, which represents the last reported sale price of our Ordinary Shares as reported on the NYSE American
on September 17, 2024), assuming no sale of any Pre-Funded Warrants, and excludes:
| |
● |
1,532,641
Ordinary Shares issuable upon the exercise of options outstanding as of the date of this prospectus at a weighted average exercise
price of USD$2.82; |
| |
|
|
| |
● |
65,000
Ordinary Shares issuable upon the exercise of warrants outstanding as of the date of this prospectus at an exercise price of USD$6.25; |
| |
|
|
| |
● |
730,229
Ordinary Shares issuable upon the vesting of Restricted Units outstanding as of the date of this prospectus; and |
| |
|
|
| |
● |
550,000 Ordinary Shares issuable upon the vesting of
performance share rights outstanding as of the date of this prospectus. |
Except
as otherwise indicated herein, all information in this prospectus assumes:
| |
● |
no exercise by the underwriters
of their option to purchase additional Ordinary Shares and/or Pre-Funded Warrants in this offering; and |
| |
|
|
| |
● |
no exercise of the Representative’s warrants to purchase 76,453 Ordinary Shares (5% of the Ordinary Shares
and Pre-Funded Warrants sold in this offering) issuable to the representative of the underwriters in connection with this offering. |
DILUTION
If
you invest in the Ordinary Shares, your interest will be immediately diluted to the extent of the difference between the public offering
price per Ordinary Share in this offering and the net tangible book value per Ordinary Share after this offering. Dilution results from
the fact that the public offering price per Ordinary Share is substantially in excess of the net tangible book value per Ordinary Share
attributable to the existing shareholders for our presently outstanding Ordinary Shares.
Our
historical net tangible book value as of March 31, 2024 was approximately US$2,698,968, or US$0.26 per Ordinary Share. Net tangible book
value per share represents the amount of total tangible assets, less our total liabilities, divided by the total number of Ordinary Shares
outstanding as of March 31, 2024. Dilution is determined by subtracting net tangible book value per Ordinary Share from the assumed public
offering price per Ordinary Share, which is US$3.27 per Ordinary Share, which represents the last reported sale price of our Ordinary
Shares as reported on the NYSE American on September 17, 2024, after deducting underwriting discounts, commissions and estimated
offering expenses payable by us.
After
giving effect to our sale of Ordinary Shares offered in this offering at the assumed public offering price of US$3.27 per Ordinary
Share, which represents the last reported sale price of our Ordinary Shares as reported on the NYSE American on September 17,
2024, after deduction of underwriting discounts, commissions and estimated offering expenses payable by us, our pro forma as adjusted
net tangible book value as of March 31, 2024, would have been approximately US$6,837,934, or US$0.57 per outstanding Ordinary
Share. This represents an immediate increase in pro forma as adjusted net tangible book value of US$0.31 per Ordinary Share to
shareholders and an immediate dilution of US$2.70 per Ordinary Share to purchasers of Ordinary Shares in this offering. The following
table presents this dilution to new investors purchasing Ordinary Shares in the offering:
| | |
As
of March 31, 2024 | |
| | |
(US$
per Ordinary Share) | |
| Assumed
public offering price per Ordinary Share | |
$ | | | |
| 3.27 | |
| Pro
forma net tangible book value as of March 31, 2024 | |
$ | 0.26 | | |
| | |
| Increase
in pro forma as adjusted net tangible book value per share attributable to new investors purchasing shares | |
$ | 0.31 | | |
| | |
| Pro
forma as adjusted net tangible book value after giving effect to the public offering | |
$ | | | |
| 0.57 | |
| Dilution
per share to new investors purchasing in the public offering | |
$ | | | |
| 2.70 | |
Each
US$1.00 increase (decrease) in the assumed public offering price of US$3.27 per Ordinary Share after deducting underwriting discounts,
commissions and estimated offering expenses payable by us would increase (decrease) the pro forma as adjusted net tangible book value
after giving effect to this offering to US$0.69 or (US$0.45) per Ordinary Share, respectively, assuming no exercise of
the overallotment option granted to the underwriters, and would increase (decrease) the dilution to investors in the offering to US$3.58
or (US$2.28) per Ordinary Share.
An
increase (decrease) of 1.0 million Ordinary Shares in the number of Ordinary Shares we are offering would increase (decrease) our pro
forma as adjusted net tangible book value as of March 31, 2024 after this offering to approximately US$0.76 or (US$0.35)
per Ordinary Share, and would decrease (increase) dilution to investors to approximately US$2.51 or (US$3.38) per Ordinary
Share, assuming the public offering price per Ordinary Share, as set forth on the cover page of this prospectus remains the same, and
after deducting the estimate underwriting discounts and commissions, non-accountable expense allowance and estimated offering expenses
payable by us. The as adjusted information is illustrative only, and we will adjust this information based on the actual public offering
price and other terms of this offering determined at pricing.
If
the underwriters exercise their overallotment option in full, the pro forma as adjusted net tangible book value per Ordinary Share after
the offering would be US$0.61, the increase in pro forma as adjusted net tangible book value per Ordinary Share to shareholders
would be US$0.36, and the immediate dilution in pro forma as adjusted net tangible book value per Ordinary Share to investors
in this offering would be US$2.66.
The
number of Ordinary Shares that will be outstanding after this offering is based on 10,478,686 Ordinary Shares outstanding as of
the date of this prospectus and the sale of 1,529,052 Ordinary Shares in this offering (at an assumed public offering price of
US$3.27 per Ordinary Share), assuming no sale of any Pre-Funded Warrants, and excludes:
| |
● |
1,532,641
Ordinary Shares issuable upon the exercise of options outstanding as of the date of this prospectus at a weighted average exercise
price of USD$2.82; |
| |
|
|
| |
● |
65,000
Ordinary Shares issuable upon the exercise of warrants outstanding as of the date of this prospectus at an exercise price of USD$6.25; |
| |
|
|
| |
● |
730,229
Ordinary Shares issuable upon the vesting of Restricted Units outstanding as of the date of this prospectus; and |
| |
|
|
| |
● |
550,000 Ordinary Shares issuable upon the vesting of
performance share rights outstanding as of the date of this prospectus. |
Except
as otherwise indicated herein, all information in this prospectus assumes:
| |
● |
no exercise by the underwriters
of their option to purchase additional Ordinary Shares and/or Pre-Funded Warrants in this offering; and |
| |
|
|
| |
● |
no
exercise of the Representative’s warrants to purchase 76,453 Ordinary Shares
(5% of the Ordinary Shares and Pre-Funded Warrants sold in this offering) issuable to the
representative of the underwriters in connection with this offering. |
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
You
should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated
financial statements and the related notes and the other financial information included elsewhere in this prospectus. This discussion
contains forward-looking statements based upon our current plans and expectations that involve risks, uncertainties, and assumptions,
such as statements regarding our plans, objectives, expectations, intentions, and beliefs. Our actual results and the timing of events
could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not
limited to, those set forth under “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements” and
elsewhere in this prospectus. Our fiscal year ends each year on June 30. Reference to a year relates to the fiscal year, ended in June
30 of the year indicated, rather than the calendar year, unless indicated by a specific date.
Company
Overview
We
are a technology company that is enabling the global martial arts and combat sports industry to maximize the monetization opportunities
available to the sector by increasing consumer participation in the sport and building upon existing community offerings within the sector.
While we believe martial arts and combat sport gyms have a superb in-gym product, they are ripe for transformation when it comes to building
sales channels, customer onboarding, optimizing engagement and driving the growth and retention of members and membership revenues within
their gym communities.
We
believe that the Alta Platform represents a considerable opportunity to aggregate the vast global community ecosystem for martial arts
and combat sports, via a single platform solution that will define the sector’s digital transformation, converting one of the world’s
largest fan bases into participants. The Alta Platform serves as a comprehensive solution for martial arts and combat sports.
During
the reporting periods, our principal activity was the provision and administration of the Warrior Training Program. Specifically, the
provision of marketing intellectual property, payments software, training syllabus and outsourced customer sales and service resources
to our licensee partner gyms throughout the world.
Recent
Developments
On
April 2, 2024, we completed our initial public offering, raising $6,500,000 by selling 1,300,000 shares at $5.00 per share. All previously
issued convertible notes were converted or redeemed. As of March 31, 2024, there are no convertible notes, host, or derivative liabilities
on the Consolidated Statement of Financial Position. Remaining interest and final fair value movement in derivative liability are reflected
in the Consolidated Statement of Profit or Loss.
Throughout
April 2024, we partnered with renowned combat sports figures, including Rafael Cordeiro (Mike Tyson’s coach) for online Muay Thai
training and former UFC champion Daniel Cormier for wrestling instructional videos, targeting both beginners and seasoned athletes.
In
May 2024, we celebrated success in expanding the global MMA community. The Warrior Training Program at SBG Ireland has historically attracted
over 700 new members, boosting gym memberships and revenue. MMA superstar Conor McGregor, an Alta investor, endorsed the program to help
drive global combat sports participation. We also announced a strategic partnership with Upper Management in Mexico to launch the Warrior
Training Program in multiple gyms and create content for the burgeoning Mexican MMA fanbase. Further, we also showcased our partnership
with City Kickboxing in New Zealand, transforming over 800 beginners into cage-ready athletes through the Warrior Training Program, significantly
boosting gym memberships and community engagement.
In
May 2024, we completed the acquisition of the assets of Hype for USD$100,000, an all-in-one digital marketing platform, designed to help
small businesses grow in today’s age of social media. Hype’s software platform strengthens the Company’s vision to
convert 640 million MMA fans to participants by providing invaluable tools to our gym owner, coach, and athlete partners to not only
grow their revenues, but also operate more efficiently, save costs and enhance the offerings to their members and community. This acquisition
is expected to accelerate Alta’s technology roadmap, bringing forward new subscription revenue opportunities for us, whilst creating
cost synergies by materially reducing product development overhead and bringing valuable technology expertise, skills and talent into
the business.
In
June 2024, we partnered with legendary MMA coach Eric Nicksick and former UFC fighters Jessica-Rose Clark and Gilbert Melendez to help
strengthen our connection to 640 million global MMA fans.
In
September 2024, we announced a revenue share agreement with UFC Gym Group in relation to the intention of rolling out the Warrior
Training Program and Hype across UFC Gym Group’s global network of gyms, consisting of both corporate-owned and franchise
locations (with over 150 locations in 40 countries, including 80 in the United States). In addition, UFC Gym Group has hundreds of gyms in development. In the initial phase, these programs are expected
to be introduced in locations across the United States, the Middle East, the UK, Germany, Mexico, India and Central Asia.
In September 2024, Conor McGregor was appointed as a global ambassador and
will provide services customarily associated with such roles for a company in the mixed martial arts and technology sector.
Financial
Overview
We
have incurred significant losses since our inception. We may continue to incur significant losses for the foreseeable future. There can
be no assurance that we will ever achieve or maintain profitability. We currently generate revenue from the sales of our products and
programs, but as these do not currently support the operational expenses of the Company, we cannot provide assurance that we will ever
be profitable.
During
the reporting periods, our operations were significantly impacted from the ongoing COVID-19 pandemic, particularly in Australia and New
Zealand. From March 2020 to June 2022, due to the COVID-19 pandemic, our operations were significantly impacted by government policy
in our operational territories that closed gyms and prevented us from running our programs with our partner gyms. The extent and duration
of lockdowns and the loss of consumer confidence in their ability to consistently access gyms in an uninterrupted manner for at least
24 months, meant that our business could not operate in any normal way during this period. As a result, our revenues were significantly
affected and the business had to recapitalize its balance sheet in a series of funding rounds from late 2020 through 2022. The significant
step the business took to mitigate this risk from late 2022 onwards was the investment in the creation of our online digital training
platform, the Alta Academy. This has enabled the creation of a digital-only training subscription that will offer the business a more
diversified revenue stream that is unaffected by lockdown policies equivalent to what was experienced in our operating territories from
2020 to 2022.
A
positive impact of the COVID-19 pandemic was that it allowed us to understand our consumers’ desire for more online information
and coaching content which could be used to supplement an “in gym” training experience or membership. The COVID-19 pandemic
also allowed us to validate our business model as the payment hub that intermediates the relationship between consumers and gyms. Serving
as a custodian of all payments during the pandemic allowed us to communicate with all affected consumers and apply uniform policies regarding
suspending payments and issuing refunds. Had these monies been held by individual gyms, the consumer experience would have been highly
variable from territory to territory. This reinforced an important component of our customer value proposition of providing a homogenous
payments experience and consumer protection, regardless of which gym a consumer trains in.
At
this stage inflation has not had a material effect on our operations, however this is somewhat due to the present scale of our company.
The nature of our business model also provides material protection against inflationary impacts as we do not have property leases, employ
coaches or operate gyms. Rather, we match consumers with in-gym training experiences, collect payments and distribute a revenue share
to the gym where the services are being redeemed. This means that our operating costs are small, relative to a traditional gym chain,
which provides inherent protection against uncertain inflationary forces. Despite this, we believe it is reasonable to assume that inflation
and a rising interest rate environment, which are designed to reduce consumer demand, may soften product demand for our premium priced
Warrior Training Program.
Historically,
the performance of the business has been impacted by our inability to obtain sufficient funding due to the deterioration in capital market
conditions during 2022. As a result, to preserve runway, we managed costs appropriately and slowed down the launch of new Warrior Training
Programs over the reporting period until sufficient capital was secured, which occurred in April 2023.
Despite
the foregoing challenges, we have continued our growth since April 2023, by delivering the following strategic initiatives to establish
transformational change and momentum in the reporting period.
| |
● |
We
launched our first online offering, the Alta Academy, to complement and further leverage our in-gym training experiences for our
customers. This contains digital content extends beyond MMA, including jiu jitsu, boxing, wrestling, and Muay Thai, among others,
with new masterclasses delivered by our elite coaching talent, including Rafael Cordeiro, Mike Angove, and Nikki Lloyd-Griffiths. |
| |
● |
We
launched four new membership tiers for Alta members, including an In-Gym Training membership tier, which leverages underutilized
capacity within our gym partner network and allows Alta members to train in our partner gyms. |
| |
● |
We
launched the first iteration of the Alta Community platform, which we believe will drive the growth of the gym and coaching communities
though the provision of new content and channels. This included the launch of gym channels. The gym channels feature is used to house
multimedia content that pertains to a specific gym’s profile on the Alta Community. This currently includes multimedia content
such as gym walkthrough videos (point of view videos demonstrating the gym’s facility) as well as interviews with gym owners
and coaches. |
| |
● |
We
successfully completed our pilot UFC Fit program with UFC Gym in San Jose. We are currently negotiating the roll-out the UFC Fit
program across the UFC Gym network. |
| |
● |
We
completed the acquisition of the assets of Steppen Pty Ltd, a fitness technology company based in Australia (“Steppen”).
Steppen is a dynamic fitness app designed to inspire, guide, and support users on their fitness journey. The Steppen platform quickly
resonated with young fitness enthusiasts around the globe, particularly in the U.S., accumulating a large following quickly after
its global launch in mid-2021. The Steppen App has seen success with over 395,000 downloads, predominantly from the U.S., reaching
over 1.8 million impressions on the Apple App Store. With a robust database of over 270,000 accounts, we believe that the Steppen
App has established a substantial user base. We plan to continue Steppen App’s operations and integrate key aspects of its
proprietary Apple mobile application technology, while exploring ways to optimize content and services for users, leveraging the
acquired expertise and technology. We believe the synergy from this acquisition is poised to drive growth, diversification, and market
expansion for Alta in the burgeoning health and wellness sector. |
| |
● |
We
completed the acquisition of the assets of Mixed Martials Arts LLC, an independent MMA media
company, based in the U.S. Mixed Martial Arts LLC represents a valuable opportunity to us, as it is one of the last independent
MMA media companies not acquired by a major corporation, making it a novel asset in the digital MMA landscape. With a substantial
digital presence, the platform boasts more than 260,000 forum accounts, more than 350,000 monthly engaged sessions, and a significant
social media footprint, including over 5 million followers across Facebook pages. Mixed Martial Arts LLC has previously initiated
effective monetization strategies, generating peak annual revenues of up to US$600,000. With the right investment in technology and
user engagement, we believe there is considerable potential for revitalizing and growing the platform’s user base and revenue
streams. |
| |
● |
We
launched ticketing services for live Alta events and seminars, including the Warrior Training Program finale events. Since launching
to March 31, 2024, we have generated ticketing revenue of A$144,817. |
| |
● |
We
completed our initial public offering, raising $6,500,000 by selling 1,300,000 shares at $5.00 per share. All previously issued convertible
notes were converted or redeemed. As of March 31, 2024, there are no convertible notes, host, or derivative liabilities on the Consolidated
Statement of Financial Position. Remaining interest and final fair value movement in derivative liability are reflected in the Consolidated
Statement of Profit or Loss. |
Historical
Results and Principal Markets in Which We Operate
Below
is a breakdown of total revenues generated by us through the Warrior Training Program, our primary product historically, by geography
over the last three financial years and for the nine months ended March 31, 2024 in Australian dollars.
Internal
management reporting presents revenue on a consolidated basis. This management reporting does not allocate revenue based on geographical
location. As such current management reporting framework are not reviewed to a specific geographical reporting location.
‘Total’
column has been extracted from audited set of consolidated financial statements over the last three financial years and from the unaudited
interim consolidated financial statements for the nine months ended March 31, 2024 in Australian dollars.
‘Country
Specific’ columns are not audited, as we have only one reportable segment. The determination of the these ‘Country Specific’
columns were based on management’s judgement that took into account program location and programs activated and recognized.
| FY
2021 | |
Total | | |
North
America | | |
Europe | | |
ANZ | |
| Revenue
from Program Fees | |
| 1,372,974 | | |
| 115,262 | | |
| 381,382 | | |
| 876,330 | |
| Less:
Contractual liabilities to gyms | |
| (773,528 | ) | |
| (64,938 | ) | |
| (214,869 | ) | |
| (493,721 | ) |
| Net
Revenue from Program Fees | |
| 599,446 | | |
| 50,324 | | |
| 166,513 | | |
| 382,609 | |
| Other
Revenue | |
| 446,262 | | |
| - | | |
| - | | |
| 446,262 | |
| FY
2022 | |
Total | | |
North
America | | |
Europe | | |
ANZ | |
| Revenue
from Program Fees | |
| 2,050,044 | | |
| 330,491 | | |
| 430,639 | | |
| 1,288,914 | |
| Less:
Contractual liabilities to gyms | |
| (1,215,191 | ) | |
| (195,903 | ) | |
| (255,267 | ) | |
| (764,021 | ) |
| Net
Revenue from Program Fees | |
| 834,853 | | |
| 134,588 | | |
| 175,372 | | |
| 524,893 | |
| Other
Revenue | |
| 105,950 | | |
| - | | |
| - | | |
| 105,950 | |
| FY
2023 | |
Total | | |
North
America | | |
Europe | | |
ANZ | |
| Revenue
from Program Fees | |
| 937,311 | | |
| 9,373 | | |
| 393,671 | | |
| 534,267 | |
| Less:
Contractual liabilities to gyms | |
| (574,025 | ) | |
| (5,740 | ) | |
| (241,091 | ) | |
| (327,194 | ) |
| Net
Revenue from Program Fees | |
| 363,286 | | |
| 3,633 | | |
| 152,580 | | |
| 207,073 | |
| Other
Revenue | |
| 1,173,421 | | |
| - | | |
| - | | |
| 1,173,421 | |
| Nine
Months Ended March 31, 2024 | |
Total | | |
North
America | | |
Europe | | |
ANZ | |
| Revenue
from Program Fees | |
| 954,621 | | |
| - | | |
| 410,485 | | |
| 544,136 | |
| Less:
Contractual liabilities to gyms | |
| (556,098 | ) | |
| - | | |
| (239,122 | ) | |
| (316,975 | ) |
| Net
Revenue from Program Fees | |
| 398,523 | | |
| - | | |
| 171,363 | | |
| 227,160 | |
| Other
Revenue | |
| 172,760 | | |
| - | | |
| - | | |
| 172,760 | |
Components
of our Results of Operations for the Year Ended June 30, 2023
Revenues
Sales
revenue consists of license fees and are recognized upon the provision of the right to access our intellectual property related to the
Warrior Training Program, which is a set of mixed martial arts training programs and relevant branding and support.
We
enter into contracts with our partner gyms for the partner gym to run our Alta branded Warrior Training Program for 20 weeks within their
gym. The contract is accompanied by a license agreement between us and our partner gyms. The determination of the program revenue amount
is dependent on the number of participants in each series for each gym. We receive payment in advance directly from the participant.
We are then required to settle contractual payments to the partner gyms as a percentage of the total training fees collected from participants.
Net revenue from program fees is the gross program fees, less contractual payments to our partner gyms. Revenues from sales of the Warrior
Training Program represented greater than 80% of our recurring revenues during the years ended June 30, 2022 and 2023.
Other
Income
Research
and Development Grant
The
R&D Grant relates to tax incentive payments from the Australian government’s Innovation Australia Research and Development
Tax Incentive Plan for research and development activities conducted in Australia in relation to the development of the technology underlying
our platform that meets the regulatory criteria. A refundable tax offset is available to eligible companies with an annual aggregate
revenue of less than A$20,000,000. Eligible companies can receive cash amounts equal to 43.5% of eligible research and development expenditures
from the Australian Taxation Office (the “ATO”).
Expenses
Research
and Development
We
incur research and development expenses related to the development of our software platform. The goal of our research and development
activities is to develop and provide a complete cloud-based solution that connects consumers with gyms, provides training programs for
members, provides complete gym management capabilities, and integrates payment technology.
The
primary research and development expenses incurred by us for the years ended June 30, 2023 and June 30, 2022 were for salaries and wages
relating to research and development activities and external contractor costs relating to research and development activities.
Contractual
Obligations to Gyms
We
enter into license agreements with partner gyms for the implementation of our branded 20 week Warrior Training Program. Under the license
agreements, we receive all revenue generated from the implementation of our Warrior Training Program by our partner gyms, and subsequently
distributes a portion of such revenues to our gym partners based on the terms of the license agreements. We recognize these contractual
obligations to gyms as a component of net revenue from program fees.
Marketing
and Advertising
We
incur marketing and advertising expenses for the promotion, and the generation of leads and revenue for the Warrior Training Program.
Marketing and advertising expenses are recognized as an expense as incurred. Our marketing and advertising costs consist primarily of:
| ● |
salaries
and related overhead expenses for personnel in marketing and advertising functions (for example wages, salaries and associated on
costs such as superannuation, share-based incentives and payroll taxes, plus travel costs and recruitment fees for new hires); and |
| |
|
| ● |
third
party costs for consultants who perform marketing and advertising activities on our behalf and under our direction, rent costs for
our global offices, and other miscellaneous costs. |
Management
and Administration
Management
and administration costs are recognized as an expense as incurred. Our management and administration costs consist primarily of employee
salaries and related costs for employees in executive, corporate and administrative functions. Other significant management and administration
expenses include audit fees, legal fees, finance support fees and other business consultant fees. Employee
salaries and benefits include wages and salaries, superannuation, non-monetary benefits, payroll taxes, annual leave and long service
leave.
Financing
Costs
Our
convertible notes can be converted into Ordinary Shares upon specific conversion events and are recognized as financial liabilities as
the number of Ordinary Shares to be issued may vary with changes in fair value. Interest related to the financial liability is recognized
in profit or loss.
Fair
Value on Financial Liabilities
Fair
value of financial liabilities comprises the fair value adjustment relating to embedded derivatives relating to the conversion option
within convertible notes. Please refer to Notes 21 and 22 of our consolidated financial statements for further detail.
Share
Based Payment Expense
Share
based compensation expenses are recognized in line with our accounting policy for share based compensation, which is described Note 22
of our consolidated financial statements. Share based compensation expenses consist of costs related to share based incentives granted
to personnel across all functions and key advisers and ambassadors.
Information
Technology Costs
Information
technology costs are incurred to support our technology stack including subscriptions and systems and maintenance costs.
Depreciation
and Amortization
Property,
Plant and Equipment, Right of Use assets and intangible assets such as trademarks and platform development costs are held and depreciated
on straight-line basis. The depreciation and amortization is recognized in the profit and loss. For further detail please refer to Notes
11, 12 and 20 of our consolidated financial statements.
Other
Expenses
Other
expenses include rent, foreign exchange gains and losses and other general costs that we incur.
Results
of Operations for the Years Ended June 30, 2023 and 2022
Comparison
of our results for the years ended June 30, 2023 and June 30, 2022
The
following table summarizes our results of operations for the fiscal years ended June 30, 2023 and June 30, 2022, respectively, and provides
information regarding the dollar and percentage increase (or decrease) during such periods.
| | |
For
the Year Ended June 30, | | |
Change | |
| | |
2023 | | |
2022 | | |
A$ | | |
% | |
| | |
(audited) | |
| Consolidated
Income Statement Data: | |
| | | |
| | | |
| | | |
| | |
| Revenue: | |
| | | |
| | | |
| | | |
| | |
| Revenue
from Program Fees | |
A$ | 937,415 | | |
A$ | 2,050,044 | | |
| (1,112,629 | ) | |
| (54 | ) |
| Less:
Contractual payments to gyms | |
A$ | (574,025 | ) | |
A$ | (1,215,191 | ) | |
| 641,166 | | |
| 53 | |
| Net
Revenue from program fees | |
A$ | 363,390 | | |
A$ | 834,853 | | |
| (471,463 | ) | |
| (56 | ) |
| Other
income: | |
| | | |
| | | |
| | | |
| | |
| Other
income | |
A$ | 1,173,421 | | |
A$ | 105,950 | | |
| 1,067,471 | | |
| 1,007 | |
| Total
revenue and other income | |
A$ | 1,536,811 | | |
A$ | 940,803 | | |
| 596,008 | | |
| 63 | |
| Expenses: | |
| | | |
A$ | | | |
| | | |
| | |
| Program
expenses | |
A$ | 229,848 | | |
A$ | 342,600 | | |
| (112,752 | ) | |
| (33 | ) |
| Employee
Salaries and benefits | |
A$ | 4,219,655 | | |
A$ | 4,664,013 | | |
| (444,358 | ) | |
| (10 | ) |
| Share
Based Payments | |
A$ | 2,365,384 | | |
A$ | 1,546,983 | | |
| 818,401 | | |
| 53 | |
| Advertising
fees | |
A$ | 721,713 | | |
A$ | 3,615,399 | | |
| (2,893,686 | ) | |
| (80 | ) |
| Professional
fees | |
A$ | 864,419 | | |
A$ | 685,870 | | |
| 178,549 | | |
| 26 | |
| Rent | |
A$ | 11,793 | | |
A$ | 2,366 | | |
| 9,427 | | |
| 398 | |
| IT
costs | |
A$ | 633,220 | | |
A$ | 640,403 | | |
| (7,183 | ) | |
| (1 | ) |
| Depreciation
and amortization | |
A$ | 360,021 | | |
A$ | 260,651 | | |
| 99,370 | | |
| 38 | |
| Net
foreign exchange gain | |
A$ | (47,359 | ) | |
A$ | (26,079 | ) | |
| (21,280 | ) | |
| (82 | ) |
| Finance
costs | |
A$ | 4,472,730 | | |
A$ | 2,191,803 | | |
| 2,280,927 | | |
| 104 | |
| Other
expenses | |
A$ | 1,432,094 | | |
A$ | 965,808 | | |
| 466,286 | | |
| 48 | |
| Fair
value movement in derivative liability | |
A$ | 6,870,729 | | |
A$ | (2,751,564 | ) | |
| 9,622,293 | | |
| 350 | |
| Total
Expenses | |
A$ | 22,134,247 | | |
A$ | 12,138,253 | | |
| 9,995,994 | | |
| 82 | |
| Loss
before income tax expense | |
A$ | (20,597,436 | ) | |
A$ | (11,197,450 | ) | |
| (9,399,986 | ) | |
| (84 | ) |
| Income
tax expense | |
| - | | |
| - | | |
| - | | |
| - | |
| Loss
after income tax expense for the year | |
A$ | (20,597,436 | ) | |
A$ | (11,197,450 | ) | |
| (9,399,986 | ) | |
| (84 | ) |
| Other
comprehensive loss, net of tax | |
A$ | (36,465 | ) | |
A$ | (31,312 | ) | |
| (5,153 | ) | |
| (16 | ) |
| Total
comprehensive loss for the year attributable to the members of the Alta Global Group Limited | |
A$ | (20,633,901 | ) | |
A$ | (11,228,762 | ) | |
| (9,405,139 | ) | |
| (84 | ) |
| Loss
per share: | |
| | | |
| | | |
| | | |
| | |
| Basic
loss per share | |
A$ | (5.26 | ) | |
A$ | (2.86 | ) | |
| | | |
| | |
| Diluted
loss per share | |
A$ | (5.26 | ) | |
A$ | (2.86 | ) | |
| | | |
| | |
Revenues
During
the year ended June 30, 2023, we generated A$937,415 in revenue from program fees and A$363,390 in net revenue from program fees, which
deducts our contractual payments to the gyms.
This
was a decrease of A$1,112,629 compared to A$2,050,044 in revenue from program fees during the year ended June 30, 2022, and a decrease
of A$471,463 compared to A$834,853 in net revenue from program fees for the year ended June 30, 2022.
The
following table shows movement within revenue for the years ended June 30, 2023 and June 30, 2022, respectively, together with the changes
in those items:
| | |
For
the Year Ended June 30, | | |
Change | |
| | |
2023 | | |
2022 | | |
A$ | | |
% | |
| | |
(audited) | | |
| | |
| |
| Revenue: | |
| | |
| | |
| | |
| |
| Revenue
from Program Fees | |
A$ | 937,415 | | |
A$ | 2,050,044 | | |
| (1,112,629 | ) | |
| (54 | ) |
| Less:
Contractual liabilities to gyms | |
A$ | (574,025 | ) | |
A$ | (1,215,191 | ) | |
| 641,166 | | |
| 53 | |
| Net
revenue from program fees | |
A$ | 363,390 | | |
A$ | 834,853 | | |
| (471,463 | ) | |
| (56 | ) |
The
decrease in net revenue from program fees for the year ended June 30, 2023 compared to the year ended June 30, 2022 is due to reduced
activation of Warrior Training Programs through licensed partner gyms. The reduction in revenue reflects management’s decision
to allocate growth capital towards building the Alta Community and Alta Academy for our clients. Please refer to the Business section
for more information.
Other
Income
Other
income was A$1,173,421 for the year ended June 30, 2023, compared to A$105,950 for the year ended June 30, 2022. The following table
shows movement within other income, together with the changes in those items:
| | |
For
the Year Ended June 30, | | |
Change | |
| | |
2023 | | |
2022 | | |
A$ | | |
% | |
| | |
(audited) | | |
| | |
| |
| Other
income: | |
| | | |
| | | |
| | | |
| | |
| Research
and development tax incentive | |
A$ | 1,149,525 | | |
A$ | - | | |
| 1,149,525 | | |
| 100 | |
| Other | |
A$ | 23,896 | | |
A$ | 105,950 | | |
| (82,054 | ) | |
| (77 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other
income | |
A$ | 1,173,421 | | |
A$ | 105,950 | | |
| 1,067,471 | | |
| 1,007 | |
Other
income increased by A$1,067,471 when comparing the year ended June 30, 2023 and the year ended June 30, 2022. This was a result of receipt
and recognition of a research and development tax incentive.
Program
Expenses
There
has been a decrease of A$112,732 in program expenses for the year ended June 30, 2023 compared with the year ended June 30, 2022. The
overall decrease reflects the reduction in the number of programs on sale between the year ended June 30, 2023 and the year ended June
30, 2022.
| | |
For
the year ended June 30, | | |
Change | |
| | |
2023 | | |
2022 | | |
A$ | | |
% | |
| | (audited) | | |
| | |
| |
| Program
Expenses: | |
| | | |
| | | |
| | | |
| | |
| Program
costs | |
A$ | 12,447 | | |
A$ | 253,614 | | |
| (241,167 | ) | |
| (95 | ) |
| Event
costs | |
A$ | 40,876 | | |
A$ | 22,513 | | |
| 18,363 | | |
| 81 | |
| Other | |
A$ | 176,525 | | |
A$ | 66,473 | | |
| 110,052 | | |
| 165 | |
| | |
| | | |
| | | |
| | | |
| | |
| Program
expenses | |
A$ | 229,848 | | |
A$ | 342,600 | | |
| (112,752 | ) | |
| (33 | ) |
Advertising
Expenses
Advertising
expenses were A$721,713 for the year ended June 30, 2023, compared with A$3,615,399 for the year ended June 30, 2022, a decrease of A$2,893,686.
The higher Advertising expense for the year ended June 30, 2022 was related to the rebranding of the Company from Wimp 2 Warrior to Alta.
This was a result of a decision to conserve and re-direct capital towards building a technology stack as described above.
| | |
For
the Year Ended June 30, | | |
Change | |
| | |
2023 | | |
2022 | | |
A$ | | |
% | |
| | |
(audited) | | |
| | |
| |
| Advertising
expense: | |
| | | |
| | | |
| | | |
| | |
| Advertising | |
A$ | 721,713 | | |
A$ | 3,615,399 | | |
| (2,893,686 | ) | |
| (80 | ) |
| Advertising | |
A$ | 721,713 | | |
A$ | 3,615,399 | | |
| (2,893,686 | ) | |
| (80 | ) |
Management
and Administration Expenses
Management
and administration expenses were A$5,084,074 for the year ended June 30, 2023, compared with A$5,349,883 for the year ended June 30,
2022, a decrease of A$265,809.
| | |
For
the Year Ended June 30, | | |
Change | |
| | |
2023 | | |
2022 | | |
A$ | | |
% | |
| | |
| | |
| | |
| |
| Management
and Administration expense: | |
| | | |
| | | |
| | | |
| | |
| Employee
salaries and benefits | |
A$ | 4,219,655 | | |
A$ | 4,664,013 | | |
| (444,358 | ) | |
| (10 | ) |
| Professional
fees | |
A$ | 864,419 | | |
A$ | 685,870 | | |
| 178,549 | | |
| 26 | |
| Management
and Administration | |
A$ | 5,084,074 | | |
A$ | 5,349,883 | | |
| (265,809 | ) | |
| (5 | ) |
Employee
salaries and benefits decreased by A$444,358 for the year ended June 30, 2023. This was primarily due to staff exiting the business.
Professional
fees increased by A$178,549 for the year ended June 30, 2023. This is primarily related to increases in accounting, legal, audit and
advisory services.
Share
Based Compensation Expenses
Share
based compensation expenses were A$2,365,384 for the year ended June 30, 2023, compared with A$1,546,983 for the year ended June 30,
2022, an increase of A$818,401. This increase was due to the issuance of new employee share options (Refer to Note 22 of our consolidated
financial statements for further detail).
Fair
Value on Financial Liabilities
Fair
value on financial liabilities comprises the fair value adjustment relating to embedded derivatives relating to the conversion option
within convertible notes and share options. The fair value loss for the year ended June 30, 2023 was A$6,870,729, compared to a fair
value gain of A$2,751,564 for the year ended June 30, 2022. The fair value adjustments are calculated with reference to an external valuation
prepared by a professional valuer.
Finance
Costs
Finance
costs increased to A$4,472,730 in the year ended June 30, 2023, from A$2,191,803 in the year ended June 30, 2022. This was primarily
the result of interest rate expense on existing convertible notes.
Other
Expenses
Other
expenses were A$1,432,094 for the year ended June 30, 2023, compared with A$965,808 for the year ended June 30, 2022, an increase of
A$466,286. The increase is primarily due to capital raising fees.
We
expect that other expenses will continue to fluctuate as a result of the movement in the Australian dollar to U.S. dollar exchange rate
going forward.
Losses
before and after income tax
Loss
after income tax was A$20,597,436 for the year ended June 30, 2023, compared with A$11,197,450 for the year ended June 30, 2022, an increase
of A$9,399,986. This increase reflects the changes in share based payments, fair value movement in derivative liability and finance costs.
Expenditure
related to Research and Development
Expenditure
related to research and development is included within the expenses outlined above and the following amounts relate to research and development
expenditure.
Research
and development expenses were A$1,105,409 for the year ended June 30, 2023 compared with A$1,602,366 for the year ended June 30, 2022,
a decrease of A$496,957.
| | |
For
the Year Ended June 30, | | |
Change | |
| | |
2023 | | |
2022 | | |
A$ | | |
% | |
| | |
(audited) | | |
| | |
| |
| Research
and Development expense: | |
| | | |
| | | |
| | | |
| | |
| Salary | |
A$ | 668,953 | | |
A$ | 492,826 | | |
| 176,127 | | |
| 36 | |
| Other
research and development expenditure | |
A$ | 436,456 | | |
A$ | 1,109,540 | | |
| (673,084 | ) | |
| (61 | ) |
| Research
and Development | |
A$ | 1,105,409 | | |
A$ | 1,602,366 | | |
| (496,957 | ) | |
| (31 | ) |
Salary
costs related to Research and Development increased by A$176,127 for the year ended June 30, 2023. This was as a result of prioritization
of by the business to focus on developing a scalable technology stack as mentioned above.
Other
research and development expenditure decreased by A$673,084 for the year ended June 30, 2023. This decrease is driven primarily by the
business decisions to reduce dependency on external consultants.
Components
of our Unaudited Results of Operations for the Nine Months Ended March 31, 2024 and 2023
Revenues
Sales
revenue consists of license fees and are recognized upon the provision of the right to access our intellectual property related to the
Warrior Training Program, which is a set of mixed martial arts training programs and relevant branding and support.
We
enter into contracts with our partner gyms for the partner gym to run our Alta branded Warrior Training Program for 20 weeks within their
gym. The contract is accompanied by a license agreement between us and our partner gyms. The determination of the program revenue amount
is dependent on the number of participants in each series for each gym. We receive payment in advance directly from the participant.
We are then required to settle contractual payments to the partner gyms as a percentage of the total training fees collected from participants.
Net revenue from program fees is the gross program fees, less contractual payments to our partner gyms. Revenues from sales of the Warrior
Training Program represented greater than 90% of our recurring revenues during the interim years ended March 31, 2024 and 2023.
Other
Income
Ticketing
Services
In
October 2023, we launched ticketing services for live Alta events and seminars, including the Warrior Training Program finale events.
Since launching to March 31, 2024, we have generated ticketing revenue of A$144,817.
Expenses
Contractual
Obligations to Gyms
We
enter into license agreements with partner gyms for the implementation of our branded 20 week Warrior Training Program. Under the license
agreements, we receive all revenue generated from the implementation of our Warrior Training Program by our partner gyms, and subsequently
distributes a portion of such revenues to our gym partners based on the terms of the license agreements. We recognize these contractual
obligations to gyms as a component of net revenue from program fees.
Marketing
and Advertising
We
incur marketing and advertising expenses for the promotion, and the generation of leads and revenue for the Warrior Training Program.
Marketing and advertising expenses are recognized as an expense as incurred. Our marketing and advertising costs consist primarily of:
| ● |
salaries
and related overhead expenses for personnel in marketing and advertising functions (for example wages, salaries and associated on
costs such as superannuation, share-based incentives and payroll taxes, plus travel costs and recruitment fees for new hires); and |
| |
|
| ● |
third
party costs for consultants who perform marketing and advertising activities on our behalf and under our direction, rent costs for
our global offices, and other miscellaneous costs. |
Management
and Administration
Management
and administration costs are recognized as an expense as incurred. Our management and administration costs consist primarily of employee
salaries and related costs for employees in executive, corporate and administrative functions. Other significant management and administration
expenses include audit fees, legal fees, finance support fees and other business consultant fees. Employee
salaries and benefits include wages and salaries, superannuation, non-monetary benefits, payroll taxes, annual leave and long service
leave.
Financing
Costs
Our
convertible notes can be converted into Ordinary Shares upon specific conversion events and are recognized as financial liabilities as
the number of Ordinary Shares to be issued may vary with changes in fair value. Interest related to the financial liability is recognized
in profit or loss.
Fair
Value on Financial Liabilities
Fair
value of financial liabilities comprises the fair value adjustment relating to embedded derivatives relating to the conversion option
within convertible notes. Please refer to Notes 15 of our interim condensed consolidated financial statements for nine months for further
detail.
Share
Based Payment Expense
Share
based compensation expenses are recognized in line with our accounting policy for share based compensation, which is described Note 16
of our interim condensed consolidated financial statements for nine months for further detail. Share based compensation expenses consist
of costs related to share based incentives granted to personnel across all functions and key advisers and ambassadors.
Information
Technology Costs
Information
technology costs are incurred to support our technology stack including subscriptions and systems and maintenance costs.
Depreciation
and Amortization
Property,
Plant and Equipment, Right of Use assets and intangible assets such as trademarks and platform development costs are held and depreciated
on straight-line basis. The depreciation and amortization is recognized in the profit and loss. For further detail please refer to Notes
10 of interim condensed consolidated financial statements for nine months for further detail.
Other
Expenses
Other
expenses include rent, foreign exchange gains and losses and other general costs that we incur.
Results
of Operations
Comparison
of our unaudited results for the nine month periods ended March 31, 2024 and March 31, 2023
The
following table summarizes our results of operations for the nine month periods ending March 31, 2024 and March 31, 2023, respectively,
and provides information regarding the dollar and percentage increase (or decrease) during such periods.
| | |
For
the Nine Months Ended March 31, | | |
Change | |
| | |
2024 | | |
2023 | | |
A$ | | |
% | |
| | |
(un-audited) | |
| Consolidated
Income Statement Data: | |
| | | |
| | | |
| | | |
| | |
| Revenue: | |
| | | |
| | | |
| | | |
| | |
| Revenue
from Program Fees | |
A$ | 954,621 | | |
A$ | 766,499 | | |
| 188,122 | | |
| 25 | |
| Less:
Contractual payments to gyms | |
A$ | (556,098 | ) | |
A$ | (462,026 | ) | |
| (94,072 | ) | |
| 20 | |
| Net
Revenue from program fees | |
A$ | 398,523 | | |
A$ | 304,473 | | |
| 94,050 | | |
| 31 | |
| Other
income: | |
| | | |
| | | |
| | | |
| | |
| Other
income | |
A$ | 172,760 | | |
A$ | 1,173,278 | | |
| (1,000,518 | ) | |
| (85 | ) |
| Total
revenue and other income | |
A$ | 571,283 | | |
A$ | 1,477,751 | | |
| (906,468 | ) | |
| (61 | ) |
| Expenses: | |
| | | |
| | | |
| | | |
| | |
| Program
expenses | |
A$ | 124,190 | | |
A$ | 189,304 | | |
| (65,114 | ) | |
| (34 | ) |
| Employee
Salaries and benefits | |
A$ | 3,908,674 | | |
A$ | 3,292,873 | | |
| 615,801 | | |
| 19 | |
| Share
Based Payments | |
A$ | 3,650,976 | | |
A$ | 1,774,037 | | |
| 1,876,939 | | |
| 106 | |
| Advertising
fees | |
A$ | 419,912 | | |
A$ | 515,197 | | |
| (95,285 | ) | |
| (18 | ) |
| Professional
fees | |
A$ | 1,505,745 | | |
A$ | 421,546 | | |
| 1,084,199 | | |
| 257 | |
| Rent | |
A$ | 7,245 | | |
A$ | 10,158 | | |
| (2,913 | ) | |
| (29 | ) |
| IT
costs | |
A$ | 416,340 | | |
A$ | 477,121 | | |
| (60,781 | ) | |
| (13 | ) |
| Depreciation
and amortization | |
A$ | 483,338 | | |
A$ | 312,293 | | |
| 171,045 | | |
| 55 | |
| Net
foreign exchange gain | |
A$ | (59,191 | ) | |
A$ | (15,961 | ) | |
| (43,230 | ) | |
| 271 | |
| Finance
costs | |
A$ | 3,219,591 | | |
A$ | 2,614,281 | | |
| 605,310 | | |
| 23 | |
| Other
expenses | |
A$ | 1,198,176 | | |
A$ | 464,569 | | |
| 733,607 | | |
| 158 | |
| Fair
value movement in derivative liability | |
A$ | (3,400,685 | ) | |
A$ | 4,666,982 | | |
| (8,067,667 | ) | |
| (173 | ) |
| Total
Expenses | |
A$ | 11,474,311 | | |
A$ | 14,722,400 | | |
| (3,248,089 | ) | |
| (22 | ) |
| Loss
before income tax expense | |
A$ | (10,903,028 | ) | |
A$ | (13,244,649 | ) | |
| 2,341,621 | | |
| (18 | ) |
| Income
tax expense | |
| - | | |
| - | | |
| - | | |
| - | |
| Loss
after income tax expense for the year | |
A$ | (10,903,028 | ) | |
A$ | (13,244,649 | ) | |
| 2,341,621 | | |
| (18 | ) |
| Other
comprehensive loss, net of tax | |
A$ | (98,128 | ) | |
A$ | (21,072 | ) | |
| (77,056 | ) | |
| 366 | |
| Total
comprehensive loss for the year attributable to the members of the Alta Global Group Limited | |
A$ | (11,001,156 | ) | |
A$ | (13,265,721 | ) | |
| 2,264,565 | | |
| (17 | ) |
| Loss
per share: | |
| | | |
| | | |
| | | |
| | |
| Basic
loss per share | |
A$ | (1.06 | ) | |
A$ | (3.38 | ) | |
| - | | |
| - | |
| Diluted
loss per share | |
A$ | (1.06 | ) | |
A$ | (3.38 | ) | |
| - | | |
| - | |
Revenues
During
the nine-month period ending March 31, 2024, we generated A$954,621 in revenue from program fees and A$398,523 in net revenue from program
fees, which deducts our contractual payments to the gyms.
This
was an increase of A$188,122 compared to A$766,499 in revenue from program fees during the nine-month period ended March 31, 2023, and
an increase of A$94,050 compared to A$304,473 in net revenue from program fees for the nine-month period ended March 31, 2023.
The
following table shows movement within revenue for the nine-month periods ending March 31, 2024 and March 31, 2023, respectively, together
with the changes in those items:
| | |
For
the Nine Months Ended March 31, | | |
Change | |
| | |
2024 | | |
2023 | | |
A$ | | |
% | |
| | |
(un-audited) | | |
| | |
| |
| Revenue: | |
| | |
| | |
| | |
| |
| Revenue
from Program Fees | |
A$ | 954,621 | | |
A$ | 766,499 | | |
| 188,122 | | |
| 25 | |
| Less:
Contractual liabilities to gyms | |
A$ | (556,098 | ) | |
A$ | (462,026 | ) | |
| (94,072 | ) | |
| 20 | |
| Net
revenue from program fees | |
A$ | 398,523 | | |
A$ | 304,473 | | |
| 94,050 | | |
| 31 | |
The
increase in the revenue was due to the number of programs rolled out across Europe, Australia and New Zealand.
Other
Income
Other
income was A$172,760 for the nine-month period ending March 31, 2024, compared to A$1,173,278 for the period ending March 31, 2023. The
following table shows movement within other income, together with the changes in those items:
| | |
For
the Nine Months Ended March 31, | | |
Change | |
| | |
2024 | | |
2023 | | |
A$ | | |
% | |
| | |
(un-audited) | | |
| | |
| |
| Other
income: | |
| | | |
| | | |
| | | |
| | |
| Ticketing
Services | |
A$ | 144,817 | | |
A$ | - | | |
| 144,817 | | |
| 100 | |
| Other | |
A$ | 27,943 | | |
A$ | 1,173,278 | | |
| (1,145,335 | ) | |
| (98 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other
income | |
A$ | 172,760 | | |
A$ | 1,173,287 | | |
| (1,000,518 | ) | |
| (85 | ) |
Other
income decreased mainly due to timing of recognition of the FY21 and FY22 R&D rebate received duing the nine-months period ending
March 31, 2023. The FY23 rebate was recognized at June 30, 2023 and hence does not appear in the nine-month period ending March 31, 2024.
Program
Expenses
There
has been a decrease of A$65,114 in program expenses for the nine-month period ending March 31, 2024 compared with the nine-month period
ending March 31, 2023. The decrease in program expenses is due to cost savings achieved through procuring merchandise.
| | |
For
the Nine Months Ended March 31, | | |
Change | |
| | |
2024 | | |
2023 | | |
$ | | |
% | |
| | |
(un-audited) | | |
| | |
| |
| Program
Expenses: | |
| | | |
| | | |
| | | |
| | |
| Program
costs | |
A$ | 7,046 | | |
A$ | 4,429 | | |
| 2,617 | | |
| 59 | |
| Event
costs | |
A$ | 35,496 | | |
A$ | 31,785 | | |
| 3,711 | | |
| 12 | |
| Other | |
A$ | 81,648 | | |
A$ | 153,090 | | |
| (71,442 | ) | |
| (47 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Program
expenses | |
A$ | 124,190 | | |
A$ | 189,304 | | |
| (65,114 | ) | |
| (34 | ) |
Advertising
Expenses
Advertising
expenses decreased by A$95,285 for the nine-month period ending March 31, 2024. The reduction in advertising reflects the improved in
the cost of acquisition achieved for the warrior program offering.
| | |
For
the Nine Months Ended March 31, | | |
Change | |
| | |
2024 | | |
2023 | | |
A$ | | |
% | |
| | |
(un-audited) | | |
| | |
| |
| Advertising
expense: | |
| | | |
| | | |
| | | |
| | |
| Advertising | |
A$ | 419,912 | | |
A$ | 515,197 | | |
| (95,285 | ) | |
| (18 | ) |
| Advertising | |
A$ | 419,912 | | |
A$ | 515,197 | | |
| (95,285 | ) | |
| (18 | ) |
Management
and Administration Expenses
Management
and administration expenses increased by A$1,700,000 for the nine-month period ending March 31, 2024.
| | |
For
the Nine Months Ended March 31, | | |
Change | |
| | |
2024 | | |
2023 | | |
A$ | | |
% | |
| | |
(un-audited) | | |
| | |
| |
| Management
and Administration expense: | |
| | | |
| | | |
| | | |
| | |
| Employee
salaries and benefits | |
A$ | 3,908,674 | | |
A$ | 3,292,873 | | |
| 615,801 | | |
| 19 | |
| Professional
fees | |
A$ | 1,505,745 | | |
A$ | 421,546 | | |
| 1,084,199 | | |
| 257 | |
| Management
and Administration | |
A$ | 5,414,419 | | |
A$ | 3,714,419 | | |
| 1,700,000 | | |
| 46 | |
Employee
salaries and benefits increased by A$615,801 for the nine-month period ending March 31, 2024. This was primarily due to new staff hires
and salary increases.
Professional
fees increased by A$1,084,199 for the nine-month period ending March 31, 2024. This is primarily related to increases in accounting,
legal and audit services fees pertaining to initial public offering on the NYSE.
Share
Based Compensation Expenses
Share
based compensation expenses were A$3,650,976 for the nine-month period ending March 31, 2024, compared with A$1,774,037 for the nine-month
period ended March 31, 2023, an increase of A$1,876,939. This increase was due to the issuance of restricted share units as per the employee
incentive plan, advisor options, reach options, warrants and over-allotment option to underwriter. Please refer to Note 16 of our interim
nine months unaudited financial statements for further detail.
Fair
Value on Financial Liabilities
Fair
value on financial liabilities comprises the fair value adjustment relating to embedded derivatives relating to the conversion option
within convertible notes. The fair value gain for the nine-month period ending March 31, 2024 was A$3,400,685, compared to a fair value
loss of A$4,666,982 for the nine-month period ending March 31, 2023.
The
fair value adjustments are calculated with reference to an external valuation prepared by a professional valuer. The valuer estimated
the value of the embedded derivative using the Monte-Carlo Simulation approach. The value of the debt component was calculated by deducting
the embedded derivative from the face value.
The
implied effective interest rate is calculated on the estimated present value of the debt component, the notes Conversion Date and Maturity
Date. The reporting dates the calculated of the debt component was measured at amortized cost using the effective rate of interest rate
calculated on issue date.
In
connection with the initial public offering of our Ordinary Shares in March 2024, all convertible notes that were on issue prior to the
initial public offering have either been converted into Ordinary Shares or redeemed. At March 31, 2024 there is no convertible note debt,
host or derivative liability, on the Consolidated Statement of Financial Position. The remaining interest on convertible notes and the
final fair value movement in derivative liability is reflected in the Consolidated Statement of Profit or Loss.
Finance
Costs
Finance
costs increased by A$605,310 in the nine-month period ending March 31, 2024. This was primarily the result of interest rate expense on
existing convertible notes. Refer above for professional valuer approach.
In
connection with the initial public offering of our Ordinary Shares in March 2024, all convertible notes that were on issue prior to the
initial public offering have either been converted into Ordinary Shares or redeemed. At March 31, 2024 there is no convertible note debt,
host or derivative liability, on the Consolidated Statement of Financial Position. The remaining interest on convertible notes and the
final fair value movement in derivative liability is reflected in the Consolidated Statement of Profit or Loss.
Other
Expenses
Other
expenses were A$1,198,176 for the nine-month period ending March 31, 2024, compared with A$464,569 for the nine-month period ending March
31, 2023, an increase of A$733,607.
The
increase is primarily due to capital raising fees, international travel and insurance. These costs were primarily due to the company
successfully closing out an initial public offering on the NYSE.
Losses
before and after income tax
Total
loss after tax was A$10,903,028 for the nine-month period ending March 31, 2024, compared with A$13,244,649 for the nine-month period
ending March 31, 2023, a decrease of A$2,341,621. This decrease reflects the changes in share based payments, fair value movement in
derivative liability and finance costs. Our historical operating losses were reflective of non cash operating expenses including the
interest component of the convertible notes and the fair value movement in the derivative liability of our convertible notes. The interest
component of the convertible notes for March 31, 2024 and 2023 were $3,207,498 and $2,571,044 respectively, and $4,420,224 and $2,162,646
for fiscal year 2023 and 2022 respectively. The fair value movement in the derivative liability of our convertible notes for March 31,
2024 and 2023 were ($3,400,685) and 4,666,982 respectively, and $6,870,729 and ($2,751,564) for fiscal year 2023 and 2022 respectively.
All convertible notes were redeemed or converted at March 31, 2024 and looking forward into future financial years will not be a component
of operating losses.
Segment
Reporting
We
have one operating segment, the provision and administration of mixed martial arts training programs and gym programs. The Consolidated
Financial Statements for the years ended June 30, 2023 and 2022 and the unaudited Interim Condensed Consolidated Financial Statements
for the nine months ending March 31, 2024 and 2023 have been presented by this single operating segment and have been presented and disclosed
as one reportable operating segment.
Liquidity
and Capital Resources
Sources
of Liquidity
We
have incurred losses from operations since inception and as of March 31, 2024, we had an accumulated deficit of A$49,160,337. We expect
that our research and development and management and administration expenses will continue to increase and, as a result, we will need
additional capital to fund our operations, which we may raise through a combination of equity offerings, debt financings, other third-party
funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements.
From
our inception through March 31, 2024, we have funded our operations principally with A$31 million in proceeds from the sale of our Ordinary
Shares and convertible notes.
As
of June 30, 2023, we had cash and cash equivalents of A$3,702,567. Cash in excess of immediate requirements is invested primarily in
money market funds in order to maintain liquidity and preserve capital.
During
the year ended June 30, 2023, we received proceeds of A$8,655,252 from issuances of convertible notes, net of transaction costs. After
the year end, we received proceeds of A$1,932,860 in relation to the Private Placement convertible notes issued on June 9, 2023.
On
March 28, 2024 we successfully listed on the New York Stock Exchange and on April 2, 2024, the Company received net proceeds of US$5,767,887
(A$8,842,460) after deducting underwriting discounts and offering expenses from this successful initial public offering.
Based
on our current planned operations and the net proceeds from this public offering of our Ordinary Shares, we expect that our cash and
cash equivalents will be sufficient to fund our operations for at least 12 months after the date of this prospectus. Our ability to continue
as a going concern is dependent upon our ability to successfully secure sources of financing and ultimately achieve profitable operations.
We may require additional financing to fund working capital and pay our obligations. We may seek to raise any necessary additional capital
through a combination of public or private equity offerings and/or debt financings. There can be no assurance that we will be successful
in acquiring additional funding at levels sufficient to fund our operations or on terms favorable to us, if at all. If adequate funds
are not available on acceptable terms when needed, we may be required to significantly reduce operating activities, which may have a
material adverse effect on our business and/or results of operations and financial condition. If we do raise additional capital through
public or private equity or convertible debt offerings, the ownership interest of our existing shareholders will be diluted, and the
terms of these securities may include liquidation or other preferences that adversely affect our existing shareholders’ rights.
If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, making capital expenditures or declaring dividends.
Cash
Flows for the fiscal years June 30, 2023 and 2022 and nine-months ending March 31, 2024 and 2023
The
following table sets forth the significant sources and uses of the cash for the fiscal years 2023 and 2022 set forth below:
| | |
For
the Year Ended June 30, | |
| | |
2023 | | |
2022 | |
| | |
| |
| Cash
Flow Data: | |
| | | |
| | |
| Net
cash used in operating activities | |
A$ | (5,555,868 | ) | |
A$ | (8,055,185 | ) |
| Net
cash provided by/(used in) investing activities | |
A$ | 69,673 | | |
A$ | (1,165,720 | ) |
| Net
cash provided by financing activities | |
A$ | 8,655,252 | | |
A$ | 5,679,651 | |
| Net
(decrease)/increase in cash and cash equivalents | |
A$ | 3,169,057 | | |
A$ | (3,541,254 | ) |
Cash
Flows from Operating Activities. Net cash used in operating activities was A$5,555,868 for the year ended June 30, 2023 compared
with A$8,055,185 for the year ended June 30, 2022, a decrease of A$2,499,317. This is due to reduced activation of Warrior Training Programs
with partner gyms, thereby reducing receipts from training participants and also reduced payments to gyms.
Cash
Flows from Investing Activities. Net cash from investing activities was A$69,673 for the year ended June 30, 2023 compared with net
cash used in investing activities of A$1,165,720 for the year ended June 30, 2022, an increase of A$1,235,393 due to reduction of payments
for intangible assets and receipt from Government grants and tax incentives related to assets.
Cash
Flows from Financing Activities. Net cash provided by financing activities was A$8,655,252 for the year ended June 30, 2023 compared
with A$5,679,651 for the year ended June 30, 2022, an increase of A$2,975,601 due to proceeds from convertible notes.
The
following table sets forth the significant sources and uses of the cash for the nine-month periods set forth below:
| | |
For
the Nine Months Ended March 31, | |
| | |
2024 | | |
2023 | |
| | |
(un-audited) | |
| Cash
Flow Data: | |
| | | |
| | |
| Net
cash used in operating activities | |
A$ | (5,250,450 | ) | |
A$ | (3,495,188 | ) |
| Net
cash used in investing activities | |
A$ | (186,759 | ) | |
A$ | (14,361 | ) |
| Net
cash provided by financing activities | |
A$ | 1,931,561 | | |
A$ | 4,223,269 | |
| Net
(decrease)/increase in cash and cash equivalents | |
A$ | (3,505,648 | ) | |
A$ | 713,720 | |
Cash
Flows from Operating Activities. Net cash outflows from operating activities increased by A$1,755,262 over the comparable
periods. This was due to increase in payments to suppliers, gyms and employees.
Cash
Flows from Investing Activities. Net cash outflows from investing activities increased by A$172,398 due to the acquisition
of intangible assets, including both internally generated and externally acquired including the acquisition of MMA LLC during the nine
months ended March 31, 2024.
Cash
Flows from Financing Activities. Net cash inflows provided by financing activities decreased by A$2,291,708. Cash provided by financing
activities at March 31, 2024 primarily represents the remaining receipt of cash proceeds from Private Placement convertible notes series
that was outstanding at June, 30 2023. Cash from other convertible notes series was receipted in fiscal year June 30, 2023.
Note
that on March 28, 2024 we successfully listed on the NYSE American and on April 2, 2024, the Company received net proceeds of US$5,767,887
(A$8,842,460) after deducting underwriting discounts and offering expenses from the initial public offering.
Operating
Capital Requirements
Although
we expect our losses to reduce in the near term, we anticipate that we will continue to incur losses for the foreseeable future. We anticipate
that we will need substantial additional funding in connection with our continuing operations. This may cast significant doubt over our
ability to continue as a going concern.
We
expect that our research and development and management and administration expenses will continue to increase and, as a result, we will
need additional capital to fund our operations, which we may raise through a combination of equity offerings, debt financings, other
third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements.
Additional
capital may not be available on reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on
terms acceptable to us, we may have to significantly delay, scale back or discontinue the development of our technology or programs.
If we raise additional funds through the issuance of additional debt or equity securities, it could result in dilution to our existing
shareholders, increased fixed payment obligations and the existence of securities with rights that may be senior to those of our Ordinary
Shares. If we incur indebtedness, we could become subject to covenants that would restrict our operations and potentially impair our
competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license
intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Any of
these events could significantly harm our business, financial condition and prospects.
Contractual
Obligations and Commitments
Employee
Liabilities
As
of June 30, 2023, we had A$376,119 accrued in annual leave and long service leave balances for our employees.
As
of March 31, 2024, we had A$442,945 accrued in annual leave and long service leave balances for our employees.
Trade
and Other Payables
As
of June 30, 2023, we had A$2,034,436 in trade and other payables. There were no other significant contractual obligations at June 30,
2023.
As
of March 31, 2024, we had A$5,047,525 in trade and other payables. Note that this payable amount includes Reach convertible notes that
were redeemed for cash of $1,029,617. The remaining Reach notes were converted to equity. There were no other significant contractual
obligations at March 31, 2024.
Certain
Differences Between IFRS and U.S GAAP
IFRS
differs from U.S GAAP in certain respects, including differences related to revenue recognition, intangible assets, share-based compensation
expense, income tax and earnings per share. Management has not assessed the materiality of differences between IFRS and U.S GAAP. Our
significant accounting policies are described in Note 2 to our consolidated financial statements and the related notes thereto included
elsewhere in this prospectus.
Application
of Critical Accounting Judgements, Estimates and Assumptions
The
preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts
in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent
liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various
factors, including expectations of future events, management believes to be reasonable under the circumstances.
Critical
accounting judgements, estimates and assumptions that have significant potential to result in a material adjustment to the carrying amounts
of assets and liabilities during each of the years are discussed below.
Reverse
Share Split
On
January 24, 2024, there was a Reverse Share Split of our issued and outstanding Ordinary Shares and Ordinary Share equivalents on the
basis of four (4) securities for every five (5) securities held. All issued and outstanding Ordinary Shares and Ordinary Share equivalents
and per share data have been adjusted throughout this prospectus to reflect the Reverse Share Split for all periods presented.
Going
Concern
The
consolidated financial statements for the reporting periods have been prepared on a going concern basis which contemplates continuity
of normal business activities and the realization of assets and settlement of liabilities in the ordinary course of business.
We
have assessed that there is a substantial doubt related to our ability to continue as a going concern as we incurred a loss after tax
of $10,903,028 for the period ended 31 March 2024 compared to $13,244,649 for the period ended 31 March 2023, had net cash outflows from
operating activities of $5,250,451 for the period ended 31 March 2024 compared to $3,495,188 for the period ended 31 March 2023, had
a net asset position of $5,224,635 as at 31 March 2024 compared to net liability $31,134,307 as at 30 June 2023, and net current asset
position of $3,920,595 as at 31 March 2024, compared to net current liability position of $21,916,914 as at 30 June 2023. As a result
of these conditions, the Company may be unable to realize its assets and discharge its liabilities in the normal, course of business.
On
April 2, 2024, the Company received net proceeds of US$5,767,887 (A$8,842,460) after deducting underwriting discounts and offering expenses
from a successful initial public offering. In addition, all convertible notes that were on issue prior to the initial public offering
have either been converted into Ordinary Shares or redeemed. Also, there is no convertible note debt, host or derivative liability, on
the Consolidated Statement of Financial Position. The remaining interest on convertible notes and the final fair value movement in derivative
liability is reflected in the Consolidated Statement of Profit or Loss.
The
injection of capital will be used to scale the business with our current product offerings into North America, Ireland, Australia and
New Zealand, pursue acquisitions, acquire notable talent and establish partnerships.
The
ongoing operation of the Company remains dependent upon raising additional funds. In light of the future expenditures to be incurred
in executing on our strategic plans, we are dependent on obtaining financing through equity financing, debt financing or other means.
The ability to arrange such funding in the future will depend in part upon the prevailing capital market conditions as well as our business
performance. There is no assurance that we will be successful in our efforts to raise additional funding on terms satisfactory to us.
If we do not obtain additional funding, we may be required to delay, reduce the scope of, or eliminate our current operations.
However,
we believe that we will be able to raise additional funds as required to meet our obligations as and when they become due and are of
the opinion that the use of the going concern basis remains appropriate. Our ability to continue as a going concern and to pay debts
as and when they become due is dependent on the following:
| |
● |
we
have historically been successful in raising funds, |
| |
● |
we
have listed on the New York Stock Exchange in the United States. As a listed vehicle now we have capital raising options such as
placements, Share Purchase Plans, Rights issues and entitlement offers, Dividend Reinvestment Plans, Hybrids and Retail notes and
PIPEs, |
| |
● |
our
level of expenditure continues to be managed and will continue to be managed to maximize run-way; and |
| |
● |
we
have reason to believe that in addition to the cash flow currently available, additional revenues will continue to be received through
the sale of our products and services throughout the course of the year. |
If
we decide to raise capital, the issuance of additional Ordinary Shares would result in dilution to our existing shareholders. We cannot
assure you that we will be successful in completing any financings or that any such equity or debt financing will be available to us
if and when required or on satisfactory terms.
Should
we be unable to raise additional funds on a timely basis, we may be required to realize our assets and discharge our liabilities other
than in the normal course of business and at amounts different to those stated in the financial statements. The financial statements
do not include any adjustments to the recoverability and classification of asset carrying amounts or the amount of liabilities that might
result should we be unable to continue as a going concern and meet our debts as and when they become due.
Revenue
From Contracts With Customers Involving Program Fees
When
recognizing revenue in relation to the sale of goods to customers, the key performance obligation of the entity is considered to be the
point of delivery of the rights to use the license and the relevant training program to the gyms as the customers, as this is deemed
to be the time that the gym obtains control of the promised service and therefore the benefits of unimpeded access.
Determination
of Variable Consideration
Judgement
is exercised in estimating variable consideration which is determined having regard to past experience with respect to the cancelled
contracts with the entity where the partner gyms maintains a right of termination pursuant to the license agreement. Revenue will only
be recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized under
the contract will not occur when the uncertainty associated with the variable consideration is subsequently resolved. We have determined
that any deposit received for training programs scheduled until a month after year end will reliably proceed and we have recognized the
relevant gross revenue as probable and measurable.
Share-Based
Payment Transactions
The
consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments
at the date at which they are granted. The fair value is determined by using either the Black-Scholes model taking into account the terms
and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based
payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact
profit or loss and equity.
Recognition
of Deferred Tax Assets
Deferred
tax assets are recognized for deductible temporary differences only if the entity considers it is probable that future taxable amounts
will be available to utilize those temporary differences and losses. We have not recognized deferred tax assets from brought forward
losses as we do not believe that it is probable that there are future taxable profits available to recover the asset as at the reporting
dates.
Intangible
assets
Intangible
assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the
acquisition. Intangible assets acquired separately are initially recognized at cost. Indefinite life intangible assets are not amortized
and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortization
and any impairment. The gains or losses recognized in profit or loss arising from the derecognition of intangible assets are measured
as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite
life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively
by changing the amortization method or period.
Trademarks
Significant
costs associated with patents or trademarks are deferred and amortized on a straight-line basis over the period of their expected benefit,
being their finite life of 10 years.
Capitalized
Web Development Costs
Costs
incurred in developing our platform that will contribute to future year financial benefits through revenue generation and/or cost reduction
are capitalized. The amortization of these costs is recognized in the profit and loss.
Software
Significant
costs associated with software are deferred and amortized on a straight-line basis over the period of their expected benefit, being their
finite life of four years.
Impairment
of Non-Financial Assets
We
assess impairment of non-financial assets at each reporting date by evaluating conditions specific to the us and to the particular asset
that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value
less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.
Impairment
of Receivables
Trade
and other receivables are assessed at each reporting date for impairment by assessing conditions and events specific to us and a provision
for refund raised accordingly.
Finance
Costs
Finance
costs attributable to qualifying assets are capitalized as part of the asset. All other finance costs are expensed in the period in which
they are incurred.
Valuation
of Derivative Liability
The
fair value of the conversion feature pertaining to the convertible notes is determined at each reporting date and the changes in fair
value are recognized in the profit and loss.
Issued
capital
Ordinary
Shares are classified as equity.
Incremental
costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Quantitative
and Qualitative Disclosure of Market Risk
The
following section provides quantitative and qualitative information on our exposure to interest rate risks, credit risk, liquidity risk
and foreign currency exchange risk. From time to time we make use of sensitivity analyses which are inherently limited in estimating
actual losses in fair value that can occur from changes in market conditions.
Credit
risk
Credit
risk arises from cash and cash equivalents, derivative financial instruments, as well as exposure to customers, including outstanding
receivables. We have no significant credit risk. For bank and financial institutions, only, independently rated and reputable parties
are accepted. We have polices in place to ensure that sales of products and services are made to customers in advance of the products
and service being provided.
Liquidity
risk
Prudent
liquidity risk management implies maintaining sufficient cash which we manage liquidity risk by continuously monitoring forecast and
actual cash flow.
Interest
rate risk
Interest
rate risk arises primarily from long term borrowings. We have no interest rate risk as a Company as the derivative liabilities attached
to the convertible notes are at a fixed rate on interest.
Foreign
currency exchange risk
Our
financial results are reported in AU dollar and a substantial portion of our operating revenues and expenses are reported in AU dollar.
Revenue and expenses recorded in local currency other that AU dollar are where practical received in to and paid out of local currency
bank accounts mitigating the Company’s exposure to foreign currency risk.
Jumpstart
Our Business Startups Act of 2012
On
April 5, 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted. We are in the process of evaluating the
benefits of relying on exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth
in the JOBS Act, if as an “emerging growth company” we choose to rely on such exemptions, we may not be required to, among
other things, (i) provide an auditor’s attestation report on our systems of internal controls over financial reporting pursuant
to Section 404, (ii) provide all of the compensation disclosure that may be required of non- emerging growth public companies under the
Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company
Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional
information about the audit and the financial statements (auditor discussion and analysis), and to the extent that we no longer qualify
as a foreign private issuer, (iv) disclose certain executive compensation-related items such as the correlation between executive compensation
and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation. These exemptions
will apply until we no longer meet the requirements of being an “emerging growth company.” We will remain an “emerging
growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of US$1.235
billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of this offering;
(iii) the date on which we have issued more than US$1 billion in nonconvertible debt during the previous three years; or (iv) the date
on which we are deemed to be a large accelerated filer under the rules of the SEC.
BUSINESS
Our
Mission
Our
mission is to empower community driven growth in the global martial arts and combat sports sector, leveraging technology to bridge the
gap between passion and participation.
Company
Overview
We
are a technology company that is enabling the global martial arts and combat sports industry to maximize the monetization opportunities
available to the sector by increasing consumer participation in the sport and building upon existing community offerings within the sector.
While we believe martial arts and combat sport gyms have a superb in-gym product, they are ripe for transformation when it comes to building
sales channels, enhancing customer onboarding, optimizing engagement and driving the growth and retention of members and membership revenues
within their gym communities.
We
believe that our platform represents a considerable opportunity to aggregate the vast global community ecosystem for martial arts and
combat sports, via a single platform solution that will define the sector’s digital transformation, converting one of the world’s
largest fan bases into participants. The Alta Platform serves as a comprehensive solution for martial arts and combat sports, offering
a blend of four core products: the Warrior Training Program, UFC Fight Fit Program, Alta Academy, and the Alta Community. To date, the
Warrior Training Program has been the core product we have monetized globally, which has been integral in enabling us to partner with
some of the best gyms and coaches globally, while building a passionate following from our participants and customers.
Mixed
martial arts (MMA) is one of the world’s fastest growing sports for participation and audience growth, with hundreds of millions
of passionate fans engaging in various levels of digital and physical participation every day. According to IBISWorld statistics, there
are currently over 45,597 martial arts and combat sports gyms in the U.S. alone that are expected to generate over US$12.6 billion in
annual revenue in 2023. Additionally, according to Sports & Fitness Industry Association’s Single Sport Reports for the Martial
Arts and Boxing Fitness, it is expected that more than 11.8 million people will engage in various martial arts and combat sports disciplines
in 2023.
There
are significant sector tailwinds which we benefit from, created by the large professional MMA leagues, including the UFC, PFL, ONE Championship
and Bellator, whose marketing budgets and broadcast reach play a pivotal role in growing the sport’s fan base. As a participant
in the martial arts sector, we target fan and consumer interest and aim to convert that interest into engagement with our premium and
immersive online and “in-gym” fitness and training experiences.
We
have successfully activated globally recognized coaches, athletes and influencers as ambassadors who continue to promote our vison and
the growth in adoption of our platform and its benefits. We believe the continuing engagement of our ambassadors will be a key element
to drive our expansion. Our network of partner gym communities includes some of the most renowned names in the combat sports sector,
including one of our cofounders, John Kavanagh, an MMA coach who is widely recognized for coaching UFC champion, Conor McGregor. Mr.
Kavanagh has assisted in the development of the training programs available exclusively on our platform and offers these programs at
his prominent gym, SBG Ireland, in Dublin. Mr. Kavanagh has also assisted us in engaging other globally recognized partner gym communities.
In addition, we have also secured key talent in the MMA sector by engaging ambassadors such as former UFC champion Daniel Cormier, UFC
broadcaster Laura Sanko and owner and head coach of City Kickboxing in Auckland New Zealand, Eugene Bareman.
Since
our inception, we have accumulated deep sector knowledge of how martial arts and combat sports operate globally, enabling us to recognize
the unique preferences and needs of the gyms, coaches and consumers within this market. We have leveraged the extensive information in
our gym inventory and community database to create an optimal pathway to attract consumers to participate in our proprietary training
programs as well as training via the weekly timetable of our partner gyms. We have built a database containing over 4,000 unique records
of martial arts and combat sports gyms globally and have over 550 gyms on the Alta Platform. Our partner gym communities include martial
arts and combat sports gym operations that span a range of training disciplines including, but not limited to, jiu jitsu, boxing, wrestling,
MMA, Muay Thai, kickboxing, judo, karate, and Tae Kwon Do.
Since
2018, we have run over 206 Warrior Training Programs globally, and over 5,107 participants have subscribed to our Warrior Training Program,
an average of 25 participants per program. In fiscal year 2021, we ran 34 Warrior Training Programs with a total of 886 participants.
In fiscal year 2022, we ran 50 Warrior Training Programs with a total of 1,163 participants. In fiscal year 2023, we ran 36 Warrior Training
Programs with a total of 865 participants. Over the last three years, the average gross revenue per participant who subscribed to our
Warrior Training Program was A$1,496. The Warrior Training Program is a 100 lesson, 20-week syllabus that provides participants with
a comprehensive introduction to the foundations of the sport of mixed martial arts. Participants who complete the 20-week Warrior Training
Program have the opportunity to compete in a sanctioned amateur mixed martial arts contest against a fellow participant in their class
cohort. The Warrior Training Program thereby acts as an “on ramp” to learning the fundamentals of all disciplines of mixed
martial arts, including wrestling, Brazilian Jiu Jitsu, boxing, Thai boxing, Judo and other disciplines. At the conclusion of the Warrior
Training Program, participants may elect to continue their training subscription and specialize in a particular martial art they enjoyed
during their Warrior Training Program. As a result of the foregoing customer engagement, our partner gyms have experienced incremental
revenue growth because of increased participation within their community. Our community development approach to acquiring participants
has redefined the participation demographics for martial arts worldwide. Specifically, we have strong female participation rates and
the average age of our members is mid to late 30s, with our oldest participants being in their 60s. Additionally, participants can become
valuable, long-standing members of their gym community after completing their first Alta program.
We
have also entered into a Partner Referral Agreement with UFC Gym. We have collaborated with UFC Gym to design and launch a new 10-week
Alta training program, called the UFC Fight Fit Program (“UFC Fight Fit Program”). UFC Gym has the option to introduce the
10 week program across its network of over 150 global locations.
In
July 2023, we launched our first online offering, the Alta Academy, to complement and further leverage our in-gym training experiences
for our customers. This activates our multi-year exclusive content agreements with our key global talent, which is a critical element
of our top of funnel marketing systems to drive in-gym participation.
A
further opportunity to aggregate the sector is through our Alta Community product, which is an extension of our existing product offerings
and represents the first global, cloud-based community-led growth and management software for martial arts and combat sports. The Alta
Community is designed for participants, coaches, and operators who are collectively referred to as “members” of the Alta
Community. The Alta Community enables the creation of individual communities and also promotes connections among these communities and
their members, thus fostering a single global community. This solution is deliberately designed to optimize the management, growth, and
monetization of martial arts and combat sports communities. It strives to enhance the digital and in-gym experiences of Alta members,
making it easier for them to discover, participate in, contribute to, coach, and operate the best martial arts and combat sports communities
on a single platform. Importantly, this entire process is facilitated through a simple monthly subscription.
In
summary, by combining our proprietary training programs with the insights and connection driven approach of the Alta Community, we have
created a commercial environment that drives efficiency, growth, and is designed to deliver partner gyms and coaches a distinct competitive
advantage. The combination of our core products positions the business strongly as a first mover in the race to aggregate such a vast
and attractive sector by creating a personalized, inclusive and attractive “on ramp” for martial arts participation, regardless
of location.
Our
Footprint - Trainalta.com, Mixedmartialarts.com and Steppen
Each
day we strive to:
| |
● |
Increase
the number of published and active gyms. |
| |
● |
Activate
recurring revenue through each active gym by running Alta Programs, selling in-gym training subscriptions and enrolling customers
in our Alta Academy and Alta Community platform. Our mantra ‘increasing earnings at your gym’ enables us to increase
our ‘share of wallet’ and drive growth. |
| |
● |
Establish
a model that generates a steady stream of leads and prospects for our products. The user generated content available on mixedmartialarts.com,
Alta content available on the Alta Academy and testimonials endorsing our programs are enabling the creation of a self-sustaining
customer acquisition model. |
| |
● |
Build
a scalable technology stack that solves customer needs and is capable of being rolled out to other sports with community attributes
similar to martial arts and combat sports. |
This
focus has enabled us to achieve the following:
| Metrics |
|
March
31, 2024 (Actual) |
| Curated
Gym Network |
|
|
| Database |
|
4,299
gyms with global inventory accessible |
| Published |
|
3,028
gyms (1,025 in Oceania, 1,699 in the United States, 172 in the United Kingdom & Ireland and 132 in other locations) with global
inventory available |
| Active |
|
552
gyms registered on trainalta.com, gym profile claimed or created, and accepted terms and conditions for the Alta platform or Hype
platform and/or accepted previous license agreement to run the Warrior Training Program |
| Ambassadors |
|
5
globally recognized influencers |
| Athlete
Profiles/Talent |
|
Over
9,878 professional and amateur fighters |
| Participants/User
Accounts |
|
Over
543,518 monthly users of three Alta platforms |
| Website
Sessions |
|
Over
580,000 combined monthly website sessions of three Alta platforms |
| Monthly
User Engagements |
|
Over
600,000 monthly average user engagements (posts and reactions) |
| Follower
base |
|
Over
5,000,000 total social media followers (Meta, X and TikTok) |
| Page
Views |
|
Over
14,000,000 combined monthly pageviews of three Alta platforms |
| Coaching
Tutorial Videos |
|
Over
3,500 tutorial videos available on Alta platforms |
| |
|
|
| Enterprise |
|
|
| Enterprise |
|
UFC
Fit partnership expansion from pilot at San Jose |
Business
Progress
Since
July 1, 2023, we have increased our gym footprint, expanding into new territories including Illinois, Arizona and Hawaii. We have also
engaged major martial arts academies including Renzo Gracie, American Top Team and American Kickboxing Academy.
In
July 2023, we launched our first online offering, the Alta Academy, to complement and further leverage our in-gym training experiences
for our customers. This activates our multi-year exclusive content agreements with our key global talent, which is a critical element
of our top of funnel marketing systems to drive in-gym participation.
Since
launch of the Alta Academy, we have expanded our digital content, including the digital syllabus for the Warrior Training Program, and
extended our online training into other disciplines beyond MMA, including jiu jitsu, boxing, wrestling, and Muay Thai, among others,
with new masterclasses delivered by our elite coaching talent, including Rafael Cordeiro, Mike Angove, Nikki Lloyd-Griffiths.
In
September 2023, we launched four new membership tiers for Alta members, including an In-Gym Training membership tier, which leverages
underutilized capacity within our gym partner network and allows Alta members to train in our partner gyms.
In
September 2023, we launched the first iteration of the Alta Community platform, which we believe will drive the growth of the gym and
coaching communities though the provision of new content and channels. This included the launch of gym channels. The gym channels feature
is used to house multimedia content that pertains to a specific gym’s profile on the Alta Community. This currently includes multimedia
content such as gym walkthrough videos (point of view videos demonstrating the gym’s facility) as well as interviews with gym owners
and coaches.
In
September 2023, we successfully completed our pilot UFC Fit program with UFC Gym in San Jose. We are currently negotiating the roll-out
the UFC Fit program across the UFC Gym network.
In
September 2023, we completed the acquisition of the assets of Steppen Pty Ltd, a fitness technology company based in Australia (“Steppen”).
Steppen is a dynamic fitness app designed to inspire, guide, and support users on their fitness journey. The Steppen platform quickly
resonated with young fitness enthusiasts around the globe, particularly in the U.S., accumulating a large following quickly after its
global launch in mid-2021. The Steppen App has seen success with over 395,000 downloads, predominantly from the U.S., reaching over 1.8
million impressions on the Apple App Store. With a robust database of over 270,000 accounts we believe that the Steppen App has established
a substantial user base. We plan to continue Steppen App’s operations and integrate key aspects of its proprietary Apple mobile
application technology, while exploring ways to optimize content and services for users, leveraging the acquired expertise and technology.
We believe the synergy from this acquisition is poised to drive growth, diversification, and market expansion for Alta in the burgeoning
health and wellness sector.
In
October 2023, we completed the acquisition of the assets of Mixed Martials Arts LLC, an independent
MMA media company, based in the U.S. Mixed Martial Arts LLC represents a valuable opportunity to us, as it is one of the last
independent MMA media companies not acquired by a major corporation, making it a novel asset in the digital MMA landscape. With a substantial
digital presence, the platform boasts more than 260,000 forum accounts, more than 350,000 monthly engaged sessions, and a significant
social media footprint, including over 5 million followers across Facebook pages. Mixed Martial Arts LLC has previously initiated effective
monetization strategies, generating peak annual revenues of up to US$600,000. With the right investment in technology and user engagement,
we believe there is considerable potential for revitalizing and growing the platform’s user base and revenue streams.
In
October 2023, we launched ticketing services for live Alta events and seminars, including the Warrior Training Program finale events.
Since launching to March 31, 2024, we have generated ticketing revenue of A$144,817.
On
April 2, 2024, we completed our initial public offering, raising $6,500,000 by selling 1,300,000 shares at $5.00 per share. All previously
issued convertible notes were converted or redeemed. As of March 31, 2024, there are no convertible notes, host, or derivative liabilities
on the Consolidated Statement of Financial Position. Remaining interest and final fair value movement in derivative liability are reflected
in the Consolidated Statement of Profit or Loss.
Throughout
April 2024, we partnered with renowned combat sports figures, including Rafael Cordeiro (Mike Tyson’s coach) for online Muay Thai
training and former UFC champion Daniel Cormier for wrestling instructional videos, targeting both beginners and seasoned athletes.
In
May 2024, we celebrated success in expanding the global MMA community. The Warrior Training Program at SBG Ireland has historically attracted
over 700 new members, boosting gym memberships and revenue. MMA superstar Conor McGregor, an Alta investor, endorsed the program to help
drive global combat sports participation. We also announced a strategic partnership with Upper Management in Mexico to launch the Warrior
Training Program in multiple gyms and create content for the burgeoning Mexican MMA fanbase. Further, we also showcased our partnership
with City Kickboxing in New Zealand, transforming over 800 beginners into cage-ready athletes through the Warrior Training Program, significantly
boosting gym memberships and community engagement.
In
May 2024, we completed the acquisition of the assets of Hype for USD$100,000, an all-in-one digital marketing platform, designed to help
small businesses grow in today’s age of social media. Hype’s software platform strengthens the Company’s vision to
convert 640 million MMA fans to participants by providing invaluable tools to our gym owner, coach, and athlete partners to not only
grow their revenues, but also operate more efficiently, save costs and enhance the offerings to their members and community. This acquisition
is expected to accelerate Alta’s technology roadmap, bringing forward new subscription revenue opportunities for us, while creating
cost synergies by materially reducing product development overhead and bringing valuable technology expertise, skills and talent into
the business.
In
June 2024, we partnered with legendary MMA coach Eric Nicksick and former UFC fighters Jessica-Rose Clark and Gilbert Melendez to help
strengthen our connection to 640 million global MMA fans.
In
September 2024, we announced a revenue share agreement with UFC Gym Group in relation to the intention of rolling out the Warrior
Training Program and Hype across UFC Gym Group’s global network of gyms, consisting of both corporate-owned and franchise
locations (with over 150 locations in 40 countries, including 80 in the United States). In addition, UFC Gym Group has hundreds of gyms
in development. In the initial phase, these programs are expected to be introduced in locations across the United States, the Middle
East, the UK, Germany, Mexico, India and Central Asia.
In
September 2024, Conor McGregor was appointed as a global ambassador and will provide services customarily associated with such roles
for a company in the mixed martial arts and technology sector.
Our
Next Growth Engines
The
growth engine of the Alta Platform is conceived as a dynamic, adaptable model, intentionally designed to reflect the ever-evolving landscape
of martial arts, ongoing technological advancements, and the shifting preferences within the global martial arts community. Rather than
being static, this strategy is crafted to be agile, accommodating new insights and market shifts.
Having
established product market fit across our operating territories with the Warrior Training Program, we expect that the next phase of our
growth will be driven by expanding our product set to meet the demand of the martial arts and combat sports community. Our extended subscription
based product suite aims to increase member engagement and lifetime value of each of our members (participants, gyms and coaches) in
the martial arts training ecosystem. For example, where a subscription to the Warrior Training Program historically had a start date
and an end date, our new product range and technology stack enables the Warrior Training Program to also be sold alongside an ongoing
in-gym training subscription (both pre and post completion of the Warrior Training Program).
Central
to this strategy is the utilization of technology to catalyze growth that is primarily community-led. It establishes a digital-to-physical
bridge that enhances engagement and participation within physical gym settings. We believe our platforms are poised to become the primary
destination for passionate martial artists and commercial practitioners, presenting avenues for content consumption and active, personalized
involvement within the sport.
Our
platforms equip users with an array of options to navigate and tailor their martial arts experience. Our services are inclusive, reaching
out to a broad spectrum of users from beginners to seasoned fighters, and also provide resources for coaches and gym owners to grow their
businesses. These services are refined to match users’ progression within martial arts, ensuring that our platforms evolve concurrently
with technology and community input.
Most
recently, we delivered a bespoke product solution for a new enterprise partner, UFC Gym, which will allow us to refine our enterprise
offerings to other large fitness chains and provide us with valuable content and user led reviews and feedback. Our ability to grow is
further bolstered by a dedicated team of experts in the field that enhance our technology, ensuring that our platforms remain at the
forefront of user engagement.
We
monetize our product offerings through our membership tiers that are customized for different degrees of engagement, enabling users to
modify their level of participation as their relationship with martial arts deepens, or reduces. This modular approach guarantees accessibility
and flexibility, presenting a variety of interaction points for every segment of the martial arts community.
The
expansion of our platforms is engineered to boost user engagement, revenue generation and lifetime value of each Alta member, embodying
a growth-centric model that anticipates and meets the needs of our users while expanding their interaction with martial arts. This blueprint
is devised to position our platforms as a central, influential force within the martial arts community that fosters a robust, interconnected
global community.
Market
Opportunity
We
believe the following key market characteristics create a large total addressable market that we believe we can address over the long-term,
and a serviceable addressable market which we currently address.
Growing
Engagement
| |
● |
According
to The Nielsen Company, LLC, MMA is one of the world’s fastest growing sports and has a large fan base, with hundreds of millions
of fans globally viewing promotions and events held by the various professional MMA leagues. |
| |
|
|
| |
● |
According
to IBISWorld, the broader martial arts market in the U.S. generated approximately US$11.6 billion in revenue in 2023, and consists
of approximately 41,849 gyms in 2023. |
| |
|
|
| |
● |
According
to Sports & Fitness Industry Association’s Single Sport Reports for Martial Arts and Boxing Fitness, approximately 11.82
million people currently train in martial arts and combat sports in the US. |
| |
|
|
| |
● |
Relative
to the amount of content and platforms for the largest sports, the small number of martial arts events and associated content means
martial arts is often considered one of the most underserved audiences in sport. |
Growing
systemic problems within the sector
The
martial arts and combat sports sector continues to enjoy significant sector tailwinds created by the large professional martial arts
leagues, including the UFC, PFL, ONE Championship and Bellator. The majority of revenues for fighting leagues in the sector derive from
broadcasting and media partnerships that are underpinned by the sector’s fan base – a community of hundreds of millions who
participate in the professional end of the sector, predominantly via broadcast viewership and ticket purchases to live events.
Separate
from these professional fighting leagues, many disaggregated small businesses exist in the martial arts and combat sports sector, many
of which are operated by the same highly qualified coaches and athletes who also serve as a “talent” to professional fighting
leagues. These small businesses are mostly martial arts and combat sport gyms, schools and academies (operators) that rely on revenues
from member (participant) fees.
These
small businesses, and their operators, coaches and participants are overwhelmed by problems, from trying to maintain and build an engaging
community on various social platforms to having a wide variety of disparate software solutions. We have classified the problem space
keeping the following three constituents in mind.
Participants
| |
● |
Effective
direct communications with gym community has been lost or diluted through free social media platforms. |
| |
|
|
| |
● |
Increasingly
poor level of quality in community discussion threads and forums as free social media platforms generate large amounts of unvetted
and unwarranted content. |
| |
|
|
| |
● |
No
curated, beginner friendly digital on-ramp/experience for participants that are new to martial arts and combat sports. |
Coaches
| |
● |
Coaches
have limited choice but to push high value content through free social media platforms to build their own personal brand and engage
students. These platforms favor entertainment skewed content, rather than content that has genuine utility or supports their training
philosophy. |
| |
|
|
| |
● |
Their
ability to directly commercialize this content through free social media platforms is limited without achieving significant views
that require an alignment to algorithmic trends often at the expense of content quality. |
Operators
| |
● |
As
small business owners with limited time and resources, gym operators are increasingly challenged in where and how to deploy their
efforts. Typically, significant resources are invested through free social media platforms, whose primary objective is to drive ad
revenue rather than bring new members to their gym. |
| |
|
|
| |
● |
Their
investment in developing marketing and sales content promoted through free social media platforms often yields inconsistent results,
unclear attribution and very limited cut-through due to content volume constraints on an individuals feed, and algorithms favoring
‘likes’ over utility or authenticity. |
| |
|
|
| |
● |
Proactively
engaging on forums hosted through free social media platforms is time consuming, and carries risk as these forums are not moderated,
and participation is plagued by unvetted online interactions with no alignment or interest in the gym. Negative reviews, whether
warranted or not, can have a huge impact on the long-term success of their business. |
| |
|
|
| |
● |
Free
social media platforms are driven to maintain users on the platform yet offer no direct path to purchase for gyms within the platform.
Leveraging a ‘lead generation’ approach often yields poor quality prospects requiring time consuming and resource intensive
outbound tele-sales. |
Our
Expertise
By
partnering with hundreds of successful martial arts and combat sports operators we have developed a deep understanding of the unique
attributes that must be present to build prosperous and healthy communities. These attributes include:
| |
● |
Shared
goals and values; |
| |
● |
Inclusivity
and diversity; |
| |
● |
Structured
learning and discipline; |
| |
● |
Supportive
coach-participant relationships; |
| |
● |
Positive
reinforcement and encouragement; |
| |
● |
Focus
on personal growth; |
| |
● |
Collaborative
learning; |
| |
● |
Non-competitive
spaces; and |
| |
● |
Social
interaction and networking. |
Our
Solution – Alta Platform
The
Alta Platform is presently a combination of our four core products; the Warrior Training Program, UFC Fit Program, Alta Academy and the
Alta Community.
Warrior
Training Program
To
date, this is the core product Alta has monetized globally which has been integral in enabling us to partner with some of the best gyms
and coaches globally, while building a passionate following from our participants and customers. Importantly, we distribute the contractual
payments to the gyms as all customers are originated in and managed via our payments platform. This ensures a homogenous and best practice
payments experience for customers and partner gyms alike. It also ensures our ability to manage our customer data and payments, a central
component of building enterprise value.
Our
Warrior Training Program, is a 100 lesson, 20 week training syllabus for members of all levels of fitness and experience, who are trained
by some of the best coaches across multiple martial arts disciplines, culminating in a fully sanctioned amateur MMA final fight night.
While completing our Warrior Training Program, participants learn the fundamental skills of martial arts and self-defense. Through our
Warrior Training Program we target MMA fans, people looking for a profound lifestyle change and those seeking a “bucket list”
fitness challenge. Our Alta members are then delivered a comprehensive training experience via a syllabus comprised of four pillars:
| |
● |
Foundations
– In the first stage of the Warrior Training Program, participants learn the foundational movements, skills and conditioning
needed to complete the Warrior Training Program. |
| |
|
|
| |
● |
Technique
and Movement – In the second stage of the Warrior Training Program, coaches expand upon the techniques, fitness and skills
that have been taught to participants. This is implemented by combining techniques in different contexts, transitions and combinations. |
| |
|
|
| |
● |
Pressure
and Preparation - In the third stage of the Warrior Training Program, participants focus on refining previously taught techniques
and applying them in training. The skills that have been taught in the first two stages of the Warrior Training Program are now implemented
through controlled live sparring and partner work. |
| |
|
|
| |
● |
Final
Fight Night – In the fourth and final stage of the Warrior Training Program, participants have the opportunity to put their
skills to the test and compete in what we believe is the only program that offers an amateur MMA fight night, just 20 weeks after
program commencement. Our final fight night provides participants with a unique opportunity to showcase their skills in front of
a live audience, competing against other participants they’ve trained alongside in their program. |
The
Warrior Training Program is governed by a license agreement with our partner gyms, such that both parties share in each other’s
success. There are no exclusivity provisions contained in our license agreement and our partner gyms have no right to reduce or limit
their performance under the agreement. Either party may terminate the license upon written notice to the other party. Such termination
will take effect after the completion of the relevant series and the series finale, but prior to a new series beginning. Additionally,
we may terminate the agreement upon written notice, with immediate effect, upon certain conduct by the partner gym. If the license is
not terminated, it will expire ten years from the commencement date of the agreement.
Pursuant
to the license agreement for the Warrior Training Program, we will pay a rate to our partner gyms that is typically a mid to high-double
digit percentage of the total program participation fees received. We retain the remainder of the fees earned during the course of the
program.
For
individual participants in this program, we provide a premium syllabus of video content, curated MMA content with 100 structured classes,
entry into the fight night upon completion of the program and premium training gear and equipment. For our gym partners, we provide marketing
campaigns to drive program participation, customer service and payment management services, and 100 premium “how to” coaching
videos to support delivery of the program. We also grant our partner gyms access to our cloud based software platform, rewards algorithm,
and library of online classes to assist with the delivery of an in-gym experience.
UFC
Fight Fit Program
We
have partnered with UFC Gym to bring UFC Gym members our UFC Fight Fit Program, a 10 week in-gym offering that can be accessed through
our Fight Program membership tier. The UFC Fight Fit Program is designed as an introduction to MMA for beginners where participants are
provided with training on the fundamentals of MMA three days per week, with notable former UFC fighters as the primary coaches. Our first
UFC Fight Fit Program is currently offered through UFC Gyms located in San Jose, California, and is designed to help participants gain
fitness and improve body composition.
Through
the UFC Fight Fit Program, participants will learn the most important skills from a variety of martial arts disciplines as they relate
to MMA. For example, in this program we teach skills and techniques for striking disciplines through training components of boxing, kickboxing
and clinch fighting. Similarly participants are also taught equivalent skills related to grappling arts including techniques derived
from Brazilian jiu-jitsu and wrestling. The final week of our UFC Fight Fit Program is dedicated to comprehensive testing and grading
whereby our expert coaches evaluate each participant’s progress through vectors including, body measurements, physical strength,
endurance and technical testing to assess their progress and proficiency.
This
program is intended as an introductory step in our participant’s path to continuing their martial arts journey, building upon their
newfound skills. The UFC Fight Fit Program is designed for beginners with no previous experience in MMA or assumed fitness background.
Accordingly, the syllabus for this program has been written to ensure that participants learn MMA in a safe training environment involving
light exercises and very limited contact. This ensures the product is directed towards the largest potential customer segment across
UFC Gym’s global footprint.
The
Fight Fit Program is governed by a license agreement with our partner gyms, such that both parties share in each other’s success.
There are no exclusivity provisions contained in our license agreement and our partner gyms have no right to reduce or limit their performance
under the agreement. Either party may terminate the license upon written notice to the other party. Such termination will take effect
after the completion of the relevant series and the series finale, but prior to a new series beginning. Additionally, we may terminate
the agreement upon written notice if the partner has failed to comply with its obligations under the agreement. If the license is not
terminated, it will expire ten years from the commencement date of the agreement.
For
the pilot program in San Jose, we have ten participants subscribed to our Fight Fit Program. The average gross revenue per participant
who subscribed to our Fight Fit Program was A$2,089. This was only for the pilot program and we look to expand across the UFC Gym network
with cross promotional marketing activities. We expect to see an increase in average participation rates over time.
Pursuant
to the license agreement for the Fight Fit Program, we will pay a rate to our partner gyms that is typically a mid to high double digit
percentage of the total program participation fees received. We retain the remainder of the fees earned during the course of the program.
For
individual participants in this program, we provide curated MMA content with 30 structured classes, premium training gear and equipment.
For our gym partners, we provide marketing campaigns to drive program participation, customer service and payment management services.
We also grant our partner gyms access to a library of online classes to assist with the delivery of an in-gym experience.
Alta
Academy
We
recently unveiled the Alta Academy, a comprehensive platform designed around curated video content that provides anyone an in-depth education
in multiple martial arts and combat sports disciplines.
Crafted
to cater to all skill levels, our Academy content resonates with individuals starting their martial arts journey, experienced participants
seeking to hone their skills, and competitive amateur and professional athletes seeking advanced techniques and insights. The curriculum,
presented both from the coach’s lens and the participant’s experience, is exclusively and proprietarily curated in collaboration
with our distinguished global talents.
Notable
contributors include stalwarts like Daniel Cormier, Laura Sanko, Rafael Cordeiro, John Kavanagh, and Mike Angove. Importantly, the Alta
Academy subscription is strategically bundled with our in-gym participation products. This holistic package ensures that subscribers
not only gain theoretical knowledge but also have avenues to apply what they learn through hands-on experiences within our extensive
gym partner network.
Furthermore,
our Academy content is a pivotal asset for top-of-the-funnel customer acquisition. It offers potential participants an immersive gateway
to explore and engage with martial arts and combat sports before transitioning to in-gym experiences. For many, this digital engagement
acts as a precursor, building confidence and interest to dive deeper into the sport through our partnered gym offerings.
We
introduce new video content multiple times per month, ensuring our subscribers receive both foundational knowledge and the latest advancements
in martial arts, creating a seamless transition from online learning to in-gym practice.
Alta
Ambassador Rafael Cordeiro
The
Alta Academy is governed by terms and conditions included in our User Agreement. Every participant user of the Alta platform must agree
to the User Agreement before they can use the Alta platform. The User Agreement is available and executed through our website. This User
Agreement applies to trainalta.com, Alta branded apps, partner.trainalta.com and other Alta-related sites, apps, communications and other
services (collectively referred to as the “Services”). If a participant has not agreed to the User Agreement, they may access
certain features as a “Visitor”. All members must be at least 18 years old unless local laws mandate a higher age and the
individual may terminate the registered Services upon written notice, effective upon the expiration date of the Services paid for.
Subscribers
to the Alta Academy may terminate the registered Services prior to the renewal of the Services previously paid for. Either party may
terminate the Services and the User Agreement if the other party fails to perform any material obligation under the User Agreement, and
such party cannot cure the non-performance within thirty (30) days of the date such party is notified by the other party of such default.
Access
to the Alta Academy is available for a monthly fee in the range of A$9.99 to A$39.99, which provides access to premium curated video
content that provides an in-depth education in multiple martial arts and combat sports disciplines to complement and enhance a subscriber’s
individual training journey. This is a proprietary feature of the Alta Platform and there is no revenue share with gym partners for the
Alta Academy.
For
our partner gyms that subscribe to the Alta Academy, we provide access to our cloud based software platform, rewards algorithm, and library
of instructional content curated by industry expert talent.
Alta
Community
Our
next phase of sector aggregation is through our Alta Community product, which is an extension of our existing product offerings and represents
the first global, cloud-based, community-led growth and management software for martial arts and combat sports.
The
Alta Community is designed for participants, coaches, and operators who are collectively referred to as “members” of the
Alta Community. The Alta Community enables the creation of individual communities and also promotes connections among these communities
and their members, thus fostering a single global community. This solution is deliberately designed to optimize the management, growth,
and monetization of martial arts and combat sports communities. It strives to enhance the digital and in-gym experiences of Alta members,
making it easier for them to discover, participate in, contribute to, coach, and operate the best martial arts and combat sports communities
on a single platform. Importantly, this entire process is facilitated through a simple monthly subscription.
The
Alta Community can be broken down into the following feature sets, which will be regularly enriched via scheduled technology updates.
Trainalta.com
– Our Engagement and Participation Portal
| |
● |
Engage
and Participate – Our members will have a unified account to manage all aspects of their training activities, consume online
content and follow other members, including gyms and coaches. Participants can tailor their engagement within the platform to best
match their needs as well as interact socially and commercially with other community members. Participants who wish to train in a
gym can discover training locations, program offerings and learn about the capabilities and experience of various coaches. |
| |
|
|
| |
● |
Reward
– As members become more involved and reach specific membership milestones, they will
be eligible for rewards. This feature is a cornerstone of building customer utility and retention
within the Alta Platform and brings recognition and rewards to all community members. Members
will be eligible for rewards depending on the state of their membership and their level of
activity.
|
Partner.trainalta.com
– Our Community Management Portal
| |
● |
Earn
and Amplify – Coaches and operators will be able to manage, communicate, create and moderate content and maintain and amplify
their businesses and brands through this partner portal. They will be able to manage their schedules and enhance their business profile
on trainalta.com. Further, coaches and operators can manage scheduling, optimize their timetables and enhance their business profile
on trainalta.com. |
| |
|
|
| |
● |
Enterprise
– We aim to cater to larger scale business models with this offering, providing them with the opportunity to integrate and
utilize both trainalta.com and partner.trainalta.com. Offering dedicated solutions to larger scale business models and gym chains,
our enterprise solutions are designed to assist these businesses by providing additional tailored programming to all their locations
and coaches. |
| |
|
|
| |
● |
Hub
– With a goal to inspire developers worldwide to add to the core Alta Platform, we
are planning to develop a comprehensive library of integrations to further accelerate Alta’s
growth. By delivering an open platform enabling developers worldwide to create additional
offerings to the core Alta platform, this will encourage the growth of a larger product set,
for the benefit of all participants on the platform.
|
Access
to the Alta Community requires the creation of a member profile and payment in exchange for monthly membership. Memberships are paid
for via a conventional monthly subscription. There will be three tiers of membership for our three core userbases as outlined below:
Membership
fees are broken into three levels, each with a different subscription cost and relevant additive benefits:
Community
Only Memberships
| |
● |
Our
entry-level membership is the most affordable membership and allows users, participants, coaches and operators to interact and connect
with the global platform community, local gym communities and consume training content with dedicated sections for coaches and gyms. |
Gym
and Coaching Memberships
| |
● |
Our
mid-level membership allows members to join a gym community and train in-gym. These members will receive enhanced features and content
previously inaccessible to the community only members, including data tracking, dietary advice and recommended content based on scheduling. |
| |
● |
Separately,
coaches and operators can input, manage and monetize their offerings and content, and receive dashboards and analytics reporting
on their platform performance. |
Fight
Program Memberships
| |
● |
Our
highest level membership is our fight program membership which allows community members to participate in, coach, or host, as applicable,
our signature programs as detailed below. |
| |
● |
Our
programs are world renowned as a transformational experience. Program participants with a fight program membership receive world
class training, advice and support from Alta and its community members. |
| |
● |
Additionally,
coaches and operators receive incremental revenue by delivering our curated program syllabus, which includes operational support
to program participants. |
Alta
Community Product Development
To
date, we have launched gym and coaching membership tiers for participant users only, which enables access to exclusive online
instructional content. This subscription further provides members access to the timetable of classes offered by various gym operators,
in the facility and location they have selected when they created or claimed their gym operator membership profile.
From
now until June 2024, we expect to release enhanced participant membership tiers, specifically designed to drive user engagement in the
social media/community feature sets of our platform, by including the following functions:
| |
● |
Content
creation on member feed - participants will be able to create and publish content on the platform’s member feed. |
| |
|
|
| |
● |
Inter
member messaging - participants will be able to compose and post direct messages to other members including gym and coach member
profiles. |
| |
|
|
| |
● |
Group
messaging - participants will be able to engage and reply in group message threads created by gym operator members. |
| |
|
|
| |
● |
Personalized
content recommendations for member feeds - participants will receive personalized recommendations for accounts, members and content
they can engage with in their member feed. |
| |
|
|
| |
● |
Personalized
training support member features - participants will receive customized recommendations on which instructional videos would be of
greatest interest considering their platform behavior and preferences. |
By
the end of June 2024, we expect to launch new enhancements to our gym and coach membership functionality with the delivery of Alta’s
earning and rewards portal, presently named Partner.trainalta.com. This functionality, designed specifically for gym operator and coach
member profiles, will encourage and reward those members for enriching their profile and interacting on the platform. The feature set
will include:
| |
● |
Membership
profile management for gym operators - gym operators will be able to create, manage and enrich their user profile. |
| |
● |
Membership
profile management for coaches - coaches will be able to create, manage and enrich their user profile. |
| |
|
|
| |
● |
Timetable
management - gym operator members will be able to create, edit and publish their timetable of classes offered via ‘gym and
coaching’ membership tiers to participant members on the platform. |
| |
|
|
| |
● |
Inter
member messaging - gym operators will be able to compose, send and respond to messages with all other members types. |
| |
|
|
| |
● |
Group
messaging - gym operators will be able to compose, send, engage and reply in group messaging threads via their gym operator profile.
|
| |
|
|
| |
● |
Member
reporting for gym operators - gym operators will be able to view detailed status reports on Alta participant members who have access
to their gyms, coaches and timetable of classes. |
| |
|
|
| |
● |
Payment
and earnings reporting for gym operators - gym operators will be able to create and view reports that reconcile all payments from
Alta in exchange for participant members accessing their gym, coaches and timetabled classes. |
| |
|
|
| |
● |
Referral
rewards for gym operator members - gym operators will be able to increase their earnings by receiving payments in exchange for referring
visitors to the platform to create a member profile and subscription. |
The
terms and conditions for participants of our programs are included in our User Agreement. Every participant user of the Alta platform
must agree to the User Agreement before they can use the Alta platform. The User Agreement is available and executed through our website.
This User Agreement applies to trainalta.com, Alta branded apps, partner.trainalta.com and other Alta-related sites, apps, communications
and other services (collectively referred to as the “Services”). If a consumer has not agreed to the User Agreement, they
may access certain features as a “Visitor”. All members must be at least 18 years old unless local laws mandate a higher
age and the individual may terminate the registered Services upon written notice, effective upon the expiration date of the Services
paid for.
The
terms and conditions for coaches and gyms participating in our programs are included in our User Agreement. Every coach or gym user of
the Alta platform, whether they’re an individual or a partner gym, must agree to the User Agreement and User Agreement Addendum
before they can use the Alta platform. Both the User Agreement and User Agreement Addendum are available and executed through our website.
This User Agreement applies to trainalta.com, Alta branded apps, partner.trainalta.com and other Alta-related sites, apps, communications
and other services (collectively referred to as the “Services”). If a coach or partner gym has not agreed to the User Agreement,
they may access certain features as a “Visitor”. All members must be at least 18 years old unless local laws mandate a higher
age and the individual or partner gym may terminate the registered Services upon written notice, effective upon the expiration date of
the Services paid for.
Users
may terminate the registered Services prior to the renewal of the Services previously paid for. Either party may terminate the Services
and the User Agreement if the other party fails to perform any material obligation under the User Agreement, and such party cannot cure
the non-performance within thirty (30) days of the date such party is notified by the other party of such default.
The
anticipated fee structure for the Alta Community is expected to be broken into three categories: coaches, gyms and participants. The
Coach Membership Tier of the Alta Community is still in development and we expect this to be available by be available by the second
calendar quarter of 2024. The Gym Membership Tier of the Alta Community is still in development and we expect this to be available by
be available by the first calendar quarter of 2024. The Participant Membership Tier, which was launched in September 2023, ranges from
A$9 per month to A$250 per month. Payments to our gym partners will vary depending on the level of in-gym training by an Alta Member.
For
participants in the Alta Community, we will make available messaging features for communication with other coaches, gyms and participants,
as well as access to gym created content via gym “albums” to discover new training locations and support training at an existing
location. Participants will be able to utilize generated content features to participate in their community and the wider online community.
Users will be able to access support training features, such as connection to gym and notifications and will benefit from access to a
rewards feature that encourages continuing and increasing engagement.
For
participants in the Alta Community, we also provide access to our cloud based software platform and rewards algorithm.
Hype
As
a result of our acquisition of Hype in May 2024, we now offer our partner gyms the highly scalable digital marketing Hype platform that
we believe will help our partner gyms grow in today’s age of social media.
This
innovative product seamlessly blends the functionalities of a mobile website builder with core email and SMS marketing capabilities,
alongside an integrated payment system. Notably, this mobile-first solution caters perfectly to owner-operators who manage much of their
business on their phones, which is ideal for many of our partner gyms. We believe the Hype platform will help our partner gyms collect
contacts and generate recurring revenue.
Hype’s
state-of-the-art technology offers user-friendly tools tailored to boost revenue streams, particularly beneficial for small businesses
like combat sports gyms. By integrating this technology into its existing platform, we estimate this transaction may accelerate our technology
roadmap by at least 18 months, delivering technology capex and development cost savings, while reducing customer acquisition costs for
our partner gyms.
We
intend to distribute the Hype product offering across our extensive community of partner gyms and thousands of coaches and athletes globally
across the Alta platforms. We believe Hype presents a significant opportunity to launch a new SaaS offering for our gym, coach, and talent
partners, further increasing the embedded revenue opportunity that exists from each gym, coach and talent relationship on our platform.
Alongside our existing product offerings, the Hype products are expected to accelerate our penetration into the martial arts and combat
sports market.
Our
access to Hype’s expert team has provided us with invaluable in-house technology expertise, fortifying our capability to deliver
cutting-edge technology solutions for the combat sports sector without additional costs.
Mixed
Martial Arts LLC
In
October 2023, we completed the acquisition of the assets of Mixed Martials Arts LLC, an independent MMA media company, based in the US.
This
acquisition includes the acquisition of all the rights and title to the online media and community platform for the sport of mixed martial
arts including software, marketing, historical articles, business services and social media accounts connected to www.mixedmartialarts.com
and www.mma.tv and all subdomain or other such subsidiary pages.
Mixed
Martials Arts LLC has established itself as a prominent gathering point for MMA enthusiasts since migrating to mma.tv in 2001. Through
strategic acquisitions, including the purchase of fight history data from Full Contact Fighter in 2006 and MMA media website Max Fighting
in 2007, it has successfully expanded its offerings and reach in the MMA community. The 2008 launch of the revamped www.mixedmartialarts.com
marked a milestone in enhancing user engagement and initiating effective monetization strategies. Despite facing industry challenges,
the platform maintains a robust digital presence and continues to be an influential player in the MMA digital media space, offering a
novel platform for fans, practitioners, and enthusiasts of the sport.
With
a substantial digital presence, the platform boasts more than 260,000 forum accounts, more than 350,000 monthly engaged sessions,
and a significant social media footprint, including more than 5 million followers across Facebook pages. Mixed Martial Arts LLC has previously
initiated effective monetization strategies, generating peak annual revenues of up to US$600,000. With the right investment in technology
and user engagement, we believe there is considerable potential for revitalizing and growing the platform’s user base and revenue
streams.
This
asset acquisition represents an immediate and significant growth of user accounts which will be engaged and developed for the purposes
of driving online community activity, leading to product offers, subscription sales and other monetization opportunities. An additional
benefit of the foregoing acquisitions, especially Mixed Martial Arts LLC, is the volume of organic search traffic generated by its websites.
Capturing this traffic organically reduces the our paid search and other ad spend, which in turn represents an opportunity to attract
and convert new customers at a lower per unit acquisition cost.
Steppen
In
September 2023, we completed the acquisition of the assets of Steppen Pty Ltd, a fitness technology company based in Australia (“Steppen”).
Steppen
is a dynamic fitness app designed to inspire, guide, and support users on their fitness journey. The Steppen platform quickly resonated
with young fitness enthusiasts around the globe, particularly in the US, accumulating a large following quickly after its global launch
in mid-2021. The Steppen App has seen success with over 395,000 downloads, predominantly from the US, reaching over 1.8 million impressions
on the Apple App Store. With a robust database of over 270,000 users, we believe that the Steppen App has established a substantial user
base.
We
plan to continue Steppen App’s operations and integrate key aspects of its proprietary Apple mobile application technology, while
exploring ways to optimize content and services for users, leveraging the acquired expertise and technology. We believe the synergy from
this acquisition is poised to drive growth, diversification, and market expansion for Alta in the burgeoning health and wellness sector.
Member
Acquisition Approach for the Alta Platform
Member
Acquisition Overview for the Alta Platform
We
are dedicated to expanding our member community by strategically acquiring new members who have a passion for martial arts or combat
sports and fitness. Our approach is data-driven and designed to align with the interests and behaviors of potential platform members.
Relationship/Platform:
| |
● |
By
offering practical solutions to improve the in-gym experience and pathways to participate in martial arts and combat sports, our
sales function combines with the utility of our platform to become an effective co-operative marketing acquisition strategy. We empower
gym owners with the knowledge and tools required to increase their revenue. This empowerment demonstrates that our platform is not
merely a product but an evolving business growth partnership. |
Direct
Targeted Marketing and Advertising:
| |
● |
Precision
Analytics: By leveraging our comprehensive data analytics and expansive member databases, we identify potential participants that
may be interested in MMA. These individuals are segmented and approached with personalized advertising campaigns across major digital
platforms, including Google, Meta, and TikTok, ensuring a high degree of relevancy and engagement. |
| |
|
|
| |
● |
Engagement-Driven
Campaigns: We create and disseminate high-impact marketing campaigns that tell evocative stories, incorporate user-generated content,
and feature interactive elements to captivate and involve MMA fans. Capitalizing on seasonal movements, major fight events, and the
inherent virality of the sport, we craft advertisements designed to resonate profoundly with our target audience, stimulating engagement
and fostering conversions. |
Cross-Promotional
Activities:
| |
● |
Alliances
with Marquee Brands: The Alta platform actively seeks and secures strategic alliances with premier brands such as UFC Fit. Through
these partnerships and data sharing protocols, we can reach a broader yet highly targeted audience, offering them an immersive experience
in the MMA lifestyle. |
| |
|
|
| |
● |
Custom-Tailored
Offers: We create exclusive promotional opportunities specifically for the members and customers of our partner brands. By providing
special incentives such as unique experiences during pinnacle events in the MMA calendar, we attract an audience already primed for
our offerings. |
Optimization
and Visibility:
| |
● |
Content
Optimization: We continuously refine the content on our digital properties, including Trainalta.com and MixedMartialArts.com, to
align with the search behaviors of MMA enthusiasts. Through keyword targeting and content strategies, we enhance our visibility,
particularly during periods of peak interest. |
| |
|
|
| |
● |
Technical
Readiness: Our platforms are optimized for high performance to accommodate increased traffic flow during major campaigns and high-interest
seasons, ensuring that new visitors encounter a seamless user experience, conducive to member conversion. |
Targeted
Seasonal Initiatives:
| |
● |
Seasonal
Marketing Initiatives: Our campaigns are also timed to coincide with key fitness milestones throughout the year, recognizing patterns
such as New Year’s fitness resolutions, spring training upticks, and summer readiness regimens. These initiatives are crafted
to appeal to fitness consumers, integrating lifestyle aspirations with the rigors and discipline of MMA training. |
| |
|
|
| |
● |
Experiential
Engagements: We design promotions that tie in with significant events and holidays, catering to the consumers’ desire for unique
and exclusive experiences augmented by MMA training and fitness regimens. |
By
integrating deep database insights and aligning with seasonal consumer behaviors, our member acquisition strategy is fine-tuned for effectiveness,
ensuring we captivate a diverse audience ranging from the core MMA fan to the lifestyle-driven fitness enthusiast. Our strategic approach
positions us to expand our member base meaningfully and sustainably, driving the growth, monetization and vitality of the Alta community.
B2B
and Enterprise Sales Partnership Approach
We
understand the local nature of the martial arts and combat sports gym industry, where trust and personal relationships are paramount.
Our strategy is to access local markets through:
| |
● |
Industry
Experts: Our sales personnel are not just representatives; they are coaching and gym operation consultants who understand the benefits
of leveraging our platform, providing personalized solutions and fostering trust through demonstrating our platforms capability as
a complimentary tool in our partner gyms’ sales, marketing and community management approach. |
| |
|
|
| |
● |
Localized
Marketing: Implement targeted marketing campaigns that resonate with the local MMA culture and interests, utilizing local media,
community events, and regional online media destinations and communities. |
| |
|
|
| |
● |
Community
Engagement: Participate in and sponsor local competitive events, strengthen partnerships with our gym partners, and engage in community
service, reinforcing our commitment to our gym partners and their communities. |
| |
|
|
| |
● |
Referral
Programs: Leverage our platforms referral program that incentivizes our existing participants and gym partners to bring in their
network, leveraging their satisfaction and trust in our platforms brand. |
| |
|
|
| |
● |
Testimonials
and Success Stories: Showcase business growth stories from our current gym partners and endorsements from our high-profile coaches
to demonstrate the impact of our Warrior Training Program. |
| |
|
|
| |
● |
Search
Engine Optimization and Online Presence: Optimize our online presence to capture interest from potential gym partners searching for
options to grow their profile in their local area. |
| |
|
|
| |
● |
Social
Media Engagement: Actively engage with the local MMA and combat sports community on social media platforms to build a passionate
following and drive awareness. |
Our
commitment to evolution and adaptability is paramount. We maintain a feedback-informed approach to our offerings, ensuring that they
align with the evolving demands of the MMA and combat sports community. This adaptive strategy reflects our commitment to staying at
the forefront of combat sports training.
Customer
Success
Our
member services team is trained in the nuances of martial arts and combat sports training and is committed to delivering an outstanding
experience to our members. Our team is dedicated to guiding our members from the outset of their training experience and throughout their
continuous engagement with us. This encompasses personalized product instruction and the sharing of important factors that help ensure
a positive participation experience. We believe we have created an onboarding process that is effective and reflects the unique needs
of our members, making them feel supported.
We
ensure that support for our members is always accessible via various channels, including social messaging and chat, phone, and web, to
provide help whenever it is needed. Our cloud-based infrastructure allows our member services team to remain relatively small, while
still able to deliver consistent and seamless support by taking advantage of modern technological conveniences that our self-servicing
capabilities provide.
Offering
our members a consistent and reliable point of contact streamlines their experience and minimizes complexity. We believe our dedication
to member support and individualized attention adds significant value to our gym partners.
Research
and Development
Our
product development strategy is based on typical inputs such as market and user research, routine strategy planning, and iterative financial
analysis, but it is first and foremost based on the principle of co-evolution.
This
approach enables the simultaneous growth of our organization alongside our growing global constituents. Our goal is to ensure our platform
remains relevant, starting with mixed martial arts, and extending to community-driven sports globally.
Accordingly,
we intend to continue to invest in research and development projects and enhance our product management, user experience design, software
engineering and quality assurance skills to help expand and improve the functionality of our current platform and broaden our capabilities
to address new market opportunities.
Future
Growth Strategy
We
believe there are significant opportunities to grow our business, and we intend to do this in established markets to take advantage of
the unique position we have created in the martial arts and combat sports sector. Since inception we have grown through positive customer
reviews, in turn amplified through social media to attract new customers. In addition, to this we have partnered with globally respected
martial arts identities who greatly expand our organic reach through their social channels and networks.
We
will continue to invest in our product platform and further develop the partner eco-system. As our product offerings expand, there is
the opportunity to cross-sell our products into our gym partner network and increase adoption of our full product suite.
We
intend to continue to invest in technology to enhance the experience for all participants on the Alta Platform, namely customers, coaches
and gym owners, in order to drive lifetime value and expand sales channels through referrals and organic promotion.
While
we are currently focused on the martial arts and combat sports sector, over time, we believe that our technology and community platform
could be expanded to support many other sports which exhibit similar community attributes to martial arts and combat sports. Once proven
in the vast addressable market of martial arts and combat sports, we feel many new sector opportunities will present themselves for similar
rollouts and monetization.
Competition
We
operate in a competitive and highly fragmented market, with multiple industry segments competing for consumers’ share of wallet
that is allocated to fitness, health and sport. While we operate in martial arts and combat sports, we consider the following key industry
categories as being competitive to our business: other studio fitness concepts; full-service health clubs; racquet, tennis, country and
other athletic clubs; value focused health clubs; and at-home fitness offerings, including digital fitness content. In addition, we face
competition from other forms of entertainment and leisure activities. We believe we compete on the basis of a number of factors, including,
but not limited to, quality of experience, relevance, accessibility, brand awareness and reputation.
Intellectual
Property
We
believe our success depends on our intellectual property, and we strive to protect it, by, among other things, obtaining, maintaining,
defending, and enforcing our intellectual property rights in the United States and internationally. As a general policy, we pursue registration
of our trademarks and proprietary technology in select international jurisdictions, monitor infringements in various countries, and protect
our intellectual property through contractual restrictions.
Government
Regulations
We
and our partner gyms are subject to all relevant laws, including regulatory oversight by state athletic commissions in relation to live
fight night events, in the territories we operate including the United Stated, United Kingdom, Australia and Ireland, among others. Live
fight night events are subject to the specific regulations for combat sport in the relevant state or territory. We monitor changes in
these laws and believe that we are in material compliance with applicable laws. These laws and regulations govern matters such as:
| |
● |
licensing
laws for athletes; |
| |
|
|
| |
● |
operation
of partner gym venues; |
| |
|
|
| |
● |
licensing,
permitting, and zoning; |
| |
|
|
| |
● |
health,
safety, and sanitation requirements; |
| |
|
|
| |
● |
the
service of food and alcoholic beverages; |
| |
|
|
| |
● |
working
conditions, labor, minimum wage and hour, citizenship, immigration, visas, harassment and discrimination, and other labor and employment
laws and regulations; |
| |
|
|
| |
● |
compliance
with the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”); |
| |
|
|
| |
● |
the
U.K. Bribery Act 2010 (the “Bribery Act”) and similar regulations in other countries, as described in more detail below; |
| |
|
|
| |
● |
antitrust
and fair competition; |
| |
|
|
| |
● |
data
privacy and information security; |
| |
|
|
| |
● |
marketing
activities; |
| |
|
|
| |
● |
environmental
protection regulations; |
| |
|
|
| |
● |
imposition
by foreign countries of trade restrictions, restrictions on the manner in which content is currently licensed and distributed, ownership
restrictions, or currency exchange controls; |
| |
|
|
| |
● |
licensing
laws for the promotion and operation of MMA events; and |
| |
|
|
| |
● |
government
regulation of the entertainment and sports industry. |
We
monitor changes in these laws and believe that we are in material compliance with applicable laws. See “Risk Factors—Risks
Related to Government Regulation.”
Many
of the events produced or promoted by us are presented in the venues of partner gyms which are subject to building and health codes and
fire regulations imposed by the state and local governments in the jurisdictions in which the venues are located. These venues are also
subject to zoning and outdoor advertising regulations and require a number of licenses in order to operate, including occupancy permits,
exhibition licenses, food and beverage permits, liquor licenses, and other authorizations. In addition, these venues located in the U.S.
are subject to the U.S. Americans with Disabilities Act of 1990 and the U.K.’s Disability Discrimination Act 1995, which require
us to maintain certain accessibility features at each of the facilities, and are subject to similar laws in foreign jurisdictions where
such venues are located.
In
various states in the United States and some foreign jurisdictions, we or our partner gyms are required to obtain licenses for promoters,
medical clearances and other permits or licenses for our athletes, and permits for our live events in order to promote and conduct those
events.
We
and our partner gyms are required to comply with the anti-corruption laws of the countries in which we operate, including the FCPA and
the Bribery Act. These regulations make it illegal for us to pay, promise to pay, or receive money or anything of value to, or from,
any government or foreign public official for the purpose of directly or indirectly obtaining or retaining business. This ban on illegal
payments and bribes also applies to agents or intermediaries who use funds for purposes prohibited by the statute.
Our
business and the businesses of our partner gyms are also subject to certain regulations applicable to our web sites and mobile applications.
The operation of these web sites and applications may be subject to a range of international, federal, state and local laws.
We
and our partner gyms are responsible for compliance with state laws that regulate the relationship between martial arts clubs and their
members. These laws include consumer protection regulations that limit the collection of monthly membership dues prior to opening, require
certain disclosures of pricing information, mandate the maximum length of contracts and “cooling off” periods for members
(after the purchase of a membership), set escrow and bond requirements for martial arts clubs, govern member rights in the event of a
member relocation or disability, provide for specific member rights when a martial arts club closes or relocates, or preclude automatic
membership renewals.
We
and our partners gyms primarily accept payments for our memberships through electronic fund transfers from members’ bank accounts,
and, therefore, we and our partner gyms are subject to both federal and state legislation and certification requirements, including the
Electronic Funds Transfer Act. Some states, such as New York and Tennessee, have passed or have considered legislation requiring gyms
and health clubs to offer a prepaid membership option at all times and/or limit the duration for which gym memberships can auto-renew
through EFT payments, if at all. Our business relies heavily on the fact that our memberships continue on a month-to-month basis after
the completion of any initial term requirements (if any), and compliance with these laws, regulations, and similar requirements may be
onerous and expensive, and variances and inconsistencies from jurisdiction to jurisdiction may further increase the cost of compliance
and doing business. States that have such health club statutes provide harsh penalties for violations, including membership contracts
being void or voidable.
Additionally,
the collection, maintenance, use, disclosure and disposal of individually identifiable data by our, or our gym partners’, businesses
are regulated internationally and in the U.S. at the federal, state and local levels as well as by certain financial industry groups,
such as the Payment Card Industry Organization and the NACHA. Federal, state and financial industry groups may also consider from time
to time new privacy and security requirements that may apply to our businesses and may impose further restrictions on our collection,
disclosure and use of individually identifiable information that are housed in one or more of our databases.
The
various regulations set out above have not materially impacted or affected the offering of our four core products: the Warrior Training
Program, UFC Fit Program, Alta Academy and the Alta Community.
Organizational
Structure
Our
subsidiaries as of the date of this prospectus and as of March 31, 2024 are set out below. Unless otherwise stated, our subsidiaries
have share capital consisting solely of Ordinary Shares that are held directly by us, and the proportion of ownership interests held
equals the voting rights held by us. The country of incorporation or registration is also their principal place of business.
| | |
| |
| |
Ownership
interest held | |
| Name
of entity | |
Country
of Incorporation | |
Active
or Deregistered | |
September
20,
2024 | | |
March 31,
2024 | |
| Wimp
2 Warrior LLC | |
United
States of America | |
Active | |
| 100 | % | |
| 100 | % |
| Wimp
2 Warrior (Ireland) Limited | |
Ireland | |
Active | |
| 100 | % | |
| 100 | % |
| Hype.OS,
Inc. | |
United
States of America | |
Active | |
| 100 | % | |
| 0 | % |
Employees
As
of the date of this prospectus, we employed 16 full-time employees and 7 part-time employees in three countries. We are not a party
to any collective bargaining agreements. We believe that our relations with our employees are good and are constantly working to further
build and improve our culture.
Facilities
Our
corporate headquarters are located at Level 1, Suite 1, 29-33 The Corso Manly, New South Wales 2095 pursuant to a monthly rental agreement.
We believe this to be sufficient to meet our needs for the foreseeable future and that any additional space we may require will be available
on commercially reasonable terms.
Legal
Proceedings
From
time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation
is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
We are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse
effect on our business, financial condition or operating results.
Our
Corporate History and Information
We
were incorporated on March 27, 2013 under the laws of Australia under the name Wimp 2 Warrior Limited and changed our name to Alta Global
Group Limited on February 2, 2022.
Our
principal executive offices are located at Level 1, Suite 1, 29-33 The Corso, Manly, New South Wales 2095, and our telephone number is
+61 1800 151 865. Our website address is https://www.trainalta.com. The information contained on our website is not incorporated
by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website
as part of this prospectus or in deciding whether to purchase our Ordinary Shares.
MANAGEMENT
Directors
and Executive Officers
The
following table lists the names, ages and positions of our current directors and executive officers as of the date of this prospectus.
| Name |
|
Age |
|
Position |
| Nick
Langton |
|
50 |
|
Founder,
Director and Chief Executive Officer |
| Vaughn
Taylor |
|
40 |
|
Chairman
of the Board of Directors |
| Hugh
Williams |
|
51 |
|
Director |
| Jonathan
Hart |
|
40 |
|
Director
and Company Secretary |
| Neale
Java |
|
40 |
|
Chief
Financial Officer |
| James
Fleet |
|
44 |
|
Co-founder
and Chief Technology Officer |
Nick
Langton – Founder, Director and Chief Executive Officer
Nick
Langton has served as our Chief Executive Officer and director since February 2017. Mr. Langton is a leading financial services executive
with over 25 years of experience. As CEO, Mr. Langton has led some of Australia’s largest wealth advisory firms including the Private
Wealth division of Perpetual Limited (ASX:PPT) and Bridges Financial Services, a wholly owned subsidiary of Insignia Financial Ltd (ASX:IFL).
Mr. Langton has an undergraduate degree in economics from University of Sydney, postgraduate in finance from Securities Institute of
Australia and completed the Advanced Management Program at Harvard Business School. Mr. Langton has served as a director of Fortnum Private
Wealth since May 2018. We believe Mr. Langton is qualified to serve as a member of our board of directors because of his role in founding
the Company, as well as his deep sector knowledge, expertise and contacts in the martial arts community globally.
Vaughn
Taylor – Chairman of the Board of Directors
Vaughn
Taylor has served as our Non-Executive Chairman since August 2021. Previously, from July 2010 to April 2021, Mr. Taylor served as Executive
Director and Chief Investment Officer of AMB Capital Partners, or AMB, the global investment platform of the Western Australian based
Bennett Family, whose wealth is tied to the Australian Iron Ore industry. Mr. Taylor was with AMB since the formation of the investment
platform in 2010, and was responsible for executing on the investment strategy, expanding the investment platform and portfolio into
offshore markets, overseeing the operations and portfolio on a day-to-day basis and sourcing new investment opportunities. Throughout
his career, Mr. Taylor has been a board member of a number of leading organizations both in Australia and internationally across a range
of sectors. In addition to his role as Non-Executive Chairman of Alta, Mr. Taylor is currently serving as a Non-Executive Director of
IperionX Limited (NASDAQ:IPX, ASX:IPX) (leading developer of low carbon titanium for advanced industries including space, aerospace,
electric vehicles and 3D printing) from March 2021 to present, Non-Executive Chairman of Frontier Pets Pty Ltd (an Australian pet food
manufacturer and direct to consumer sales business) from May 2021 to present, Non-Executive Chairman of Urban Rest Holdings Pty Ltd (trading
as Urban Rest) (a global serviced apartment provider focusing on the corporate traveler), Non-Executive Director of Year 13 Pty Ltd (a
youth engagement platform connecting youth with career advice and post-school opportunities) from May 2021 to present and Non-Executive
Director of Xcend Pty Ltd (an Australian share registry and unitholder registry provider to listed and unlisted companies and funds)
from September 2022 to present. Mr. Taylor holds a Bachelor of Business (Accounting) and a Master of Business (Real Estate) from RMIT
University and gained further accreditation at the Robert H. Smith School of Business at the University of Maryland (USA). Mr. Taylor
also holds a Graduate Diploma in Applied Finance and Investment from Financial Services Professional Body, FINSIA, and is a member of
FINSIA and the Australian Institute of Company Directors. We believe Mr. Taylor is qualified to serve as a member of our board of directors
because of his extensive experience in investing growth capital into operating companies and working with founders to build highly successful
businesses.
Hugh
Williams – Director
Hugh
Williams has served as our director since August 2021. For the past 13 years Mr. Williams has been Managing Director of Pitt Street Real
Estate Partners, which is a diversified real estate financier, developer and investor. During this period, Mr. Williams has sat on more
than 20 private company boards and chaired numerous committees in that time. We believe Mr. Williams is qualified to serve as a member
of our board of directors because of his extensive experience in strategy, development, and operation of highly successful businesses.
Jonathan
Hart – Director and Company Secretary
Jonathan
Hart has served as our director since May 2023 and Secretary since August 2021. Mr. Hart is a corporate lawyer and has over 20 years
of corporate advisory experience. He has extensive cross border experience specializing in corporate advisory, scale up and debt and
equity financing, across a broad range of industry sectors. Mr. Hart holds a Bachelor of Laws and Commerce from Murdoch University. Mr.
Hart currently serves as a director of Hartness Consulting Pty Ltd, established in 2012 specializing in corporate advisory and debt and
equity services to private and publicly listed companies in a range of sectors including technology, healthcare and resources. From April
2023 to May 2024, Mr. Hart served as a director of Xcend, an Australian share registry and unitholder registry provider to listed and
unlisted companies and funds. Since December 2022, Mr. Hart has served as company secretary of Urban Rest, a global service apartment
provider focusing on the corporate traveler. Since March 2023, Mr. Hart has served as a company secretary of Noviqtech Limited, a company
harnessing the power of artificial intelligence and distributed ledger technology to provide trusted and transparent reporting across
supply chains, carbon emissions reporting, and guarantee of origin. Since September 2024, Mr. Hart has served as a company
secretary of Opyl Limited, a company dedicated to leveraging data and technology to transform the landscape of clinical trials and medical
research. Since September 2024, Mr. Hart has served as company secretary of Brazilian Rare Earths Limited, a company exploring for rare
earth elements and other critical minerals in Brazil. From March 2020 to March 2024, Mr. Hart has served as company
secretary of HeraMED Limited, a medical data and technology company involved in the digital transformation of maternity care. We believe
Mr. Hart is qualified to serve as a member of our board of directors because he brings extensive legal and corporate experience as well
as a strong business background to our company.
Neale
Java – Chief Financial Officer
Neale
Java has served as our Chief Financial Officer since March 2023. Mr. Java brings a track record of leadership in the technology industry
and partnering with executive leadership and boards to drive exceptional growth in enterprise value. This record is complemented by his
results in taking companies from start-up to scale up, broad experience in accessing capital markets and has a strong track record of
growing companies globally with rapidly evolving strategies. Prior to serving as our Chief Financial Officer, Mr. Java was the Chief
Financial Officer of Gelteq ltd from June 2022 to February 2023; Chief Financial Officer of Control Bionics Ltd. (ASX:CBL) from February
2021 to June 2022; and Chief Financial Officer and Chief Operating Officer at thedocyard Limited (ASX:TDY) from October 2019 to December
2020. In addition, Mr. Java served as the Executive Director at thedocyard (ASX:TDY) from June 2020 to December 2020 and served on the
advisory board of Treety. Mr. Java received a Bachelor of Electrical Engineering from University of Wollongong in 2006, a Master of Applied
Finance from Macquarie University in 2012 and an Executive Master of Business Administration from INSEAD in 2019. He has also completed
the Executive Program for Growing Companies at the Graduate School of Business of Stanford University in 2016 and is a graduate and member
of the Australian Institute of Company Directors since 2021. We believe Mr. Java is qualified to serve as the Chief Financial Officer
because he brings significant strategic, operational and financial expertise across from a range of publicly listed and private companies,
particularly emerging technologies, SaaS and e-commerce companies.
James
Fleet – Co-founder and Chief Technology Officer
James
Fleet has served as our Chief Technology Officer since May 2021. In July 2023, Mr. Fleet was conferred Co-founder status in recognition
of his efforts in support of the Company and creation of the Company’s platform. Mr. Fleet has worked for or advised leading global
brands across key industry sectors to deliver transformational technology and digital growth programs. More recently, Mr. Fleet has held
senior leadership roles within start up success stories such as CEO for Appliances Online (The Winning Group) from May 2015 to April
2016, and General Manager for Compare The Market (automotive and general insurance) from July 2011 to July 2013, with both businesses
becoming market leaders in their sectors on the back of large-scale ecommerce and digital transformation programs led by Mr. Fleet. Mr.
Fleet has been involved with the Company since 2017, initially as an investor and technology advisor.
There
are no family relationships among any of our directors or executive officers. The business address of each of our directors and senior
management is Alta Global Group Limited, Level 1, Suite 1, 29-33, The Corso, Manly, New South Wales 2095.
Board
Composition
Immediately
following completion of this offering, our board of directors will consist of four members, including our Chief Executive Officer. We
believe that each of our directors has relevant industry experience. The membership of our board is directed by the following requirements
of our Constitution and Board Charter:
| |
● |
there
must be a minimum of 3 directors and may be a maximum of 10 directors; |
| |
● |
in
respect of a matter where a director has a material interest, the director may not vote in relation to the proposed arrangement except
as permitted by the Corporations Act; |
| |
● |
the
Chairman of our board should, where possible, be a non-executive director; and |
| |
● |
our
board should, collectively, have the appropriate mix of qualifications, expertise and experience which will assist the board in fulfilling
its responsibilities, as well as assisting the Company in achieving growth and delivering value to shareholders. |
Our
board is responsible for overseeing the performance of management. Our board has established delegated limits of authority, which define
the matters that are delegated to management and those that require board’s approval. The functions and responsibilities reserved
for the board and executive management are set out in our Board Charter.
Each
non-executive director has a letter of appointment confirming the terms and conditions of their appointment as a director of the Company.
In addition, the Company has entered into Deeds of Access, Insurance and Indemnity with its directors. Similar arrangements will be put
in place for directors nominated for appointment upon the approval by the board.
The
Company has or will agree to indemnify each of its directors against all liabilities incurred while holding office to the extent permitted
by Australian law, including indemnifying directors for any legal expenses incurred in defending proceedings relating to their directorship
of the Company. Any indemnified amounts must be repaid to the Company to the extent that a director is reimbursed from an insurance policy
maintained by the Company for the directors. The Company has also agreed to obtain and pay the premiums for insurance policies for each
of its directors, which include run-off cover for each director for a period of seven years after the director ceased to hold office.
Board
Committees
To
assist our board of directors with the effective discharge of its duties, we have established a Remuneration and Nomination Committee
and an Audit and Risk Committee, which committees operate under specific charters approved by our board of directors, which will be available
on our website after consummation of this offering.
Remuneration
and Nomination Committee
The
members of our Remuneration and Nomination Committee are Vaughn Taylor, Hugh Williams and Jonathan Hart. Mr. Williams acts as chairman
of the committee. The committee’s role involves:
| |
● |
identifying,
evaluating and recommending qualified nominees to serve on our board of directors; |
| |
|
|
| |
● |
evaluating,
adopting and administering our compensation plans and similar programs advisable for us, as well as modifying or terminating existing
plans and programs; |
| |
|
|
| |
● |
establishing
policies with respect to equity compensation arrangements; and |
| |
|
|
| |
● |
overseeing,
reviewing and reporting on various remuneration matters to our board of directors. |
Audit
and Risk Committee
The
members of our Audit and Risk Committee are Vaughn Taylor, Hugh Williams and Jonathan Hart. Mr. Taylor acts as chairman of the committee.
Subject to applicable phase-in requirements, the members of the committee will meet the criteria for independence of audit committee
members set forth in Rule 10A-3 under the Exchange Act and Section 303A.06 and 303.07 of the New York Stock Exchange’s listing
standards. Each member of our Audit and Risk Committee will meet the financial literacy requirements of the listing standards of the
NYSE American. The principal duties and responsibilities of our Audit and Risk Committee will include, among other things:
| |
● |
overseeing
and reporting on various auditing and accounting matters to our board of directors, including the selection of our independent accountants,
the scope of our annual audits, fees to be paid to the independent accountants, the performance of our independent accountants and
our accounting practices; |
| |
|
|
| |
● |
overseeing
and reporting on various risk management matters to our board of directors; |
| |
|
|
| |
● |
considering
and approving or disapproving all related-party transactions; |
| |
|
|
| |
● |
reviewing
our annual and semi-annual financial statements and reports and discussing the statements and reports with our independent registered
public accounting firm and management; |
| |
|
|
| |
● |
reviewing
and pre-approving the engagement of our independent registered public accounting firm to perform audit services and any permissible
non-audit services; |
| |
|
|
| |
● |
evaluating
the performance of our independent registered public accounting firm and deciding whether to retain their services; and |
| |
|
|
| |
● |
establishing
procedures for the receipt, retention and treatment of complaints received by us regarding financial controls, accounting or auditing
matters. |
Code
of Conduct
The
Company has adopted a Corporate Code of Conduct applicable to all directors, officers and employees, which provides a framework for decisions
and actions in relation to ethical conduct in employment. It underpins the Company’s commitment to integrity and fair dealing in
its business affairs and to a duty of care to all employees, clients and stakeholders. The document sets out the principles covering
appropriate conduct in a variety of contexts and outlines the minimum standard of behavior expected from employees, including to:
| |
● |
act
honestly, with integrity and in the best interests of the Company as a whole; |
| |
● |
operate
within the law at all times; |
| |
● |
carry
out their work to a high standard; |
| |
● |
preserve
the confidentiality of sensitive information of the Company; |
| |
● |
avoid
conflicts of interest which may influence the conduct of duties; |
| |
● |
not
participate in corrupt conduct; and |
| |
● |
observe
the Company’s Code of Conduct, Securities Trading Policy and insider trading laws. |
The
directors and executives also have a fiduciary relationship with shareholders of the Company, making it unlawful to improperly use their
position to gain advantage for themselves. At all times, directors and officers must act in the best interest of the Company and eliminate
or abstain from participating in any discussion or decision-making process in relation to matters which they have a conflict of interest,
not engage in insider trading and comply with all applicable anti-bribery laws.
Remuneration
Principles
used to determine the nature and amount of remuneration
The
objective of our reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework
aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered
to conform to the market best practice for the delivery of reward. The board ensures that executive reward satisfies the following key
criteria for good reward governance practices:
| |
● |
competitiveness
and reasonableness; |
| |
● |
acceptability
to shareholders; |
| |
● |
performance
linkage/ alignment of executive compensation; and |
| |
● |
transparency. |
The
board is responsible for determining and reviewing remuneration arrangements for its directors and executives. The performance of the
Company depends on the quality of its directors and executives. The remuneration philosophy is to attract, motivate and retain high performance
and high quality personnel.
The
reward framework is designed to align executive reward to shareholders’ interests. The board has considered that it should seek
to enhance shareholders’ interests by:
| |
● |
having
economic profit as a core component of plan design; |
| |
|
|
| |
● |
focusing
on sustained growth in shareholder wealth, consisting of dividends and growth in share price,
and delivering constant or increasing return on assets as well as focusing the executive
on key non-financial
drivers
of value; and |
| |
|
|
| |
● |
attracting
and retaining high caliber executives. |
Additionally,
the reward framework should seek to enhance executives’ interests by:
| |
● |
rewarding
capability and experience; |
| |
|
|
| |
● |
reflecting
competitive reward for contribution to growth in shareholder wealth; and |
| |
|
|
| |
● |
providing
a clear structure for earning rewards. |
In
accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is separate.
Non-Executive
Directors Remuneration
Fees
and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors’ fees and
payments are reviewed annually by the board. The board may, from time to time, receive advice from independent remuneration consultants
to ensure non-executive directors’ fees and payments are appropriate and in line with the market.
Executive
Remuneration
We
aim to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable
components.
The
executive remuneration and reward framework has four components:
| |
● |
base
pay and non-monetary benefits; |
| |
|
|
| |
● |
short
term cash incentives; |
| |
|
|
| |
● |
employee
incentive plan (“EIP”) offerings; and |
| |
|
|
| |
● |
other
remuneration such as superannuation and long service leave. |
The
combination of these comprises the executive’s total remuneration.
Fixed
remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the board based on individual
and business unit performance, our overall performance and comparable market remunerations.
Executives
may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle benefits) where it does
not create any additional costs to us and provides additional value to the executive.
The
EIP may be used to align the targets of the business units with the performance hurdles of executives. For example incentives are granted
to executives based on specific annual targets and key performance indicators, being achieved. Key performance indicators include profit
contribution, customer satisfaction, leadership contribution and product management. Longer-term incentives may be used under the EIP
which may include long service leave and share-based payments. Shares may be awarded to executives over a period of three years based
on long-term incentive measures. These include increase in shareholders’ value relative to the entire market and the increase compared
to our direct competitors.
Executive
and Director Remuneration
Details
of the remuneration of our executive officers and non-executive directors for the fiscal year ended June 30, 2024 are set forth below
(in A$).
| | |
Salary
and Fees | | |
Other
Benefits | | |
Post-
Employment Benefits | | |
Short
Term Benefits | | |
Long
Term Benefits | | |
Options
(1) | | |
Total | |
| Non-Executive
Directors | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Vaughn
Taylor (2) | |
$ | 150,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | 339,676 | | |
$ | 489,676 | |
| Hugh
Williams (3) | |
$ | 75,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | 186,145 | | |
$ | 261,145 | |
| Jonathan
Hart (4) | |
$ | 90,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | 137,372 | | |
$ | 227,372 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Executive
Directors and Officers | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Nick
Langton (5) | |
$ | 300,000 | | |
$ | 29,353 | | |
$ | 33,000 | | |
$ | | | |
$ | 35,367 | | |
$ | 714,793 | | |
$ | 1,112,513 | |
| Neale
Java (6) | |
$ | 270,270 | | |
$ | 17,981 | | |
$ | 29,730 | | |
$ | 98,589 | | |
$ | - | | |
$ | 339,676 | | |
$ | 756,246 | |
| |
(1) |
The
amounts in this column reflect the aggregate grant date fair value of performance rights awards and stock options granted to our
individual directors and executive management in FY2024, as determined under International Reporting Standards. |
| |
|
|
| |
(2) |
For
the fiscal year ending June 30, 2024, Mr. Taylor, through Nalaroo Holdings Pty Ltd as trustee for the Lavoipierre Taylor Fam Trust
Account, was issued 73,600 share rights (subject to vesting conditions) which may be converted into Ordinary Shares under the EIP.
50% of the share rights will vest and become exercisable on October 1, 2025 and the balance of the share rights will vest and become
exercisable on October 1, 2026. |
| |
|
|
| |
(3) |
For
the fiscal year ending June 30, 2024, Mr. Williams, through Champ 7 Pty Ltd as trustee for the Williams Family Trust Account, was
issued 14,400 share rights (subject to vesting conditions) which may be converted into Ordinary Shares under the EIP. 50% of the
share rights will vest and become exercisable on October 1, 2025 and the balance of the share rights will vest and become exercisable
on October 1, 2026. |
| |
|
|
| |
(4) |
For
the fiscal year ending June 30, 2024, Mr. Hart, as trustee for the J Hart Family Trust Account, was issued 47,600 share rights (subject
to vesting conditions) which may be converted into Ordinary Shares under the EIP. 50% of the share rights will vest and become exercisable
on October 1, 2025 and the balance of the share rights will vest and become exercisable on October 1, 2026. |
| |
|
|
| |
(5) |
For
the fiscal year ending June 30, 2024, Mr. Langton, through Snowflower Holdings Pty Ltd as trustee for the Snowflower Family Trust
Account, was issued 172,000 share rights (subject to vesting conditions) which may be converted into Ordinary Shares under the EIP.
50% of the share rights will vest and become exercisable on October 1, 2025 and the balance of the share rights will vest and become
exercisable on October 1, 2026. Tanya Langton, spouse of Mr. Langton, was issued 6,000 share rights (subject to vesting conditions)
which may be converted into Ordinary Shares under the EIP. 50% of the share rights will vest and become exercisable on October 1,
2025 and the balance of the 50% of the share rights will vest and become exercisable on October 1, 2026. |
| |
|
|
| |
(6) |
For
the fiscal year ending June 30, 2024, under Mr. Java’s employment agreement, Mr. Java was paid a short-term incentive of A$98,589.
Mr. Java, through 3213 Ventures Pty Ltd as trustee for the Java Holdings Trust, was issued 34,400 share rights (subject to vesting
conditions) which may be converted into Ordinary Shares under the EIP. 50% of the share rights will vest and become exercisable on
October 1, 2025 and the balance of the share rights will vest and become exercisable on October 1, 2026 |
Employment
and Consultant Agreements
Nick
Langton
We
entered into an employment agreement with Nick Langton, the Chief Executive Officer of the Company, on July 1, 2023. Pursuant to the
employment agreement, Mr. Langton shall receive a base salary of A$300,000 per annum, exclusive of superannuation. Either party may terminate
the employment agreement upon twelve months written notice. We may also terminate the employment agreement by giving Mr. Langton pay
in lieu of notice for part or a whole of the notice period, or by requesting that Mr. Langton undertake alternative, or no duties, for
the duration of his notice. If Mr. Langton does not work during his entire notice period, we reserve the right to withhold any salary
owed to Mr. Langton for the unworked portion of his notice period. We may also terminate the employment agreement without notice if Mr.
Langton engages in misconduct as specified in the employment agreement. If terminated other than due to voluntary resignation, death,
disability or for cause, then Mr. Langton will be entitled to a lump sum severance payment, equivalent to 12 months’ pay (exclusive
of short or long-term incentives).
Neale
Java
We
entered into an employment agreement with Neale Java, the Chief Financial Officer of the Company, on February 20, 2023. Pursuant to the
employment agreement, Mr. Java shall receive a base salary of A$300,000 per annum, inclusive of superannuation. Under Mr. Java’s
employment agreement, subject to the Company raising a minimum of A$15 million by June 30, 2024, Mr. Java was eligible for a short term
incentive up to a maximum of A$150,000, payable on completion of a successful capital raising. The actual short term incentive paid in
June 2024 was A$98,589. Mr. Java’s employment is subject to a probationary period of six months. After such probationary period
has ended, either party may terminate the employment agreement upon 3 months’ written notice, and we may terminate the employment
agreement by giving Mr. Java pay in lieu of notice for part or a whole of the notice period. We may also terminate the employment agreement
immediately “for cause” if Mr. Java is guilty of serious misconduct or otherwise commits a serious or persistent breach of
the employment agreement. During the probationary period, Mr. Java may terminate his employment upon four weeks’ written notice
or immediately by forfeiting four weeks’ compensation, and the Company may terminate Mr. Java’s employment upon one weeks’
written notice or immediately with one weeks’ compensation in lieu of written notice.
Jonathan
Hart
We
entered into a consultancy engagement letter with Jonathan Hart on August 20, 2021. The term of the consultancy engagement letter is
set to August 20, 2024, but can be extended by mutual written consent. Pursuant to the consultancy engagement letter, Mr. Hart shall
receive a base fee of A$90,000 per annum. Mr. Hart’s consultancy engagement letter with us may be terminated upon 3 months’
written notice or immediately by us upon a breach by Mr. Hart of a material term or obligation of the agreement that is not remedied
within 5 days of written notice. Further, we may immediately terminate the consultancy engagement letter on written notice (i) upon Mr.
Hart’s bankruptcy or arrangement or composition with creditors generally, (ii) if Mr. Hart becomes of unsound mind or a person
whose person or estate is liable to be dealt with in any way under Australian law relating to mental health, or (iii) if Mr. Hart is
involved in an event or omits to do something which in the reasonable opinion of the Company involves moral turpitude or dishonesty,
would bring the Company or Mr. Hart into public disrepute, contempt or scandal, or would tend to reflect unfavorably on the Company,
any of its products or services, or any of its suppliers or customers. If terminated for any other reason, Mr. Hart will be entitled
to a paid his consulting fee for a period of 3 months following termination.
Start-Up
Employee Share Option Plan
In
August 2021, our board approved a Start-Up Employee Share Option Plan, or ESOP. The ESOP was available for employees, directors, advisors
and consultants, with the ESOP to be managed by the board, at its discretion.
The
ESOP was designed with the aim to be tax efficient for our recipients and remove any taxation event on issuance or vesting. In Australia,
the Australian Taxation Office, or ATO, developed “start up ESOP concessions” for companies, like ours, that are deemed to
be start-ups under criteria established by the ATO. The start up concessions were developed to make Australia competitive in order to
attract and retain top talent in the start-up eco-system.
We
have issued options under the ESOP on the following terms:
| |
● |
options
may be exercised for Ordinary Shares; |
| |
|
|
| |
● |
three
year vesting - cliff vesting on three-year anniversary after issuance; |
| |
|
|
| |
● |
strike
price – net tangible assets adjusted for convertible notes, divided by the number of outstanding Ordinary Shares assuming conversion
of any convertible notes (“Net Tangible Asset”). The Net Tangible Asset method has been adopted as per valuation guidelines
set by the ATO; and |
| |
|
|
| |
● |
the
board has discretion to force vesting or conversion on certain liquidity events such as an initial public offering or sale of our
Company. |
As
of March 31, 2024, we have options to purchase up to 784,098 Ordinary Shares outstanding at a weighted average exercise price of A$1.28
per share.
Employee
Incentive Plan
Background
On
June 26, 2023, our board approved our Employee Incentive Plan, or EIP. The EIP provides ongoing incentives to any full time or part time
employee of the Company or any of its subsidiaries (including a director or secretary of the Company or its subsidiaries who holds salaried
employment with the Company or its subsidiaries on a full or part time basis) who is determined by the board to be eligible to receive
grants of securities under the EIP. Such individuals are referred to as the Eligible Participants. The Company intends to make offers
to Eligible Participants in Australia and other jurisdictions including the United States, subject to compliance with applicable laws.
As
of September 20, 2024, we have issued 730,229 share rights which are convertible into Ordinary Shares under the EIP. 590,729 of
such share rights will vest and become exercisable in two tranches between October 2025 and October 2026. 139,500 of such share rights
will vest and become exercisable in three tranches between May 2025 and August 2027.
Key
Terms
Employee
Awards
Under
the EIP, the Company may offer or issue to Eligible Participants, the following awards (“Employee Awards”):
| |
● |
performance
rights: a right to be issued or provided with an Ordinary Share at no issue price on specific vesting conditions being achieved;
|
| |
|
|
| |
● |
options:
a right to be issued or provided with an Ordinary Share upon the payment of the exercise price and which can only be exercised if
specific vesting conditions are achieved; |
| |
|
|
| |
● |
loan
shares: Ordinary Shares issued subject to a limited recourse loan and at no interest rate, subject to specific vesting conditions;
|
| |
|
|
| |
● |
deferred
share awards: Ordinary Shares issued to Eligible Participants: |
| |
● |
who
elect to receive Ordinary Shares instead of any wages, salary, director’s fees, or other remuneration; or |
| |
|
|
| |
● |
by
the Company, in its discretion, in addition to their wages, salary and remuneration, or in lieu of any discretionary cash bonus or
other incentive payment; or |
| |
● |
exempt
share awards: Ordinary Shares issued for no consideration or at an issue price which is a discount to the market price with the
intention that up to A$1,000 (or such other amount which is exempted from tax under the Income Tax Assessment Act 1936 (Cth) or the
Income Tax Assessment Act 1997 (Cth) from time to time) of the total value or discount received by each employee will be exempt from
tax. |
Eligible
Employees
Employee
Awards may be granted at the discretion of the board to any person who is an employee or director of, or an individual who provides services
to, the Company, collectively, the Primary Participants, or another person who is a spouse, parent, child or sibling of the Primary Participant.
Price
The
board has discretion to determine the issue price and/or exercise price for the Employee Awards.
Vesting
and Exercise of Employee Awards
The
Employee Awards held by a participant will vest in and become exercisable on the satisfaction of any vesting conditions specified in
the offer and in accordance with the rules of the EIP. Vesting conditions may be waived at the discretion of the board.
Change
of Control
In
the event a takeover bid is made to acquire all of the Company’s Ordinary Shares on issue, or a scheme of arrangement, selective
capital reduction or other transaction is initiated which has an effect similar to a full takeover bid, the board may waive unsatisfied
vesting conditions in relation to some or all Employee Awards. Further, if a takeover bid is made to acquire all of the Company’s
Ordinary Shares on issue, participants may accept the takeover bid in respect of any Employee Awards (other than exempt share awards)
which they hold notwithstanding the restriction period in respect of those Employee Awards has not expired.
Claw
Back
If
any vesting conditions of an Employee Award are mistakenly waived or deemed satisfied when in fact they were not satisfied, then, in
accordance with the terms of the EIP, the board may determine that the relevant Employee Awards expire (if not yet exercised), or it
may otherwise recover from the participant some or all of the Ordinary Shares issued on exercise of the Employee Awards or any proceeds
received from the sale of those shares.
Variation
of Share Capital
If
prior to the exercise of an Employee Awards, the Company undergoes a reorganization of capital or bonus issue, the terms of the Employee
Awards will be changed to the extent necessary to comply with the applicable listing rules.
PRINCIPAL
SHAREHOLDERS
The
following table presents certain information regarding the beneficial ownership of our Ordinary Shares as of September 20, 2024
by:
| |
● |
each
person known by us to be the beneficial owner of more than 5% of our Ordinary Shares; |
| |
● |
each
of our directors and named executive officers individually; and |
| |
● |
each
of our directors and executive officers as a group. |
Applicable
percentage ownership before the offering is based on 10,478,686 Ordinary Shares outstanding as of September 20, 2024. Applicable
percentage ownership after the offering is based on 12,007,738 Ordinary Shares outstanding after this offering, assuming 1,529,052
Ordinary Shares and no Pre-Funded Warrants being sold in this offering (at an assumed public offering price of US$3.27 per
Ordinary Share, which represents the last reported sale price of our Ordinary Shares as reported on the NYSE American on September 17,
2024) and no exercise of the underwriters’ option to purchase additional Ordinary Shares.
Beneficial
ownership is determined according to the rules of the SEC and generally means that a person has beneficial ownership of a security if
he or she possesses sole or shared voting or investment power of that security and includes options that are currently vested and exercisable
or exercisable within 60 days of September 20, 2024. Information with respect to beneficial ownership has been furnished to us
by each director, executive officer, or 5% or more shareholder, as the case may be. Ordinary Shares subject to options currently vested
and exercisable and Ordinary Shares that vest upon the satisfaction of various performance conditions are deemed to be outstanding for
computing the percentage ownership of the person holding these options and shares, but are not deemed outstanding for computing the percentage
of any other person.
Except
as otherwise indicated, all of the shares reflected in the table are Ordinary Shares and all persons listed below have sole voting and
investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. The information
is not necessarily indicative of beneficial ownership for any other purpose.
Based
on information known to us, as of September 20, 2024, we had 307 shareholders of record and 18 shareholders of record in the United
States . A number of our Ordinary Shares are held by nominee companies so we cannot be certain of the identity of those beneficial
owners. Except as otherwise indicated in the table below, addresses of our directors, executive officers and named beneficial owners
are in care of Alta Global Group Limited, Level 1, Suite 1, 29-33 The Corso, Manly, New South Wales 2095.
| | |
Ordinary Shares Beneficially Owned Prior to the Offering | | |
Ordinary Shares
Beneficially
Owned After the
Offering | |
| Shareholder | |
Number | | |
Percent | | |
Number | | |
Percent | |
| 5% and Greater Shareholders | |
| | | |
| | | |
| | | |
| | |
| Snowflower Holdings Pty Ltd <Snowflower Family A/C> (1) | |
| 982,768 | | |
| 9.38 | % | |
| 982,768 | | |
| 8.18 | % |
| Officers and Directors | |
| | | |
| | | |
| | | |
| | |
| Nick Langton (2) | |
| 986,314 | | |
| 9.41 | % | |
| 986,314 | | |
| 8.21 | % |
| Vaughn Taylor (3) | |
| 235,920 | | |
| 2.25 | % | |
| 235,920 | | |
| 1.96 | % |
| Hugh Williams (4) | |
| 372,532 | | |
| 3.56 | % | |
| 372,532 | | |
| 3.10 | % |
| Jonathan Hart (5) | |
| 16,952 | | |
| * | | |
| 16,952 | | |
| * | |
| Neale Java | |
| 2,044 | | |
| * | | |
| 2,044 | | |
| * | |
| Officers and directors as a group (5 persons) | |
| 1,613,762 | | |
| 15.40 | % | |
| 1,613,762 | | |
| 13.44 | % |
| * |
Represents
beneficial ownership of less than 1% of the outstanding Ordinary Shares of Alta. |
| (1) |
Mr.
Langton is a director of Snowflower Holdings Pty Ltd. |
| |
|
| (2) |
Ordinary
Shares held by Snowflower Holdings Pty Ltd (Snowflower Family Trust), an entity controlled by Mr. Langton. Mr. Langton has voting
and dispositive control over all of these securities of the company. Also includes 3,554 Ordinary Shares held by Mrs. Tanya Langton,
Mr. Langton’s wife. |
| |
|
| (3) |
Ordinary
Shares held by Nalaroo Holdings Pty Ltd (Lavoipierre Taylor Family Trust), an entity controlled by Mr. Taylor. |
| |
|
| (4) |
Ordinary
Shares held by Champ 7 Pty Ltd (Williams Family Trust), an entity controlled by Mr. Williams and 164,026 Ordinary Shares held by
Gibb Street Capital Pty Ltd, an entity controlled by Mr. Williams. |
| |
|
| (5) |
Ordinary
Shares held by Jonathan Hart (J Hart Family Trust). Mr. Hart is a beneficiary under the trust. |
RELATED
PARTY TRANSACTIONS
Other
than compensation arrangements which are described under “Management – Remuneration” or as disclosed below,
since July 1, 2021, we did not enter into any transactions or loans with any: (i) enterprises that directly or indirectly, through one
or more intermediaries, control, are controlled by or are under common control with us; (ii) associates; (iii) individuals owning, directly
or indirectly, an interest in our voting power that gives them significant influence over us, and close members of any such individual’s
family; (iv) key management personnel and close members of such individuals’ families; or (v) enterprises in which a substantial
interest in our voting power is owned, directly or indirectly, by any person described in (iii) or (iv) or over which such person is
able to exercise significant influence.
Indemnification
Agreements
Our
Constitution provides that, except to the extent prohibited by Australian law, including the Corporations Act and, to the extent that
an officer is not otherwise indemnified by us pursuant to an indemnification agreement, we will indemnify every person who is or has
been an officer of the company against any liability (other than legal costs that are unreasonable) incurred by that person as an officer.
This includes any liability incurred by that person in their capacity as an officer of our subsidiary where we requested that person
to accept that appointment.
We
have entered into Deeds of Access, Insurance and Indemnity (“Indemnity Deeds”) with Nick Langton, Vaughn Taylor, Hugh Williams,
Jonathan Hart and Neale Java, each a director or executive officer. Under the Indemnity Deeds, we have agreed to indemnify (to the maximum
extent permitted under Australian law and our Constitution, subject to certain specified exceptions) each director and executive officer
against all liabilities incurred in their capacity as our or our subsidiaries’ director or officer and any and all costs and expenses
relating to such a claim or to any notified event incurred by such director or executive officer, including costs and expenses reasonably
and necessarily incurred to mitigate any liability for such a claim or any claim which may arise from such a notified event. The Indemnity
Deeds provide that the indemnities are unlimited as to amount, continuous and irrevocable.
Separately,
we have obtained insurance for our directors and executive officers, as required by the Indemnity Deeds.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.
Related
Person Transaction Policy
We
comply with Australian law (including the Corporations Act) regarding approval of transactions with related parties. We have adopted
a conflict of interest and related person transaction policy that sets forth our procedures for the identification, review, consideration
and approval or ratification of related person transactions. For purposes of our policy, a related person transaction is a transaction,
arrangement or similar contractual relationship, or any series of similar transactions, arrangements or relationships, in which we and
any related person are, were or will be participants, with the exception of usual transactions in the ordinary course of business. A
related person is any member of our board of directors, our senior management, including any of their immediate family members, and any
entity owned or controlled by such persons.
Under
the policy, if a transaction has been identified as a related person transaction, including any transaction that was not a related person
transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to
consummation, the person responsible for the transaction must present information regarding the related person transaction to the Company
secretary or chair of the audit committee for review, consideration and approval or ratification. The presentation must include a description
of, among other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to us of the transaction
and whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third
party or to or from employees generally. Under the policy, we will collect information that we deem reasonably necessary from the Company
secretary or chair of our audit committee to enable us to identify any existing or potential related-person transactions and to effectuate
the terms of the policy.
All
of the transactions described in this prospectus were entered into prior to the adoption of the written policy, but in considering and
approving each related party transactions, the board of directors followed Australian law (including the Corporations Act).
Key
Related Party Transactions
On
August 21, 2021, Lavoipierre Taylor Family Trust Account was issued options exercisable for a total of 94,193 Ordinary Shares, at an
exercise price of A$0.78 per Ordinary Share, vesting over 3 years, beginning on June 30, 2022. Nalaroo Holdings Pty Ltd is the trustee
for the trust, and Mr. Taylor is a director of Nalaroo Holdings Pty Ltd. For the year ended June 30, 2022, Mr. Taylor reinvested into
the Company 100% of his board fees earned from August 20, 2021, to June 30, 2022, totaling A$129,000 via the purchase of 129,000 Series
A Notes. For the year ended June 30, 2023, Mr. Taylor reinvested into the Company 100% of his board fees earned from July 1, 2022, to
March 31, 2023, and 50% of his board fees earned from April 1, 2023, to June 30, 2023, totaling A$131,250 via the purchase of 131,250
Series A Extension Notes. On October 10, 2023 Lavoipierre Taylor Family Trust Account was issued 73,600 share rights (subject to vesting
conditions) which may be converted into Ordinary Shares under the EIP. 50% of the share rights will vest and become exercisable on October
1, 2025 and the balance of the share rights will vest and become exercisable on October 1, 2026.
On
August 21, 2021, Champ 7 Pty Ltd was issued options exercisable for a total of 73,215 Ordinary Shares, at an exercise price of A$0.78
per Ordinary Share, vesting over 3 years, beginning on June 30, 2022. Mr. Williams is a director of Champ 7 Pty Ltd. For the year ended
June 30, 2022, Mr. Williams reinvested into the Company 100% of his board fees earned from August 20, 2021, to June 30, 2022, totaling
A$43,000 via the purchase of 43,000 Series A Notes. For the year ended June 30, 2023, Mr. Williams reinvested into the Company 100% of
his board fees earned from July 1, 2022, to March 31, 2023, and 50% of his board fees earned from April 1, 2023, to June 30, 2023, totaling
A$65,625 via the purchase of 65,625 Series A Extension Notes. On October 10, 2023 Champ 7 Pty Ltd was issued 14,400 share rights (subject
to vesting conditions) which may be converted into Ordinary Shares under the EIP. 50% of the share rights will vest and become exercisable
on October 1, 2025 and the balance of the share rights will vest and become exercisable on October 1, 2026.
On
August 21, 2021, Snowflower Holdings Pty Ltd was issued options exercisable for a total of 189,757 Ordinary Shares, at an average exercise
price of A$3.20 per Ordinary Share, vesting over 3 years, beginning on June 30, 2022. On March 1, 2023, Snowflower Holdings Pty Ltd was
issued options exercisable for a total of 20,622 Ordinary Shares, at an exercise price of A$0.29 per Ordinary Share, which vest on March
1, 2026. Mr. Langton is a director of Snowflower Holdings Pty Ltd. On October 10, 2023, Snowflower Holdings Pty Ltd was issued 172,000
share rights (subject to vesting conditions) which may be converted into Ordinary Shares under the EIP. 50% of the share rights will
vest and become exercisable on and from October 1, 2025 and the balance of the share rights will vest and become exercisable on and from
October 1, 2026.
On
August 21, 2021, Tanya Langton, our Head of Global Events and Logistics and the spouse of our Chief Executive Officer Nick Langton, was
issued options exercisable for a total of 64,206 Ordinary Shares, at an average exercise price of A$0.74 per Ordinary Share, vesting
over 3 years, beginning on June 30, 2022. On March 1, 2023, Mrs. Langton, was issued options exercisable for a total of 4,061 Ordinary
Shares, at an average exercise price of A$0.29 per Ordinary Share, which vest on March 1, 2026. On October 10, 2023, Mrs. Langton was
issued 6,000 share rights (subject to vesting conditions) which may be converted into Ordinary Shares under the EIP. 50% of the share
rights will vest and become exercisable on October 1, 2025 and the balance of the 50% of the share rights will vest and become exercisable
on October 1, 2026.
On
August 31, 2021, the J Hart Family Trust Account was issued options exercisable for a total of 8,392 Ordinary Shares, at an exercise
price of A$0.78, which vest on August 31, 2024. On March 1, 2023, the J Hart Family Trust Account was issued options exercisable for
a total of 10,132 Ordinary Shares, at an exercise price of A$0.29, which vest on March 1, 2026. Mr. Hart is the trustee of the trust.
On October 10, 2023, the J Hart Family Trust Account was issued 47,600 share rights (subject to vesting conditions) which may be converted
into Ordinary Shares under the EIP. 50% of the share rights will vest and become exercisable on October 1, 2025 and the balance of the
50% of the share rights will vest and become exercisable on October 1, 2026.
On
August 21, 2021, ABRB Pty Ltd, was issued options exercisable for a total of 155,190 Ordinary Shares, at an exercise price of A$0.78,
vesting over 3 years beginning on June 30, 2022. Due to the resignation of Angus Benbow, a director of ABRB Pty Ltd., on March 31, 2023,
84,863 options lapsed and are no longer exercisable, while 70,327 options remain exercisable. On March 1, 2023, ABRB Pty Ltd, was issued
options exercisable for a total of 27,728 Ordinary Shares, at an exercise price of A$0.29, which vest on March 1, 2026.
On
March 1, 2023, 3213 Ventures Pty Ltd was issued options exercisable for a total of 160,000 Ordinary Shares, at an exercise price of A$0.29,
which vest on March 1, 2026. Mr. Java is a director of 3213 Ventures Pty Ltd. On October 10, 2023, 3213 Ventures Pty Ltd was issued 34,400
share rights (subject to vesting conditions) which may be converted into Ordinary Shares under the EIP. 50% percent of the share rights
will vest and become exercisable on October 1, 2025 and the balance of the 50% of the share rights will vest and become exercisable on
October 1, 2026.
DESCRIPTION
OF SHARE CAPITAL
The
following descriptions are summaries of the material terms of our Constitution. Reference is made to the more detailed provisions of
the Constitution. Please note that this summary is not intended to be exhaustive. For further information please refer to the full version
of our Constitution which is included as an exhibit to this registration statement.
General
We
are a public company limited by shares registered under the Corporations Act which is regulated by the Australian Securities and Investments
Commission, or ASIC. Our corporate affairs are principally governed by our Constitution and the Corporations Act.
Generally
speaking, the terms of our Constitution are not significantly different than a U.S. company’s charter documents, except we do not
have a limit on our authorized share capital and the concept of par value is not recognized under Australian law.
Subject
to restrictions on the issue of securities in our Constitution and the Corporations Act and any other applicable law, we may at any time
issue shares and grant options or warrants on any terms, with the rights and restrictions and for the consideration that our board determines.
The
rights and restrictions attaching to Ordinary Shares are derived through a combination of our Constitution, the common law applicable
to Australia, the Corporations Act and other applicable law. A general summary of some of the rights and restrictions attaching to our
Ordinary Shares are summarized below. Each ordinary shareholder is entitled to receive notice of, and to be present, vote and speak at,
general meetings.
Reverse
Share Split
On
January 24, 2024, we effectuated a four-for-five (4:5) Reverse Share Split of our Ordinary Shares. No fractional shares were issued in
connection with the Reverse Share Split as all fractional shares were rounded up to the next whole share.
Our
Constitution
Our
Constitution is similar in nature to the bylaws of a U.S. corporation. It does not provide for or prescribe any specific objectives or
purposes of Alta. It may be amended or repealed and replaced by special resolution of shareholders, which is a resolution passed by at
least 75% of the votes cast by shareholders entitled to vote on the resolution.
Under
Australian law, a company has the legal capacity and powers of an individual both within and outside Australia. The material provisions
of our Constitution are summarized below. This summary is not intended to be complete nor to constitute a definitive statement of the
rights and liabilities of our shareholders. Our Constitution is filed as an exhibit to this registration statement.
Interested
Directors
A
director who has a material personal interest in a matter that is being considered at a meeting of directors must not be present while
the matter is being considered at the meeting or vote on that matter except where permitted by the Corporations Act.
Directors’
Compensation
Pursuant
to our Constitution, the total aggregate fixed sum per annum to be paid to the directors (excluding salaries of executive directors)
from time to time will not exceed the sum determined by the shareholders in a general meeting and the total aggregate fixed sum will
be divided among the directors as the directors shall determine and, in default of agreement between them, then in equal shares.
Remuneration
payable by the Company to the Managing Director and any other executive Directors may be by way of salary, bonuses, or any other elements
but must not include a commission on, or percentage of, operating revenue.
Powers
Exercisable by Directors
Pursuant
to our Constitution (subject to the Corporations Act), the management and control of our business affairs are vested in our board. Subject
to the Corporations Act, our board has the power to raise or borrow money, and charge any of our property or business or any uncalled
capital, and may issue debentures or give any other security for any of our debts, liabilities or obligations or of any other person,
in each case, in the manner and on terms it deems fit.
Rotation
of Directors
Pursuant
to our Constitution, there must be an election of Directors at the Company’s annual general meeting. Upon the Company’s admission
to a Financial Market, no director except a Managing Director shall hold office for a period of three years, or beyond the third annual
general meeting following the Director’s election, whichever is the longer, without submitting themselves for re-election. If no
Director is standing for election or re-election, then the directors to retire at an annual general meeting are those who have been longest
in office since their last election and if there are 2 or more who were elected on the same day, then the Director to retire will be
decided by lot, unless the relevant Directors agree otherwise.
Rights
and Restrictions on Classes of Shares
Subject
to the Corporations Act, the rights attaching to our Ordinary Shares are detailed in our Constitution. Our Constitution provides that
the Board may issue shares from time to time with preferred, deferred or other special rights, whether in relation to dividends, voting,
return of share capital, or otherwise. Subject to the Corporations Act, or any rights and restrictions attached to a class of shares
currently on issue, we may issue further shares on such terms and conditions as our board resolves. Currently, our outstanding share
capital consists of only Ordinary Shares.
Dividend
Rights
Subject
to the Corporations Act, our board may from time to time determine to pay any interim, special or final dividends to shareholders, fix
the amount of dividend, the record date for determining entitlements to, and for payment of, a dividend and the method of payment of
a dividend.
Voting
Rights
Under
our Constitution, each shareholder has one vote determined by a show of hands at a meeting of the shareholders unless a poll is required
under the Constitution or the Corporations Act. On a poll vote, each shareholder shall have one vote for each fully paid share and a
fractional vote for each share that is not fully paid, such fraction being equivalent to the proportion of the amount that has been paid
to such date on that share. Shareholders may vote by proxy. Under Australian law, shareholders of a public company are not permitted
to approve corporate matters by written consent. Our Constitution does not provide for cumulative voting.
Right
To Share in Our Profits
Subject
to the Corporations Act and pursuant to our Constitution, our shareholders are entitled to participate in our profits only by payment
of dividends. Our board may from time to time determine to pay dividends to the shareholders; however, under the Corporations Act, we
must not pay a dividend unless: (a) our assets exceed our liabilities immediately before the dividend is declared and the excess is sufficient
for the payment of the dividend; (b) the payment of the dividend is fair and reasonable to our shareholders as a whole; and (c) the payment
of the dividend does not materially prejudice our ability to pay our creditors. Unless any share is issued on terms providing to the
contrary, all dividends are to be apportioned and paid proportionately to the amounts paid, or credited as paid on the relevant shares.
Rights
to Share in the Surplus in the Event of Liquidation
Our
Constitution provides for the right of shareholders to participate if there is a surplus of assets in the event of our liquidation.
No
Redemption Provision for Ordinary Shares
There
are no redemption provisions in our Constitution in relation to Ordinary Shares. Under our Constitution and subject to the Corporations
Act, redeemable preference shares may be issued and liable to be redeemed on the terms that they are issued, which may be at our option.
Variation
or Cancellation of Share Rights
The
rights attached to shares in a class of shares may only be varied or cancelled (unless otherwise provided by the terms of issue of Shares
in a class, in which case the procedure set out in the terms of issue applies), by either:
| |
● |
a
special resolution passed by members holding shares in the class; or |
| |
● |
the
written consent of members with at least 75% of the shares in the class. |
Liability
for Further Capital Calls
According
to our Constitution, the board may make any calls from time to time upon shareholders in respect of all monies unpaid on partly-paid
shares (if any), subject to the terms upon which any of the partly-paid shares have been issued. Each shareholder is liable to pay the
amount of each call in the manner, at the time, and at the place specified by the board. Calls may be made payable by installment. Failure
to pay a call will result in interest becoming payable on the unpaid amount and ultimately, forfeiture of those shares. As of the date
of this prospectus, all of our issued shares are fully paid.
Comparison
of Australian and Delaware Law
The
table below provides a summary of the Australian law applicable to Alta as an Australian public company, and certain rights attaching
to Alta’s shares. These laws and/or rights may be different to those which would apply if Alta were incorporated in Delaware and
subject to Delaware and US federal laws, the table below provides a summary comparison for illustrative purposes. Investors should also
carefully review the relevant risks highlighted in this section in this regard and the summary of the matters set forth under the section
entitled “Description of Share Capital”, as well as the copy of our Constitution (which is included as an exhibit to the
registration statement to which this prospectus forms a part), prior to investing in the Ordinary Shares.
| Matter |
|
Australian
public company |
|
Listed
US company incorporated in Delaware |
| Share
capital |
|
The
Corporations Act does not:
●
prescribe the minimum amount of share capital that Alta should have;
●
prescribe a minimum issue price for each share in Alta; or
●
require Alta to place a maximum limit on the share capital that its members may subscribe.
Australian
law does not contain any concept of authorized capital or par value per share.
Under
Australian law and our Constitution, the issue price of shares is set by the Alta Directors collectively as a board at the time of
each issue. |
|
A
US company’s certificate of incorporation may authorize the issue of up to a maximum number of shares, which may consist of
different classes of shares and stipulate the par value for those shares. |
| |
|
|
|
|
| Issuing
additional shares |
|
Subject
to the Corporations Act, our Constitution authorizes the Alta Board to allot and issue securities in the capital of Alta to any person
on such terms and with such rights as the Board determines. |
|
A
US company’s by-laws will generally permit the issue of authorized and unissued shares
of any class by vote of the board of directors in such manner, for such consideration and
on such terms as the board of directors may determine, without stockholder approval.
Furthermore,
under the NYSE listing rules, a listed company will not be able to disparately reduce or restrict voting rights of the shares through
any corporate action or issuance. |
| |
|
|
|
|
| Transfer
of shares |
|
Under
Australian law and our Constitution, securities in Alta are generally freely transferable.
The
Alta Directors may however refuse to register a transfer of shares in limited circumstances as detailed in our Constitution, and
where the transfer would be contrary to the Corporations Act. |
|
Under
the DGCL, shares are generally freely transferable.
Transfer
of shares may be subject to restrictions imposed by US federal or state securities laws, by the certificate of incorporation or by-laws
or by an agreement signed with the holders of shares at issue.
Generally,
a transfer of shares shall be made only on the transfer books of a Delaware incorporated company or by a transfer agent designated
to transfer shares of a Delaware incorporated company. Where a Delaware incorporated company Shares are certificated, certificates
must be surrendered for cancellation before a new certificate, if any, is issued. |
| Matter |
|
Australian
public company |
|
Listed
US company incorporated in Delaware |
| Dividends
and distributions |
|
Our
Constitution permits the Board to declare dividends to shareholders from time to time in
its sole discretion.
Under
the Corporations Act, a company may only pay a dividend where, in summary, the company’s assets exceed its liabilities at the
relevant time to the extent of the dividend to be declared, the payment is fair and reasonable to the company’s shareholders
as a whole and does not materially prejudice the company’s ability to pay its creditors. |
|
Under
the DGCL, the board of directors of a company incorporated in Delaware is permitted to declare
and pay dividends to stockholders either:
●
out of that company’s surplus, which is defined to be the net assets less statutory capital; or
●
if no surplus exists, then out of the net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal
year, provided that the capital of the corporation is not less than the aggregate amount of the capital represented by the corporation’s
outstanding stock of all classes having a preference on distribution of assets.
Holders
of common stock will generally be entitled to receive dividends when and as declared by the company’s Board out of funds legally
available for that purpose. |
| |
|
|
|
|
| Voting
rights and Quorum Requirements |
|
Our
Constitution provides that:
●
on a show of hands each individual present who is a member, proxy, attorney or representative of a member entitled to vote has one
vote;
●
on a poll each shareholder has one vote for every fully paid share held and a fraction of a vote for each partly paid share held,
with the fraction of the vote being equivalent to the portion of the share paid up; and
●
two shareholders present constitutes a quorum. |
|
Generally
speaking, a company incorporated in Delaware’s certificate of incorporation provides that each stockholder is entitled to one
vote for each share of capital stock entitled to vote, unless otherwise provided by the DGCL or the company’s governing documents. |
| Matter |
|
Australian
public company |
|
Listed
US company incorporated in Delaware |
| Variation
in rights |
|
Under
the Corporations Act, if a company has a constitution that sets out a procedure for varying
or cancelling rights attached to shares in a class of shares, those rights may be varied
or cancelled only in accordance with the procedure.
Under
our Constitution, the rights may only be varied or cancelled:
●
with the consent in writing of the holders of at least 75% of the issued Shares of that class; or
●
with the sanction of a special resolution passed at a separate general meeting of the holders of the Shares of the class.
The
company must give written notice of the variation or cancellation to the members of the class within 7 days after the variation or
cancellation is made.
The
Corporations Act also provides that where shareholders in an affected class do not all agree (whether by resolution or written consent)
to the:
●
variation or cancellation of their rights; or
●
a modification to the relevant constitution to allow rights to be varied or cancelled,
then
shareholders with at least 10% of the votes in the affected class may apply to the court (within a limited time frame) to have the
variation, cancellation or modification set aside.
Subject
to the shares’ terms of issue, the rights attached to a class of shares are not deemed varied by the issue of further shares
of that class. |
|
Under
the DGCL, any amendment to the company incorporated Delaware’s certificate of incorporation
requires approval by holders of the outstanding shares of a particular class if that amendment
would:
●
increase or decrease the aggregate number of authorized shares of that class;
●
increase or decrease the par value of the shares of that class; or
●
alter or change the powers, preferences or special rights of the shares of that class so as to affect them adversely.
If
an amendment would alter or change the powers, preferences or special rights of one or more series of any class so as to adversely
affect that series without adversely affecting the entire class, then only the shares of the series so affected shall be considered
a separate class and entitled to such separate class approval of the proposed amendment.
Under
the DGCL, amendments to a company incorporated in Delaware’s certificate of incorporation also generally require:
●
a board resolution recommending the amendment; and
●
approval of a majority of the outstanding shares entitled to vote and a majority of the outstanding shares of each class entitled
to vote.
Certain
amendments to the relevant company’s certificate of incorporation could, in the future, require approval of only the majority
of the shares of the then issued and outstanding preferred stock, because the DGCL and the company’s certificate of incorporation
permit the company to issue preferred shares with powers, preferences and rights superior to those of common stock.
Pursuant
to a company incorporated in Delaware’s by-laws, a company incorporated in Delaware’s by-laws or certificate of incorporation
may be adopted, amended or repealed by the board of directors or by the affirmative vote of the holders of a majority of the voting
power of all of the shares of the corporation then issued and outstanding and entitled to vote generally in any election of directors,
voting together as a single class. |
| Matter |
|
Australian
public company |
|
Listed
US company incorporated in Delaware |
| Related
party and director transactions |
|
The
Corporations Act governs the provision of financial benefits to related parties of public
companies and requires that shareholder approval is obtained prior to financial benefits
being provided to related parties or giving the financial benefit falls within a specific
exception set out in the Corporations Act (for example, a benefit given on arms’ length
terms or the reasonable remuneration or reimbursement of an officer or employee).
Directors,
when entering into transactions with Alta, are also subject to the Australian common law and statutory duties to avoid actual and
potential conflicts of interest. There are also disclosure requirements and voting restrictions imposed on directors under the Corporations
Act on matters involving a material personal interest.
Within
the parameters summarized above, under our Constitution a director’s position as such does not disqualify that person from:
●
holding any other office or place of profit or employment (except with Alta’s auditor), on such terms as the Alta Directors
approve;
●
being a shareholder in or a director of a company promoted by Alta or in which Alta may be interested as a vendor, shareholder or
otherwise; or
●
entering into an agreement with Alta.
A
director must also comply with:
●
the material personal interest provisions set out in section 191 of the Corporations Act; and
●
section 195 of the Corporations Act in relation to being present and voting at a board meeting that considers a matter in which he
or she has a material personal interest. |
|
Under
the DGCL, no contract or transaction between a company incorporated in Delaware and one or
more of its directors or officers, or between the relevant company and any other corporation,
partnership, association or other organization in which one or more of its directors or officers
are directors or officers or have a financial interest will be void or voidable solely for
that reason, or solely because the relevant director or officer is present at or participates
in the company board or committee meeting that authorizes the contract or transaction, or
solely because the vote of the relevant director or officer is counted for that purpose,
if:
●
the material facts as to the director’s or officer’s relationship or interest, and as to the contract or transaction,
are disclosed or known to the board of directors or committee, and the board of directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or
●
the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are
disclosed or known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good
faith by vote of the stockholders; or
●
the contract or transaction is fair to the company as of the time that it is authorized, approved or ratified by the board of directors,
committee or stockholders. |
| Matter |
|
Australian
public company |
|
Listed
US company incorporated in Delaware |
| Protection
against oppression of shareholders |
|
The
Corporations Act empowers the court to make any order it considers appropriate if conduct
of a company’s affairs is found to be oppressive to a member or members.
Such
orders may include winding up, regulating the conduct of the company’s affairs, authorizing a member to institute derivative
proceedings or requiring a person to engage in or abstain from specified conduct. |
|
The
DGCL contains no equivalent statutory provisions. However, Delaware law may provide judicial remedies to stockholders in comparable
circumstances. |
| |
|
|
|
|
| Buy-back
of shares |
|
The
Corporations Act allows Alta to buy-back its own shares through a specific buy-back procedure
provided that:
●
the buy-back does not materially prejudice Alta’s ability to pay its creditors; and
●
Alta follows the relevant procedures set out in the Corporations Act.
The
buy-back procedure includes the form of shareholder approval (for example, ordinary, special or unanimous resolutions), a notice
period and disclosure to be given to the shareholders, depending on the type of buy-back to be undertaken. |
|
The
DGCL generally permits a Delaware incorporated company to purchase or redeem its outstanding
shares out of funds legally available for that purpose without obtaining stockholder approval,
provided that:
●
the capital of a Delaware incorporated company is not impaired;
●
such purchase or redemption would not cause the capital of a Delaware incorporated company to become impaired;
●
the purchase price does not exceed the price at which the shares are redeemable at the option of a Delaware incorporated company;
and
●
immediately following any such redemption a Delaware incorporated company shall have outstanding one or more shares of one or more
classes or series of stock, which shares shall have full voting powers. |
| Matter |
|
Australian
public company |
|
Listed
US company incorporated in Delaware |
| Takeovers |
|
The
Corporations Act prohibits the acquisition of a relevant interest in voting shares of a company
where the acquisition would increase a person’s voting power in the company to over
20% or increases from a starting point that is above 20% and below 90%, except in certain
circumstances.
The
Corporations Act also sets out disclosure requirements for persons who have or cease to have a substantial holding in a company.
Compulsory acquisition is permitted by holders with an interest of 90% or more of a class of securities.
Certain
exceptions to this general takeover prohibition are set out in the Corporations Act, including:
●
an acquisition resulting from a scheme of arrangement undertaken in accordance with the Corporations Act and approved by the court;
and
●
an acquisition that results from the acceptance of an offer under a takeover bid.
In
this respect, any takeover bid made for Alta must be on the same terms for all shareholders, subject to minor exceptions, and must
comply with the timetable, disclosure and other requirements set out in the Corporations Act.
The
purpose of these provisions is to seek to ensure that shareholders in a target company that they have a reasonable and equal opportunity
to share in any premium for control and that they are given reasonable time and sufficient information to assess the merits of the
proposal. |
|
Section
203 of the DGCL applies to a company and provides that if a holder acquires 15% or more of
a company’s voting stock (an “Interested Holder”) without prior approval
of the board of directors, then for three years a company cannot engage in a broad range
of business combinations with such Interested Holder. Such business combinations include
(a) certain mergers or consolidations with the Interested Holder or entities affiliated with
the Interested Holder,
(b)
certain sales, leases, exchanges, mortgages, pledges, transfers or other dispositions of the company assets to the Interested Holder,
which assets have an aggregate market value equal to 10% or more of either all of the assets of a company or all of the outstanding
stock of a company,(c) certain transactions which result in the issuance or transfer by a company or by any direct or indirect majority
owned subsidiary, to the Interested Holder, of any stock of a company or of such a company subsidiary, (d) certain transactions involving
a company or any direct or indirect majority-owned subsidiaries which have the effect, directly or indirectly, of increasing the
proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the
company or such subsidiary which is owned by the Interested Holder, except as a result of immaterial changes due to fractional share
adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly by the Interested
holder, and (e) any receipt by the Interested Holder of the benefit, directly or indirectly (except proportionately as a stockholder
of the company), of any loans, advances, guarantees, pledges or other financial benefits (other than those expressly permitted by
Section 203(c)(3)(i)-(iv)) provided by or through the company or any direct or indirect majority-owned subsidiary.
The
Section 203 limitation would not apply if (a) the business combination was approved by the board of directors of the company before
the holder became an Interested Holder, (b) the business combination is subsequently approved by the a company board of directors
and also by two-thirds of the a company stock held by persons other than such Interested Holder at an annual or special meeting of
stockholders, or (c) upon consummation of the transaction which resulted in the stockholder becoming an Interested Holder of the
company, the Interested Holder owned at least 85% of the company’s voting stock which was outstanding at the time the transaction
commenced (excluding stock owned by any directors who are also officers and certain employee stock plans).
The
effect of the restriction is to give the company’s board of directors the ability to prevent or inhibit an unsolicited takeover
attempt initiated through a merger or asset purchase proposal. It may also dissuade unsolicited tender offer proposals unless the
offeror is confident of achieving the 85% shareholding level via the tender offer. |
| Matter |
|
Australian
public company |
|
Listed
US company incorporated in Delaware |
| Annual
shareholder meetings |
|
Under
the Corporations Act, the annual general meeting of Alta is required to be held at least once every calendar year and within five
months after the end of each financial year. |
|
The
DGCL requires a company incorporated in Delaware to have an annual stockholders’ meeting
to elect directors, unless directors are elected by written consent in lieu of an annual
meeting.
Under
the DGCL, a director or stockholder of a company incorporated in Delaware may petition the Court of Chancery of Delaware for an order
compelling the holding of an annual meeting if:
●
no annual meeting has been held, or action by written consent to elect directors in lieu of an annual meeting has been taken, for
a period of 30 days after the date designated for the annual meeting; or
●
no date for an annual meeting has been designated for a period of 13 months after the latest to occur of the company’s
organization, the last annual meeting or the last action by written consent to elect directors in lieu of an annual
meeting. |
| |
|
|
|
|
| Shareholders’
right to request or requisition a general meeting |
|
The
Corporations Act requires the Directors to call a general meeting on the request of members
with at least 5% of the vote that may be cast at the general meeting or at least 100 Shareholders
who are entitled to vote at a general meeting.
Shareholders
with at least 5% of the votes that may be cast at the general meeting may also call and arrange to hold a general meeting at their
own expense. |
|
Annual
meetings of stockholders shall be held at a time designated by or in the manner provided
in the bylaws.
Special
meetings of stockholders may be called by the board of directors or by such person or persons as may be authorized by the certificate
of incorporation or by the bylaws. |
| |
|
|
|
|
| Notice
of Meetings |
|
The
Corporations Act requires at least 28 days’ notice of a general meeting of company listed on a financial exchange. |
|
The
DGCL provide that notice of a stockholders’ meeting be delivered not less than ten days nor more than 60 days before the date
of the meeting to each stockholder entitled to vote at such meeting, except as otherwise provided in the company’s by-laws
or as required by the DGCL. |
| Matter |
|
Australian
public company |
|
Listed
US company incorporated in Delaware |
| Remuneration
reports |
|
The
Corporations Act requires that a public company’s annual report must include a report
by the Directors on the company’s remuneration framework (remuneration report).
At
the company’s annual general meeting, shareholders must vote to approve or reject the remuneration report.
The
vote on the resolution is advisory only and does not bind the directors or the company. However, if the company’s remuneration
report receives a ‘no’ vote of 25% of more, the company’s subsequent remuneration report must explain whether and
how shareholders’ concerns have been taken into account.
If
the company’s subsequent remuneration report receives a ‘no’ vote of 25% or more, shareholders will vote at the
same annual general meeting to determine whether the directors (other than the managing director) will need to stand for re-election
within 90 days.
If
the resolution passes, then the ‘spill meeting’ at which the directors face re-election, will take place within 90 days.
Our
Constitution provides that the directors are entitled to be remunerated. The extend of such remuneration shall be determined by the
Alta Board, subject to laws relating to the giving of benefits to related parties, and to the extent applicable, any maximum amount
that is from time to time approved by the shareholders of the company in a general meeting in accordance with any applicable listing
rules.
Our
Constitution also provides that:
●
the remuneration may be provided in the form of shares or other securities of the company or any subsidiary of the company, or options
or rights to acquire such shares or other securities, on such terms as the Alta Board may decide; and
●
the directors may also be paid all travelling, and other expenses properly incurred by them: (a) in attending and returning from:
(i) meetings of directors or any committee; or (ii) general meetings of the company; or (b) otherwise in connection with the business
of the company. |
|
In
the U.S., the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (U.S.) requires
all ‘reporting companies’ to have an advisory Shareholder vote on pay at least
once every three years.
Companies
must report the results and say how they have responded to these when making decisions on pay the following year.
So
long as Alta qualifies as an ‘emerging growth company,’ it will not be required to hold an advisory Shareholder vote
on pay.
The
Company will be an emerging growth company until the earliest of: (i) the last day of the fiscal year in which our annual gross revenues
exceed US$1.235 billion, (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of common
equity securities of the company pursuant to an effective registration statement under the Securities Act of 1933, (iii) the date
on which the Company has, during the previous three year period, issued more than US$1 billion in non-convertible debt, or (iv) the
date that we become a ‘large accelerated filer’ as defined in Rule 12b-2 under the U.S. Exchange Act.
A
company becomes a large accelerated filer if it meets the following conditions as of the end of its fiscal year: (i) it has an aggregate
worldwide market value of the voting and non-voting common equity held by non-affiliates of US$700 million or more as of the last
business day of its second fiscal quarter; (ii) it has been subject to the requirements of Section 13(a) or 15(d) of the U.S. Exchange
Act for at least 12 months; (iii) it has filed at least one annual report pursuant to Section 13(a) or 15(d) of the U.S. Exchange
Act; and (iv) it is not eligible to rely on certain requirements for smaller reporting companies for its annual and quarterly reports. |
| Matter |
|
Australian
public company |
|
Listed
US company incorporated in Delaware |
| Approval
of Corporate Matters by Written Consent |
|
Our
Constitution provides that anything which may be done by resolution of the Company in a general meeting, may be done by written resolution. |
|
Unless
otherwise specified in a corporation’s certificate of incorporation, shareholders may take action permitted to be taken at
an annual or special meeting, without a meeting, prior notice or a vote, if consents, in writing, setting forth the action, are signed
by shareholders with not less than the minimum number of votes that would be necessary to authorize the action at a meeting. All
consents must be dated and are only effective if the requisite signatures are collected within 60 days of the earliest dated consent
delivered. |
| |
|
|
|
|
| Special
resolutions |
|
Under
the Corporations Act, a special resolution must be a resolution that is passed by at least
75% of the votes cast by members entitled to vote on the resolution.
Approval
by special resolution of shareholders is required for actions such as modifying or repealing our Constitution, changing Alta’s
name or company type, selectively reducing or buying back capital (in some circumstances), providing financial assistance in connection
with the acquisition of shares in the company, and undertaking a voluntary winding up of Alta. |
|
The
DGCL contains no concept of special resolutions. |
| |
|
|
|
|
| Removing
directors |
|
The
Corporations Act provides that a public company may by resolution at a general meeting remove
a director from office.
Notice
of intention to move the resolution must be given by the company at least 2 months before the meeting is to be held, and the company
must notify the director as soon as possible after notice of the intention is received. |
|
Subject
to certain exceptions, the DGCL provides that directors may be removed with or without cause by the affirmative vote of the holders
of a majority of the voting power of all of the outstanding shares of capital stock entitled to vote generally in the election of
directors. |
| Matter |
|
Australian
public company |
|
Listed
US company incorporated in Delaware |
| Duties
and liability of directors |
|
General
duties imposed by the Corporations Act on directors and officers of companies include duties
to exercise duties and powers with due care and diligence, in good faith and for a proper
purpose, and not to improperly use their position or information obtained through their position
to gain advantage or cause detriment to the company.
Under
the Corporations Act, there is a general prohibition on a company or a related body corporate exempting officers from any liability
incurred as an officer of the company. |
|
Under
Delaware law, the directors of a company incorporated in Delaware have fiduciary obligations,
including the duty of care and the duty of loyalty.
The
duty of care requires directors to act in good faith, with the care that a reasonable person in a similar position and circumstances
would exercise and in a manner the director reasonably believes to be in the best interests of the company and its stockholders.
Directors must inform themselves of all reasonably available material information before making business decisions on behalf of the
company and to act with requisite care in discharging their duties to the company.
The
duty of loyalty requires directors to act in good faith and in the company’s best interests.
Under
the DGCL, a company incorporated in Delaware may include in its certificate of incorporation a provision eliminating the personal
liability of a director or officer to the company or its stockholders for monetary damages for a breach of fiduciary duty as a director
or officer.
However,
the provision may not eliminate liability for:
●
breach of the director’s or officer’s duty of loyalty;
●
acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law;
●
directors for unlawful payment of dividends;
●
directors for unlawful purchases or redemptions of shares;
●
any transaction from which the director or officer derived an improper personal benefit; or
●
an officer in any action by or in the right of the corporation. |
| Matter |
|
Australian
public company |
|
Listed
US company incorporated in Delaware |
| Bringing
or intervening in legal proceedings on behalf of the entity |
|
A
member, former member or person entitled to be a member of a company, or an officer or former
officer of a company, may bring proceedings on behalf of a company and in the company’s
name where the company is unwilling or unable to do so.
Proceedings
may only be brought if leave is granted by a Court, including Federal Court, the Supreme Court of a State or Territory of Australia,
or Federal Circuit and Family Court of Australia, for the person to bring or intervene in proceedings.
Leave
will generally be granted if the court is satisfied that:
●
it is probable that the company itself will not bring the proceedings or properly take responsibility for them;
●
the applicant is acting in good faith;
●
it is in the best interests of the company that the applicant be granted leave;
●
if the application relates to leave to bring proceedings, there is a serious question to be tried;
●
either at least 14 days before making the application, the applicant gave written notice of the application to the company, or it
is appropriate to grant leave even though the notice period was not provided. |
|
The
DGCL permits a stockholder to bring a derivative action on behalf of a company if those in
control of the company have failed to assert a claim belonging to the relevant company.
Derivative
actions have certain standing and eligibility requirements, including that the plaintiff in the action must generally have been a
stockholder of the company at the time that the act complained of occurred and must maintain his or her status as a stockholder of
the company throughout the course of the litigation. Derivative plaintiffs must have previously made a demand on the directors of
the company to assert the corporate claim, unless such a demand would have been futile. |
| |
|
|
|
|
| Continuous
disclosure |
|
The
Corporations Act contains provisions which require a listed company to comply with the relevant
disclosure rules of their financial market, in summary being such information concerning
the company that a reasonable person would expect to have a material effect on the price
or the value of the company’s shares.
There
are also periodic reporting and disclosure rules that apply, requiring it (among other things) to report to ASIC at the end of every
half year and annually in respect of its financial statements and reports. |
|
US
reporting companies are subject to US federal securities laws and regulations in relation
to its ongoing disclosure obligations.
Once
listed on a national securities exchange, the US company will also be subject to the ongoing disclosure obligations of such exchange.
The
NYSE listing rules and US federal securities laws and regulations will generally require disclosure to the public of any material
information that would reasonably be expected to affect the value of a company’s shares or influence investors’ decisions.
This includes:
●
annual reports on Form 10-K;
●
quarterly reports on Form 10-Q;
●
current reports containing material information required to be disclosed on Form 8-K;
●
company insider reports; and
●
proxy statement. |
| Matter |
|
Australian
public company |
|
Listed
US company incorporated in Delaware |
| Inspection
of Books and Records |
|
Inspection
of our records is governed by the Corporations Act. Any member of the public has the right to inspect or obtain copies of our registers,
and the Company may charge a fee not exceeding the prescribed fee set by regulation. Shareholders are not required to pay a fee for
inspection of our registers or minute books of the meetings of shareholders. Other corporate records, including minutes of directors’
meetings, financial records and other documents, are not open for inspection by the public or shareholders. Where a shareholder is
acting in good faith and an inspection is deemed to be made for a proper purpose, a shareholder may apply to the court to make an
order for inspection of our books. |
|
All
shareholders of a Delaware corporation have the right, upon written demand, to inspect or obtain copies of the corporation’s
shares ledger and its other books and records for any purpose reasonably related to such person’s interest as a shareholder |
| |
|
|
|
|
| Insider
trading |
|
The
Corporations Act prohibits any person who:
●
possesses information that is not generally available, but if it were generally available, a reasonable person would expect it to
have a material effect on the price or value of company’s securities (Inside Information); and
●
knew, or ought reasonably to have known, that the information was Inside Information,
from
applying for, buying or selling those securities (or entering an agreement to do so) or procuring others to do so. The prohibition
also extends to the communication of the information (or causing the information to be communicated) directly or indirectly to third
parties if the person knew, or ought reasonably to have known, that the recipient would or would be likely to apply for, buy or sell
the securities (or enter an agreement to do so), or procure others to do so.
This
prohibition is subject to certain limited exceptions. |
|
US
federal securities laws generally prohibit any person who possesses material non-public information relating to a company incorporated
in the US or its securities from buying or selling those securities or procuring others to do so, or from communicating the material
non-public information to third parties. |
| Matter |
|
Australian
public company |
|
Listed
US company incorporated in Delaware |
| Winding
up |
|
The
members of a solvent company may determine to wind-up the company under the Corporations
Act. A special resolution is required.
From
the passing of the resolution, the company must cease to carry on its business except so far as the liquidator considers is required
for the beneficial disposal or winding up of that business, but the corporate state and corporate powers of the company continue
until it is deregistered.
Our
Constitution states that if Alta is wound up, if the assets available for distribution among the shareholders are insufficient to
repay the whole of the paid up capital, the assets must be distributed so that, as nearly as may be, the losses are borne by the
shareholders in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up, on
the Shares held by them respectively, alternatively, if the assets available for distribution among the shareholders are more than
sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess must be distributed among
the shareholders in proportion to the capital at the commencement of the winding up paid up, or which ought to have been paid up,
on the Shares held by them respectively.
Further,
a liquidator may, with the sanction of a special resolution, divide the assets of Alta among the shareholders in kind. The liquidator
cannot compel any member to accept marketable securities in respect of which there is a liability as part of a distribution of assets
of Alta.
The
Corporations Act also provides that subject to provisions as to preferential payments, the property of a company must, on its winding
up, be applied in satisfaction of its liabilities equally and, subject to that application, must, unless the company’s constitution
otherwise provides, be distributed among the members according to their rights and interests in the company. |
|
The
DGCL permits the board of directors to authorize the dissolution of a company incorporated
in Delaware if:
●
a majority of the directors in office adopt a resolution to approve dissolution at a board meeting called for that purpose;
●
holders of a majority of the issued and outstanding shares entitled to vote on the matter adopt a resolution to approve dissolution
at a stockholders’ meeting called for that purpose; and
●
a certificate of dissolution is filed with the Delaware Secretary of State.
The
DGCL also permits stockholders to authorize the dissolution of a company incorporated in Delaware without board action if:
●
all of the stockholders entitled to vote on the matter provide written consent to dissolution; and
●
a certificate of dissolution is filed with the Delaware Secretary of State. |
General
Meetings of Shareholders
Under
Australian law, shareholders of a public company are not permitted to approve corporate matters by written consent. General meetings
of shareholders may be called by our board. Notice of the proposed meeting of our shareholders is required at least 28 days prior to
such meeting under the Corporations Act. Except as permitted under the Corporations Act, shareholders may not convene a meeting. Under
the Corporations Act, shareholders with at least 5% of the votes that may be cast at a general meeting may call and arrange to hold a
general meeting. The meeting must be called in the same way in which general meetings of the company may be called, including the dispatch
of a notice of meeting including the matters to be voted upon. The shareholders calling the meeting must pay the expenses of calling
and holding the meeting.
The
Corporations Act requires the directors to call and arrange to hold a general meeting on the request of shareholders with at least 5%
of the votes that may be cast at a general meeting. The request must be made in writing, state any resolution to be proposed at the meeting,
be signed by the shareholders making the request and be given to the Company. The board must call the meeting not more than 21 days after
the request is made. The meeting must be held not later than two months after the request is given.
Foreign
Ownership Regulation
There
are no limitations on the rights to own securities imposed by our Constitution. However, acquisitions and proposed acquisitions of shares
in Australian companies may be subject to review and approval by the Australian Federal Treasurer under the Foreign Acquisitions and
Takeovers Act 1975, or the FATA, which generally applies to acquisitions or proposed acquisitions by a foreign person (as defined in
the FATA) or associated foreign persons in certain transactions including those dealing with national security matters, of a sensitive
nature or dealing with an interest in land, or which are otherwise over certain monetary thresholds, including where the transaction:
| |
● |
would
result in such persons having an interest in 20% or more of the issued shares of, or control of 20% or more of the voting power in,
an Australian company; and/or |
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by
non-associated foreign persons that would result in such foreign person having an interest in 40% or more of the issued shares of,
or control of 40% or more of the voting power in, an Australian company. |
The
Company is currently not considered by the Directors to be an Australian land corporation for the purposes of the FATA.
Whether
prior approval of the Australian Federal Treasurer is required for an investor to be issued shares in the Company is an assessment which
must be undertaken by each investor, as compliance with the FATA in those circumstances is the investor’s obligation.
Separate
and stricter rules apply for foreign government investors (defined by the FATA). Generally, foreign government investors must seek prior
Foreign Investment Review Board approval where they acquire a direct interest in an entity or business. The term ‘direct interest’
has a very broad meaning under the Foreign Acquisitions and Takeovers Regulations 2015 and ranges from a 10% interest in an entity to
an interest of any percentage in an entity which gives the foreign government investor the ability to influence or participate in the
central management and control of the entity or business or determine its policy.
The
Australian Federal Treasurer may prevent a proposed acquisition in the above categories or impose conditions on such acquisition if the
Treasurer is satisfied that the acquisition would be contrary to the national interest. If a foreign person acquires shares or an interest
in shares in an Australian company in contravention of the FATA, the Australian Federal Treasurer may take a number of actions including
imposing civil or criminal penalties or ordering the divestiture of such person’s shares or interest in shares in the Company.
The Australian Federal Treasurer may order divestiture pursuant to the FATA if he determines that the acquisition has resulted in that
foreign person, either alone or together with other non-associated or associated foreign persons, controlling the Company and that such
control is contrary to the national interest.
Ownership
Threshold
There
are no provisions in our Constitution that require a shareholder to disclose ownership above a certain threshold. Upon becoming a U.S.
public company, our shareholders will also be subject to disclosure requirements under U.S. securities laws.
Issues
of Shares and Change in Capital
Subject
to our Constitution, the Corporations Act, and any other applicable law, we may at any time issue shares and grant options or warrants
on any terms, with preferred, deferred or other special rights and restrictions and for the consideration and other terms that the directors
determine.
Subject
to the requirements of our Constitution, the Corporations Act, and any other applicable law, including relevant shareholder approvals,
we may consolidate or divide our share capital into a larger or smaller number by resolution, reduce our share capital (provided that
the reduction is fair and reasonable to our shareholders as a whole and does not materially prejudice our ability to pay creditors) or
buy back our Ordinary Shares whether under an equal access buy-back or on a selective basis.
Change
of Control
Takeovers
of Australian public companies, such as Alta are regulated by the Corporations Act, which prohibits the acquisition of a “relevant
interest” in issued share capital of a public company if the acquisition will lead to that person’s or someone else’s
voting power in the company (when aggregated with their “associates”) increasing from 20% or below to more than 20%, or increasing
from a starting point that is above 20% and below 90%, subject to a range of exceptions.
Generally,
a person will have a relevant interest in the securities of a company if the person:
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is
the holder of the securities; |
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○ |
has
power to exercise, or control the exercise of, a right to vote attached to the securities; or |
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○ |
has
the power to dispose of, or control the exercise of a power to dispose of, the securities, including any indirect or direct power
or control. |
If,
at a particular time, a person has a relevant interest in issued securities and the person:
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○ |
has
entered or enters into an agreement with another person with respect to the securities; |
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○ |
has
given or gives another person an enforceable right, or has been or is given an enforceable right by another person, in relation to
the securities (whether the right is enforceable presently or in the future and whether or not on the fulfillment of a condition); |
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○ |
has
granted or grants an option to, or has been or is granted an option by, another person with respect to the securities; or |
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○ |
the
other person would have a relevant interest in the securities if the agreement were performed, the right enforced or the option exercised, |
then
the other person is taken to already have a relevant interest in the securities.
There
are a number of exceptions to the above prohibition on acquiring a relevant interest in issued share capital in a company above 20%.
In general terms, applicable exceptions which may apply include a regulated takeover, or a “whitewash resolution” of shareholders,
among other exemptions.
ASIC
and the Australian Takeovers Panel have a wide range of powers relating to breaches of takeover provisions, including the ability to
make orders canceling contracts, freezing transfers of, and rights attached to, securities, and forcing a party to dispose of securities.
There are certain defenses to breaches of the takeover provisions provided in the Corporations Act. Our Constitution, which is included
as an exhibit to this registration statement to which this prospectus forms a part, also contains a requirement for our shareholders
to approve any proportionate takeover bid (i.e., a bid for a specified proportion of a class of securities) without the approval of a
majority of our shareholders voting at a general meeting. For these provisions to be effective they must be approved by shareholders
at a general meeting at least every three years. The clause in the Constitution is operative until July 20, 2026 unless re-approved for
a longer period. The existence of these provisions may have the effect of discouraging proportionate takeover bids.
Transfer
Agent and Registrar
The
transfer agent and registrar for our Ordinary Shares is VStock Transfer, LLC. Its address is 18 Lafayette Place, Woodmere, NY 11598,
and its telephone number is (212) 828-8436.
Listing
Our
Ordinary Shares are listed on the NYSE American under the symbol “MMA.”
DESCRIPTION
OF SECURITIES WE ARE OFFERING
We
are offering up to 1,529,052 Ordinary Shares and up to 1,529,052 Pre-Funded Warrants to purchase up to 1,529,052
Ordinary Shares. We are also registering the Ordinary Shares issuable from time to time upon exercise of the Pre-Funded Warrants offered
hereby.
Common
Stock
The
material terms and provisions of our Ordinary Shares are described under the caption “Description of Share Capital” in this
prospectus and are incorporated herein by reference.
Pre-Funded
Warrants
The
following summary of certain terms and provisions of Pre-Funded Warrants that are being offered hereby is not complete and is subject
to, and qualified in its entirety by, the provisions of the Pre-Funded Warrant, the form of which is filed as an exhibit hereto and which
is incorporated by reference into the registration statement of which this prospectus forms a part. Prospective investors should carefully
review the terms and provisions of the form of Pre-Funded Warrant for a complete description of the terms and conditions of the Pre-Funded
Warrants.
Duration
and Exercise Price
Each
Pre-Funded Warrant offered hereby will have an initial exercise price of $0.001 per share. The Pre-Funded Warrants will be immediately
exercisable and may be exercised at any time until the Pre-Funded Warrants are exercised in full. The exercise price and number of Ordinary
Shares issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or
similar events affecting our Ordinary Shares and the exercise price.
Exercisability
The
Pre-Funded Warrants will be exercisable, at the option of each holder, in whole or in part, by delivering a duly executed exercise notice
accompanied by payment in full for the number of Ordinary Shares purchased upon such exercise (except in the case of a cashless exercise
as discussed below). A holder (together with its affiliates) may not exercise any portion of the Pre-Funded Warrant to the extent that
the holder would own more than 4.99% (or, at the election of a purchaser, 9.99%) of the outstanding Ordinary Shares immediately after
exercise, except that upon at least 61 days’ prior notice from the holder to us, the holder may increase the amount of ownership
of outstanding stock after exercising the holder’s Pre-Funded Warrants up to 9.99% of the number of Ordinary Shares outstanding
immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Pre-Funded
Warrants. No fractional Ordinary Shares will be issued in connection with the exercise of a Pre-Funded Warrant. In lieu of fractional
shares, we will pay the holder an amount in cash equal to the fractional amount multiplied by the exercise price.
Cashless
Exercise
In
lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price,
the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of Ordinary Shares determined
according to a formula set forth in the Pre-Funded Warrants.
Fundamental
Transaction
In
the event of a fundamental transaction, as described in the Pre-Funded Warrants and generally including any reorganization, recapitalization
or reclassification of our Ordinary Shares, the sale, transfer or other disposition of all or substantially all of our properties or
assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding voting securities,
the holders of the Pre-Funded Warrants will be entitled to receive upon exercise of the Pre-Funded Warrants the kind and amount of securities,
cash or other property that the holders would have received had they exercised the Pre-Funded Warrants immediately prior to such fundamental
transaction, other than one in which a successor entity that is a publicly traded corporation (whose stock is quoted or listed for trading
on a national securities exchange, including, but not limited to, the New York Stock Exchange, the NYSE American, the Nasdaq Global Select
Market, the Nasdaq Global Market or the Nasdaq Capital Market) assumes the Pre-Funded Warrants such that the Pre-Funded Warrants shall
be exercisable for the publicly traded common stock of such successor entity.
Transferability
Subject
to applicable laws, a Pre-Funded Warrant may be transferred at the option of the holder upon surrender of the Pre-Funded Warrant to us
together with the appropriate instruments of transfer.
Exchange
Listing
We
do not intend to list the Pre-Funded Warrants on any securities exchange or nationally recognized trading system.
Rights
as a Stockholder
Except
as otherwise provided in the Pre-Funded Warrants or by virtue of such holder’s ownership of, the holders of the Pre-Funded Warrants
do not have the rights or privileges of holders of our Ordinary Shares, including any voting rights, until they exercise their Pre-Funded
Warrants.
SHARES
ELIGIBLE FOR FUTURE SALE
Future
sales of substantial amounts of our Ordinary Shares, including Ordinary Shares issued upon exercise of outstanding options, in the public
market in the United States, or the possibility of such sales, could negatively affect the market price in the United States of our Ordinary
Shares and our ability to raise equity capital in the future.
Upon
completion of this offering, there will be outstanding 12,007,738 Ordinary Shares assuming no sale of Pre-Funded Warrants and
no exercise of the underwriters’ option to purchase additional Ordinary Shares and/or Pre-Funded Warrants. Of that amount, 1,529,052
Ordinary Shares will be publicly held by investors participating in this offering, and 10,478,686 Ordinary Shares will
be held by our existing shareholders, some of whom may be our “affiliates” as that term is defined in Rule 144 under the
Securities Act. All of the Ordinary Shares sold in the offering will be freely transferable in the United States by persons other than
our “affiliates,” as that term is defined in Rule 144 under the Securities Act. As defined in Rule 144, an “affiliate”
of an issuer is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under
common control with, the issuer. Ordinary Shares purchased by one of our affiliates may not be resold, except pursuant to an effective
registration statement or an exemption from registration, including Rule 144 under the Securities Act (as described below).
The
Ordinary Shares held by existing shareholders are, and any Ordinary Shares issuable upon exercise of options outstanding following the
completion of this offering will be, “restricted securities,” as that term is defined in Rule 144 under the Securities Act.
These restricted securities may be sold in the United States only if they are registered or if they qualify for an exemption from registration
under Rule 144 or Rule 701 under the Securities Act. These rules are described below.
Lock-up
Agreements
We,
along with our directors and executive officers, have agreed with the underwriters that for a period of three months, in the case of
our officers and directors only if the offering is consummated after December 27, 2024, after the date of this prospectus, referred to
herein as the restricted period, subject to specified exceptions will not, without the prior written consent of ThinkEquity LLC, offer,
pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right,
or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any of our Ordinary Shares or any securities
convertible into or exercisable or exchangeable for our Ordinary Shares, or enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of our Ordinary Shares. In addition, ThinkEquity LLC, as
representative of the underwriters, may in its discretion release some or all of the shares subject to the lock-up agreements prior to
the expiration of the restricted period at any time, subject applicable notice requirements and in some cases, without public notice.
If such a release is granted for one of our officers or directors, ThinkEquity LLC, as representative of the underwriters, will, at least
three business days before the effective date of such release, notify us of the impending release, and we will announce the impending
release by press release through a major news service at least two business days before the effective date of the release.
Rule
144
In
general, under Rule 144 of the Securities Act and beginning 90 days after the date of this prospectus, a person who is not deemed to
have been our affiliate at any time during the three months preceding a sale and who has beneficially owned “restricted securities”
within the meaning of Rule 144 for more than six months may be entitled to sell an unlimited number of shares, subject only to the availability
of current public information about us. A non-affiliate who has beneficially owned “restricted securities” for at least one
year from the later of the date these shares were acquired from us or from our affiliate would be entitled to freely sell those shares.
A
person who is deemed to be an affiliate of ours and who has beneficially owned “restricted securities” for at least six months
would be entitled to sell, within any three-month period, a number of shares that is not more than the greater of:
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1.0%
of the number of our Ordinary Shares then outstanding; or |
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● |
the
average weekly reported trading volume of our Ordinary Shares on NYSE American during the four calendar weeks preceding the date
on which a notice of the sale on Form 144 is filed with the SEC by such person. |
Sales
under Rule 144 of the Securities Act by persons who are deemed to be our affiliates are also subject to manner-of-sale provisions, notice
requirements and the availability of current public information about us as specified in Rule 144. In addition, in each case, these shares
would remain subject to lock-up arrangements and would only become eligible for sale when the lock-up period expires.
Regulation
S
Regulation
S provides generally that sales made in offshore transactions are not subject to the registration or prospectus delivery requirements
of the Securities Act.
Rule
701
Rule
701 under the Securities Act, as in effect on the date of this prospectus, permits resales of shares in reliance upon Rule 144 but without
compliance with certain restrictions of Rule 144, including the holding period requirement. If any of our employees, executive officers,
directors consultants or advisors purchase Ordinary Shares under a written compensatory plan or contract, they may be entitled to rely
on the resale provisions of Rule 701, but all holders of Rule 701 Ordinary Shares would be required to wait until ninety (90) days after
the date of this prospectus before selling any such shares.
Equity
Incentive Plans
We
intend to file with the SEC a registration statement on Form S-8 under the Securities Act covering the Ordinary Shares reserved for issuance
under our equity incentive plans. The registration statement is expected to be filed and become effective as soon as practicable after
the completion of this offering. Accordingly, shares registered under the Form S-8 registration statement will be available for sale
in the open market following the registration statement’s effective date, subject to Rule 144 volume limitations and the lock-up
agreements described above, if applicable.
TAXATION
The
following is a summary of certain material U.S. federal and Australian income tax considerations to U.S. Holders, as defined below,
of the acquisition, ownership and disposition of Ordinary Shares or Pre-Funded Warrants. This discussion is based on the laws in
force as of the date of this registration statement, and is subject to changes in the relevant income tax law, including changes
that could have retroactive effect. The following summary does not take into account or discuss the tax laws of any country or other
taxing jurisdiction other than the United States and Australia. Holders are advised to consult their tax advisors concerning the
overall tax consequences of the acquisition, ownership and disposition of Ordinary Shares or Pre-Funded Warrants in their particular
circumstances. This discussion is not intended, and should not be construed, as legal or professional tax advice. Each investor
should consult its own tax adviser with regard to the application of the U.S. federal tax laws to their particular situation, as
well as any tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.
This
summary does not address the effects of U.S. federal estate and gift tax laws, the alternative minimum tax, the Medicare tax on
certain net investment income or any state and local tax considerations within the United States, and is not a comprehensive
description of all U.S. federal or Australian income tax considerations that may be relevant to a decision to acquire or dispose of
Ordinary Shares or Pre-Funded Warrants. Furthermore, this summary does not address U.S. federal or Australian income tax considerations relevant to
holders subject to taxing jurisdictions other than, or in addition to, the United States and Australia, and does not address all
possible categories of holders, some of which may be subject to special tax rules.
Certain
Material U.S. Federal Income Tax Considerations
The
following summary, subject to the limitations set forth below, describes certain material U.S. federal income tax consequences to a
U.S. Holder (as defined below) of the acquisition, ownership and disposition of our Ordinary Shares, Pre-Funded Warrants or Ordinary
Shares received upon exercise of the Pre-Funded Warrants as of the date hereof. Except where noted, this summary is limited to U.S.
Holders who purchase Ordinary Shares or Pre-Funded Warrants in the offering and hold such shares as capital assets within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended, or the Code.
This
section does not discuss the tax consequences to any particular holder, nor any tax considerations that may apply to U.S. Holders subject
to special tax rules, such as:
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insurance
companies; |
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banks
or other financial institutions; |
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individual
retirement and other tax-deferred accounts; |
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● |
regulated
investment companies; |
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real
estate investment trusts; |
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individuals
who are former U.S. citizens or former long-term U.S. residents; |
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brokers,
dealers or traders in securities, commodities or currencies; |
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● |
traders
that elect to use a mark-to-market method of accounting; |
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investors
subject to special tax accounting rules as a result of any item of gross income with respect to our Ordinary Shares or Pre-Funded
Warrants being taken into account in an applicable financial statement; |
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persons
holding our Ordinary Shares or Pre-Funded Warrants through a partnership (including an entity or arrangement treated as a
partnership for U.S. federal income tax purposes) or S corporation; |
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grantor
trusts; |
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tax-exempt
entities; |
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persons
that hold Ordinary Shares or Pre-Funded Warrants as a position in a straddle or as part of a hedging, constructive sale, conversion
or other integrated transaction for U.S. federal income tax purposes; |
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persons
that have a functional currency other than the U.S. dollar; |
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persons
that hold our Ordinary Shares or Pre-Funded Warrants in connection with a trade or business outside the United States; |
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persons
that own (directly, indirectly or constructively) 5% or more of our equity; |
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persons
subject to special tax accounting rules under Section 451(b) of the Code; or |
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persons
that are not U.S. Holders (as defined below). |
In
this section, a “U.S. Holder” means a beneficial owner of Ordinary Shares or Pre-Funded Warrants that is, for U.S.
federal income tax purposes:
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an
individual who is a citizen or resident of the United States; |
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a
corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under
the laws of the United States or any state thereof or the District of Columbia; |
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an
estate the income of which is subject to U.S. federal income taxation regardless of its source; or |
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a
trust (i) the administration of which is subject to the primary supervision of a court in the United States and for which one or
more U.S. persons have the authority to control all substantial decisions or (ii) that has an election in effect under applicable
income tax regulations to be treated as a U.S. person for U.S. federal income tax purposes. |
In
addition, this summary does not address the 3.8% Medicare contribution tax imposed on certain net investment income, the U.S.
federal estate and gift tax or the alternative minimum tax consequences of the acquisition, ownership, and disposition of our
Ordinary Shares or Pre-Funded Warrants. We have not received nor do we expect to seek a ruling from the U.S. Internal Revenue Service, or the IRS,
regarding any matter discussed herein. No assurance can be given that the IRS would not assert, or that a court would not sustain, a
position contrary to any of those set forth below. Each prospective investor should consult its own tax advisors with respect to the
U.S. federal, state, local and non-U.S. tax consequences of acquiring, owning and disposing of our Ordinary Shares or Pre-Funded Warrants.
If
an entity or arrangement treated as a partnership for U.S. federal income tax purposes acquires, owns or disposes of Ordinary Shares
or Pre-Funded Warrants, the U.S. federal income tax treatment of a partner in such partnership generally will depend on the status of the partner and the
activities of the partnership. Any such partner or partnership should consult its own tax advisor as to the U.S. federal income tax
consequences of acquiring, owning and disposing of our Ordinary Shares or Pre-Funded Warrants.
The
discussion below is based upon the provisions of the Code, and the U.S. Treasury regulations, rulings and judicial decisions thereunder
as of the date hereof, and such authorities may be replaced, revoked or modified, possibly with retroactive effect, so as to result in
U.S. federal income tax consequences different from those discussed below.
You
are urged to consult your own tax advisor with respect to the U.S. federal, as well as state, local and non-U.S., tax consequences
to you of acquiring, owning and disposing of Ordinary Shares or Pre-Funded Warrants in light of your particular circumstances,
including the possible effects of changes in U.S. federal and other tax laws.
Distributions
As
described in “Dividends and Dividend Policy” above, we do not currently anticipate paying any distributions on our
Ordinary Shares or Pre-Funded Warrants in the foreseeable future. However, to the extent there are any distributions made with
respect to our Ordinary Shares or Pre-Funded Warrants in the foreseeable future, and subject to the passive foreign investment
company, or PFIC, rules discussed below, the gross amount of any such distributions (without deduction for any withholding tax) made
out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) will generally be
taxable to you as ordinary dividend income on the date such distribution is actually or constructively received. Distributions in
excess of our current and accumulated earnings and profits, as so determined, will be treated first as a tax-free return of capital
to the extent of your adjusted tax basis in the Ordinary Shares or Pre-Funded Warrants, as applicable, and thereafter as capital
gain. Notwithstanding the foregoing, we do not intend to maintain calculations of earnings and profits, as determined for U.S.
federal income tax purposes. Consequently, you should expect to treat any distributions paid with respect to our Ordinary Shares or
Pre-Funded Warrants as dividend income. See “Backup Withholding Tax and Information Reporting Requirements” below. If
you are a corporate U.S. Holder, dividends paid to you generally will not be eligible for the dividends-received deduction generally
allowed under the Code.
If
you are a non-corporate U.S. Holder, dividends paid to you by a “qualified foreign corporation” may be subject to taxation
at a maximum rate of 20% if the dividends are “qualified dividends.” Dividends will be treated as qualified dividends if
(a) certain holding period requirements are satisfied, (b) we are eligible for benefits under the Convention between the Government of
the United States of America and the Government of Australia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with Respect to Taxes on Income, as amended, or the Treaty, or our Ordinary Shares are readily tradable on an established U.S. securities
market, and (c) we were not, in the taxable year prior to the year in which the dividend was paid, and are not, in the taxable year in
which the dividend is paid, a PFIC.
We
do not believe we were a PFIC for our taxable years ended June 30, 2022 and 2023, and do not expect to be a PFIC for our taxable year
ended June 30, 2024. However, our status as a PFIC in the current taxable year ending June 30, 2024 and future taxable years will depend
in part upon our use of the funds from the offering, as well as our income and assets (which for this purpose depends in part on the
market value of our shares) in those years. See the discussion below under “Passive Foreign Investment Company.” In addition,
although we believe that our Ordinary Shares will generally be considered to be readily tradable on an established securities market,
there can be no assurance that the Ordinary Shares will continue to be considered readily tradable on an established securities market
in later years. You should consult your tax advisor regarding the availability of the reduced tax rate on any dividends paid with respect
to our Ordinary Shares or Pre-Funded Warrants.
Includible
distributions paid in Australian dollars, including any Australian withholding taxes, will be included in your gross income in a U.S.
dollar amount calculated by reference to the spot exchange rate in effect on the date of actual or constructive receipt, regardless of
whether the Australian dollars are converted into U.S. dollars at that time. If Australian dollars are converted into U.S. dollars on
the date of actual or constructive receipt, your tax basis in those Australian dollars will be equal to their U.S. dollar value on that
date and, as a result, you generally should not be required to recognize any foreign exchange gain or loss.
If
Australian dollars so received are not converted into U.S. dollars on the date of receipt, you will have a basis in the Australian dollars
equal to their U.S. dollar value on the date of receipt. Any gain or loss on a subsequent conversion or other disposition of the Australian
dollars generally will be treated as ordinary income or loss to you and generally will be income or loss from sources within the United
States for foreign tax credit limitation purposes.
Dividends
you receive with respect to Ordinary Shares or Pre-Funded Warrants will be treated as foreign source income, which may be relevant
in calculating your foreign tax credit limitation. The limitation on foreign taxes eligible for credit is calculated separately with
respect to specific classes of income. For these purposes, dividends generally will be categorized as “passive” income.
Subject to certain limitations, you generally will be entitled, at your option, to claim either a credit against your U.S. federal
income tax liability or a deduction in computing its U.S. federal taxable income in respect of any Australian taxes withheld. If you
elect to claim a deduction, rather than a foreign tax credit, for Australian taxes withheld for a particular taxable year, the
election will apply to all foreign taxes paid or accrued by you or on your behalf in the particular taxable year.
The
availability of the foreign tax credit and the application of the limitations on its availability are fact specific and are subject to
complex rules. You are urged to consult your own tax advisor as to the consequences of Australian withholding taxes and the availability
of a foreign tax credit or deduction. See “Australian Tax Considerations-Taxation of Dividends.”
Sale,
Exchange or Other Disposition of Ordinary Shares or Pre-Funded Warrants
Subject
to the PFIC rules discussed below, you generally will, for U.S. federal
income tax purposes, recognize capital gain or loss on a sale, exchange or other disposition of Ordinary Shares or Pre-Funded Warrants
equal to the difference between the amount realized on the disposition (determined in the case of sales, exchanges or dispositions in
currencies other than U.S. dollars by reference to the spot exchange rate in effect on the date of the sale, exchange or disposition or,
if sold, exchanged or disposed of on an established securities market and you are a cash basis taxpayer or an electing accrual basis taxpayer,
the spot exchange rate in effect on the settlement date) and your adjusted tax basis (as determined in U.S. dollars) in the Ordinary Shares
or Pre-Funded Warrants. Your initial tax basis will be your U.S. dollar purchase price for such Ordinary Shares or Pre-Funded Warrants.
If you are an accrual basis taxpayer that is not eligible to or does not elect to determine the amount realized using the spot rate on
the settlement date, you will recognize foreign currency gain or loss to the extent of any difference between the U.S. dollar amount realized
on the date of sale, exchange or disposition and the U.S. dollar value of the currency received at the spot rate on the settlement date.
Assuming
we are not a PFIC and have not been treated as a PFIC during your holding
period for your Ordinary Shares or Pre-Funded Warrants, this recognized gain or loss will generally be long-term capital gain or loss
if you have held the Ordinary Shares or Pre-Funded Warrants for more than one year. Generally, if you are a non-corporate U.S. Holder,
long-term capital gains are subject to U.S. federal income tax at preferential rates. For foreign tax credit limitation purposes, gain
or loss recognized upon a disposition generally will be treated as from sources within the United States. However, in limited circumstances,
the Treaty can re-source U.S. source income as Australian source income. The deductibility of capital losses is subject to limitations
for U.S. federal income tax purposes.
You
should consult your own tax advisor regarding the availability of a foreign tax credit or deduction in respect of any Australian tax
imposed on a sale or other disposition of Ordinary Shares or Pre-Funded Warrants. See “Australian Tax Considerations-Tax on Sales or other
Dispositions of Shares or Pre-Funded Warrants.”
Passive
Foreign Investment Company
The
rules governing PFICs can result in adverse tax consequences to U.S. Holders. We generally will be classified as a PFIC for any taxable
year if (i) at least 75% of our gross income for the taxable year consists of certain types of passive income (the “Income Test”)
or (ii) at least 50% of our gross assets during the taxable year, based on a quarterly average and generally determined by value, produce
or are held for the production of passive income (the “Asset Test”). Passive income for this purpose generally includes,
among other things, dividends, interest, rents, royalties, gains from commodities and securities transactions and gains from the disposition
of assets that produce or are held for the production of passive income. In determining whether a foreign corporation is a PFIC, a pro-rata
portion of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is
taken into account. Under this rule, we should be deemed to own a proportionate share of the assets and to have received a proportionate
share of the income of our principal subsidiaries for purposes of the PFIC determination.
Although
we do not believe that we were a PFIC for the current year, our determination is based on an interpretation of complex provisions of
the law, which are subject to changes, potentially retroactively. In addition, because PFIC status is determined on an annual basis based
on facts and circumstances, and generally cannot be determined until the end of the taxable year, and because the calculation of the
value of our assets may be based in part on the value of our securities, which may fluctuate considerably, there can be no assurance
that we are not a PFIC for the current taxable year or will not be a PFIC for future taxable years.
U.S.
Federal Income Tax Treatment of a Shareholder of a PFIC
If
we are a PFIC for any taxable year during which you hold Ordinary Shares or Pre-Funded Warrants, absent certain elections (including
the mark-to-market election or qualified electing fund election described below), you generally will be subject to adverse rules
(regardless of whether we continue to be classified as a PFIC) with respect to (1) any “excess distribution” (generally,
any distributions you receive on your Ordinary Shares or Pre-Funded Warrants in a taxable year that are greater than 125% of the
average annual distributions you receive in the three preceding taxable years or, if shorter, your holding period) and (2) any gain
recognized from a sale or other disposition (including a pledge) of such Ordinary Shares or Pre-Funded Warrants. Under these rules:
| |
● |
the
excess distribution or gain will be allocated ratably over your holding period for the Ordinary Shares or Pre-Funded Warrants; |
| |
● |
the
amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were classified as
a PFIC in the U.S. holder’s holding period, will be treated as ordinary income arising in the current taxable year; and |
| |
● |
the
amount allocated to each other taxable year during your holding period in which we were classified as a PFIC (i) will be subject
to income tax at the highest rate in effect for that year and applicable to you and (ii) will be subject to an interest charge generally
applicable to underpayments of tax with respect to the resulting tax attributable to each such year. |
In
addition, if you are a non-corporate U.S. Holder, you will not be eligible for reduced rates of taxation on any dividends that we pay
if we are a PFIC for either the taxable year in which the dividend is paid or the preceding year.
Although
PFIC status is determined annually, if you held Ordinary Shares or Pre-Funded Warrants during any taxable year while we were a PFIC,
such determination generally will apply to you for subsequent years, whether or not we meet either the Income Test or Asset Test for
PFIC status in those subsequent years. However, if we cease to be a PFIC, or Pre-Funded Warrants you can avoid the continuing impact
of the PFIC rules by making a special election to recognize gain as if your Ordinary Shares or Pre-Funded Warrants had been sold on
the last day of the last taxable year during which we were a PFIC. You are urged to consult your tax advisor about this
election.
If
we are a PFIC, the tax liability for amounts allocated to years prior to the year of disposition or excess distribution cannot be
offset by any net operating loss, and gains (but not losses) recognized on the transfer of the Ordinary Shares or Pre-Funded
Warrants cannot be treated as capital gains, even if the Ordinary Shares or Pre-Funded Warrants are held as capital assets.
Furthermore, unless otherwise provided by the U.S. Treasury Department, if we are a PFIC, you will be required to file an annual
report (currently Form 8621) describing your interest in us, making an election on how to report PFIC income, and providing other
information about your share of our income and any gain realized on the disposition of our Ordinary Shares or Pre-Funded Warrants.
If
we are a PFIC for any taxable year during which any of our non-U.S. subsidiaries is also a PFIC, during such year you would be treated
as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules to such
subsidiary. It is possible that any subsidiary we own would be a PFIC for the current taxable year or future taxable years. You should
consult your tax advisor regarding the tax consequences if the PFIC rules apply to any of our subsidiaries.
PFIC
“Mark-to-market” Election
In
certain circumstances, a holder of “marketable stock” of a PFIC can avoid certain of the adverse rules described above by
making a mark-to-market election with respect to such stock. For purposes of these rules, “marketable stock” is stock which
is “regularly traded” (traded in greater than de minimis quantities on at least 15 days during each calendar quarter)
on a “qualified exchange” or other market within the meaning of applicable U.S. Treasury Regulations. A “qualified
exchange” includes a national securities exchange that is registered with the SEC.
If
you make a mark-to-market election, you must include in gross income, as ordinary income, for each taxable year that we are a PFIC
an amount equal to the excess, if any, of the fair market value of your Ordinary Shares that are
“marketable stock” at the close of the taxable year over your adjusted tax basis in such Ordinary Shares. If you make such election, you may also claim a deduction as an ordinary loss in each such year for the excess, if any, of
your adjusted tax basis in such Ordinary Shares over their fair market value at the end of the year, but only
to the extent of the net amount previously included in income as a result of the mark-to-market election. The adjusted tax basis of
your Ordinary Shares with respect to which the mark-to-market election applies would be adjusted to reflect
amounts included in gross income or allowed as a deduction because of such election. If you make an effective mark-to-market
election, any gain you recognize upon the sale or other disposition of your Ordinary Shares in a year that we
are a PFIC will be treated as ordinary income and any loss will be treated as ordinary loss, but only to the extent of the net
amount previously included in income as a result of the mark-to-market election.
Under
current law, the mark-to-market election may be available to U.S. Holders of Ordinary Shares if the Ordinary
Shares are listed on the NYSE American, which constitutes a qualified exchange, although there can be no
assurance that the Ordinary Shares will be “regularly traded” for purposes of the mark-to-market
election. Additionally, because a mark-to-market election cannot be made for equity interests in any lower-tier PFIC that we may
own, if you make a mark-to-mark election with respect to us, you may continue to be subject to the PFIC rules with respect to any
indirect investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes,
notwithstanding the fact that the value of such equity interest had already been taken into account indirectly via mark-to-market
adjustments. Additionally, a mark-to-market election may not be available
with respect to the Pre-Funded Warrants, which are not regularly traded on a qualified exchange.
If
you make a mark-to-market election, it will be effective for the taxable year for which the election is made and all subsequent
taxable years unless the Ordinary Shares are no longer regularly traded on a qualified exchange or the IRS
consents to the revocation of the election. You are urged to consult your tax advisors about the availability of the mark-to-market
election, and whether making the election would be advisable in your particular circumstances.
PFIC
“QEF” election
Alternatively,
in certain cases a U.S. Holder can avoid the interest charge and the other adverse PFIC tax consequences described above by obtaining
certain information from the PFIC and electing to treat us as a “qualified electing fund” under Section 1295 of the Code.
However, we do not anticipate that this option will be available to you because we do not intend to provide the information regarding
our income that would be necessary to permit you to make this election.
You
are urged to contact your own tax advisor regarding the determination of whether we are a PFIC and the tax consequences of such status.
Backup
Withholding Tax and Information Reporting Requirements
Payments
of dividends with respect to the Ordinary Shares or Pre-Funded Warrants and proceeds from the sale, exchange or other disposition of
the Ordinary Shares or Pre-Funded Warrants, by a U.S. paying agent or other U.S. intermediary, or made into the United States, will be reported to the IRS
and to you as may be required under applicable Treasury regulations. Backup withholding may apply to these payments if you fail to
provide an accurate taxpayer identification number or certification of exempt status or otherwise fail to comply with applicable
certification requirements. Certain U.S. Holders (including, among others, corporations) are not subject to backup withholding and
information reporting. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a
payment to you will be refunded (or credited against your U.S. federal income tax liability, if any), provided the required
information is timely furnished to the IRS. Prospective investors should consult their own tax advisors as to their qualification
for exemption from backup withholding and the procedure for establishing an exemption.
Certain
individual U.S. Holders (and under Treasury regulations, certain entities) may be required to report to the IRS (currently on Form
8938) information with respect to their investment in the Ordinary Shares or Pre-Funded Warrants not held through an account with a
U.S. financial institution.
The
discussion above is not intended to constitute a complete analysis of all tax considerations applicable to an investment in Ordinary
Shares or Pre-Funded Warrants. You should consult with your own tax advisor concerning the tax consequences to you in your particular
situation.
Treatment
of Pre-Funded Warrants
Although
it is not entirely free from doubt, we believe that a Pre-Funded Warrant should be treated as a separate class of our Ordinary Shares
for U.S. federal income tax purposes and a U.S. Holder of Pre-Funded Warrants should generally be taxed in the same manner as a holder
of Ordinary Shares except as described below. Accordingly, no gain or loss should be recognized upon the exercise of a Pre-Funded Warrant
and, upon exercise, the holding period of a Pre-Funded Warrant should carry over to the Ordinary Shares received. Similarly, the tax
basis of the Pre-Funded Warrant should carry over to the Ordinary Shares received upon exercise, increased by the exercise price of $0.001
per Ordinary Share. However, such characterization is not binding on the IRS, and the IRS may treat the Pre-Funded Warrants as warrants
to acquire Ordinary Shares. If so, the amount and character of a U.S. Holder’s gain with respect to an investment in Pre-Funded Warrants
could change. Accordingly,
each U.S. Holder should consult its own tax advisor regarding the risks associated with the acquisition of a Pre-Funded Warrant pursuant
to this offering (including potential alternative characterizations). The balance of this discussion generally assumes that the characterization
described above is respected for U.S. federal income tax purposes.
Australian
Tax Considerations
In
this section, we discuss the material Australian income tax, stamp duty and goods and services tax considerations related to the
acquisition, ownership and disposal by the absolute beneficial owners of the Ordinary Shares or Pre-Funded Warrants. This discussion has been reviewed by
K&L Gates, Australian counsel to Alta with respect to certain tax matters.
It
is based upon existing Australian tax law as of the date of this registration statement, which is subject to change, possibly retrospectively.
This discussion does not address all aspects of Australian tax law which may be important to particular investors in light of their individual
investment circumstances, such as shares held by investors subject to special tax rules (for example, financial institutions, insurance
companies or tax exempt organizations). In addition, this summary does not discuss any foreign or state tax considerations, other than
stamp duty.
Prospective
investors are urged to consult their tax advisors regarding the Australian and foreign income and other tax considerations of the acquisition,
ownership and disposition of the shares. As used in this summary a “Non-Australian Shareholder” is a holder that is not an
Australian tax resident and is not carrying on business in Australia through a permanent establishment.
Taxation
of Dividends
Australia
operates a dividend imputation system under which dividends may be declared to be “franked” to the extent of tax paid on
company profits. Fully franked dividends paid to Non-Australian Shareholders are not subject to dividend withholding tax. An exemption
for dividend withholding tax can also apply to unfranked dividends that are declared to be conduit foreign income, or CFI, and paid to
Non-Australian Shareholders. Dividend withholding tax will be imposed at 30%, unless a shareholder is a resident of a country with which
Australia has a double taxation agreement and qualifies for the benefits of the treaty. Under the provisions of the current Treaty, the
Australian tax withheld on unfranked dividends that are not declared to be CFI paid by us to a resident of the United States which is
beneficially entitled to that dividend is limited to 15% where that resident is a qualified person for the purposes of the Treaty.
If
a Non-Australian Shareholder is a company and owns a 10% or more interest, the Australian tax withheld on dividends paid by us to which
a resident of the United States is beneficially entitled is limited to 5%. In limited circumstances the rate of withholding can be reduced
to zero.
Tax
on Sales or other Dispositions of Shares or Pre-Funded Warrants-Capital gains tax
Non-Australian
Shareholders will not be subject to Australian capital gains tax on the gain made on a sale or other disposal of Ordinary Shares or Pre-Funded Warrants,
unless they, together with associates, hold 10% or more of our issued capital, at the time of disposal or for 12 months of the last
two years prior to disposal.
Non-Australian
Shareholders who own a 10% or more interest would be subject to Australian capital gains tax if more than 50% of our direct or indirect
assets, determined by reference to market value, consists of Australian land, leasehold interests or Australian mining, quarrying or
prospecting rights. The Treaty is unlikely to limit Australia’s right to tax any gain in these circumstances. Net capital gains
are calculated after reduction for capital losses, which may only be offset against capital gains.
Tax
on Sales or other Dispositions of Shares or Pre-Funded Warrants-Shareholders Holding Shares on Revenue Account
Some
Non-Australian Shareholders may hold shares on revenue rather than on capital account for example, share traders. These shareholders
may have the gains made on the sale or other disposal of the shares included in their assessable income under the ordinary income taxing
provisions of the income tax law, if the gains are sourced in Australia.
Non-Australian
Shareholders assessable under these ordinary income provisions in respect of gains made on shares held on revenue account would be assessed
for such gains at the Australian tax rates for non-Australian residents, which start at a marginal rate of 32.5%. Some relief from Australian
income tax may be available to Non-Australian Shareholders under the Treaty. Non-Australian Shareholders that are companies deriving
Australian sourced income will be assessed at the applicable Australian corporate tax of either 25% or 30%, depending on the composition
and level of income derived by the corporate shareholder.
To
the extent an amount would be included in a Non-Australian Shareholder’s assessable income under both the capital gains tax provisions
and the ordinary income provisions, the capital gain amount would generally be reduced, so that the shareholder would not be subject
to double tax on any part of the income gain or capital gain.
Dual
Residency
If
a shareholder is a resident of both Australia and the United States under those countries’ domestic taxation laws, that shareholder
may be subject to tax as an Australian resident. If, however, the shareholder is determined to be a U.S. resident for the purposes of
the Treaty, the Australian tax would be subject to limitation by the Treaty. Shareholders should obtain specialist taxation advice in
these circumstances.
Stamp
Duty
No
stamp duty should be payable by Australian residents or non-Australian residents on the issue and trading of shares that are quoted on
the ASX or NYSE American at all relevant times unless they acquire a significant interest (i.e., the shares that are subject of the arrangement
do not represent 90% or more of all issued shares) and the company is a landholder for duty purposes.
Australian
Death Duty
Australia
does not have estate or death duties. As a general rule, no capital gains tax liability is realized upon the inheritance of a deceased
person’s shares. The disposal of inherited shares by beneficiaries may, however, give rise to a capital gains tax liability if
the gain falls within the scope of Australia’s jurisdiction to tax.
Goods
and Services Tax
The
issue or transfer of shares to a non-Australian resident investor will not incur Australian goods and services tax.
UNDERWRITING
ThinkEquity
LLC, is acting as the representative of the underwriters of this offering, which we refer to as the Representative. Subject to the terms
and conditions of an underwriting agreement entered into between the Company and the Representative (the “Underwriting Agreement”),
we have agreed to sell to each underwriter named below and each underwriter named below has severally and not jointly agreed to purchase
from us, at the public offering price per share less the underwriting discounts and commissions set forth on the cover page of this prospectus,
the number of Ordinary Shares and Pre-Funded Warrants listed next to its name in the following table:
| Name | |
Number
of Ordinary
Shares | | |
Number
of Pre-Funded
Warrants | |
| ThinkEquity LLC | |
| | | |
| | |
| Total | |
| | | |
| | |
The
Underwriting Agreement provides that the obligations of the underwriters to pay for and accept delivery of the Ordinary Shares and Pre-Funded
Warrants offered by this prospectus are subject to various conditions and representations and warranties, including the approval of certain
legal matters by their counsel and other conditions specified in the Underwriting Agreement. The Ordinary Shares and Pre-Funded Warrants
are offered by the underwriters, subject to prior sale, when, as and if issued to and accepted by them. The underwriters reserve the
right to withdraw, cancel or modify the offer to the public and to reject orders in whole or in part. The underwriters are obligated
to take and pay for all of the Ordinary Shares and Pre-Funded Warrants offered by this prospectus if any such Ordinary Shares or Pre-Funded
Warrants are taken.
We
expect that delivery of the Ordinary Shares and Pre-Funded Warrants will be made against payment therefor on or about , 2024. Under Rule
15c6-1 under the Exchange Act, trades in the secondary market are generally required to settle in one business day, unless the parties
to any such trade expressly agree otherwise.
Over-Allotment
Option
We
have granted to the underwriters an option, exercisable no later than 45 calendar days after the closing of this offering, to purchase
up to an additional 229,358 Ordinary Shares and/or Pre-Funded Warrants (15% of the Ordinary Shares and Pre-Funded Warrants, respectively,
sold in this offering) from us to cover over-allotments, if any, at a price per Ordinary Shares and Pre-Funded Warrant equal to the public
offering price for such Ordinary Shares and Pre-Funded Warrants, less the underwriting discounts and commissions. The underwriters may
exercise this option only to cover over-allotments made in connection with this offering. If the underwriters exercise this option in
whole or in part, then the underwriters will be severally committed, subject to the conditions described in the Underwriting Agreement,
to purchase these additional Ordinary Shares and/or Pre-Funded Warrants. If any additional Ordinary Shares and/or Pre-Funded Warrants
are purchased, the underwriters will offer the additional Ordinary Shares and/or Pre-Funded Warrants on the same terms as those on which
the Ordinary Shares and/or Pre-Funded Warrants are being offered hereby.
Discounts,
Commissions and Expenses
The
Representative has advised us that the underwriters propose to offer the Ordinary Shares and Pre-Funded Warrants to the public at the
public offering price per share set forth on the cover page of this prospectus. The underwriters may offer Ordinary Shares and Pre-Funded
Warrants to securities dealers at that price less a concession of not more than US$ per share. After the initial offering to the public,
the public offering price and other selling terms may be changed by the Representative.
The
following table shows the total underwriting discounts and commissions payable to the underwriters by us in connection with this offering
(assuming both the exercise in full and non-exercise of the overallotment option to purchase additional Ordinary Shares and/or Pre-Funded
Warrants we have granted to the underwriters):
| | |
Per
Ordinary
Share | | |
Per
Pre-Funded Warrant | | |
Total
Without Over-allotment Option | | |
Total
With Over-allotment Option | |
| Public offering price | |
US$ | | | |
US$ | | | |
US$ | | | |
US$ | | |
| Underwriting discounts and commissions (7.5%) | |
US$ | | | |
US$ | | | |
US$ | | | |
US$ | | |
| Non-accountable expense allowance (1.0%) | |
US$ | | | |
US$ | | | |
US$ | | | |
US$ | | |
| Proceeds to us, before expenses | |
US$ | | | |
US$ | | | |
US$ | | | |
US$ | | |
We
have paid an expense deposit of US$35,000 to the Representative, which will be applied against the Representative’s accountable
out-of-pocket expenses (in compliance with FINRA Rule 5110(g)(4)) that are payable by us in connection with this offering and will be
reimbursed to us to the extent not incurred. We have agreed to reimburse the Representative for the reasonably documented fees and expenses
of its legal counsel in connection with the offering in an amount not to exceed US$125,000, the fees and expenses related to the use
of Ipreo’s book building, prospectus tracking and compliance software for the offering in the amount of US$29,500, up to US$1,500
for each background check of any officer and director added since our IPO, the costs associated with bound volumes of the offering materials
as well as commemorative mementos and lucite tombstones in an amount not to exceed US$3,000, data services and communications expenses
up to US$10,000, actual accountable “road show” expenses up to US$10,000 and up to US$30,000 of the Representative’s
market making and trading, and clearing firm settlement expenses for the offering.
We
expect that the expenses of this offering payable by us, not including underwriting discounts and commissions, will be approximately
US$230,000.
Indemnification
Pursuant
to the underwriting agreement, we have agreed to indemnify the underwriters against certain liabilities, including liabilities under
the Securities Act, or to contribute to payments that the underwriters or such other indemnified parties may be required to make in respect
of those liabilities.
Representative’s
Warrants
In
addition, we have agreed to issue warrants to the representative to purchase a number of Ordinary Shares equal to 5% of the number of
Ordinary Shares and Pre-Funded Warrants sold in this offering. These warrants will be exercisable at any time and from time to time,
in whole or in part, during the four and one-half year period commencing 180 days from the commencement of sales of the securities in
the offering, will have an exercise price equal to 125% of the public offering price and will terminate on the fifth anniversary of the
effective date of the registration statement of which this prospectus is a part. The warrants and the underlying Ordinary Shares have
been deemed compensation by the Financial Industry Regulatory Authority, Inc., or FINRA, and are therefore subject to FINRA Rule 5110(e)(1).
In accordance with FINRA Rule 5110(e)(1), neither the underwriter warrants nor any of our shares issued upon exercise of the underwriter
warrants may be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or
call transaction that would result in the effective economic disposition of such securities by any person, for a period of 180 days immediately
following the date of effectiveness or commencement of sales of the offering pursuant to which the underwriter warrants are being issued,
subject to certain exceptions.
Lock-Up
Agreements
We
have agreed not to (i) offer, pledge, issue, sell, contract to sell, purchase, contract to purchase, lend or otherwise transfer or dispose
of, directly or indirectly, any Ordinary Shares or any securities convertible into or exercisable or exchangeable for our Ordinary Shares;
(ii) enter into any swap or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of Ordinary
Shares; or (iii) file any registration statement with the SEC relating to the offering of any of our Ordinary Shares or any securities
convertible into or exercisable or exchangeable for our Ordinary Shares, without the prior written consent of ThinkEquity LLC, for a
period of three months following the date of this prospectus. These restrictions on future issuances are subject to exceptions for (i)
the issuance of our Ordinary Shares, Pre-Funded Warrants and Ordinary Shares underlying the Pre-Funded Warrants sold in connection with
this offering, (ii) the issuance of our Ordinary Shares or options to acquire our Ordinary Shares pursuant to our existing equity incentive
plans and (iii) the filing of one or more registration statements on Form S-8 with respect to our Ordinary Shares underlying our equity
incentive plans from time to time. ThinkEquity LLC, in its sole discretion, may waive or release us from the restrictions described above,
in whole or in part at any time. In addition, we have agreed for a period of 24 months after the date of this prospectus, we will not
directly or indirectly offer to sell, sell, contract to sell, grant any option to sell or otherwise dispose of any shares of our capital
stock or any securities convertibles or exercisable for shares of our capital stock in any “at-the-market,” continuous equity
or variable rate transaction, without the prior written consent of ThinkEquity LLC.
In
connection with our initial public offering in March 2024, our directors and officers agreed with the underwriters, subject to
certain exceptions, not to sell, transfer or dispose of, directly or indirectly, any of our Ordinary Shares or securities
convertible into or exercisable or exchangeable for our Ordinary Shares until March 27, 2025. In addition, each of our directors and
executive officers will enter into a lock-up agreement with the Representative if this offering is consummated after December 27,
2024. Under the lock-up agreements, such persons may not, directly or indirectly, sell, offer to sell, contract to sell, or grant
any option for the sale (including any short sale), grant any security interest in, pledge, hypothecate, hedge, establish an open
“put equivalent position” (within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended, or
the Exchange Act), or otherwise dispose of, or enter into any transaction which is designed to or could be expected to result in the
disposition of, any of our Ordinary Shares or securities convertible into or exchangeable for our Ordinary Shares, or publicly
announce any intention to do any of the foregoing, without the prior written consent of ThinkEquity LLC, for a period of three
months from the date of this prospectus with respect to officers and directors, in the case of any lock-up agreement in respect of
this offering. These restrictions on future issuances are subject to certain exceptions,
including:
| ● |
transfers
of Ordinary Shares or securities convertible into or exercisable or exchangeable for Ordinary Shares as a bona fide gift or, upon
the death of the signatory, by will or intestacy; provided that no public announcement or filing under Section 16(a) of the Exchange
Act, or any other public filing or disclosure, shall be made during the restricted period unless such filing is required and clearly
indicates in the footnotes thereto that the transfer is by bona fide gift, will, or intestacy, as applicable; |
| ● |
transactions
relating to Ordinary Shares or securities convertible into or exercisable or exchangeable for Ordinary Shares acquired in open market
transactions after the completion of the offering of the Ordinary Shares; provided that no filing under Section 16(a) of the Exchange
Act is required or voluntarily made in connection with subsequent sales of the Ordinary Shares or such other securities acquired
in such open market transactions; |
| ● |
transfers
of Ordinary Shares or securities convertible into or exercisable or exchangeable for Ordinary Shares that occur by operation of law
pursuant to a qualified domestic order in connection with a divorce settlement or other court order; provided that no public announcement
or filing under Section 16(a) of the Exchange Act, or any other public filing or disclosure, shall be made during the restricted
period, unless such filing is required and clearly indicates in the footnotes thereto that the transfer is by operation of law, court
order, or in connection with a divorce settlement, as the case may be; |
| ● |
dispositions
to any trust the beneficiaries of which are the signatory or immediate family members of the signatory, or, if the signatory is a
trust, to any beneficiaries of such trust; provided that no public announcement or other filing under Section 16(a) of the Exchange
Act, or any other public filing or disclosure reporting a reduction in beneficial ownership of Ordinary Shares, shall be required
or shall be voluntarily made during the restricted period; |
| ● |
transfers
to an immediate family member or a trust formed for the benefit of an immediate family member; provided that no public announcement
or other filing under Section 16(a) of the Exchange Act, or any other public filing or disclosure reporting a reduction in beneficial
ownership of Ordinary Shares, shall be required or shall be voluntarily made during the restricted period; and |
| ● |
transfers
of Ordinary Shares or securities convertible into or exercisable or exchangeable for Ordinary Shares in connection with a tender
offer, merger, consolidation or other similar transaction made to all holders of the Ordinary Shares involving a change of control. |
Certain
of the exceptions described above are subject to a requirement that the transferee enter into a lock-up agreement with the underwriters
containing similar restrictions. The Representative, in its sole discretion, may release the Ordinary Shares subject to the lock-up agreements
described above in whole or in part at any time.
Electronic
Distribution
This
prospectus may be made available in electronic format on websites or through other online services maintained by the underwriters or
by their affiliates. In those cases, prospective investors may view offering terms online and prospective investors may be allowed to
place orders online. Other than this prospectus in electronic format, the information on the underwriters’ websites or our website
and any information contained in any other websites maintained by any underwriters or by us is not part of this prospectus or the registration
statement of which this prospectus forms a part, has not been approved and/or endorsed by us or the underwriters in their capacity as
underwriters, and should not be relied upon by investors.
Price
Stabilization, Short Positions and Penalty Bids
In
connection with the offering the underwriters may engage in stabilizing transactions, syndicate covering transactions and penalty bids
in accordance with Regulation M under the Exchange Act:
| |
● |
Stabilizing
transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. |
| |
● |
Sales
by the underwriters of securities in excess of the number of securities the underwriters are obligated to purchase creates a syndicate
short position. The underwriters may close out any syndicate short position by purchasing shares in the open market. |
| |
● |
Syndicate
covering transactions involve purchases of Ordinary Shares in the open market after the distribution has been completed in order
to cover syndicate short positions. |
| |
● |
Penalty
bids permit the underwriters to reclaim a selling concession from a syndicate member when the Ordinary Shares originally sold by
the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions. |
These
stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price
of our Ordinary Shares or preventing or retarding a decline in the market price of our Ordinary Shares. As a result, the price of our
Ordinary Shares may be higher than the price that might otherwise exist in the open market. These transactions may be discontinued at
any time.
Neither
we nor the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described
above may have on the price of our Ordinary Shares. In addition, neither we nor the underwriters make any representation that the underwriters
will engage in these transactions or that any transaction, if commenced, will not be discontinued without notice.
Other
Relationships
From
time to time, certain of the underwriters and their affiliates may provide in the future, various advisory, investment and commercial
banking and other services to us in the ordinary course of business, for which they may receive customary fees and commissions. However,
except as disclosed in this prospectus, we have no present arrangements with any of the underwriters for any further services.
Pricing
of the Offering
The
public offering price will be determined by negotiations between us and the Representative. Among the factors to be considered in determining
the public offering price are the current market price of our Ordinary Shares, our future prospects and those of our industry in general,
certain financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities,
and certain financial and operating information of companies engaged in activities similar to ours.
Offer
Restrictions Outside the United States
Other
than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the Ordinary Shares
and Pre-Funded Warrants offered by this prospectus in any jurisdiction where action for that purpose is required. The Ordinary Shares
and Pre-Funded Warrants offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any
other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in
any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction.
Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to
the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer
to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.
Australia
This
prospectus is not a disclosure document under Chapter 6D of the Australian Corporations Act, has not been lodged with the Australian
Securities and Investments Commission and does not purport to include the information required of a disclosure document under Chapter
6D of the Australian Corporations Act. Accordingly, (i) the offer of the securities under this prospectus is only made to persons to
whom it is lawful to offer the securities without disclosure under Chapter 6D of the Australian Corporations Act under one or more exemptions
set out in section 708 of the Australian Corporations Act, (ii) this prospectus is made available in Australia only to those persons
as set forth in clause (i) above, and (iii) the offeree must be sent a notice stating in substance that by accepting this offer, the
offeree represents that the offeree is such a person as set forth in clause (i) above, and, unless permitted under the Australian Corporations
Act, agrees not to sell or offer for sale within Australia any of the securities sold to the offeree within 12 months after its transfer
to the offeree under this prospectus.
Canada
The
securities may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors,
as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted
clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale
of the securities must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements
of applicable securities laws. Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies
for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies
for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s
province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s
province or territory for particulars of these rights or consult with a legal advisor. Pursuant to section 3A.3 of National Instrument
33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI33-105 regarding
underwriters’ conflicts of interest in connection with this offering.
China
The
information in this document does not constitute a public offer of the securities, whether by way of sale or subscription, in the People’s
Republic of China (excluding, for purposes of this paragraph, Hong Kong Special Administrative Region, Macau Special Administrative Region
and Taiwan). The securities may not be offered or sold directly or indirectly in the PRC to legal or natural persons other than directly
to “qualified domestic institutional investors.”
European
Economic Area
In
relation to each Member State of the European Economic Area (each a “Relevant State”), none of our securities have been offered
or will be offered pursuant to this offering to the public in that Relevant State prior to the publication of a prospectus in relation
to such shares which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant
State and notified to the competent authority in that Relevant State, all in accordance with the Prospectus Regulation, except that it
may make an offer to the public in that Relevant State of our securities at any time under the following exemptions under the Prospectus
Regulation:
| |
● |
to
any legal entity which is a qualified investor as defined in the Prospectus Regulation; |
| |
● |
to
fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Regulation), subject to obtaining
the prior consent of the underwriters; or |
| |
● |
in
any other circumstances falling within Article 1(4) of the Prospectus Regulation, |
provided
that no such offer of securities shall require us or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus
Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.
In
the case of any securities being offered to a financial intermediary as that term is used in Article 5(1) of the Prospectus Regulation,
each such financial intermediary will be deemed to have represented, acknowledged and agreed that the securities acquired by it in the
offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale
to, persons in circumstances which may give rise to an offer of any securities to the public other than their offer or resale in a Relevant
State to qualified investors as so defined or in circumstances in which the prior consent of the underwriters has been obtained to each
such proposed offer or resale.
For
the purposes of this provision, the expression an “offer of securities to the public” in relation to any securities in any
Relevant State means the communication in any form and by means of sufficient information on the terms of the offer and the securities
to be offered so as to enable an investor to decide to purchase securities, and the expression “Prospectus Regulation” means
Regulation (EU) 2017/1129.
France
This
document is not being distributed in the context of a public offering of financial securities (offre au public de titres financiers)
in France within the meaning of Article L.411-1 of the French Monetary and Financial Code (Code monétaire et financier) and Articles
211-1 et seq. of the General Regulation of the French Autorité des marchés financiers (“AMF”). The securities
have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France.
This
document and any other offering material relating to the securities have not been, and will not be, submitted to the AMF for approval
in France and, accordingly, may not be distributed or caused to distributed, directly or indirectly, to the public in France.
Such
offers, sales and distributions have been and shall only be made in France to (i) qualified investors (investisseurs qualifiés)
acting for their own account, as defined in and in accordance with Articles L.411-2-II-2 and D.411-1 to D.411-3, D. 744-1, D.754-1 and
D.764-1 of the French Monetary and Financial Code and any implementing regulation and/or (ii) a restricted number of non-qualified investors
(cercle restreint d’investisseurs) acting for their own account, as defined in and in accordance with Articles L.411-2-II-2°
and D.411-4, D.744-1, D.754-1 and D.764-1 of the French Monetary and Financial Code and any implementing regulation.
Pursuant
to Article 211-3 of the General Regulation of the AMF, investors in France are informed that the securities cannot be distributed (directly
or indirectly) to the public by the investors otherwise than in accordance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 to L.621-8-3
of the French Monetary and Financial Code.
Ireland
The
information in this document does not constitute a prospectus under any Irish laws or regulations and this document has not been filed
with or approved by any Irish regulatory authority as the information has not been prepared in the context of a public offering of securities
in Ireland within the meaning of the Irish Prospectus (Directive 2003/71/EC) Regulations 2005 (the “Prospectus Regulations”).
The securities have not been offered or sold, and will not be offered, sold or delivered directly or indirectly in Ireland by way of
a public offering, except to (i) qualified investors as defined in Regulation 2(l) of the Prospectus Regulations and (ii) fewer than
100 natural or legal persons who are not qualified investors.
Israel
The
securities offered by this prospectus have not been approved or disapproved by the Israeli Securities Authority, or ISA, nor have such
securities been registered for sale in Israel. The securities may not be offered or sold, directly or indirectly, to the public in Israel,
absent the publication of a prospectus. The ISA has not issued permits, approvals or licenses in connection with this offering or publishing
the prospectus; nor has it authenticated the details included herein, confirmed their reliability or completeness, or rendered an opinion
as to the quality of the securities being offered. Any resale in Israel, directly or indirectly, to the public of the securities offered
by this prospectus is subject to restrictions on transferability and must be effected only in compliance with the Israeli securities
laws and regulations.
Italy
The
offering of the securities in the Republic of Italy has not been authorized by the Italian Securities and Exchange Commission (Commissione
Nazionale per le Società e la Borsa, or CONSOB) pursuant to the Italian securities legislation and, accordingly, no offering material
relating to the securities may be distributed in Italy and such securities may not be offered or sold in Italy in a public offer within
the meaning of Article 1.1(t) of Legislative Decree No. 58 of 24 February 1998, or Decree No. 58, other than:
| |
● |
to
Italian qualified investors, as defined in Article 100 of Decree no. 58 by reference to Article 34-ter of CONSOB Regulation no. 11971
of 14 May 1999, or Regulation no. 1197l, as amended (“Qualified Investors”); and |
| |
|
|
| |
● |
in
other circumstances that are exempt from the rules on public offer pursuant to Article 100 of Decree No. 58 and Article 34-ter of
Regulation No. 11971 as amended. |
Any
offer, sale or delivery of the securities or distribution of any offer document relating to the securities in Italy (excluding placements
where a Qualified Investor solicits an offer from the issuer) under the paragraphs above must be:
| |
● |
made
by investment firms, banks or financial intermediaries permitted to conduct such activities in Italy in accordance with Legislative
Decree No. 385 of 1 September 1993 (as amended), Decree No. 58, CONSOB Regulation No. 16190 of 29 October 2007 and any other applicable
laws; and |
| |
|
|
| |
● |
in
compliance with all relevant Italian securities, tax and exchange controls and any other applicable laws. |
Any
subsequent distribution of the securities in Italy must be made in compliance with the public offer and prospectus requirement rules
provided under Decree No. 58 and the Regulation No. 11971 as amended, unless an exception from those rules applies. Failure to comply
with such rules may result in the sale of such securities being declared null and void and in the liability of the entity transferring
the securities for any damages suffered by the investors.
Japan
The
securities have not been and will not be registered under Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan
(Law No. 25 of 1948), as amended, or the FIEL, pursuant to an exemption from the registration requirements applicable to a private placement
of securities to Qualified Institutional Investors (as defined in and in accordance with Article 2, paragraph 3 of the FIEL and the regulations
promulgated thereunder). Accordingly, the securities may not be offered or sold, directly or indirectly, in Japan or to, or for the benefit
of, any resident of Japan other than Qualified Institutional Investors. Any Qualified Institutional Investor who acquires securities
may not resell them to any person in Japan that is not a Qualified Institutional Investor, and acquisition by any such person of securities
is conditional upon the execution of an agreement to that effect.
New
Zealand
The
securities offered hereby have not been offered or sold, and will not be offered or sold, directly or indirectly in New Zealand and no
offering materials or advertisements have been or will be distributed in relation to any offer of shares in New Zealand, in each case
other than:
| |
● |
to
persons whose principal business is the investment of money or who, in the course of and for the purposes of their business, habitually
invest money; |
| |
● |
to
persons who in all the circumstances can properly be regarded as having been selected otherwise than as members of the public; |
| |
● |
to
persons who are each required to pay a minimum subscription price of at least NZ$500,000 for the securities before the allotment
of those shares (disregarding any amounts payable, or paid, out of money lent by the issuer or any associated person of the issuer);
or |
| |
● |
in
other circumstances where there is no contravention of the Securities Act 1978 of New Zealand (or any statutory modification or reenactment
of, or statutory substitution for, the Securities Act 1978 of New Zealand). |
Portugal
This
document is not being distributed in the context of a public offer of financial securities (oferta pública de valores mobiliários)
in Portugal, within the meaning of Article 109 of the Portuguese Securities Code (Código dos Valores Mobiliários). The
securities have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in Portugal. This document
and any other offering material relating to the securities have not been, and will not be, submitted to the Portuguese Securities Market
Commission (Comissăo do Mercado de Valores Mobiliários) for approval in Portugal and, accordingly, may not be distributed
or caused to distributed, directly or indirectly, to the public in Portugal, other than under circumstances that are deemed not to qualify
as a public offer under the Portuguese Securities Code. Such offers, sales and distributions of securities in Portugal are limited to
persons who are “qualified investors” (as defined in the Portuguese Securities Code). Only such investors may receive this
document and they may not distribute it or the information contained in it to any other person.
Sweden
This
document has not been, and will not be, registered with or approved by Finansinspektionen (the Swedish Financial Supervisory Authority).
Accordingly, this document may not be made available, nor may the securities be offered for sale in Sweden, other than under circumstances
that are deemed not to require a prospectus under the Swedish Financial Instruments Trading Act (1991:980) (Sw. lag (1991:980) om handel
med finansiella instrument). Any offering of securities in Sweden is limited to persons who are “qualified investors” (as
defined in the Financial Instruments Trading Act). Only such investors may receive this document and they may not distribute it or the
information contained in it to any other person.
Switzerland
The
securities may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock
exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for
issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses
under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland.
Neither this document nor any other offering material relating to the securities may be publicly distributed or otherwise made publicly
available in Switzerland.
Neither
this document nor any other offering material relating to the securities have been or will be filed with or approved by any Swiss regulatory
authority. In particular, this document will not be filed with, and the offer of securities will not be supervised by, the Swiss Financial
Market Supervisory Authority. This document is personal to the recipient only and not for general circulation in Switzerland.
United
Arab Emirates
Neither
this document nor the securities have been approved, disapproved or passed on in any way by the Central Bank of the United Arab Emirates
or any other governmental authority in the United Arab Emirates, nor have we received authorization or licensing from the Central Bank
of the United Arab Emirates or any other governmental authority in the United Arab Emirates to market or sell the securities within the
United Arab Emirates. This document does not constitute and may not be used for the purpose of an offer or invitation. We may not render
services relating to the securities within the United Arab Emirates, including the receipt of applications and/or the allotment or redemption
of such shares.
No
offer or invitation to subscribe for securities is valid or permitted in the Dubai International Financial Centre.
United
Kingdom
The
communication of this prospectus and any other documents or materials relating to the issue of our securities offered hereby is not being
made, and such documents and/or materials have not been approved, by an authorized person for purposes of Section 21 of the United
Kingdom’s Financial Services and Markets Act 2000, as amended, or the FSMA. Accordingly, such documents and/or materials are not
being distributed to, and must not be passed on to, the general public in the United Kingdom.
In
the United Kingdom, this prospectus is being distributed only to, and are directed only at, persons who: (i) have professional experience
in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005, as amended, or the Order; and/or (ii) are high net worth entities (or persons to whom they may otherwise lawfully be communicated)
falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”).
Any person in the United Kingdom that is not a relevant person should not act or rely on the information included in this prospectus
or use it as basis for taking any action. In the United Kingdom, any investment or investment activity to which this prospectus relates
is only available to, and will be engaged in with, relevant persons.
Any
invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) in connection with the issue
or sale of our securities may only be communicated or caused to be communicated in circumstances in which Section 21(1) of the FSMA does
not apply to us.
EXPENSES
RELATING TO THIS OFFERING
Set
forth below is an itemization of the estimated expenses, excluding underwriting discounts, that are expected to be incurred in connection
with our offer and sale of the Ordinary Shares and Pre-Funded Warrants. Expenses for the offering will be borne by us. All amounts except
the SEC registration fee, and the Financial Industry Regulatory Authority Inc. filing fee and the stock exchange listing fee are estimates.
| SEC registration fee | |
US$ | | | |
| 902 | |
| FINRA filing fee | |
| | | |
| 1,363 | |
| Transfer agent’s fees and expenses | |
| | | |
| 5,000 | |
| Printing expenses | |
| | | |
| 5,000 | |
| Legal fees and expenses | |
| | | |
| 85,000 | |
| Accounting fees and expenses | |
| | | |
| 127,544 | |
| Miscellaneous and other fees and expenses | |
| | | |
| 2,691 | |
| Total | |
US$ | | | |
| 227,500 | |
LEGAL
MATTERS
The
validity of the Ordinary Shares and Pre-Funded Warrants to be issued in this offering and certain regulatory matters will be passed upon
for us by K&L Gates, 25/525 Collins St, Melbourne VIC 3000, Australia, our Australian counsel. Certain matters as to U.S. federal
law and New York state law will be passed upon for us by Sheppard Mullin Richter & Hampton LLP, New York, New York, our U.S. counsel.
Certain legal matters in connection with this offering will be passed upon for the underwriters by Loeb & Loeb LLP, New York, New
York.
EXPERTS
The
consolidated financial statements as of June 30, 2023 and 2022 and for each of the two years in the period ended June 30, 2023 included
in this prospectus and elsewhere in the registration statement have been so included in reliance upon the report (which contains an explanatory
paragraph relating to our ability to continue as a going concern as described in Note 3 of the financial statements) of BDO Audit Pty
Ltd, independent registered public accountants, appearing elsewhere herein, given on the authority of said firm as experts in accounting
and auditing. The report on the consolidated financial statements contains an explanatory paragraph regarding the Company’s ability
to continue as a going concern.
ENFORCEABILITY
OF CIVIL LIABILITIES
We
are a limited company incorporated under the laws of Australia. Certain of our directors and officers and certain other persons named
in this prospectus are citizens and residents of countries other than the United States and all or a significant portion of their assets
may be located outside the United States. As a result, it may not be possible for you to:
| |
● |
effect
service of process within the United States upon our non-U.S. resident directors or on us; |
| |
● |
Enforce,
in U.S. courts, judgments obtained against our non-U.S. resident directors or us in the U.S. courts in any action, including actions
under the civil liability provisions of U.S. securities laws; |
| |
● |
Enforce,
in U.S. courts, judgments obtained against our non-U.S. resident directors or us in courts of jurisdictions outside the United States
in any action, including actions under the civil liability provisions of U.S. securities laws; or |
| |
● |
bring
an original action in an Australian court to enforce liabilities against our non-U.S. resident directors or us based solely upon
U.S. securities laws. |
You
may also have difficulties enforcing in courts outside the United States judgments that are obtained in U.S. courts against any of our
non-U.S. resident directors or us, including actions under the civil liability provisions of the U.S. securities laws. Australia has
developed a different body of securities laws as compared to the United States and may provide protections for investors to a lesser
extent.
It
may be difficult (or impossible in some circumstances) for Australian companies to commence court actions or proceedings before the federal
courts of the United States or other jurisdiction in which it conducts business or has assets. This may make it difficult for us to recover
amounts we are owed and to generally enforce our rights, which may have an adverse impact on our operations and financial standing. Even
where we are able to enforce our rights, this may be costly and/or time consuming, risky, and may not guarantee recovery, which in turn
may have an adverse impact on our operations and financial standing. With that noted, there are no treaties between Australia and the
United States that would affect the recognition or enforcement of foreign judgments in Australia. We also note that investors may be
able to bring an original action in an Australian court against us to enforce liabilities based in part upon U.S. federal securities
laws.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
This
prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules to the registration
statement. For further information, we refer you to the registration statement and the exhibits and schedules filed as part of the registration
statement. If a document has been filed as an exhibit to the registration statement, we refer you to the copy of the document that has
been filed. Each statement in this prospectus relating to a document filed as an exhibit is qualified in all respects by the filed exhibit.
We
are subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers.
Accordingly, we are required to file reports, including annual reports on Form 20-F, and other information with the SEC. We are allowed
four months following the end of our fiscal year to file our annual report with the SEC instead of approximately three, and we are not
required to disclose certain detailed information regarding executive compensation that is required from U.S. domestic issuers. In addition,
we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently as companies
that are not foreign private issuers whose securities are registered under the Exchange Act. Also, as a foreign private issuer, we are
exempt from the rules of the Exchange Act prescribing the furnishing of proxy statements to shareholders, and our senior management,
directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions contained
in Section 16 of the Exchange Act.
As
a foreign private issuer, we also are exempt from the requirements of Regulation FD (Fair Disclosure) which, generally, are meant to
ensure that select groups of investors are not privy to specific information about an issuer before other investors. We are still subject
to the anti-fraud and anti-manipulation rules of the SEC, such as Rule 10b-5. Since many of the disclosure obligations required of us
as a foreign private issuer are different than those required by other U.S. domestic reporting companies, our shareholders, potential
shareholders and the investing public in general should not expect to receive information about us in the same amount, and at the same
time, as information is received from, or provided by, other U.S. domestic reporting companies. We are liable for violations of the rules
and regulations of the SEC which do apply to us as a foreign private issuer.
We
have filed with the SEC a registration statement on Form F-1, including relevant exhibits and schedules, under the Securities Act with
respect to the Ordinary Shares and Pre-Funded Warrants to be sold in this offering. This prospectus, which constitutes a part of the
registration statement, summarizes material provisions of contracts and other documents that we refer to in this prospectus. Since this
prospectus does not contain all of the information contained in the registration statement, you should read the registration statement
and its exhibits and schedules for further information with respect to us and our Ordinary Shares and Pre-Funded Warrants. Statements
contained in this prospectus regarding the contents of any agreement, contract or other document referred to are not necessarily complete
and reference is made in each instance to the copy of the contract or document filed as an exhibit to the registration statement. The
SEC also maintains a website that contains reports, proxy and information statements and other information regarding registrants that
file electronically with the SEC. The address of the website is www.sec.gov.
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
INTERIM
FINANCIAL REPORT FOR THE NINE MONTHS ENDED MARCH 31, 2024 and 2023
Report
of Independent Registered Public Accounting Firm
Shareholders
and Board of Directors
Alta
Global Group Limited
Level
1, Suite 1, 29-33 The Corso
Manly,
New South Wales 2095
Opinion
on Consolidated Financial Statements
We
have audited the accompanying consolidated statements of financial position of Alta Global Group Limited and Controlled Entities (the
“Company”) as of June 30, 2023 and 2022, the related consolidated statements of profit or loss and other comprehensive loss,
statements of changes in equity, and statements of cash flows for the years then ended, and the related notes and schedules (collectively
referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of the Company at June 30, 2023 and 2022, and the results of its operations and its
cash flows for the years then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting
Standards Board and interpretations (collectively “IFRS”).
Substantial
doubt about the Company’s ability to continue as a Going Concern
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As described
in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from operations, has a net working capital
deficiency, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management’s
evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 3. The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified
with respect to this matter.
Basis
for opinion
These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We
conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our
audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audit provides a reasonable basis for our opinion.
/s/
BDO Audit Pty Ltd
We
have served as the Company’s auditor since 2023.
Sydney,
Australia
November
17, 2023 (January 24, 2024, as to the effects of the reverse share split described in Note 17)
BDO
Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia
Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International
Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
CONSOLIDATED
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE LOSS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
| | |
Note | |
June 30, 2023 | | |
June 30, 2022 | |
| | |
| |
A$ | | |
A$ | |
| Revenue | |
| |
| | | |
| | |
| Revenue from Program Fees | |
5 | |
| 937,415 | | |
| 2,050,044 | |
| Less: Contractual payments to gyms | |
5 | |
| (574,025 | ) | |
| (1,215,191 | ) |
| Net Revenue from Program Fees | |
| |
| 363,390 | | |
| 834,853 | |
| | |
| |
| | | |
| | |
| Other Income | |
5 | |
| 1,173,421 | | |
| 105,950 | |
| Total Revenue | |
| |
| 1,536,811 | | |
| 940,803 | |
| | |
| |
| | | |
| | |
| Expenses | |
| |
| | | |
| | |
| | |
| |
| | | |
| | |
| Program Expenses | |
6 | |
| 229,848 | | |
| 342,600 | |
| Employee salaries and benefits | |
| |
| 4,219,655 | | |
| 4,664,013 | |
| Share Based Payments | |
22 | |
| 2,365,384 | | |
| 1,546,983 | |
| Advertising fees | |
| |
| 721,713 | | |
| 3,615,399 | |
| Professional fees | |
| |
| 864,419 | | |
| 685,870 | |
| Rent | |
| |
| 11,793 | | |
| 2,366 | |
| IT costs | |
| |
| 633,220 | | |
| 640,403 | |
| Depreciation and amortization | |
| |
| 360,021 | | |
| 260,651 | |
| Net foreign exchange gain | |
6 | |
| (47,359 | ) | |
| (26,079 | ) |
| Finance costs | |
6 | |
| 4,472,730 | | |
| 2,191,803 | |
| Other expenses | |
| |
| 1,432,094 | | |
| 965,808 | |
| Fair Value movement derivative liability | |
8 | |
| 6,870,729 | | |
| (2,751,564 | ) |
| Total Expenses | |
| |
| 22,134,247 | | |
| 12,138,253 | |
| | |
| |
| | | |
| | |
| Loss before income tax expense | |
| |
| (20,597,436 | ) | |
| (11,197,450 | ) |
| Income tax expense | |
7 | |
| - | | |
| - | |
| | |
| |
| | | |
| | |
| Loss after income tax expense for the year | |
| |
| (20,597,436 | ) | |
| (11,197,450 | ) |
| | |
| |
| | | |
| | |
| Other comprehensive loss, net of tax | |
| |
| (36,465 | ) | |
| (31,312 | ) |
| | |
| |
| | | |
| | |
| Total comprehensive loss for the year attributable to the members of Alta Global Group Limited | |
| |
| (20,633,901 | ) | |
| (11,228,762 | ) |
| | |
| |
| | | |
| | |
| Basic loss per share | |
27 | |
| (5.26 | ) | |
| (2.86 | ) |
| Diluted loss per share | |
27 | |
| (5.26 | ) | |
| (2.86 | ) |
The
above consolidated statements should be read in conjunction with the accompanying notes.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
CONSOLIDATED
STATEMENT OF FINANCIAL POSITION
AS
AT JUNE 30, 2023 AND 2022
| | |
Note | |
June 30, 2023 | | |
June 30, 2022 | |
| | |
| |
A$ | | |
A$ | |
| Current Assets | |
| |
| | | |
| | |
| | |
| |
| | | |
| | |
| Cash and cash equivalents | |
9 | |
| 3,702,567 | | |
| 569,975 | |
| Trade and other receivables | |
10 | |
| 2,365,638 | | |
| 928,737 | |
| Other assets | |
| |
| 33,641 | | |
| 61,499 | |
| Total current assets | |
| |
| 6,101,846 | | |
| 1,560,211 | |
| | |
| |
| | | |
| | |
| Non-current assets | |
| |
| | | |
| | |
| | |
| |
| | | |
| | |
| Property and Equipment | |
11 | |
| 94,928 | | |
| 108,420 | |
| Right-of-use asset | |
20 | |
| 157,540 | | |
| 276,907 | |
| Intangible assets | |
12 | |
| 811,361 | | |
| 1,060,716 | |
| Other Assets | |
| |
| 65,110 | | |
| 117,824 | |
| Total non-current assets | |
| |
| 1,128,939 | | |
| 1,563,867 | |
| Total assets | |
| |
| 7,230,785 | | |
| 3,124,078 | |
| | |
| |
| | | |
| | |
| Current liabilities | |
| |
| | | |
| | |
| | |
| |
| | | |
| | |
| Trade and other payables | |
13 | |
| 2,034,436 | | |
| 2,086,171 | |
| Unearned revenue | |
15 | |
| 174,290 | | |
| 295,743 | |
| Current Employee Entitlements | |
14 | |
| 357,227 | | |
| 215,419 | |
| Current Financial Liabilities | |
21 | |
| 25,331,307 | | |
| 7,907,953 | |
| Current Lease Liability | |
20 | |
| 121,500 | | |
| 124,349 | |
| Total current liabilities | |
| |
| 28,018,760 | | |
| 10,629,635 | |
| | |
| |
| | | |
| | |
| Non-current liabilities | |
| |
| | | |
| | |
| Non-current Financial Liabilities | |
21 | |
| 10,273,278 | | |
| 5,182,363 | |
| Non-current Employee Entitlements | |
14 | |
| 18,892 | | |
| - | |
| Non-current Lease liability | |
20 | |
| 54,162 | | |
| 177,870 | |
| Total non-current liabilities | |
| |
| 10,346,332 | | |
| 5,360,233 | |
| | |
| |
| | | |
| | |
| Total liabilities | |
| |
| 38,365,092 | | |
| 15,989,868 | |
| | |
| |
| | | |
| | |
| Net liabilities | |
| |
| (31,134,307 | ) | |
| (12,865,790 | ) |
| | |
| |
| | | |
| | |
| Equity | |
| |
| | | |
| | |
| | |
| |
| | | |
| | |
| Issued Capital | |
17 | |
| 3,385,281 | | |
| 3,385,281 | |
| Share-based payment reserve | |
16 | |
| 3,912,367 | | |
| 1,546,983 | |
| Foreign currency translation reserve | |
16 | |
| (65,832 | ) | |
| (29,367 | ) |
| Accumulated losses | |
| |
| (38,366,123 | ) | |
| (17,768,687 | ) |
| Total deficit | |
| |
| (31,134,307 | ) | |
| (12,865,790 | ) |
The
above consolidated statements should be read in conjunction with the accompanying notes.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
| | |
| | |
Share-based | | |
Foreign Currency | | |
| | |
| |
| | |
Issued Capital | | |
Payment Reserve | | |
Translation Reserve | | |
Accumulated Losses | | |
Total | |
| | |
A$ | | |
A$ | | |
A$ | | |
A$ | | |
A$ | |
| | |
| | |
| | |
| | |
| | |
| |
| Opening balance as at July 1, 2022 | |
| 3,385,281 | | |
| 1,546,983 | | |
| (29,367 | ) | |
| (17,768,687 | ) | |
| (12,865,790 | ) |
| Loss after tax | |
| - | | |
| - | | |
| - | | |
| (20,597,436 | ) | |
| (20,597,436 | ) |
| Other comprehensive loss | |
| - | | |
| - | | |
| (36,465 | ) | |
| - | | |
| (36,465 | ) |
| Total comprehensive loss | |
| - | | |
| - | | |
| (36,465 | ) | |
| (20,597,436 | ) | |
| (20,633,901 | ) |
| Share-based payments (see Note 22) | |
| - | | |
| 2,365,384 | | |
| - | | |
| - | | |
| 2,365,384 | |
| Closing balance as at June 30, 2023 | |
| 3,385,281 | | |
| 3,912,367 | | |
| (65,832 | ) | |
| (38,366,123 | ) | |
| (31,134,307 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Opening balance as at July 1, 2021 | |
| 3,385,281 | | |
| ` | | |
| 1,945 | | |
| (6,571,237 | ) | |
| (3,184,011 | ) |
| Loss after tax | |
| - | | |
| - | | |
| - | | |
| (11,197,450 | ) | |
| (11,197,450 | ) |
| Other comprehensive income/(loss) | |
| - | | |
| - | | |
| (31,312 | ) | |
| - | | |
| (31,312 | ) |
| Total comprehensive income/(loss) | |
| - | | |
| - | | |
| (31,312 | ) | |
| (11,197,450 | ) | |
| (11,228,762 | ) |
| Share-based payments (see Note 22) | |
| - | | |
| 1,546,983 | | |
| - | | |
| - | | |
| 1,546,983 | |
| Closing balance as at June 30, 2022 | |
| 3,385,281 | | |
| 1,546,983 | | |
| (29,367 | ) | |
| (17,768,687 | ) | |
| (12,865,790 | ) |
The
above consolidated statements should be read in conjunction with the accompanying notes.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
CONSOLIDATED
STATEMENT OF CASH FLOWS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
| | |
Note | |
June 30, 2023 | | |
June 30, 2022 | |
| | |
| |
A$ | | |
A$ | |
| Cash flows from operating activities | |
| |
| | | |
| | |
| Receipts from training participants (inclusive of GST) | |
| |
| 1,493,676 | | |
| 2,004,336 | |
| Payments to member gyms, suppliers and employees (inclusive of GST) | |
| |
| (8,106,683 | ) | |
| (10,136,314 | ) |
| Receipts from Government grants and tax incentives related to expenditure | |
| |
| 1,109,645 | | |
| 105,950 | |
| Interest and other finance costs paid | |
| |
| (52,506 | ) | |
| (29,157 | ) |
| Net cash used in operating activities | |
18 | |
| (5,555,868 | ) | |
| (8,055,185 | ) |
| | |
| |
| | | |
| | |
| Cash flows from investing activities | |
| |
| | | |
| | |
| Payments for property equipment, net of disposal | |
| |
| (14,796 | ) | |
| (59,429 | ) |
| Payments for intangible assets | |
| |
| (352,181 | ) | |
| (1,043,468 | ) |
| Receipts from Government grants and tax incentives related to assets | |
| |
| 383,936 | | |
| | |
| Bank guarantee deposit | |
| |
| 52,714 | | |
| (62,823 | ) |
| Net cash provided by/(used in) investing activities | |
| |
| 69,673 | | |
| (1,165,720 | ) |
| | |
| |
| | | |
| | |
| Cash flows from financing activities | |
| |
| | | |
| | |
| Proceeds from convertible notes, net of transaction costs | |
| |
| 8,655,252 | | |
| 5,679,651 | |
| | |
| |
| | | |
| | |
| Net cash from financing activities | |
| |
| 8,655,252 | | |
| 5,679,651 | |
| | |
| |
| | | |
| | |
| Net increase/(decrease) in cash and cash equivalents | |
| |
| 3,169,057 | | |
| (3,541,254 | ) |
| Cash and cash equivalents at the beginning of the financial year | |
| |
| 569,975 | | |
| 4,142,541 | |
| Effect of exchange rate changes on cash | |
| |
| (36,465 | ) | |
| (31,312 | ) |
| Cash and cash equivalents at the end of the financial year | |
9 | |
| 3,702,567 | | |
| 569,975 | |
The
above consolidated statements should be read in conjunction with the accompanying notes.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
1. Corporate information
Alta
Global Group Limited (the Company or the Parent Entity) was incorporated and is domiciled in Australia. The Company changed its registered
name from Wimp 2 Warrior Limited to Alta Global Group Limited on February 2, 2022. The Company is a for-profit Australian unlisted public
company limited by shares with a principal place of business at Level 1, Suite 1, 29-33 The Corso, Manly, New South Wales 2095.
Note
2. Significant accounting policies
The
principal accounting policies adopted in the preparation of the consolidated financial statements are set out below. These policies have
been consistently applied to all the years presented, unless otherwise stated.
Unless
otherwise indicated, the consolidated financial statements and the notes thereto are presented in AUD, which is also the Company’s
functional currency.
Basis
of preparation
Statement
of compliance
These
financial statements have been prepared in accordance with International Financial Reporting Standards and International Accounting Standards
as issued by the International Accounting Standards Board (IASB) and Interpretations (collectively IFRSs) and the Corporations Act 2001.
The
preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also
requires Company management to exercise judgment in applying the Company’s accounting policies. The areas where significant judgments
and estimates have been made in preparing the financial statements and their effect are disclosed in Note 3.
Basis
of measurement
The
financial statements have been prepared on the basis of historical cost, except for the measurement at fair value of selected financial
assets and financial liabilities.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
2. Significant accounting policies - continued
Principles
of consolidation
The
consolidated financial statements incorporate all the assets, liabilities and results of the Company and all the subsidiary companies
and other interests it controlled during the period. The Company controls an entity when it is exposed to, or has the rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
The
assets, liabilities and results of its subsidiaries are fully consolidated into the consolidated financial statements from the date which
control is obtained. The consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany transactions,
balances and unrealized gains or losses on transactions between Company entities are fully eliminated on consolidation. Accounting policies
of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting policies of the Company.
Operating
segments
Operating
segments are presented using the ‘management approach’, where the information presented is on the same basis as the internal
reports provided to the Chief Operating Decision Makers (“CODM”). The CODM is responsible for the allocation of resources
to operating segments and assessing their performance.
Foreign
currency translation
The
financial statements are presented in Australian dollars, which is the Company’s functional and presentation currency.
Foreign
currency transactions
Foreign
currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange
rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss.
New
or amended Accounting Standards and Interpretations adopted
The
principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
The
entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the International Accounting Standards
Board (‘IASB’) that are mandatory for the current reporting period.
Changes
in accounting policies and changes in estimates
Any
new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
2. Significant accounting policies - continued
Revenue
Recognition
The
entity recognizes revenue as follows:
Revenue
from contracts with customers
Revenue
is recognized at an amount that reflects the consideration to which the entity is expected to be entitled in exchange for transferring
goods or services to a customer. For each contract with a customer, the entity; identifies the contract with a customer; identifies the
performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration
and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone
selling price of each distinct good or service to be delivered; and recognizes revenue when or as each performance obligation is satisfied
in a manner that depicts the transfer to the customer of the goods or services promised.
Variable
consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds,
any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the ‘expected
value’ or ‘most likely amount’ method. The measurement of variable consideration is subject to a constraining principle
whereby revenue will only be recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative
revenue recognized will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration
is subsequently resolved. Amounts received that are subject to the constraining principle are recognized as a refund liability.
Program
revenue
Program
revenue consists of license fees which are recognized following the occurrence of both the transfer of the right to use the Company’s
intellectual property upon signing of the license agreement and once usage of the license occurs at the commencement of the Alta MMA
Training Program. The Company’s intellectual property consists of a set of mixed martial arts training programs and relevant branding
and support. A license agreement consists of the right to use the intellectual property of the Company and either party may terminate
the license upon written notice to the other party. If the agreement is terminated in this manner, the termination will take effect after
the completion of the relevant series and the series finale, but prior to a new series beginning. The amount of program revenue is dependent
on the number of participants in each series for each gym.
Based
on the license agreement, a usage-based royalty arrangement is in place between the Company and the gyms. The Company recognizes program
revenue following the occurrence of both the transfer of the right to use the Company’s intellectual property upon signing of the
license agreement and once usage of the license which occurs at the commencement of the Alta MMA Training Program.
The
Company has the ultimate responsibility of ensuring the Alta MMA Training Program meets customer specifications and price determination.
The Company is therefore considered the principal in these arrangements. The Company receives training fees directly from the participants
and subsequently distributes a portion of such revenues to our gym partners based on the terms of the license agreements.
Contractual
Payments to Gyms
The
Company is required to settle contractual payments to the gyms as a percentage of the total training fees collected from participants.
Net revenue from program fees is recognized as revenue from program fees less the contractual obligations payable to the gyms.
Sales
of merchandise
Revenue
from the sale of program merchandise is recognized at the point in time when the gyms obtain control of the goods, which is generally
at the time of delivery.
Event
revenue
Revenue
from event ticket sales is recognized at the point in time when the event occurs.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
2. Significant accounting policies - continued
Other
income
Other
income is recognized when it is received or when the right to receive payment is established.
Research
& Development Incentive
Government
grant, including the R&D incentives, shall not be recognized until there is reasonable assurance that the Company will comply with
the conditions attaching to them and that the grants will be received.
Current
and non-current classification
Assets
and liabilities are presented in the statement of financial position based on current and non-current classification.
Cash
and cash equivalents
Cash
and cash equivalents include cash on hand, deposits held at call with financial institutions, other short- term, highly liquid investments
with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant
risk of changes in value. For the statement of cash flows presentation purposes, cash and cash equivalents also includes bank overdrafts,
which are shown within trade and other payables in current liabilities on the statement of financial position.
Trade
and other receivables
Trade
receivables are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less
any allowance for expected credit losses. Receivable from participants is generally due for settlement within 20 weeks.
Expected
Credit Losses
The
entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure
the expected credit losses, trade receivables have been grouped based on days overdue. Trade and other receivables are recognized at
amortized cost, less any allowance for expected credit losses.
Trade
and other payables
These
amounts represent liabilities for goods and services provided to the entity prior to the end of the financial year and which are unpaid.
Other payables include cash received from the participants on behalf of the gyms. Due to their short-term nature they are measured at
amortized cost and are not discounted.
Plant
and equipment
Plant
and equipment are stated at cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly
attributable to the acquisition of the items. Depreciation is calculated on a straight- line basis to write off the net cost of each
item of property, plant and equipment over their expected useful lives as follows:
| Plant and equipment |
|
3 to 5 years |
| Computer equipment |
|
3 to 5 years |
| Office equipment |
|
3 to 5 years |
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
2. Significant accounting policies - continued
The
residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
An
item of property, plant and equipment is derecognized upon disposal or when there is no future economic benefit to the entity. Gains
and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Intangible
assets
Intangible
assets are initially measured at their fair value at the date of the acquisition and are subsequently measured at cost less amortization
and any impairment. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern
of consumption or useful life are accounted for prospectively by changing the amortization method or period.
Trademarks
Significant
costs associated with patents or trademarks are deferred and amortized on a straight-line basis over the period of their expected benefit,
being their finite life of 10 years.
Platform
development cost
Costs
incurred in both internally and from external providers in developing the platform that will contribute to future year financial benefits
through revenue generation and/or cost reduction are capitalized to software. These costs are amortized on a straight-line basis over
the estimated useful life (4 years) since first used.
Research
and development
Research
costs are expensed in the period in which they are incurred. Development costs are capitalized when it is probable that the project will
be a success considering its commercial and technical feasibility.
Impairment
of non-financial assets
Intangible
assets are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.
Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable
amount.
Recoverable
amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in-use is the present value of
the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to
which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.
Borrowings
Advances
and borrowings are initially recognized at the fair value of the consideration received, net of transaction costs. They are subsequently
measured at amortized cost using the effective interest method.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
2. Significant accounting policies - continued
Employee
benefits
Short-term
employee benefits
Liabilities
for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12
months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.
Other
long-term employee benefits
The
liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the
present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the
projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and
periods of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to
maturity and currency that match, as closely as possible, the estimated future cash.
Goods
and Services Tax (GST) and other similar taxes
Revenues,
expenses, and assets are recognized net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority.
In this case it is recognized as part of the cost of the acquisition of the asset or as part of the expense.
Receivables
and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to,
the tax authority is included in other receivables or other payables in the statement of financial position.
Cash
flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable
from, or payable to the tax authority, are presented as operating cash flows.
Commitments
and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
Issued
capital
Issued
and paid up capital is recognized at the fair value of the consideration received by the Parent entity.
When
shares recognized as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognized
as a deduction from equity.
Income
tax
The
income tax expense for the year is the tax payable on the current year’s taxable income based on the national income tax rate for
each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases
of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.
Deferred
tax assets and liabilities are recognized for temporary differences at the tax rates expected to apply when the assets are recovered
or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax
rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
2. Significant accounting policies - continued
An
exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax
asset or liability is recognized in relation to these temporary differences if they arose in a transaction, other than a business combination,
that at the time of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred
tax assets are recognized for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts
will be available to utilize those temporary differences and losses.
Deferred
tax liabilities and assets are not recognized for temporary differences between the carrying amount and tax bases of investments in controlled
entities where the parent company is able to control the timing of the reversal of the temporary differences and it is probable that
the differences will not reverse in the foreseeable future.
Deferred
tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when
the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the Company
has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability
simultaneously.
Current
and deferred tax is recognized as income or an expense and included in profit and loss for the period except where the tax arises from
a transaction which is recognized in other comprehensive oncome or equity, in which case the tax is recognized in other comprehensive
income to equity respectively.
Convertible
note
On
issuance of the convertible notes, an assessment is made to determine whether the convertible notes contain an equity instrument or whether
the whole instrument should be classified as a financial liability.
When
it is determined that the whole instrument is a financial liability and no equity instrument, the conversion option is separated from
the host debt and classified as a derivative liability.
The
carrying value of the host contract at initial recognition is determined as a difference between the consideration received and the fair
value of the embedded derivative. The host contract is subsequently measured at amortized cost using the effective interest rate method.
The embedded derivative it subsequently measured at fair value at the end of each reporting period through the profit and loss. Refer
to Note 21 Financial Liabilities for disclosure of key terms of the convertible notes. The convertible note and the derivative are presented
as financial liabilities on the Statement of Financial Position.
On
conversion at maturity, the financial liability is reclassified to equity and no gain or loss is recognized. Transaction costs are deducted
from equity, net of associated income tax.
Share-based
payments
The
Company provides benefits to consultants, advisors and employees (including directors) of the consolidated entity in the form of share-based
payment transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’).
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are
granted. The fair value is determined by an external valuation using a Black- Scholes option pricing model.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
2. Significant accounting policies - continued
The
cost of equity-settled transactions is recognized, together with a corresponding increase in equity, over the period in which the performance
conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting date’).
The
cumulative expense recognized for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which
the vesting period has expired and (ii) the number of awards that, in the opinion of the directors of the consolidated entity, will ultimately
vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market
performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.
No
expense is recognized for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.
Where
an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognized
for the award is recognized immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement
award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award.
Classification
and measurement of financial liabilities
The
Company’s financial liabilities include trade and other payables, financial liabilities measured at amortized cost and derivative
financial instruments. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs
unless the Company’s designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities
are measured at amortized cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL,
which are carried subsequently at fair value with gains or losses recognized in profit or loss.
Right-of-use
assets
A
right-of-use asset is recognized at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the
initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of
any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate
of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use
assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever
is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation
is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
Lease
liabilities
A
lease liability is recognized at the commencement date of a lease. The lease liability is initially recognized at the present value of
the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot
be readily determined, the consolidated entity’s incremental borrowing rate. Lease payments comprise of fixed payments less any
lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value
guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination
penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortized cost using the effective interest method. The carrying amounts are remeasured if there is
a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty
of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of
use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully.
Fair
value measurement
When
an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is
based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal
market, in the most advantageous market.
Fair
value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in
their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques
that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximizing the
use of relevant observable inputs and minimizing the use of unobservable inputs.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
2. Significant accounting policies - continued
Assets
and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance
of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined
based on a reassessment of the lowest level of input that is significant to the fair value measurement.
For
recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or
when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is
a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification
of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.
Earnings
per share
Basic
earnings per share
Basic
earnings per share is calculated by dividing the profit attributable to the owners of the Company, excluding any costs of servicing equity
other than Ordinary Shares, by the weighted average number of Ordinary Shares outstanding during the financial year, adjusted for bonus
elements in Ordinary Shares issued during the financial year.
Diluted
earnings per share
Diluted
earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax
effect of interest and other financing costs associated with dilutive potential Ordinary Shares and the weighted average number of shares
assumed to have been issued for no consideration in relation to dilutive potential Ordinary Shares.
Parent
entity financial information
The
financial information for the Parent entity, Alta Global Group Limited, disclosed in Note 19 has been prepared on the same basis as the
consolidated financial statement. Investments in subsidiaries are accounted for at cost less provision for impairment in the financial
statements of the Parent entity.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
3. Critical accounting judgements, estimates and assumptions
The
preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts
in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent
liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various
factors, including expectations of future events, management believes to be reasonable under the circumstances.
Going
concern
The
consolidated financial statements for the reporting periods have been prepared on a going concern basis which contemplates continuity
of normal business activities and the realization of assets and settlement of liabilities in the ordinary course of business.
We
have assessed that there is substantial doubt related to going concern that may cast significant doubt over our ability to continue as
a going concern as we incurred a loss after tax of $20,597,436 at June 30, 2023, compared to $11,197,450 at June 30, 2022, had net cash
outflows from operating activities of $5,555,868 for the year ended June 30, 2023, compared to $8,055,185 for the year ended June 30,
2022, and had a net liability position of $31,134,307 at June 30, 2023, compared to $12,865,790 at June 30, 2022 and net current liability
position of $21,916,914 at June 30, 2023, as compared to $9,069,424 at June 30, 2022. As a result of these conditions, the Company may
be unable to realize its assets and discharge its liabilities in the normal, course of business.
The
ongoing operation of the Company remains dependent upon raising additional funds. In light of the future expenditures to be incurred
in executing on our strategic plans, we are dependent on obtaining financing through equity financing, debt financing or other means.
The ability to arrange such funding in the future will depend in part upon the prevailing capital market conditions as well as our business
performance. There is no assurance that we will be successful in our efforts to raise additional funding on terms satisfactory to us.
If we do not obtain additional funding, we may be required to delay, reduce the scope of, or eliminate our current operations.
However,
we believe that we will be able to raise additional funds as required to meet our obligations as and when they become due and are of
the opinion that the use of the going concern basis remains appropriate. Our ability to continue as a going concern and to pay debts
as and when they become due is dependent on the following:
| |
● |
we have historically been
successful in raising funds and are planning to be admitted to the Official List; |
| |
● |
our level of expenditure
continues to be managed and will continue to be managed to maximize run-way; and |
| |
● |
we have reason to believe
that in addition to the cash flow currently available, additional funds will continue to be received through revenue received through
the sale of our products and services throughout the course of the year. |
If
we decide to raise capital by issuing equity securities, the issuance of additional Ordinary Shares would result in dilution to our existing
shareholders. We cannot assure you that we will be successful in completing any financings or that any such equity or debt financing
will be available to us if and when required or on satisfactory terms.
Additionally,
should this capital not be raised, the Company’s non-redeemable convertible notes that mature in December 2023 will convert to
equity and remaining redeemable convertible notes will mature and redeem in 2025 for either cash or equity at the discretion of the noteholder.
Should
we be unable to raise additional funds on a timely basis, we may be required to realize our assets and discharge our liabilities other
than in the normal course of business and at amounts different to those stated in the financial statements. The financial statements
do not include any adjustments to the recoverability and classification of asset carrying amounts or the amount of liabilities that might
result should we be unable to continue as a going concern and meet our debts as and when they become due.
Revenue
from contracts with customers involving program fees
When
recognizing revenue in relation to the sale of goods to customers, the key performance obligation of the entity is considered to be the
point in time of the rights to access the license and the relevant training program to the gyms as the customers, as this is deemed to
be the time that the gym obtains control of the promised service and therefore the benefits of unimpeded access.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
3. Critical accounting judgements, estimates and assumptions - continued
Determination
of variable consideration
Judgement
is exercised in estimating variable consideration which is determined having regard to past experience with respect to the cancelled
contracts with the entity where the member gyms maintain a right of terminate pursuant to the license agreement. Revenue will only be
recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized under
the contract will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
Share-based
payment transactions
The
consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments
at the date at which they are granted. The fair value is determined by using Black-Scholes model taking into account the terms and conditions
upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would
have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss
and equity.
Convertible
Notes
The
Company has determined the convertible note instrument to be a financial liability. It is separated into two components being the host
debt and derivative liability.
The
carrying value of the host contract at initial recognition is determined as a difference between the consideration received and the fair
value of the embedded derivative. The host contract is subsequently measured at amortized cost using the effective interest rate method.
The derivative liability is recognized as such due to its conversion feature relating to a Qualified Equity Investment (as defined below)
and the likelihood of its occurrence. The embedded derivative is subsequently measured at fair value at the end of each reporting period
through the profit and loss based on the Monte Carlo simulation as valued by an external valuer. The convertible note and the derivative
are presented as financial liabilities on the Consolidated Statement of Financial Position, refer to Note 21 Financial Liabilities for
further details.
Recognition
of deferred tax assets
Deferred
tax assets are recognized for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts
will be available to utilize those temporary differences and losses.
The
carrying amount of unrecognized deferred tax assets are reviewed at each reporting date. Previously unrecognized deferred tax assets
are only recognized to the extent that it is probable that there are future taxable profits available to recover the asset. The Company
has not recognized the benefit of these unused deductible temporary difference and tax losses. These losses will only be recognized where
it is probable that future taxable profit will be available against which the benefits of the deferred tax asset will be utilized.
Fair
value measurement hierarchy
The
consolidated entity is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based
on the lowest level of input that is significant to the entire fair value measurement, being:
Level
1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level
2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;
and
Level
3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair value
and therefore which category the asset or liability is placed in can be subjective.
The
fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include discounted cash
flow analysis or the use of observable inputs that require significant adjustments based on unobservable inputs.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
3. Critical accounting judgements, estimates and assumptions - continued
Estimation
of useful lives of assets
The
consolidated entity determines the estimated useful lives and related depreciation and amortization charges for its property, plant and
equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some
other event. The depreciation and amortization charge will increase where the useful lives are less than previously estimated lives,
or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.
Impairment
of non-financial assets
The
consolidated entity assesses impairment of non-financial assets at each reporting date by evaluating conditions specific to the consolidated
entity and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset
is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates
and assumptions.
Expected
Credit Losses
The
allowance for expected credit losses requires a degree of estimation judgment. The Company has applied the simplified approach to measuring
expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have
been grouped based on days overdue. Trade and other receivables are recognized at amortized cost, less any allowance for expected credit
losses.
Provision
for Refund Liability
The
provision for refund liability is recognized for expected volume payable to customers in relation to sales made until the end of the
reporting period. The Company’s obligation to provide a refund, cancellation or credit note falls under the Company’s standard
trading terms, and is recognized as a provision. The estimate of expected returns requires judgement and reflects the amount that the
reporting entity expects to repay or credit customers, using either the expected value method or the most-likely amount method.
Capitalized
platform development costs
Costs
incurred both internally and from external providers in developing the platform that meet the recognition criteria of development costs
under IAS 38 have been capitalized as intangible assets and are amortized over their useful, life.
Research
and Development Incentive
Judgement
is required in determining the amount of grant revenue relating to the research and development incentive claim. There are certain transactions
and calculations undertaken during the ordinary course of business for which the ultimate tax determination may be subject to change.
The Company calculates its research and development claim based on the Company’s understanding of the tax law. Where the final
outcome of these matters is different from the amounts that were initially recorded, such differences will impact the profit or loss
in the year in which such determination is made.
Note
4. Operating segments
Identification
of reportable operating segments
Segment
reporting is based on the information that management uses to make decisions about the operation of the Company. Operating segment determination
is based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision
Makers (‘CODM’)) in assessing performance and in determining the allocation of resources. The Company has identified one
operating segment as the provision and administration of mixed martial arts training programs, gym programs.
The
CODM reviews EBITDA (earnings before interest, tax, depreciation, and amortization). The accounting policies adopted for internal reporting
to the CODM are consistent with those adopted in the financial statements. Application of IFRS 8 and quantitative thresholds for determination
of reportable segments sees the consolidated entity disclosing only one reportable operating segment. The Consolidated Financial Statements
for the years ended June 30, 2023 and 2022 have been presented by this single operating segment and have been presented and disclosed
as one reportable operating segment.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
5. Revenue
| | |
2023 $ | | |
2022 $ | |
| Program fees | |
| | | |
| | |
| Revenue from program fees | |
| 937,415 | | |
| 2,050,044 | |
| Contractual payments to gyms | |
| (574,025 | ) | |
| (1,215,191 | ) |
| Net Revenue from program fees | |
| 363,390 | | |
| 834,853 | |
| Other Income | |
| | | |
| | |
| Finale, franchise fee and others fees | |
| 22,600 | | |
| 100,378 | |
| Merchandise sales | |
| 1,296 | | |
| 5,572 | |
| Research and Development tax incentive* | |
| 1,149,525 | | |
| - | |
| Total other income | |
| 1,173,421 | | |
| 105,950 | |
| Total Revenue | |
| 1,536,811 | | |
| 940,803 | |
*
The Company will continue to apply for the Research and Development incentive as long as it continues to be eligible and will conduct
eligible research and development activities. The applicable legislation that governs the eligibility to participate in the R&D incentive
program is Division 355 of the Income Tax Assessment Act 1997 (ITAA 1997).
Disaggregation
of Revenue
The
disaggregation of revenue from contracts with customers is disclosed below. The Company only has one major product line, being the provision
of Gym Programs. All revenues are generated by the Australian Parent Entity:
| Revenue from program fees ($) | |
| 937,415 | | |
| 2,050,044 | |
| Contractual payments to gyms ($) | |
| (574,025 | ) | |
| (1,215,191 | ) |
| Net Revenue from program fees ($) | |
| 363,390 | | |
| 834,853 | |
Timing
of revenue recognition – All goods transferred at a point in time.
Note
6. Expenses
| Event Costs | |
$ | 40,876 | | |
| 22,513 | |
| Program costs | |
$ | 12,447 | | |
| 253,614 | |
| Merchant fees | |
$ | 44,427 | | |
| 66,327 | |
| Other costs | |
$ | 132,098 | | |
| 146 | |
| Total program expenses | |
$ | 229,848 | | |
| 342,600 | |
| Convertible notes interest | |
$ | 4,420,224 | | |
| 2,162,646 | |
| Bank fees | |
$ | 13,071 | | |
| 6,454 | |
| Bank interest and lease interest | |
$ | 39,435 | | |
| 22,703 | |
| Total finance costs | |
$ | 4,472,730 | | |
| 2,191,803 | |
| | |
| | | |
| | |
| Unrealized currency (gains) | |
$ | (36,181 | ) | |
| (36,660 | ) |
| Realized currency losses/(gains) | |
$ | (11,178 | ) | |
| 10,581 | |
| Net foreign exchange (gains) | |
$ | (47,359 | ) | |
| (26,079 | ) |
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
7. Income Tax
Income
tax expense consists of the following:
| | |
2023$ | | |
2022$ | |
| Deferred tax expense | |
| - | | |
| - | |
| Current tax expense | |
| - | | |
| - | |
| Total Income tax expense | |
| - | | |
| - | |
| | |
| | | |
| | |
| Effective tax rate reconciliation: | |
| | | |
| | |
| Loss before income tax expense | |
| (20,597,436 | ) | |
| (11,197,450 | ) |
| Prima facie income tax benefit on loss before income tax calculated at 25% | |
| 5,149,359 | | |
| 2,799,363 | |
| Add tax effect of | |
| | | |
| | |
| - other non-allowable items | |
| (3,297,349 | ) | |
| 143,430 | |
| Less tax effect of | |
| | | |
| | |
| - items not assessable for income tax | |
| (1,435,790 | ) | |
| (1,377,243 | ) |
| - items deductible for taxation not accounting | |
| 772,848 | | |
| 114,471 | |
| Deferred tax not recognized | |
| (1,189,068 | ) | |
| (1,680,021 | ) |
| Income tax expense | |
| - | | |
| - | |
The
Company has carried forward tax losses, calculated according to Australian income tax legislation of $16,315,346 at June 30, 2023, compared
to $11,559,076 at June 30, 2022, which will be deductible from future assessable income provided that income is derived. Deferred tax
assets and liabilities are based on the assumption that no adverse change will occur in the income tax legislation.
The
benefit of these losses will only be recognized where it is probable that future taxable profit will be available against which the benefits
of the deferred tax asset can be utilized. This is based on the anticipation that the Company will derive sufficient future assessable
income to enable the benefit to be realized and comply with the conditions of deductibility imposed by the law.
The
Company has assessed future forecast profits and concluded that not enough criteria have been satisfied to recognize any deferred tax
assets at the period ended June 30, 2023. Unused tax losses to not have an expiry date.
Note
8. Fair value measurement
Fair
value hierarchy
The
following tables detail the consolidated entity’s assets and liabilities, measured or disclosed at fair value, using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
| |
● |
Level 1: Quoted prices
(unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date |
| |
● |
Level 2: Inputs other than
quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly |
| |
● |
Level 3: Unobservable inputs
for the asset or liability. Considerable judgement is required to determine what is significant to fair value and therefore which
category the asset or liability is placed in can be subjective. |
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
8. Fair value measurement - continued
| | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| Consolidated – June 30, 2023 | |
$ | | |
$ | | |
$ | | |
$ | |
| | |
| | |
| | |
| | |
| |
| Assets | |
| - | | |
| - | | |
| - | | |
| - | |
| Total assets | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | |
| Liabilities | |
| | | |
| | | |
| | | |
| | |
| Derivative Liabilities – refer to Note 21 | |
| - | | |
| - | | |
| 18,694,729 | | |
| 18,694,729 | |
| Total liabilities | |
| - | | |
| - | | |
| 18,694,729 | | |
| 18,694,729 | |
| | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| Consolidated – June 30, 2022 | |
$ | | |
$ | | |
$ | | |
$ | |
| | |
| | |
| | |
| | |
| |
| Assets | |
| - | | |
| - | | |
| - | | |
| - | |
| Total assets | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | |
| Liabilities | |
| | | |
| | | |
| | | |
| | |
| Derivative Liabilities – refer to Note 21 | |
| - | | |
| - | | |
| 878,653 | | |
| 878,653 | |
| Total liabilities | |
| - | | |
| - | | |
| 878,653 | | |
| 878,653 | |
There
were no transfers between levels during the financial years.
The
carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their
short-term nature. The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current
market interest rate that is available for similar financial liabilities.
Valuation
techniques for fair value measurements categorized within level 2 and level 3
The
fair value of the Financial Liabilities for the host liability and the derivative liability has been determined using a combination of
Monte Carlo Simulation (MCS) and Black-Scholes model (BSM). The Company used valuations specialists to perform these valuations.
Level
3 liabilities
Movements
in level 3 liabilities during the current and previous financial years are set out below:
| | |
Derivative liability | | |
Total | |
| Consolidated | |
$ | | |
$ | |
| | |
| | |
| |
| Balance at July 1, 2021 | |
| 1,722,686 | | |
| 1,722,686 | |
| | |
| | | |
| | |
| Fair value of derivative liability recognized for convertible notes issued during the year | |
| 1,907,531 | | |
| 1,907,531 | |
| Fair value movement recognized in profit or loss | |
| (2,751,564 | ) | |
| (2,751,564 | ) |
| Balance at June 30, 2022 | |
| 878,653 | | |
| 878,653 | |
| | |
| | | |
| | |
| Fair value of derivative liability recognized for convertible notes issued during the year | |
| 10,945,347 | | |
| 10,945,347 | |
| Fair value movement recognized in profit or loss | |
| 6,870,729 | | |
| 6,870,729 | |
| | |
| | | |
| | |
| Balance at June 30, 2023 | |
| 18,694,729 | | |
| 18,694,729 | |
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
8. Fair value measurement - continued
The
level 3 liabilities unobservable inputs at issue date of each of the convertible notes series are as follow:
| Series A | |
| | |
| Implied valuation | |
$ | 28,000,000 | |
| Volatility | |
| 74 | % |
| Risk free rate | |
| 0.0 | % |
| Probability of conversion | |
| 50 | % |
| Series A – July 21 | |
| | |
| Implied valuation | |
$ | 28,000,000 | |
| Volatility | |
| 74 | % |
| Risk free rate | |
| 0.1 | % |
| Probability of conversion | |
| 50 | % |
| Series A – August 21 | |
| | |
| Implied valuation | |
$ | 28,000,000 | |
| Volatility | |
| 62 | % |
| Risk free rate | |
| 0.0 | % |
| Probability of conversion | |
| 50 | % |
| Series B1 | |
| | |
| Implied valuation | |
$ | 120,000,000 | |
| Volatility | |
| 74 | % |
| Risk free rate | |
| 0.6 | % |
| Probability of conversion | |
| 50 | % |
| Series B2 | |
| | |
| Implied valuation | |
$ | 70,000,000 | |
| Volatility | |
| 66 | % |
| Risk free rate | |
| 3 | % |
| Probability of conversion | |
| 50 | % |
| Series A Extension | |
| | |
| Implied valuation | |
$ | 28,000,000 | |
| Volatility | |
| 65 | % |
| Risk free rate | |
| 3.5 | % |
| Probability of conversion | |
| 0 | % |
| Reach | |
| | |
| Implied valuation | |
$ | 40,000,000 | |
| Volatility | |
| 60 | % |
| Risk free rate | |
| 3.6 | % |
| Probability of conversion | |
| 100 | % |
| Private Placement | |
| | |
| Implied valuation | |
$ | 53,685,000 | |
| Volatility | |
| 60 | % |
| Risk free rate | |
| 3.5 | % |
| Probability of conversion | |
| 100 | % |
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
9. Cash and cash equivalents
| | |
2023 $ | | |
2022 $ | |
| Cash on hand | |
| 1,000 | | |
| 1,000 | |
| Cash at bank | |
| 3,701,567 | | |
| 568,975 | |
| Total cash and cash equivalents | |
| 3,702,567 | | |
| 569,975 | |
| | |
| | | |
| | |
| Cash as per above | |
| 3,702,567 | | |
| 569,975 | |
| Balance as per statement of cash flows | |
| 3,702,567 | | |
| 569,975 | |
Note
10. Trade and other receivables
| | |
2023 $ | | |
2022 $ | |
| Trade Receivables | |
| 351,905 | | |
| 781,471 | |
| Research and Development Tax Incentive Receivable | |
| 63,776 | | |
| - | |
| Other advances | |
| 1,952,560 | | |
| 149,869 | |
| Less; allowance credit losses | |
| (2,603 | ) | |
| (2,603 | ) |
| Total trade and other receivables | |
| 2,365,638 | | |
| 928,737 | |
Included
in Other advances for fiscal year 2023 is $1,932,860 (2022: nil) in principal amount of Convertible Notes that were issued during the
year ended June 30, 2023, but for which proceeds had not yet been received by the Company at June 30, 2023.
The
Company has applied the simplified approach to measuring expected credit losses, which use a lifetime expected loss allowance. The Company
also recognizes a refund liability in line with our revenue recognition policy in Note 2.
Note
11. Property and equipment
| | |
2023 $ | | |
2022 $ | |
| Plant and equipment - at cost | |
| 69,210 | | |
| 69,210 | |
| Less: Accumulated depreciation | |
| (56,002 | ) | |
| (59,021 | ) |
| | |
| 13,208 | | |
| 10,189 | |
| | |
| | | |
| | |
| Computer equipment - at cost | |
| 95,612 | | |
| 82,925 | |
| Less: Accumulated depreciation | |
| (54,929 | ) | |
| (30,954 | ) |
| | |
| 40,683 | | |
| 51,971 | |
| | |
| | | |
| | |
| Office equipment - at cost | |
| 2,090 | | |
| 2,090 | |
| Less: Accumulated depreciation | |
| (1,313 | ) | |
| (1,054 | ) |
| | |
| 777 | | |
| 1,036 | |
| | |
| | | |
| | |
| Furniture and Fittings - at cost | |
| 49,537 | | |
| 49,536 | |
| Less: Accumulated depreciation | |
| (9,277 | ) | |
| (4,312 | ) |
| | |
| 40,260 | | |
| 45,224 | |
| Total property and equipment | |
| 94,928 | | |
| 108,420 | |
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
11. Property and equipment - continued
| | |
2023 $ | | |
2022 $ | |
| Property Plant and Equipment | |
| | | |
| | |
| Balance at beginning of year | |
| 10,189 | | |
| 11,250 | |
| Additions | |
| 2,110 | | |
| 36,516 | |
| Disposals | |
| - | | |
| - | |
| Depreciation expense | |
| 909 | | |
| (37,577 | ) |
| Balance at end of the year | |
| 13,208 | | |
| 10,189 | |
| | |
| | | |
| | |
| Computer Equipment | |
| | | |
| | |
| Balance at beginning of year | |
| 51,971 | | |
| 41,578 | |
| Additions | |
| 12,687 | | |
| 37,505 | |
| Disposals | |
| - | | |
| - | |
| Depreciation expense | |
| (23,975 | ) | |
| (27,112 | ) |
| Balance at end of the year | |
| 40,683 | | |
| 51,971 | |
| | |
| | | |
| | |
| Office Equipment | |
| | | |
| | |
| Balance at beginning of year | |
| 1,036 | | |
| 7,472 | |
| Additions | |
| - | | |
| - | |
| Disposals | |
| - | | |
| (45,658 | ) |
| Depreciation expense | |
| (259 | ) | |
| 39,222 | |
| Balance at end of the year | |
| 777 | | |
| 1,036 | |
| | |
| | | |
| | |
| Furniture and Fittings | |
| | | |
| | |
| Balance at beginning of year | |
| 45,224 | | |
| 18,470 | |
| Additions | |
| - | | |
| 31,066 | |
| Disposals | |
| - | | |
| - | |
| Depreciation expense | |
| (4,964 | ) | |
| (4,312 | ) |
| Balance at end of the year | |
| 40,260 | | |
| 45,224 | |
Note
12. Intangible assets
| | |
2023 | | |
2022 | |
| | |
($) | | |
($) | |
| Trademark - at cost | |
| 50,843 | | |
| 50,843 | |
| Less: Accumulated amortization | |
| (24,429 | ) | |
| (24,429 | ) |
| | |
| 26,414 | | |
| 26,414 | |
| Platform development - at cost | |
| 1,136,149 | | |
| 1,167,904 | |
| Less: Accumulated depreciation | |
| (351,202 | ) | |
| (133,602 | ) |
| | |
| 784,947 | | |
| 1,034,302 | |
| Total intangible assets | |
| 811,361 | | |
| 1,060,716 | |
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
12. Intangible assets - continued
Reconciliations
of the movement of intangible assets are set out below:
| Trademark | |
| | | |
| | |
| Balance at beginning of the year | |
$ | 26,414 | | |
$ | 19,966 | |
| Additions | |
| - | | |
| 6,448 | |
| Amortization expense | |
| - | | |
| - | |
| Balance at end of the year | |
$ | 26,414 | | |
$ | 26,414 | |
| | |
| | | |
| | |
| Platform development costs | |
| | | |
| | |
| Balance at beginning of the year | |
$ | 1,034,302 | | |
$ | 111,777 | |
| Additions | |
| 352,182 | | |
| 1,037,020 | |
| Disposals | |
| - | | |
| - | |
| Research & Development tax incentive | |
| (383,937 | ) | |
| - | |
| Amortization expense | |
| (217,600 | ) | |
| (114,495 | ) |
| Balance at end of the year | |
$ | 784,947 | | |
$ | 1,034,302 | |
Note
13. Trade and other payables
| | |
2023 $ | | |
2022 $ | |
| Payable to member gyms | |
| 61,065 | | |
| 96,257 | |
| Taxes payable | |
| 560,204 | | |
| 674,617 | |
| Trade payables | |
| 723,105 | | |
| 954,696 | |
| Provision for refund liability | |
| 70,000 | | |
| 95,000 | |
| Other Payables | |
| 620,062 | | |
| 265,601 | |
| Total trade and other payables | |
| 2,034,436 | | |
| 2,086,171 | |
Note
14. Current - Employee Entitlements
| Current Employee Entitlement | |
$ | 357,227 | | |
$ | 215,419 | |
| Non-current Employee Entitlements | |
$ | 18,892 | | |
$ | - | |
Note
15. Unearned Revenue
| Unearned Revenue | |
$ | 174,290 | | |
$ | 295,743 | |
Note
16. Reserves
| Share based payment reserve | |
$ | 3,912,367 | | |
$ | 1,546,983 | |
| Foreign currency translation reserve | |
$ | (65,832 | ) | |
$ | (29,367 | ) |
Share
based payment reserve
The
reserve is used to recognize increments and decrements in share based payment transactions.
Foreign
currency translation reserve
The
reserve is used to recognize exchange differences arising from the translation of the financial statements of foreign operations to Australian
dollars.
Note
17. Issued capital
| | |
2023 Shares | | |
2022 Shares | | |
2023 $ | | |
2022 $ | |
| Owners share capital, opening | |
| 4,898,438 | | |
| 4,898,438 | | |
| 3,385,281 | | |
| 3,385,281 | |
| Issuances | |
| - | | |
| - | | |
| - | | |
| - | |
| Buyback | |
| - | | |
| - | | |
| - | | |
| - | |
| Reverse Share Split (1) | |
| (979,688 | ) | |
| (979,688 | ) | |
| - | | |
| - | |
| Owners share capital, closing | |
| 3,918,750 | | |
| 3,918,750 | | |
| 3,385,281 | | |
| 3,385,281 | |
| |
(1) |
On
January 24, 2024, there was a Reverse Share Split of our issued and outstanding Ordinary Shares and Ordinary Share equivalents on
the basis of four (4) securities for every five (5) securities held. All issued and outstanding Ordinary Shares and Ordinary Share
equivalents and per share data have been adjusted throughout the financial statements to reflect the Reverse Share Split for all
periods presented. |
Capital
risk management
The
Company’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns
for shareholders and benefits for other stakeholders and to maintain an optimum capital structure.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
17. Issued capital - continued
The
Company’s capital includes Ordinary Share capital and financial liabilities supported by financial assets. There are no externally
imposed capital requirements.
The
Company effectively manages capital by assessing the Company’s financial risks and adjusting its capital structure in response
to changes in these risks and the market. These responses include the management of debt and share issuances.
Note
18. Notes to statement of cash flows
| | |
2023 $ | | |
2022 $ | |
| Loss after income tax | |
| (20,597,436 | ) | |
| (11,197,450 | ) |
| Non-cash flows in operating loss: | |
| | | |
| | |
| Accrued interest on convertible notes | |
| 4,420,225 | | |
| 2,162,646 | |
| Share-based payments | |
| 2,365,384 | | |
| 1,546,983 | |
| Convertible notes issued in lieu of payment for services | |
| 624,425 | | |
| - | |
| Depreciation and amortization expense | |
| 360,022 | | |
| 260,651 | |
| Fair value movement of derivatives | |
| 6,870,729 | | |
| (2,751,564 | ) |
| | |
| | | |
| | |
| Changes in assets and liabilities: | |
| | | |
| | |
| Decrease in trade and other receivables | |
| 506,737 | | |
| 130,933 | |
| Decrease in other assets | |
| 33,091 | | |
| 1,015,343 | |
| Decrease/Increase in trade and other payables | |
| (153,292 | ) | |
| 993,662 | |
| Decrease in net deferred revenue | |
| (121,453 | ) | |
| (339,222 | ) |
| Decrease/Increase in provision for refund | |
| (25,000 | ) | |
| 20,000 | |
| Increase in employee entitlement | |
| 160,700 | | |
| 102,833 | |
| Net cash used in operating activities | |
| (5,555,868 | ) | |
| (8,055,185 | ) |
Note
19. Related parties transactions
(a)
Directors
The
following persons held office as Directors of the Company during the years reported:
| |
● |
Nicholas
Langton |
| |
● |
Angus
Benbow (Appointed August 20, 2021, Resigned March 31, 2023) |
| |
● |
Hugh
Williams (Appointed August 20, 2021) |
| |
● |
Vaughn
Taylor (Appointed August 20, 2021) |
| |
● |
Richard
Cranny (Resigned August 20, 2021) |
| |
● |
Kelly
Hestermann (Resigned August 20, 2021) |
| |
● |
Jonathan
Hart (Appointed May 1, 2023) |
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
19. Related parties transactions - continued
(b)
Remuneration of Key Management Personnel
Key
management personnel remuneration:
| | |
2023 | | |
2022 | |
| | |
$ | | |
$ | |
| | |
| | |
| |
| Short term benefits | |
| 657,879 | | |
| 671,709 | |
| Post-employment benefits | |
| 33,191 | | |
| 43,542 | |
| Long term benefits | |
| 18,892 | | |
| - | |
| Share Based payments | |
| 1,065,554 | | |
| 897,586 | |
| Total | |
| 1,775,516 | | |
| 1,612,837 | |
(c)
Related Party Transactions
Shares
Held by Key Management Personnel:
| | |
Shares
2023 | | |
Shares
2022 | |
| | |
| | |
| |
| Opening Balance | |
| 1,786,093 | | |
| 2,955,616 | |
| Issued | |
| - | | |
| 477,000 | |
| Repurchased | |
| - | | |
| (1,200,000 | ) |
| Resignation of Key Management Personnel | |
| (530,609 | ) | |
| - | |
| Reverse Share Split | |
| (106,122 | ) | |
| (446,523 | ) |
| Closing Balance | |
| 1,361,606 | | |
| 1,786,093 | |
Options
Held by Key Management Personnel:
| | |
Options
2023 | | |
Options
2022 | |
| | |
| | |
| |
| Opening Balance | |
| 515,850 | | |
| - | |
| Issued | |
| 279,221 | | |
| 644,813 | |
| Expired | |
| (106,078 | ) | |
| - | |
| Reverse Share Split | |
| (34,629 | ) | |
| (128,963 | ) |
| Closing Balance | |
| 654,365 | | |
| 515,850 | |
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
19. Related parties transactions - continued
Convertible
Notes held by Key Management Personnel:
The
following have been adjusted to account for the 4-for-5 Reverse Share Split as detailed in Note 17:
For
the fiscal year ending June 30, 2023, Mr. Taylor reinvested into the Company 100% of his board fees earned from July 1, 2022 to March
31, 2023, and 50% of his board fees earned from April 1, 2023 to June 30, 2023, totaling $131,250 via the purchase of 131,250 Series
A Extension Notes.
For
the year ending June 30, 2022, Mr. Taylor reinvested into the Company 100% of his board fees earned from August 28, 2021 to June 30,
2022, totaling $129,000 via the purchase of 129,000 Series A Notes. Salary and fees are excluding GST. On August 31, 2021, Mr. Taylor,
was issued options exercisable for a total of 94,193 Ordinary Shares, at an exercise price of $0.78 per Ordinary Share which vest 3 years
from the issue date.
For
the fiscal year ending June 30, 2023, Mr. Williams reinvested into the Company 100% of his board fees earned from July 1, 2022 to March
31, 2023, and 50% of his board fees earned from April 1, 2023 to June 30, 2023, totaling $65,625 via the purchase of 65,625 Series A
Extension Notes.
For
the year ending June 30, 2022, Mr. Williams reinvested into the Company 100% of his board fees earned from August 28, 2021 to June 30,
2022, totaling $43,000 via the purchase of 43,000 Series A Notes. On August 31, 2021, Mr. Williams was issued options exercisable for
a total of 73,214 Ordinary Shares, at an exercise price of $0.78 per Ordinary Share which vest 3 years from the issue date.
On
March 1, 2023, Mr. Langton, through Snowflower Holdings Pty Ltd (Snowflower Family Trust) was issued options exercisable for a total
of 20,622 Ordinary Shares, at an exercise price of $0.29 per Ordinary Share, which vest 3 years from the issue date, being March 1, 2026.
On
August 31, 2021, Mr. Langton, was issued options exercisable for a total of 189,757 Ordinary Shares, at a weighted average of $3.20 per
Ordinary Share, which vest 3 years from the issue date.
On
March 1, 2023, Mr. Benbow, through ABRB Pty Ltd (Benbow Trust), was issued options exercisable for a total of 27,728 Ordinary Shares,
at an exercise price of $0.29 per Ordinary Share, which vest 3 years from the issue date, being March 1, 2026.
On
August 21, 2021, Mr. Benbow, was issued options exercisable for a total of 155,190 Ordinary Shares, at an exercise price of $0.78 per
Ordinary Share, which vest 3 years from the issue date.
On
March 1, 2023, Mr. Hart, through the J Hart Family Trust, was issued options exercisable for a total of 10,132 Ordinary Shares, at an
exercise price of $0.29 per Ordinary Share, which vest 3 years from the issue date, being March 1, 2026. Salary and fees are excluding
GST. Mr. Hart serves as trustee for the trust.
Mr.
Java was appointed as CFO effective February 20, 2023. On March 1, 2023, Mr. Java, though 3213 Ventures Pty Ltd (Java Holdings Trust),
was issued options exercisable for a total of 160,000 Ordinary Shares, at an exercise price of $0.29 per Ordinary Share, which vest 3
years from the issue date, being March 1, 2026.
Other
related parties:
Tanya
Langton, our Head of Global Events and Logistics and the spouse of our Chief Executive Officer Nick Langton received compensation consisting
of (i) short term benefits in the amount of $153,999 for the year ending June 30, 2023, as compared with $177,860 for the year ended
June 30, 2022, (ii) post-employment benefits of $13,989 for the year ending June 30, 2023, as compared with $15,269 for the year ending
June 30, 2022, and (iii) share based payments in the amount of $141,585 for the year ending June 30, 2023, as compared with $115,129
for the year ending June 30, 2022.
On
August 21, 2021, Mrs. Langton was issued options exercisable for a total of 64,206 Ordinary Shares, at an average exercise price of $0.74
per Ordinary Share, vesting over 3 years, beginning on June 30, 2022.
On
March 1, 2023, Mrs. Langton, was issued options exercisable for a total of 4,060 Ordinary Shares, at an average exercise price of $0.29
per Ordinary Share, which vest on March 1, 2026.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
19. Related parties transactions - continued
Other
than as disclosed the Company did not enter into any transactions or loans with any:
| |
(i) |
enterprises
that directly or indirectly, through one or more intermediaries, control, are controlled by or are under common control with us; |
| |
(ii) |
associates; |
| |
(iii) |
individuals
owning, directly or indirectly, an interest in our voting power that gives them significant influence over us, and close members
of any such individual’s family; |
| |
(iv) |
key
management personnel and close members of such individuals’ families; or |
| |
(v) |
enterprises
in which a substantial shareholder interest in our voting power is owned, directly or indirectly, by any person described in (iii)
or (iv) or over which such person is able to exercise significant influence. |
(d)
Parent Entity
The
individual financial statements of the Parent Entity show the following aggregate amounts:
Results
of the parent entity
| | |
2023
$ | | |
2022
$ | |
| | |
| | |
| |
| Loss for the period | |
| (20,053,426 | ) | |
| (10,667,136 | ) |
| Other comprehensive loss for the period | |
| - | | |
| - | |
| Total comprehensive loss for the period | |
| (20,053,426 | ) | |
| (10,667,136 | ) |
| Financial position of the parent entity | |
| | | |
| | |
| Assets | |
| | | |
| | |
| Current assets | |
| 7,307,155 | | |
| 2,123,586 | |
| Non-current assets | |
| 1,120,872 | | |
| 1,556,123 | |
| Total Assets | |
| 8,428,027 | | |
| 3,679,709 | |
| | |
| | | |
| | |
| Liabilities | |
| | | |
| | |
| Current liabilities | |
| 28,018,760 | | |
| 10,353,079 | |
| Non-current liabilities | |
| 10,346,332 | | |
| 5,575,653 | |
| Total Liabilities | |
| 38,365,092 | | |
| 15,928,732 | |
| Net Liabilities | |
| (29,937,065 | ) | |
| (12,249,023 | ) |
| | |
| | | |
| | |
| Equity | |
| | | |
| | |
| Contributed equity | |
| 3,385,281 | | |
| 3,385,281 | |
| Reserves | |
| 3,912,367 | | |
| 1,546,983 | |
| Accumulated losses | |
| (37,234,713 | ) | |
| (17,181,287 | ) |
| Total equity | |
| (29,937,065 | ) | |
| (12,249,023 | ) |
There
were no material contingent assets and liabilities in the Parent Entity at June 30, 2023 (nil – 30 June 2022)
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
19. Related parties transactions - continued
(e)
Subsidiaries
The
Company’s subsidiaries at June 30, 2023 are set out below. Unless otherwise stated, they have share capital consisting solely of
Ordinary Shares that are held directly by the company, and the proportion of ownership interests held equals the voting rights held by
the company. The country of incorporation or registration is also their principal place of business.
| Name of entity | |
Place of business | |
Ownership interest held | |
| | |
| |
2023 | | |
2022 | |
| Wimp 2 Warrior LLC | |
United States of America | |
| 100 | % | |
| 100 | % |
| Wimp 2 Warrior Productions Pty Ltd | |
Australia | |
| 95 | % | |
| 95 | % |
| Wimp 2 Warrior Digital Pty Ltd | |
Australia | |
| 0 | % | |
| 100 | % |
| Wimp 2 Warrior (Ireland) Limited | |
Ireland | |
| 100 | % | |
| 100 | % |
Note
20. Leases
At
the commencement of a lease contract, the Company assesses whether the contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration.
For
the period ended June 30, 2023 and 2022, the Company entered into a long-term lease with related balances as follows:
| | |
2023 | | |
2022 | |
| | |
$ | | |
$ | |
| (a) Right-of-use asset | |
| | | |
| | |
| Right of use asset | |
| 400,829 | | |
| 400, 829 | |
| Less: Accumulated amortization | |
| (243,290 | ) | |
| (123,922 | ) |
| Balance at end of year | |
| 157,540 | | |
| 276,907 | |
| | |
| | | |
| | |
| Balance at beginning of year | |
| 276,907 | | |
| 393,285 | |
| Additions | |
| - | | |
| - | |
| Less: amortization for the period | |
| (119,367 | ) | |
| (116,378 | ) |
| Balance at end of the year | |
| 157,540 | | |
| 276,907 | |
| (b) Lease liabilities | |
| | | |
| | |
| | |
| | | |
| | |
| Current lease liability | |
| 121,500 | | |
| 124,349 | |
| Non-current lease liability | |
| 54,162 | | |
| 177,870 | |
| Total lease liabilities | |
| 175,662 | | |
| 302,219 | |
The
total of future lease payments (including those lease payments that are not included in the measurement of the lease liability, e.g.
for short-term leases and leases of low-value items) are disclosed for each of the following periods (refer to Note 23).
| Less than one year | |
| 127,560 | | |
| 132,560 | |
| One to two years | |
| 28,214 | | |
| 127,360 | |
| Two to five years | |
| 28,214 | | |
| 56,427 | |
| Five years and over | |
| - | | |
| - | |
| Total future lease payments | |
| 183,789 | | |
| 316,347 | |
Note
21. Financial Liabilities
| | |
2023 $ | | |
2022 $ | |
| Convertible note payable - Current | |
| 25,331,307 | | |
| 7,907,953 | |
| Convertible note payable - Non Current | |
| 10,273,278 | | |
| 5,182,363 | |
| Total Financial Liabilities | |
| 35,604,585 | | |
| 13,090,316 | |
| | |
| | | |
| | |
| Host Liability – Current | |
| 16,567,450 | | |
| 7,907,953 | |
| Host Liability – Non Current | |
| 342,406 | | |
| 4,303,710 | |
| Derivative liability - Current | |
| 8,763,857 | | |
| - | |
| Derivative liability – Non Current | |
| 9,930,872 | | |
| 878,653 | |
| Total Convertible Notes Payable | |
| 35,604,585 | | |
| 13,090,316 | |
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
21. Financial Liabilities - continued
The
convertible notes issued by the Company have been split into the debt liability and a derivative component. The fair value of the Financial
Liabilities for the host liability and the derivative liability has been determined using a combination of Monte Carlo Simulation (MCS)
and Black-Scholes model (BSM).
During
the years ended June 30, 2023 and June 30, 2022, the Company raised capital by issuing convertible notes to investors as summarized below.
For most of the Convertible Notes issued by the Company, in the event of a “Qualified Equity Investment” or a “Sale,”
which includes the sale of at least 50% of the Company’s Ordinary Shares, the Convertible Notes mandatorily convert into the Company’s
Ordinary Shares.
Series A
Key Terms of these Series A convertibles notes are as follows
| Issue date | |
| 23-Dec-20 | |
| Conversion Date | |
| 23-Dec-22 | |
| Modification Date | |
| 1-Dec-22 | |
| Modified Conversion Date | |
| 31-Dec-23 | |
| Term (Years) | |
| 2.0 | |
| Face Value | |
| 7,319,818 | |
| Interest Rate | |
| 8.5 | % |
| Conversion Discount (Qualified Equity Investment) | |
| 20.0 | % |
Series
A – July 21
Key Terms of these Series A convertibles notes are as follows
| Issue Date | |
| 7-Jul-21 | |
| Conversion Date | |
| 7-Jul-23 | |
| Term (Years) | |
| 2.0 | |
| Face Value | |
| 525,000 | |
| Interest Rate | |
| 8.5 | % |
| Conversion Discount (Qualified Equity Investment) | |
| 20.0 | % |
Series
A – August 21
Key Terms of these Series A convertibles notes are as follows
| Issue
Date |
|
|
20-Aug-21 |
|
| Conversion
Date |
|
|
9-Dec-22 |
|
| Modification
Date |
|
|
1-Dec-22 |
|
| Modified
Conversion Date |
|
|
31-Dec-23 |
|
| Term
(Years) |
|
|
1.3 |
|
| Face
Value |
|
|
172,000 |
|
| Interest
Rate |
|
|
8.5 |
% |
| Conversion
Discount (Qualified Equity Investment) |
|
|
20.0 |
% |
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
21. Financial Liabilities - continued
Series
B1
Key Terms of the Series B1 convertibles notes are as follows
| Issue
Date |
|
|
15-Dec-21 |
|
| Conversion
Date |
|
|
15-Dec-23 |
|
| Modification
Date |
|
|
1-Dec-22 |
|
| Modified
Conversion Date |
|
|
31-Dec-23 |
|
| Term
(Years) |
|
|
2.0 |
|
| Face
Value |
|
|
4,982,652 |
|
| Interest
Rate |
|
|
8.5 |
% |
| Conversion
Discount (Qualified Equity Investment) |
|
|
20.0 |
% |
Series B2
Key Terms of this Series B2 convertibles notes are as follows
| Issue
Date |
|
|
1-July-22 |
|
| Conversion
Date |
|
|
30-June-24 |
|
| Modification
Date |
|
|
1-Dec-22 |
|
| Modified
Conversion Date |
|
|
31-Dec-23 |
|
| Term
(Years) |
|
|
2.0 |
|
| Face
Value |
|
|
671,284 |
|
| Interest
Rate |
|
|
10 |
% |
| Conversion
Discount (Qualified Equity Investment) |
|
|
20.0 |
% |
Series A Extension
Key Terms of this Series A Extension convertibles notes are as follows
| Issue
Date |
|
|
16-Nov-22 |
|
| Conversion
Date |
|
|
31-Dec-23 |
|
| Term
(Years) |
|
|
1.1 |
|
| Face
Value |
|
|
1,571,873 |
|
| Interest
Rate |
|
|
15 |
% |
| Conversion
Discount (Qualified Equity Investment) |
|
|
25 |
% |
| Reach |
|
| |
|
| Key
Terms of this Reach convertibles notes are as follows |
|
| |
|
|
|
|
| Issue
Date |
|
|
13-Feb-23 |
|
| Conversion
Date |
|
|
13-Feb-25 |
|
| Term
(Years) |
|
|
2.0 |
|
| Face
Value* |
|
|
3,195,000 |
|
| Interest
Rate |
|
|
15 |
% |
| Conversion
Discount (Qualified Equity Investment) |
|
|
20 |
% |
*$3,025,841
of Reach convertible notes, inclusive of accrued interest, were rolled into the Private Placement on June 9, 2023.
Private Placement
Key Terms of this Private Placement convertibles notes are as follows
| Issue
Date |
|
|
9-June-23 |
|
| Conversion
Date |
|
|
9-June-25 |
|
| Term
(Years) |
|
|
2.0 |
|
| Face
Value |
|
|
9,215,591 |
|
| Interest
Rate |
|
|
10 |
% |
| Conversion
Discount (Qualified Equity Investment) |
|
|
30 |
% |
Note
22. Share-based payments
During
the years ended June 30, 2023 and June 30, 2022, the Company granted share options to advisors and consultants (as remuneration for services
provided), as well as select employees and Directors of the Company under the board approved Employee Share Option Plan (ESOP).
Each
share option converts into one Ordinary Share of the Company on exercise. An option may be exercised by either (a) paying to the Company
the Exercise Price of the Option being exercised (Cash Exercise) or (b) if elected by the Option Holder by setting off the total Exercise
Price against the number of Shares which they are entitled to receive upon exercise (Cashless Exercise Facility). The options carry neither
rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting, subject to meeting the vesting
conditions, to the date of their expiry.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
22. Share-based payments - continued
Options
are exercisable at a price determined by each option grant and range from $0.01 (relating to options granted as consideration for foregone
cash payment for services provided) to $6.73 per share (relating to issuances under the ESOP which qualifies for the ATO ESS start-up
tax concessions available for SME unlisted companies). All options are vested over three years. If the options remain unexercised after
the period agreed from the date of grant the options expire. Options are forfeited if the employee leaves the Company before the options
vest unless otherwise agreed by the Board.
The
values of the Options are calculated by applying the Black-Scholes model. The Company used valuations specialists to perform these valuations.
Details
of the expense arising from performance rights:
| | |
2023 | | |
2022 | |
| | |
$ | | |
$ | |
| | |
| | |
| |
| ESOP | |
| 1,052,245 | | |
| 914,682 | |
| Sweat Options | |
| 1,164,524 | | |
| 632,301 | |
| Reach | |
| 148,615 | | |
| - | |
| Total Share based payments | |
| 2,365,384 | | |
| 1,546,983 | |
Details
of the number of share options outstanding during the year adjusted to account for the 4-for-5 Reverse Share Split, as detailed in Note
17, are as follows:
| | |
ESOP | | |
SWEAT | | |
REACH | |
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| Beginning of year | |
| 556,074 | | |
| - | | |
| 312,362 | | |
| - | | |
| - | | |
| - | |
| Granted During the year | |
| 312,886 | | |
| 556,074 | | |
| 31,693 | | |
| 312,362 | | |
| 45,794 | | |
| - | |
| Forfeited/expired during the year | |
| (84,862 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Exercised during the year | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| End of the year | |
| 784,098 | | |
| 556,074 | | |
| 344,055 | | |
| 312,362 | | |
| 45,794 | | |
| - | |
The
model inputs for options granted during the reporting periods include:
| Grant Date | |
Exercise Price | | |
Term | |
Spot Price | | |
Share Price Volatility | | |
Expected Dividend Yield | | |
Risk Free Interest Rate | |
| ESOP | |
| | | |
| |
| | | |
| | | |
| | | |
| | |
| 31 Aug 2021 | |
$ | 0.62 | | |
3 years | |
$ | 5.72 | | |
| 67.3 | % | |
| 0.0 | % | |
| 0.2 | % |
| 31 Aug 2021 | |
$ | 5.72 | | |
3 years | |
$ | 5.72 | | |
| 67.3 | % | |
| 0.0 | % | |
| 0.2 | % |
| 1 March 2022 | |
$ | 0.62 | | |
3 years | |
$ | 18.51 | | |
| 66.4 | % | |
| 0.0 | % | |
| 1.5 | % |
| 23 Feb 2023 | |
$ | 0.23 | | |
3.0 years | |
$ | 5.72 | | |
| 64.5 | % | |
| 0.0 | % | |
| 3.6 | % |
| SWEAT | |
| | | |
| |
| | | |
| | | |
| | | |
| | |
| 21 Aug 2021 | |
$ | 0.62 | | |
2.86 years | |
$ | 5.72 | | |
| 66.6 | % | |
| 0.0 | % | |
| 0.5 | % |
| 21 Aug 2021 | |
$ | 0.01 | | |
2.86 years | |
$ | 5.72 | | |
| 66.6 | % | |
| 0.0 | % | |
| 0.5 | % |
| 21 Aug 2022 | |
$ | 0.01 | | |
4.90 years | |
$ | 10.80 | | |
| 65.4 | % | |
| 0.0 | % | |
| 3.0 | % |
| REACH | |
| | |
| |
| | |
| | |
| | |
| |
| 13 Feb 2023 | |
$ | 5.72 | | |
3.30 years | |
$ | 5.72 | | |
| 65.4 | % | |
| 0.0 | % | |
| 3.5 | % |
| 9 June 2023 | |
$ | 6.73 | | |
3.15 years | |
$ | 6.12 | | |
| 60.1 | % | |
| 0.0 | % | |
| 3.8 | % |
The
share-based payment expense of $2,365,384 at June 30, 2023, as compared with the share-based payment expense of $1,546,983 at June 30,
2022, has been recognized in the Consolidated Statement of Profit or Loss and Other Comprehensive Loss.
Note
23. Financial Instruments
Capital
management
The
Company’s objectives when managing share capital, reserves, and accumulated losses, which represents the Company’s capital,
are to:
| ● |
safeguard
their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other
stakeholders; and |
| ● |
sustain
future product development. |
Financial
risk management
The
Company’s activities expose it to a variety of financial risks: market risk (primarily currency risk), credit risk, and liquidity
risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize
potential adverse effects on the financial performance of the Company. The Company uses different methods to measure different types
of risk to which it is exposed. These methods include sensitivity analysis in the case of foreign exchange risk and aging analysis for
credit risk.
Financial
risk management is carried out by the Chief Financial Officer (CFO) and overseen by the Board of Directors.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
23. Financial Instruments - continued
Market
Risk
Foreign
exchange risk
Foreign
exchange risk arises when future commercial transactions and recognized assets and liabilities are denominated in a currency that is
not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting. The Company operates
internationally and is exposed to foreign exchange risk arising primarily from currency exposures to the NZ Dollar, Euro, and US Dollar.
The
Company’s financial results are reported in AU dollar and a substantial portion of our operating revenues and expenses are reported
in AU dollar. Revenue and expenses recorded in local currency other that AU dollar are where practical received in to and paid out of
local currency bank accounts mitigating the Company’s exposure to foreign currency risk.
Credit
risk
Credit
risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well
as credit exposures to customers, including outstanding receivables and committed transactions.
The
Company has no significant concentrations of credit risk. For banks and financial institutions, only independently rated and reputable
parties are accepted. The Company has policies in place to ensure that sales of products and services are made to customers in advance
of the products and service being provided The maximum exposure to credit risk at the reporting date is the carrying amount of the financial
assets.
Liquidity
risk
Liquidity
risk arises from the Company’s management of cash and working capital. It is the risk that the Company will encounter difficulty
in meeting its financial obligations as they fall due. The Company’s policy is to ensure that it will always have sufficient cash
to allow it to meet its liabilities as and when they fall due. The Company manages its liquidity needs by carefully monitoring scheduled
debt servicing payments for long-term financial liabilities as well as cash-outflows due in day-to-day business.
Remaining
contractual maturities
The
following tables detail the Company’s remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities
are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and
therefore these totals may differ from their carrying amount in the statement of financial position.
| | |
Weighted
average
interest rate | | |
1 year or
less | | |
Between 1
and 2 years | | |
Between 2
and 5 years | | |
Remaining
contractual
maturities | |
| Consolidated 2023 | |
% | | |
$ | | |
$ | | |
$ | | |
$ | |
| | |
| | |
| | |
| | |
| | |
| |
| Non - Derivative | |
| | | |
| | | |
| | | |
| | | |
| | |
| Non-interest bearing | |
| | | |
| | | |
| | | |
| | | |
| | |
| Trade and other payables | |
| - | | |
| 2,034,436 | | |
| - | | |
| - | | |
| 2,034,436 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Interest bearing – fixed rate | |
| | | |
| | | |
| | | |
| | | |
| | |
| Financial liability – host debt | |
| 9.30 | % | |
| 16,567,450 | | |
| 342,406 | | |
| - | | |
| 16,909,856 | |
| Lease liability | |
| 3.5 | % | |
| 127,361 | | |
| 28,214 | | |
| 28,214 | | |
| 183,789 | |
| Total non - derivative | |
| | | |
| 18,729,247 | | |
| 370,620 | | |
| 28,214 | | |
| 19,128,081 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Derivative | |
| | | |
| | | |
| | | |
| | | |
| | |
| Derivative liability | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Total Derivative | |
| | | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
Weighted
average
interest rate | | |
1 year or
less | | |
Between 1
and 2 years | | |
Between 2
and 5 years | | |
Remaining
contractual
maturities | |
| Consolidated 2022 | |
% | | |
$ | | |
$ | | |
$ | | |
$ | |
| | |
| | |
| | |
| | |
| | |
| |
| Non - Derivative | |
| | | |
| | | |
| | | |
| | | |
| | |
| Non-interest bearing | |
| | | |
| | | |
| | | |
| | | |
| | |
| Trade and other payables | |
| - | | |
| 2,086,171 | | |
| - | | |
| - | | |
| 2,086,171 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Interest bearing – fixed rate | |
| | | |
| | | |
| | | |
| | | |
| | |
| Financial liability – host debt | |
| 8.5 | % | |
| 7,907,953 | | |
| 4,303,710 | | |
| - | | |
| 12,211,663 | |
| Lease liability | |
| 3.5 | % | |
| 132,560 | | |
| 127,360 | | |
| 56,427 | | |
| 316,347 | |
| Total non - derivative | |
| | | |
| 10,126,684 | | |
| 4,431,070 | | |
| 56,427 | | |
| 14,614,181 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Derivative | |
| | | |
| | | |
| | | |
| | | |
| | |
| Derivative liability | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Total Derivative | |
| | | |
| - | | |
| - | | |
| - | | |
| - | |
The
cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
ALTA
GLOBAL GROUP LIMITED
ACN
163 057 565
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2023 AND 2022
Note
23. Financial Instruments - continued
Fair
value estimation
The
fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their
short-term nature. The fair value of financial liabilities approximates their carrying values.
Note
24. Remuneration of auditors
During
the financial year the following fees were paid or payable for services provided by BDO Audit Pty Ltd, the auditor of the Company and
its network firms:
| Audit of financial statements | |
2023 | | |
2022 | |
| | |
$ | 138,750 | | |
$ | 91,300 | |
Note
25. Contingent Assets and Liabilities
There
were no material contingent assets and liabilities at June 30, 2023 (nil – June 30, 2022).
Note
26. Commitments
The
Company had no material Commitments at June 30, 2023 (nil – June 30, 2022).
Note
27. Loss per share
| | |
2023 | | |
2022 | |
| | |
$ | | |
$ | |
| Reconciliation of loss after tax | |
| (20,597,436 | ) | |
| (11,197,450 | ) |
| | |
| | | |
| | |
| Weighted average number of Ordinary Shares outstanding during the year used in calculating loss per share (1) | |
| 3,918,750 | | |
| 3,918,750 | |
| | |
| | | |
| | |
| Loss per share attributable to the owners of Alta Global Group Limited | |
| | | |
| | |
| Basic loss per share | |
| (5.26 | ) | |
| (2.86 | ) |
| Diluted loss per share | |
| (5.26 | ) | |
| (2.86 | ) |
| |
(1) |
On
January 24, 2024, there was a Reverse Share Split of our issued and outstanding Ordinary Shares and Ordinary Share equivalents on
the basis of four (4) securities for every five (5) securities held. All issued and outstanding Ordinary Shares and Ordinary Share
equivalents and per share data have been adjusted throughout the financial statements to reflect the Reverse Share Split for all
periods presented. |
Note
28. Events after the reporting period
In
July 2023, A$525,624 in principal amount of our Series A - July 21 Convertible Notes, plus accrued interest, were converted into 87,126
Ordinary Shares. In the same month, 344,055 unlisted options were converted to 327,142 Ordinary Shares for various officers, directors,
employees or consultants.
In
August 2023, the Company entered into a conditional agreement to purchase the assets of Steppen, a fitness technology company based in
Australia. In September 2023, the acquisition was completed and as consideration for the asset acquisition, we issued the seller an unsecured
and non-redeemable convertible promissory note with a principal amount of US$64,977.
In
October 2023, the Company entered into a conditional agreement to purchase the assets of Mixed Martials Arts LLC, an independent MMA
media company, based in US. The acquisition was completed and as consideration for the asset acquisition, we have issued the seller an
unsecured and non-redeemable convertible promissory note with a principal amount of US$250,000 and US$25,000 cash.
In
addition, in October 2023, various officers, directors, employees, ambassadors, and consultants were issued 590,729 share rights (subject
to vesting conditions) which may be converted into Ordinary Shares under the Company’s Employee Incentive Plan. The Board has also
approved a further pool of 40,000 share rights for future issuances, 50% of which will vest and become exercisable on October 1, 2025,
and 50% of which will vest and become exercisable on October 1, 2026.
On
January 24, 2024, there was a Reverse Share Split of our issued and outstanding Ordinary Shares and Ordinary Share equivalents on the
basis of four (4) securities for every five (5) securities held. All issued and outstanding Ordinary Shares and Ordinary Share equivalents
and per share data have been adjusted throughout the financial statements to reflect the Reverse Share Split for all periods presented.
On
April 2, 2024, the Company closed its initial public offering of 1,300,000 Ordinary Shares at a public offering price of $5.00 per share,
for gross proceeds of $6,500,000, before deducting underwriting discounts and offering expenses.
ALTA
GLOBAL GROUP LIMITED
UNAUDITED
INTERIM CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS FOR THE NINE MONTHS
ENDED
MARCH 31, 2024 AND 2023
UNAUDITED
INTERIM CONDENSED CONSOLIDATED STATEMENT OF
PROFIT
OR LOSS AND OTHER COMPREHENSIVE LOSS FOR THE
NINE
MONTHS ENDED MARCH 31, 2024 AND MARCH 31, 2023
| | |
Note | |
March 31, 2024 ($) | | |
March 31, 2023 ($) | |
| Revenue | |
| |
| | | |
| | |
| Revenue from Program Fees | |
5 | |
| 954,621 | | |
| 766,499 | |
| Less: Contractual payments to gyms | |
5 | |
| (556,098 | ) | |
| (462,026 | ) |
| Net Revenue from Program Fees | |
| |
| 398,523 | | |
| 304,473 | |
| | |
| |
| | | |
| | |
| Other Income | |
5 | |
| 172,760 | | |
| 1,173,278 | |
| Total Revenue | |
| |
| 571,283 | | |
| 1,477,751 | |
| | |
| |
| | | |
| | |
| Expenses | |
| |
| | | |
| | |
| | |
| |
| | | |
| | |
| Program Expenses | |
6 | |
| 124,190 | | |
| 189,304 | |
| Employee salaries and benefits | |
| |
| 3,908,674 | | |
| 3,292,873 | |
| Share Based Payments | |
16 | |
| 3,650,976 | | |
| 1,774,037 | |
| Advertising fees | |
| |
| 419,912 | | |
| 515,197 | |
| Professional fees | |
| |
| 1,505,745 | | |
| 421,546 | |
| Rent | |
| |
| 7,245 | | |
| 10,158 | |
| IT costs | |
| |
| 416,340 | | |
| 477,121 | |
| Depreciation and amortization | |
| |
| 483,338 | | |
| 312,293 | |
| Net foreign exchange gain | |
6 | |
| (59,191 | ) | |
| (15,961 | ) |
| Finance costs | |
6 | |
| 3,219,591 | | |
| 2,614,281 | |
| Other expenses | |
| |
| 1,198,176 | | |
| 464,569 | |
| Fair Value movement in derivative liability | |
| |
| (3,400,685 | ) | |
| 4,666,982 | |
| Total Expenses | |
| |
| 11,474,311 | | |
| 14,722,400 | |
| | |
| |
| | | |
| | |
| Loss before income tax expense | |
| |
| (10,903,028 | ) | |
| (13,244,649 | ) |
| Income tax expense | |
| |
| - | | |
| - | |
| | |
| |
| | | |
| | |
| Loss after income tax expense for the period | |
| |
| (10,903,028 | ) | |
| (13,244,649 | ) |
| | |
| |
| | | |
| | |
| Other comprehensive loss, net of tax | |
| |
| (98,128 | ) | |
| (21,072 | ) |
| | |
| |
| | | |
| | |
| Total comprehensive loss for the period attributable to the | |
7 | |
| (11,001,156 | ) | |
| (13,265,721 | ) |
| members of Alta Global Group Limited | |
| |
| | | |
| | |
| | |
| |
| | | |
| | |
| Basic loss per share | |
20 | |
| (1.06 | ) | |
| (3.38 | ) |
| Diluted loss per share | |
20 | |
| (1.06 | ) | |
| (3.38 | ) |
The
above consolidated statements should be read in conjunction with the accompanying notes.
UNAUDITED
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS
AT MARCH 31, 2024 AND JUNE 30, 2023
| | |
Note | |
March 31, 2024 ($) | | |
June 30, 2023 ($) | |
| Current Assets | |
| |
| | | |
| | |
| | |
| |
| | | |
| | |
| Cash and cash equivalents | |
8 | |
| 98,790 | | |
| 3,702,567 | |
| Trade and other receivables | |
9 | |
| 9,346,315 | | |
| 2,365,638 | |
| Other assets | |
| |
| 41,081 | | |
| 33,641 | |
| Total current assets | |
| |
| 9,486,186 | | |
| 6,101,846 | |
| | |
| |
| | | |
| | |
| Non-current assets | |
| |
| | | |
| | |
| | |
| |
| | | |
| | |
| Property, Plant and Equipment | |
| |
| 82,462 | | |
| 94,928 | |
| Right-of-use asset | |
17 | |
| 302,506 | | |
| 157,540 | |
| Intangible assets | |
10 | |
| 1,087,651 | | |
| 811,361 | |
| Other Assets | |
| |
| 65,106 | | |
| 65,110 | |
| Total non-current assets | |
| |
| 1,537,725 | | |
| 1,128,939 | |
| Total assets | |
| |
| 11,023,911 | | |
| 7,230,785 | |
| | |
| |
| | | |
| | |
| Current liabilities | |
| |
| | | |
| | |
| | |
| |
| | | |
| | |
| Trade and other payables | |
11 | |
| 5,047,525 | | |
| 2,034,436 | |
| Unearned revenue | |
| |
| - | | |
| 174,290 | |
| Current Employee Entitlements | |
| |
| 389,886 | | |
| 357,227 | |
| Current Financial Liabilities | |
15 | |
| - | | |
| 25,331,307 | |
| Current Lease Liability | |
17 | |
| 128,181 | | |
| 121,500 | |
| Total current liabilities | |
| |
| 5,565,591 | | |
| 28,018,760 | |
| | |
| |
| | | |
| | |
| Non-current liabilities | |
| |
| | | |
| | |
| | |
| |
| | | |
| | |
| Non-current Financial Liabilities | |
15 | |
| - | | |
| 10,273,278 | |
| Non-current Employee Entitlements | |
| |
| 53,060 | | |
| 18,892 | |
| Non-current Lease Liability | |
17 | |
| 180,625 | | |
| 54,162 | |
| Total non-current liabilities | |
| |
| 233,685 | | |
| 10,346,332 | |
| | |
| |
| | | |
| | |
| Total liabilities | |
| |
| 5,799,276 | | |
| 38,365,092 | |
| | |
| |
| | | |
| | |
| Net assets/(liabilities) | |
| |
| 5,224,635 | | |
| (31,134,307 | ) |
| | |
| |
| | | |
| | |
| Equity | |
| |
| | | |
| | |
| | |
| |
| | | |
| | |
| Issued Capital | |
13 | |
| 49,521,160 | | |
| 3,385,281 | |
| Share-based payment reserve | |
12 | |
| 5,027,773 | | |
| 3,912,367 | |
| Foreign currency translation reserve | |
12 | |
| (163,961 | ) | |
| (65,832 | ) |
| Accumulated losses | |
| |
| (49,160,337 | ) | |
| (38,366,123 | ) |
| Total equity/(deficit) | |
| |
| 5,224,635 | | |
| (31,134,307 | ) |
The
above consolidated statements should be read in conjunction with the accompanying notes.
UNAUDITED
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR
THE NINE MONTHS ENDED MARCH 31, 2024 AND MARCH 31, 2023
| March 31, 2024 | |
Issued Capital ($) | | |
Share-based Payment Reserve ($) | | |
Foreign Currency Translation Reserve ($) | | |
Accumulated Losses ($) | | |
Total ($) | |
| | |
| | |
| | |
| | |
| | |
| |
| Opening balance as at July 1, 2023 | |
| 3,385,281 | | |
| 3,912,367 | | |
| (65,832 | ) | |
| (38,366,123 | ) | |
| (31,134,307 | ) |
| Loss after tax | |
| - | | |
| - | | |
| - | | |
| (10,903,028 | ) | |
| (10,903,028 | ) |
| Other comprehensive (loss) | |
| - | | |
| - | | |
| (98,128 | ) | |
| - | | |
| (98,128 | ) |
| Total comprehensive (loss) | |
| - | | |
| - | | |
| (98,128 | ) | |
| (10,903,028 | ) | |
| (11,001,156 | ) |
| Share-based payments (see Note 16) | |
| - | | |
| 3,650,976 | | |
| - | | |
| - | | |
| 3,650,976 | |
| Issued of Shares fully paid net of Transaction cost (see Note 13) | |
| 8,789,914 | | |
| - | | |
| - | | |
| - | | |
| 8,789,914 | |
| Issue of Shares from conversion of convertible notes (see Note 13) | |
| 34,919,208 | | |
| - | | |
| - | | |
| - | | |
| 34,919,208 | |
| Advisor options vested (see Note 13) | |
| 2,426,757 | | |
| (2,426,757 | ) | |
| - | | |
| - | | |
| - | |
| Advisor options forfeited (see Note 13) | |
| - | | |
| (108,813 | ) | |
| - | | |
| 108,813 | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Closing balance as at March 31, 2024 | |
| 49,521,160 | | |
| 5,027,773 | | |
| (163,960 | ) | |
| (49,160,338 | ) | |
| 5,224,635 | |
| March 31, 2023 | |
Issued Capital ($) | | |
Share-based Payment Reserve ($) | | |
Foreign Currency Translation Reserve ($) | | |
Accumulated Losses ($) | | |
Total ($) | |
| | |
| | |
| | |
| | |
| | |
| |
| Opening balance as at July 1, 2022 | |
| 3,385,281 | | |
| 1,546,983 | | |
| (29,367 | ) | |
| (17,768,687 | ) | |
| (12,865,790 | ) |
| Loss after tax | |
| - | | |
| - | | |
| - | | |
| (13,244,649 | ) | |
| (13,244,649 | ) |
| Other comprehensive (loss) | |
| - | | |
| - | | |
| (21,072 | ) | |
| - | | |
| (21,072 | ) |
| Total comprehensive (loss) | |
| - | | |
| - | | |
| (21,072 | ) | |
| (13,244,649 | ) | |
| (13,265,721 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Share-based payments (see Note 16) | |
| - | | |
| 1,774,037 | | |
| - | | |
| - | | |
| 1,774,037 | |
| Closing balance as at March 31, 2023 | |
| 3,385,281 | | |
| 3,321,020 | | |
| (50,439 | ) | |
| (31,013,336 | ) | |
| (24,357,474 | ) |
The
above consolidated statements should be read in conjunction with the accompanying notes.
UNAUDITED
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR
THE NINE MONTHS ENDED MARCH 31, 2024 AND MARCH 31, 2023
| | |
Note | |
March 31, 2024 ($) | | |
March 31, 2023 ($) | |
| Cash flows from operating activities | |
| |
| | | |
| | |
| Receipts from training participants (inclusive of GST) | |
| |
| 938,529 | | |
| 1,114,767 | |
| Payments to member gyms, suppliers & employees (inclusive of GST) | |
| |
| (6,240,662 | ) | |
| (6,060,298 | ) |
| Receipts from Government grants and tax incentives related to expenditure | |
| |
| 63,776 | | |
| 1,493,581 | |
| Interest and other finance costs paid | |
| |
| (12,093 | ) | |
| (43,238 | ) |
| Net cash used in operating activities | |
| |
| (5,250,450 | ) | |
| (3,495,188 | ) |
| | |
| |
| | | |
| | |
| Cash flows from investing activities | |
| |
| | | |
| | |
| Payments for property equipment, net of disposal | |
| |
| (20,073 | ) | |
| (12,273 | ) |
| Payments for intangible assets | |
| |
| (166,686 | ) | |
| (54,805 | ) |
| Bank guarantee deposit | |
| |
| - | | |
| 52,717 | |
| Net cash used in investing activities | |
| |
| (186,759 | ) | |
| (14,361 | ) |
| | |
| |
| | | |
| | |
| Cash flows from financing activities | |
| |
| | | |
| | |
| Proceeds from convertible notes, net of transaction costs | |
| |
| 1,931,561 | | |
| 4,223,269 | |
| Net cash from financing activities | |
| |
| 1,931,561 | | |
| 4,223,269 | |
| | |
| |
| | | |
| | |
| Net (decrease) /increase in cash and cash equivalents | |
| |
| (3,505,648 | ) | |
| 713,720 | |
| Cash and cash equivalents at the beginning of the financial period | |
| |
| 3,702,567 | | |
| 569,975 | |
| Effect of exchange rate changes on cash | |
| |
| (98,129 | ) | |
| (21,072 | ) |
| Cash and cash equivalents at the end of the financial period | |
8 | |
| 98,790 | | |
| 1,262,623 | |
The
above consolidated statements should be read in conjunction with the accompanying notes.
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
Note
1. Corporate information
Alta
Global Group Limited (the “Company” or the “Parent Entity”) was incorporated and is domiciled in Australia. The
Company changed its registered name from Wimp 2 Warrior Limited to Alta Global Group Limited on 2 February 2022.
The
Company, an Australian company, is listed solely on NYSE American and is governed by the rules of the NYSE American and the U.S. Securities
and Exchange Commission. For purposes of U.S. securities law the Company is a “foreign private issuer” (FPI). In addition,
the Company qualifies as an “emerging growth company” for U.S. securities law purposes. The Company is a for-profit Australian
unlisted public company limited by shares with a principal place of business at Level 1, Suite 1, 29-33 The Corso, Manly, New South Wales
2095.
Note
2. Significant accounting policies
The
principal accounting policies adopted in the preparation of the unaudited interim consolidated financial statements are set out below.
These policies have been consistently applied to all the periods presented, unless otherwise stated. The unaudited interim consolidated
financial statements are presented in AUD, which is also the Company’s functional currency.
Basis
of preparation
These
financial statements for the interim nine month reporting period ended 31 March 2024 and 31 March 2023 have been prepared in accordance
with International Financial Reporting Standard IAS 34 ‘Interim Financial Reporting’ as appropriate for for-profit oriented
entities.
These
interim financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly,
these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2023 and any public announcements
made by the company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations
Act 2001.
The
principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period,
unless otherwise stated.
New
or amended Accounting Standards and Interpretations adopted
The
consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the International Accounting
Standards Board (“IASB”) that are mandatory for the current reporting period.
Any
new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Intangible
Assets
Intangible
assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the
acquisition. Intangible assets acquired separately in an asset acquisition are separately recognised at cost. Indefinite life intangible
assets are not amortized and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured
at cost less amortization and any impairment. The gains or losses recognized in profit or loss arising from the derecognition of intangible
assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful
lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted
for prospectively by changing the amortization method or period.
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
Issued
capital
Ordinary
Shares are classified as equity.
Incremental
costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Note
3. Critical accounting judgements, estimates and assumptions
The
preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts
in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent
liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various
factors, including expectations of future events, management believes to be reasonable under the circumstances.
In
preparing the interim condensed consolidated financial statements, no significant changes in accounting estimates, assumptions and judgements
have occurred compared to the significant accounting judgements, estimates and assumptions discussed in the consolidated financial statements
as of and for the fiscal year ended 30 June 2023 other than described below.
Going
concern
The
consolidated financial statements for the reporting periods have been prepared on a going concern basis which contemplates continuity
of normal business activities and the realization of assets and settlement of liabilities in the ordinary course of business.
We
have assessed that there is a substantial doubt related to going concern that may cast significant doubt over our ability to continue
as a going concern as we incurred a loss after tax of $10,903,028 for the period ended 31 March 2024 compared to $13,244,649 for the
period ended 31 March 2023, had net cash outflows from operating activities of $5,250,451 for the period ended 31 March 2024 compared
to $3,495,188 for the period ended 31 March 2023, had a net asset position of $5,224,635 as at 31 March 2024 compared to net liability
$31,134,307 as at 30 June 2023, and net current asset position of $3,920,595 as at 31 March 2024, compared to net current liability position
of $21,916,914 as at 30 June 2023. As a result of these conditions, the Company may be unable to realize its assets and discharge its
liabilities in the normal, course of business.
On
April 2, 2024, the Company received net proceeds of US$5,767,887 (A$8,842,460) after deducting underwriting discounts and offering expenses
from a successful initial public offering. In addition, all convertible notes that were on issue prior to the initial public offering
have either been converted into ordinary shares or redeemed and therefore is no convertible note debt, host or derivative liabilities,
on the Consolidated Statement of Financial Position as at 31 March 2024.
The
remaining interest on convertible notes and the final fair value movement in derivative liability is reflected in the Consolidated Statement
of Profit or Loss for the period ended 31 March 2024.
The
injection of capital will be used to scale the business with our current product offerings into North America, Ireland, Australia and
New Zealand, pursue acquisitions, acquire notable talent and establish partnerships.
The
ongoing operation of the Company remains dependent upon raising additional funds. In light of the future expenditures to be incurred
in executing on our strategic plans, we are dependent on obtaining financing through equity financing, debt financing or other means.
The ability to arrange such funding in the future will depend in part upon the prevailing capital market conditions as well as our business
performance. There is no assurance that we will be successful in our efforts to raise additional funding on terms satisfactory to us.
If we do not obtain additional funding, we may be required to delay, reduce the scope of, or eliminate our current operations.
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
However,
we believe that we will be able to raise additional funds as required to meet our obligations as and when they become due and are of
the opinion that the use of the going concern basis remains appropriate. Our ability to continue as a going concern and to pay debts
as and when they become due is dependent on the following:
| |
● |
we
have historically been successful in raising funds, |
| |
● |
we
have now listed on the New York Stock Exchange in the United States. As a listed vehicle now we have capital raising options such
as placements, Share Purchase Plans, Rights issues and entitlement offers, Dividend Reinvestment Plans, Hybrids and Retail notes
and PIPEs, |
| |
● |
our
level of expenditure continues to be managed and will continue to be managed to maximize run-way; and |
| |
● |
we
have reason to believe that in addition to the cash flow currently available, additional revenues will continue to be received through
the sale of our products and services throughout the course of the year. |
If
we decide to raise capital, the issuance of additional Ordinary Shares would result in dilution to our existing shareholders. We cannot
assure you that we will be successful in completing any financings or that any such equity or debt financing will be available to us
if and when required or on satisfactory terms.
Should
we be unable to raise additional funds on a timely basis, we may be required to realize our assets and discharge our liabilities other
than in the normal course of business and at amounts different to those stated in the financial statements. The financial statements
do not include any adjustments to the recoverability and classification of asset carrying amounts or the amount of liabilities that might
result should we be unable to continue as a going concern and meet our debts as and when they become due.
Lease
term
The
lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement is exercised in
determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying asset will be exercised,
or an option to terminate the lease will not be exercised, when ascertaining the periods to be included in the lease term. In determining
the lease term, all facts and circumstances that create an economical incentive to exercise an extension option, or not to exercise a
termination option, are considered at the lease commencement date. Factors considered may include the importance of the asset to the
consolidated entity’s operations; comparison of terms and conditions to prevailing market rates; incurrence of significant penalties;
existence of significant leasehold improvements; and the costs and disruption to replace the asset. The consolidated entity reassesses
whether it is reasonably certain to exercise an extension option, or not exercise a termination option, if there is a significant event
or significant change in circumstances.
Note
4. Operating segments
Identification
of reportable operating segments
Segment
reporting is based on the information that management uses to make decisions about the operation of the Company. Operating segment determination
is based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision
Makers (“CODM”)) in assessing performance and in determining the allocation of resources. The Company has identified one
operating segment as the provision and administration of mixed martial arts training programs, gym programs.
The
CODM reviews EBITDA (earnings before interest, tax, depreciation, and amortization). The accounting policies adopted for internal reporting
to the CODM are consistent with those adopted in the financial statements. Application of IFRS 8 and quantitative thresholds for determination
of reportable segments sees the consolidated entity disclosing only one reportable operating segment. The unaudited interim condensed
consolidated financial statements for the nine months ended 31 March 2024 and 2023 have been presented by this single operating segment
and have been presented and disclosed as one reportable operating segment.
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
Note
5. Revenue
| | |
March 31, 2024 ($) | | |
March 31, 2023 ($) | |
| Program fees | |
| | | |
| | |
| | |
| | | |
| | |
| Revenue from program fees | |
| 954,621 | | |
| 766,499 | |
| Contractual payments to gyms | |
| (556,098 | ) | |
| (462,026 | ) |
| Net Revenue from program fees | |
| 398,523 | | |
| 304,473 | |
| Other Income | |
| | | |
| | |
| | |
| | | |
| | |
| Research and Development tax incentive | |
| - | | |
| 1,149,525 | |
| Finale, franchise fee and other fees | |
| 170,376 | | |
| 22,600 | |
| Merchandise sales | |
| 2,384 | | |
| 1,153 | |
| Total other income | |
| 172,760 | | |
| 1,173,278 | |
| Total Revenue | |
| 571,283 | | |
| 1,477,751 | |
Disaggregation
of Revenue
The
disaggregation of revenue from contracts with customers is disclosed below. The Company only has one major product line, being the provision
of Gym Programs. All revenues are generated by the Australian Parent Entity:
| Revenue from program fees | |
| 954,621 | | |
| 766,499 | |
| Contractual payments to gyms | |
| (556,098 | ) | |
| (462,026 | ) |
| Net Revenue from program fees | |
| 398,523 | | |
| 304,473 | |
Timing
of revenue recognition – All goods transferred at a point in time.
Note
6. Expenses
| | |
March 31, 2024 ($) | | |
March 31, 2023 ($) | |
| | |
| | |
| |
| Event Costs | |
| 35,496 | | |
| 31,785 | |
| Program costs | |
| 7,046 | | |
| 4,429 | |
| Merchant fees | |
| 23,720 | | |
| 34,653 | |
| Other costs | |
| 57,928 | | |
| 118,437 | |
| Total program expenses | |
| 124,190 | | |
| 189,304 | |
| | |
| | | |
| | |
| Convertible notes interest – contractual and effective | |
| 3,207,498 | | |
| 2,571,044 | |
| Bank fees | |
| 9,928 | | |
| 10,354 | |
| Bank interest and lease interest | |
| 2,165 | | |
| 32,883 | |
| Total finance costs | |
| 3,219,591 | | |
| 2,614,281 | |
| | |
| | | |
| | |
| Unrealized currency (gains) | |
| (49,594 | ) | |
| (25,292 | ) |
| Realized currency (gains)/losses | |
| (9,597 | ) | |
| 9,331 | |
| Net foreign exchange (gains) | |
| (59,191 | ) | |
| (15,961 | ) |
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
Note
7. Fair value measurement
Fair
value hierarchy
The
following tables detail the consolidated entity’s assets and liabilities, measured or disclosed at fair value, using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
| |
● |
Level
1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement
date. |
| |
● |
Level
2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. |
| |
● |
Level
3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair value
and therefore which category the asset or liability is placed in can be subjective. |
| | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| Consolidated – March 31, 2024 | |
$ | | |
$ | | |
$ | | |
$ | |
| | |
| | |
| | |
| | |
| |
| Assets | |
| - | | |
| - | | |
| - | | |
| - | |
| Total assets | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | |
| Liabilities | |
| | | |
| | | |
| | | |
| | |
| Derivative Liabilities – refer Note 15 | |
| - | | |
| - | | |
| - | | |
| - | |
| Total liabilities | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| Consolidated – June 30, 2023 | |
$ | | |
$ | | |
$ | | |
$ | |
| | |
| | |
| | |
| | |
| |
| Assets | |
| - | | |
| - | | |
| - | | |
| - | |
| Total assets | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | |
| Liabilities | |
| | | |
| | | |
| | | |
| | |
| Derivative Liabilities – refer Note 15 | |
| - | | |
| - | | |
| 18,694,729 | | |
| 18,694,729 | |
| Total liabilities | |
| - | | |
| - | | |
| 18,694,729 | | |
| 18,694,729 | |
There
were no transfers between levels during the financial periods.
The
level 3 liabilities unobservable inputs at issue date of each of the convertible notes series are as follow:
| Series
A |
|
|
|
| Implied
valuation |
|
$ |
28,000,000 |
|
| Volatility |
|
|
74 |
% |
| Risk
free rate |
|
|
0.0 |
% |
| Probability
of conversion |
|
|
50 |
% |
| Series
A - July 21 |
|
|
|
| Implied
valuation |
|
$ |
28,000,000 |
|
| Volatility |
|
|
74 |
% |
| Risk
free rate |
|
|
0.1 |
% |
| Probability
of conversion |
|
|
50 |
% |
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
| Series A – August 21 | |
| |
| Implied valuation | |
$ | 28,000,000 | |
| Volatility | |
| 62 | % |
| Risk free rate | |
| 0.0 | % |
| Probability of conversion | |
| 50 | % |
| Series B1 | |
| |
| Implied valuation | |
$ | 120,000,000 | |
| Volatility | |
| 74 | % |
| Risk free rate | |
| 0.6 | % |
| Probability of conversion | |
| 50 | % |
| Series B2 | |
| |
| Implied valuation | |
$ | 70,000,000 | |
| Volatility | |
| 66 | % |
| Risk free rate | |
| 3 | % |
| Probability of conversion | |
| 50 | % |
| Series A Extension | |
| |
| Implied valuation | |
$ | 28,000,000 | |
| Volatility | |
| 65 | % |
| Risk free rate | |
| 3.5 | % |
| Probability of conversion | |
| 0 | % |
| Reach | |
| |
| Implied valuation | |
$ | 40,000,000 | |
| Volatility | |
| 60 | % |
| Risk free rate | |
| 3.6 | % |
| Probability of conversion | |
| 100 | % |
| Private Placement | |
| |
| Implied valuation | |
$ | 53,685,000 | |
| Volatility | |
| 60 | % |
| Risk free rate | |
| 3.5 | % |
| Probability of conversion | |
| 100 | % |
| Mixed Martial Arts LLC | |
| |
| Implied valuation | |
$ | 384,750 | |
| Volatility | |
| 49 | % |
| Risk free rate | |
| 4.3 | % |
| Probability of conversion | |
| 100 | % |
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
| Steppen | |
| |
| Implied valuation | |
$ | 100,000 | |
| Volatility | |
| 47 | |
| Risk free rate | |
| 4.2 | % |
| Probability of conversion | |
| 100 | % |
Note
8. Cash and cash equivalents
| | |
March 31, 2024 ($) | | |
June 30, 2023 ($) | |
| Cash on hand | |
| 1,000 | | |
| 1,000 | |
| Cash at bank * | |
| 97,790 | | |
| 3,701,567 | |
| Total cash and cash equivalents | |
| 98,790 | | |
| 3,702,567 | |
| | |
| | | |
| | |
| Cash as per above | |
| 98,790 | | |
| 3,702,567 | |
| Balance as per statement of cash flows | |
| 98,790 | | |
| 3,702,567 | |
*
The Company received $8,842,460 from Initial Public Offering proceeds on 2 April 2024. Please refer to Note 9 below.
Note
9. Trade and other receivables
| | |
March 31, 2024 ($) | | |
March 31, 2023 ($) | |
| | |
| | |
| |
| Trade Receivables | |
| 63,442 | | |
| 351,905 | |
| Proceeds from IPO | |
| 8,842,460 | | |
| - | |
| Research and Development Tax incentive receivable | |
| - | | |
| 63,776 | |
| Other advances | |
| 443,016 | | |
| 1,952,560 | |
| Less; allowance for credit losses | |
| (2,603 | ) | |
| (2,603 | ) |
| Total trade and other receivables | |
| 9,346,315 | | |
| 2,365,638 | |
The
Company has applied the simplified approach to measuring expected credit losses, which use a lifetime expected loss allowance. The Company
also recognizes a refund liability in line with our revenue recognition policy.
Note
10. Intangible assets
| | |
March 31, 2024 ($) | | |
June 30, 2023 ($) | |
| Trademark - at cost | |
| 52,243 | | |
| 50,843 | |
| Less: Accumulated amortization | |
| (28,347 | ) | |
| (24,429 | ) |
| | |
| 23,896 | | |
| 26,414 | |
| Platform development - at cost | |
| 1,798,562 | | |
| 1,136,149 | |
| Less: Accumulated depreciation | |
| (734,807 | ) | |
| (351,202 | ) |
| | |
| 1,063,755 | | |
| 784,947 | |
| Total intangible assets | |
| 1,087,651 | | |
| 811,361 | |
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
Reconciliations
of the movement of intangible assets are set out below:
| | |
March 31, 2024
($) | | |
June 30, 2023
($) | |
| Trademark | |
| | | |
| | |
| Balance at beginning of the period | |
| 26,414 | | |
| 26,414 | |
| Additions | |
| - | | |
| - | |
| Amortization expense | |
| (2,518 | ) | |
| - | |
| Balance at end of the period | |
| 23,896 | | |
| 26,414 | |
| | |
| | | |
| | |
| Platform development costs | |
| | | |
| | |
| Balance at beginning of the period | |
| 784,947 | | |
| 1,034,302 | |
| Additions from internal development | |
| 152,249 | | |
| 352,182 | |
| Additions acquired * | |
| 484,750 | | |
| - | |
| Research & Development tax incentive | |
| - | | |
| (383,937 | ) |
| Amortization expense | |
| (358,191 | ) | |
| (217,600 | ) |
| Balance at end of the period | |
| 1,063,755 | | |
| 784,947 | |
*
Included in additions is acquired intangible assets of:
| |
● |
In
September 2023, we completed the acquisition of the assets of Steppen Pty Ltd, a fitness technology company based in Australia (“Steppen”).
As consideration for the asset acquisition, we issued Steppen an unsecured and non-redeemable convertible promissory note (on the
same terms as the recently completed Private Placement), with a principal amount of US$ 64,977. |
| |
● |
In
October 2023, we completed the acquisition of the assets of Mixed Martials Arts LLC, an independent MMA media company, based in the
US. As consideration for the asset acquisition, we issued Mixed Martials Arts LLC an unsecured and non-redeemable convertible promissory
note (on the same terms as the recently completed Private Placement), with a principal amount of US$250,000 and paid US$25,000 in
cash. |
| |
● |
Management
determined both there acquired intangible assets did not pass the concentration test under IFRS 3 Business Combinations. Thereby
were accounted for as acquisition of intangible assets. |
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
Note
11. Trade and other payables
| | |
March 31, 2024
($) | | |
June 30, 2023
($) | |
| Payable to member gyms | |
| 244,241 | | |
| 723,105 | |
| Taxes payable | |
| 380,882 | | |
| 560,204 | |
| Trade payables | |
| 1,851,001 | | |
| 61,065 | |
| Provision for refund liability | |
| 45,000 | | |
| 70,000 | |
| Provision for bonus entitlement | |
| 150,000 | | |
| - | |
| Other Payables * | |
| 2,376,401 | | |
| 620,062 | |
| Total trade and other payables | |
| 5,047,525 | | |
| 2,034,436 | |
*
In February 2023, the Company issued an aggregate amount of A$3,195,000 in principal amount of secured and redeemable convertible promissory
notes from Wholesale Holdings Pty Ltd ATF Wholesale Holdings Alta Trust (“Reach Trust Notes”), an investment entity arranged
by Reach Markets. As at March, 31 2024, the aggregate principal amount of Reach Trust Notes outstanding was A$765,000, excluding capitalised
interest or A$1,029,617, including capitalised interest. All outstanding amounts on this facility was fully repaid out of IPO proceeds.
The Reach Facility involved investors located outside of the United States in an exempt transaction pursuant to Regulation S under the
Securities Act. In addition, other payables also includes accruals of A$829,0000 for legal and accounting services provided in support
of Initial Public Offering process.
Note
12. Reserves
| Share based payment reserve | |
| 5,027,773 | | |
| 3,912,367 | |
| Foreign currency translation reserve | |
| (163,961 | ) | |
| (65,832 | ) |
Share
based payment reserve
The
reserve is used to recognize increments and decrements in share based payment transactions.
Foreign
currency translation reserve
The
reserve is used to recognize exchange differences arising from the translation of the financial statements of foreign operations to Australian
dollars.
Note
13. Issued capital
| | |
March 31, 2024 Shares | | |
June 30, 2023 Shares | | |
March 31, 2024 ($) | | |
June 30, 2023 ($) | |
| Owners share capital, opening (1) | |
| 3,918,750 | | |
| 3,918,750 | | |
| 3,385,281 | | |
| 3,385,281 | |
| Issued and fully paid | |
| 1,300,000 | | |
| - | | |
| 9,964,825 | | |
| - | |
| Share issue transaction costs net of tax | |
| - | | |
| - | | |
| (1,174,911 | ) | |
| - | |
| Issue of shares from the conversion of the convertible notes (2) | |
| 4,721,794 | | |
| - | | |
| 34,881,208 | | |
| - | |
| Advisor Options exercised (3) | |
| 327,142 | | |
| - | | |
| 2,464,757 | | |
| - | |
| Owners share capital, closing | |
| 10,267,686 | | |
| 3,918,750 | | |
| 49,521,160 | | |
| 3,385,281 | |
| |
(1) |
On
January 24, 2024, there was a reverse share split of our issued and outstanding Ordinary Shares and Ordinary Share equivalents on
the basis of four (4) securities for every five (5) securities held. All issued and outstanding Ordinary Shares and Ordinary Share
equivalents and per share data have been adjusted throughout the financial statements to reflect the reverse share split for all
periods presented. |
| |
(2) |
The
issue of shares from the conversion of convertible notes reflects and includes the face value of the note and interest accrued at
a fixed rate defined in the agreements, along with the value of the derivative prior to conversion. This interest figure includes
both the accrued interest rate (contractual and effective) relating to the convertible notes, with the contractual capitalized interest
rate ranging between 8.5% to 15% per annum, and the derivative reflects the effective interest rate being the cost of the relevant
conversion discounts to market value at the conversion date. |
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
| |
(3) |
Note
that 327,142 Advisor Options fully vested and were exercised into Shares between July 2023 and December 2023 and 16,193 Advisor Options
were forfeited. |
Capital
risk management
The
Company’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns
for shareholders and benefits for other stakeholders and to maintain an optimum capital structure.
The
Company’s capital includes ordinary share capital and financial liabilities supported by financial assets. There are no externally
imposed capital requirements.
The
Company effectively manages capital by assessing the Company’s financial risks and adjusting its capital structure in response
to changes in these risks and the market. These responses include the management of debt and share issuances.
Note
14. Controlled Entities
Alta
Global Group Limited is the parent entity of the Group.
The
Company’s subsidiaries at 31 March 2024 are set out below. Unless otherwise stated, they have share capital consisting solely of
Ordinary Shares that are held directly by the company, and the proportion of ownership interests held equals the voting rights held by
the company. The country of incorporation or registration is also their principal place of business.
| Name of entity | |
Place of business | |
Ownership interest held | |
| | |
| |
March 31, 2024 | | |
June 30, 2023 | |
| | |
| |
| | |
| |
| Wimp 2 Warrior LLC | |
United States of America | |
| 100 | % | |
| 100 | % |
| Wimp 2 Warrior Productions Pty Ltd * | |
Australia | |
| 0 | % | |
| 95 | % |
| Wimp 2 Warrior Digital Pty Ltd * | |
Australia | |
| 0 | % | |
| 100 | % |
| Wimp 2 Warrior (Ireland) Limited | |
Ireland | |
| 100 | % | |
| 100 | % |
*
Entities deregistered in the period to 31 March 2024.
Note
15. Financial Liabilities
| | |
March 31, 2024
($) | | |
June 30, 2023
($) | |
| Convertible note payable - Current | |
| - | | |
| 25,331,307 | |
| Convertible note payable – Non Current | |
| - | | |
| 10,273,278 | |
| Total Financial Liabilities | |
| - | | |
| 35,604,585 | |
| | |
| | | |
| | |
| Host Liability - Current | |
| - | | |
| 16,567,450 | |
| Host Liability – Non Current | |
| - | | |
| 342,406 | |
| Derivative liability -Current | |
| - | | |
| 8,763,857 | |
| Derivative liability - Non Current | |
| - | | |
| 9,930,872 | |
| Total Convertible Notes Payable | |
| - | | |
| 35,604,585 | |
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
The
convertible notes issued by the Company have been split into the debt liability and a derivative component. The fair value of the Financial
Liabilities for the host liability and the derivative liability has been determined using a combination of Monte Carlo Simulation (MCS)
and Black-Scholes model (BSM).
During
the reporting period Series A – July 21 matured and converted to equity on 7 July 2023, while Series A, Series A – Aug 21,
Series B1, Series B2 and Series A Extension matured and converted to equity on 31 December 2023. During the reporting period the Company
issued two additional Convertible Notes for the acquisition of Mixed Martial Arts LLC and Steppen. Mixed Martial Arts LLC, Steppen, Reach
and Private Placement convertible notes converted to equity or were redeemed for cash on March, 28 2024, on successful listing on the
NYSE by the Company, as per the conversion date in the table below.
Convertible
notes held by investors in the reporting period are summarized below:
| Series A | |
| |
| | |
| |
| Key Terms of this Series A convertible notes are as follows | |
| |
| | |
| |
| Issue date | |
| 23-Dec-20 | |
| Pre Modification Maturity Date | |
| 23-Dec-22 | |
| Modification Date | |
| 1-Dec-22 | |
| Modified Maturity Date | |
| 31-Dec-23 | |
| Conversion Date | |
| 31-Dec-23 | |
| Term (Years) | |
| 2.0 | |
| Face Value | |
| 7,319,818 | |
| Interest Rate | |
| 8.5 | % |
| Conversion Discount (Qualified Equity Investment) | |
| 20.0 | % |
| Series A – July 21 | |
| |
| | |
| |
| Key Terms of this Series A convertible notes are as follows | |
| |
| | |
| |
| Issue Date | |
| 7-Jul-21 | |
| Maturity Date | |
| 7-Jul-23 | |
| Conversion Date | |
| 7-Jul-23 | |
| Term (Years) | |
| 2.0 | |
| Face Value | |
| 525,000 | |
| Interest Rate | |
| 8.5 | % |
| Conversion Discount (Qualified Equity Investment) | |
| 20.0 | % |
| Series A – August 21 | |
| |
| | |
| |
| Key Terms of this Series A convertible notes are as follows | |
| |
| | |
| |
| Issue Date | |
| 20-Aug-21 | |
| Pre Modification Maturity Date | |
| 9-Dec-22 | |
| Modification Date | |
| 1-Dec-22 | |
| Modified Maturity Date | |
| 31-Dec-23 | |
| Conversion Date | |
| 31-Dec-23 | |
| Term (Years) | |
| 1.3 | |
| Face Value | |
| 172,000 | |
| Interest Rate | |
| 8.5 | % |
| Conversion Discount (Qualified Equity Investment) | |
| 20.0 | % |
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
| Series B1 | |
| |
| | |
| |
| Key Terms of this Series B1 convertible notes are as follows | |
| |
| | |
| |
| Issue Date | |
| 15-Dec-21 | |
| Pre Modification Maturity Date | |
| 15-Dec-23 | |
| Modification Date | |
| 1-Dec-22 | |
| Modified Maturity Date | |
| 31-Dec-23 | |
| Conversion Date | |
| 31-Dec-23 | |
| Term (Years) | |
| 2.0 | |
| Face Value | |
| 4,982,652 | |
| Interest Rate | |
| 8.5 | % |
| Conversion Discount (Qualified Equity Investment) | |
| 20.0 | % |
| Series B2 | |
| |
| | |
| |
| Key Terms of this Series B2 convertible notes are as follows | |
| |
| | |
| |
| Issue Date | |
| 1-July-22 | |
| Pre Modification Maturity Date | |
| 30-June-24 | |
| Modification Date | |
| 1-Dec-22 | |
| Modified Maturity Date | |
| 31-Dec-23 | |
| Conversion Date | |
| 31-Dec-23 | |
| Term (Years) | |
| 2.0 | |
| Face Value | |
| 671,284 | |
| Interest Rate | |
| 10 | % |
| Conversion Discount (Qualified Equity Investment) | |
| 20.0 | % |
| Series A Extension | |
| |
| | |
| |
| Key Terms of this Series A Extension convertible notes are as follows | |
| |
| | |
| |
| Issue Date | |
| 16-Nov-22 | |
| Maturity Date | |
| 31-Dec-23 | |
| Conversion Date | |
| 31-Dec-23 | |
| Term (Years) | |
| 1.1 | |
| Face Value | |
| 1,571,873 | |
| Interest Rate | |
| 15 | % |
| Conversion Discount (Qualified Equity Investment) | |
| 25 | % |
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
| Reach | |
| |
| | |
| |
| Key Terms of this Reach convertible notes are as follows | |
| |
| | |
| |
| Issue Date | |
| 13-Feb-23 | |
| Maturity Date | |
| 13-Feb-25 | |
| Conversion Date ** | |
| 28-Mar-24 | |
| Term (Years) | |
| 2.0 | |
| Face Value* | |
| 3,195,000 | |
| Interest Rate | |
| 15 | % |
| Conversion Discount (Qualified Equity Investment) | |
| 20 | % |
*$3,025,841
of Reach convertible notes, inclusive of accrued interest, were rolled into the Private Placement on June 9, 2023.
**
$1,029,617 was redeemed for cash, the remaining Reach notes were converted to equity.
| Private Placement | |
| |
| | |
| |
| Key Terms of this Private Placement convertible notes are as follows | |
| |
| | |
| |
| Issue Date | |
| 9-June-23 | |
| Maturity Date | |
| 9-June-25 | |
| Conversion Date | |
| 28-Mar-24 | |
| Term (Years) | |
| 2.0 | |
| Face Value | |
| 9,215,591 | |
| Interest Rate | |
| 10 | % |
| Conversion Discount (Qualified Equity Investment) | |
| 30 | % |
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
| Mixed Martial Arts LLC | |
| |
| | |
| |
| Key Terms of this Mixed Martial Arts LLC convertible note are as follows | |
| |
| | |
| |
| Issue Date | |
| 26-Oct-23 | |
| Maturity Date | |
| 9-June-25 | |
| Conversion Date | |
| 28-Mar-24 | |
| Term (Years) | |
| 1.6 | |
| Face Value | |
| 384,750 | |
| Interest Rate | |
| 10 | % |
| Conversion Discount (Qualified Equity Investment) | |
| 25 | % |
| Steppen | |
| |
| | |
| |
| Key Terms of this Steppen convertible note are as follows | |
| |
| | |
| |
| Issue Date | |
| 20-Sept-23 | |
| Maturity Date | |
| 9-June-25 | |
| Conversion Date | |
| 28-Mar-24 | |
| Term (Years) | |
| 1.7 | |
| Face Value | |
| 100,000 | |
| Interest Rate | |
| 10 | % |
| Conversion Discount (Qualified Equity Investment) | |
| 25 | % |
Note
16. Share-based payments
During
the periods 31 March 2024 and 30 June 2023, the Company granted share options to advisors and consultants (as remuneration for services
provided), as well as select employees and Directors of the Company under the board approved Employee Share Option Plan (ESOP)
Each
share option converts into one Ordinary Share of the Company on exercise. An option may be exercised by either (a) paying to the Company
the Exercise Price of the Option being exercised (Cash Exercise) or (b) if elected by the Option Holder by setting off the total Exercise
Price against the number of Shares which they are entitled to receive upon exercise (Cashless Exercise Facility). The options carry neither
rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting, subject to meeting the vesting
conditions, to the date of their expiry.
Options
are exercisable at a price determined by each option grant and range from $0.01 (relating to options granted as consideration for foregone
cash payment for services provided), to $6.73 per share (relating to issuances under the ESOP which qualifies for the ATO ESS start-up
tax concessions available for SME unlisted companies). All options are vested over three years. If the options remain unexercised after
the period agreed from the date of grant the options expire. Options are forfeited if the employee leaves the Company before the options
vest unless otherwise agreed by the Board.
The
values of the Options are calculated by applying the Black-Scholes model. The Company used valuations specialists to perform these valuations.
During
the reporting periods the Company also issued share rights to select employees of the Company under the board approved Employee Incentive
Plan (EIP). These share rights may be converted into Ordinary Shares under the EIP. Fifty percent of the share rights will vest and be
exercisable on October 1, 2025 and the remaining fifty percent of the share rights will vest and be exercisable on and from October 1,
2026.
The
values of the Share Rights are calculated by applying the Black-Scholes model. The Company used valuations specialists to perform these
valuations.
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
Details
of the expense arising from performance rights, options and warrants:
| | |
March 31, 2024 | | |
June 30, 2023 | |
| | |
($) | | |
($) | |
| | |
| | |
| |
| ESOP | |
| 1,388,497 | | |
| 1,052,245 | |
| Advisor Options (1) | |
| 1,086,937 | | |
| 1,164,524 | |
| Reach | |
| 34,937 | | |
| 148,615 | |
| Warrants (2) | |
| 253,391 | | |
| - | |
| Over allotment Option (3) | |
| 163,794 | | |
| - | |
| RSU | |
| 723,420 | | |
| - | |
| Total Share based payments* | |
| 3,650,976 | | |
| 2,365,384 | |
| |
1. |
Note
that 327,142 Advisor Options vested and were exercised into Shares between July 2023 and December 2023 and 16,193 Advisor Options
were forfeited. At 31 March 2024, nil remaining Advisor Options were on issue. |
| |
2. |
Note
that this expense is pertaining to the issuance of warrants (equating to 65,000 Ordinary Shares on exercise) to the Underwriter as
part of the underwriting agreement. These Warrants will be exercisable at any time and from time to time, in whole or in part, during
the four and a half year period commencing 180 days from the commencement of sales of the securities in the Offering, at a price
per share equal to 125.0% of the public offering price per share of common stock at the Offering. The issuance acts as additional
compensation for ThinkEquity services that would be rendered over a 24 month period from the Closing of the initial public offering.
As these services vary and are not for a specific service, the fair value of this allocation cannot be estimated reliably. Thereby,
the fair value of these warrants at grant date were calculated by applying the Black-Scholes model. The Company used valuations specialists
to perform these valuations. |
| |
3. |
Note
that this expense is pertaining to the option granted to the underwriter, exercisable within 45 days after the closing of the Offering,
to acquire up to an additional 15% of the total number of Shares to be offered by the company in the offering, solely for the purpose
of covering over-allotments. This over-allotment option (not a service) essentially granted the underwriter the right to sell more
shares than originally planned if the demand for a security issue proves higher than expected. The fair value of this service cannot
be estimated reliably as the exercise was subjective on share price performance and/or timing. Thereby, the fair value of these options
at grant date were calculated using the Black-Scholes model. The Company used valuations specialists to perform these valuations.
In addition, please note that these options have not been exercised and the 45-day limit has expired. |
Details
of the number of share options outstanding during the year, adjusted to account for the 4-for-5 reverse share split, are as follows:
| | |
ESOP | | |
ADVISOR | |
| | |
March 31, 2024 | | |
June 30, 2023 | | |
March 31, 2024 | | |
June 30, 2023 | |
| Beginning of period | |
| 784,098 | | |
| 556,074 | | |
| 344,055 | | |
| 312,362 | |
| Granted during the period | |
| - | | |
| 312,886 | | |
| - | | |
| 31,693 | |
| Forfeited/expired during the period | |
| - | | |
| (84,862 | ) | |
| (16,913 | ) | |
| - | |
| Exercised during the period | |
| - | | |
| - | | |
| (327,142 | ) | |
| - | |
| End of the period | |
| 784,098 | | |
| 784,098 | | |
| - | | |
| 344,055 | |
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
| | |
Reach | | |
RSU | |
| | |
March 31, 2024 | | |
June 30, 2023 | | |
March 31, 2024 | | |
June 30, 2023 | |
| Beginning of period | |
| 45,794 | | |
| - | | |
| - | | |
| - | |
| Granted during the period | |
| - | | |
| 45,794 | | |
| 630,729 | | |
| - | |
| Forfeited/expired during the period | |
| - | | |
| - | | |
| - | | |
| - | |
| Exercised during the period | |
| - | | |
| - | | |
| - | | |
| - | |
| End of the period | |
| 45,794 | | |
| 45,794 | | |
| 630,729 | | |
| - | |
| | |
Over Allotment Option | | |
Warrants | |
| | |
March 31, 2024 | | |
June 30, 2023 | | |
March 31, 2023 | | |
June 30, 2023 | |
| Beginning of period | |
- | | |
- | | |
- | | |
- | |
| Granted during the period | |
| 195,000 | | |
| - | | |
| 65,000 | | |
| - | |
| Forfeited/expired during the period | |
| - | | |
| - | | |
| - | | |
| - | |
| Exercised during the period | |
| - | | |
| - | | |
| - | | |
| - | |
| End of the period | |
| 195,000 | | |
| - | | |
| 65,000 | | |
| - | |
| | |
Total options outstanding | |
| | |
March 31, 2024 | | |
June 30, 2023 | |
| Total beginning of period | |
| 1,173,947 | | |
| 868,436 | |
| Total granted during the period | |
| 890,729 | | |
| 390,373 | |
| Total forfeited/expired during the period | |
| (16,913 | ) | |
| (84,862 | ) |
| Total exercised during the period | |
| (327,142 | ) | |
| - | |
| Total end of the period | |
| 1,720,620 | | |
| 1,173,947 | |
The
model inputs for options granted during the reporting periods include:
| Grant Date | |
Exercise price | | |
Term | | |
Spot Price | | |
Share price volatility | | |
Expected Dividend yield | | |
Risk free interest rate | |
| ESOP | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| 31 Aug 2021 | |
$ | 0.62 | | |
| 3 years | | |
$ | 5.72 | | |
| 67.3 | % | |
| 0.0 | % | |
| 0.2 | % |
| 31 Aug 2021 | |
$ | 5.72 | | |
| 3 years | | |
$ | 5.72 | | |
| 67.3 | % | |
| 0.0 | % | |
| 0.2 | % |
| 1 March 2022 | |
$ | 0.62 | | |
| 3 years | | |
$ | 18.51 | | |
| 66.4 | % | |
| 0.0 | % | |
| 1.5 | % |
| 23 Feb 2023 | |
$ | 0.23 | | |
| 3.0 years | | |
$ | 5.72 | | |
| 64.5 | % | |
| 0.0 | % | |
| 3.6 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| ADVISOR | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| 21 Aug 2021 | |
$ | 0.62 | | |
| 2.86 years | | |
$ | 5.72 | | |
| 66.6 | % | |
| 0.0 | % | |
| 0.5 | % |
| 21 Aug 2021 | |
$ | 0.01 | | |
| 2.86 years | | |
$ | 5.72 | | |
| 66.6 | % | |
| 0.0 | % | |
| 0.5 | % |
| 21 Aug 2022 | |
$ | 0.01 | | |
| 4.90 years | | |
$ | 10.80 | | |
| 65.4 | % | |
| 0.0 | % | |
| 3.0 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| REACH | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| 13 Feb 2023 | |
$ | 5.72 | | |
| 3.30 years | | |
$ | 5.72 | | |
| 65.4 | % | |
| 0.0 | % | |
| 3.5 | % |
| 9 June 2023 | |
$ | 6.73 | | |
| 3.15 years | | |
$ | 6.12 | | |
| 60.1 | % | |
| 0.0 | % | |
| 3.8 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| RSUs | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| 10 Oct 2023 | |
| - | | |
| 3 years | | |
$ | 7.64 | | |
| N/A | | |
| 0 | % | |
| N/A | |
| 1 Mar 2024 | |
| - | | |
| 3 years | | |
$ | 7.52 | | |
| N/A | | |
| 0 | % | |
| N/A | |
| Warrants | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
27 March 2024
Over allotment | |
US$ | 6.25 | | |
| 5 years | | |
$ | 5.00 | | |
| 62.9 | % | |
| 0 | % | |
| 3.7 | % |
| 27 March 2024 | |
$ | 5.00 | | |
| 0.12 years | | |
$ | 5.00 | | |
| 46 | % | |
| 0 | % | |
| 3.7 | % |
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
The
share-based payment expense of $3,650,976 for the nine-months ending 31 March 2024 ($1,774,037 for the nine-months ending 31 March 2023)
has been recognized in the unaudited interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Loss.
Note
17. Leases
At
the commencement of a lease contract, the Company assesses whether the contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration.
For
the nine-months ended 31 March 2024, the Company determined with reasonable certainty that it would exercise its extension option at
its current premises for two additional years. As a result, the Company has reassessed the lease term and related balances, which are
reflected in the table below:
| | |
March 31, 2024 | | |
June 30, 2023 | |
| | |
($) | | |
($) | |
| (a) Right-of-use asset | |
| | | |
| | |
| Right of use asset | |
| 613,691 | | |
| 400,829 | |
| Less: Accumulated amortization | |
| (311,185 | ) | |
| (243,290 | ) |
| Balance at end of year | |
| 302,506 | | |
| 157,540 | |
| | |
| | | |
| | |
| Balance at beginning of year | |
| 157,540 | | |
| 276,907 | |
| Additions | |
| 212,862 | | |
| - | |
| Less: amortization for the period | |
| (67,897 | ) | |
| (119,367 | ) |
| Balance at end of the year | |
| 302,506 | | |
| 157,540 | |
| (b) Lease liabilities | |
| | | |
| | |
| | |
| | | |
| | |
| Current lease liability | |
| 128,181 | | |
| 121,500 | |
| Non-current lease liability | |
| 180,625 | | |
| 54,162 | |
| Total lease liabilities | |
| 308,806 | | |
| 175,662 | |
The
total of future lease payments (including those lease payments that are not included in the measurement of the lease liability, e.g.
for short-term leases and leases of low-value items) are disclosed for each of the following periods.
| | |
March 31, 2024 ($) | | |
June 30, 2023 ($) | |
| Less than one year | |
| 138,630 | | |
| 127,361 | |
| One to two years | |
| 149,831 | | |
| 28,214 | |
| Two to five years | |
| 19,217 | | |
| 28,214 | |
| Five years and over | |
| - | | |
| - | |
| Total future lease payments | |
| 307,678 | | |
| 183,789 | |
NOTES
TO THE UNAUDITED INTERIM
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
Note
18. Contingent Assets and Liabilities
There
were no material contingent assets and liabilities at 31 March 2024 (nil – 30 June 2023).
Note
19. Commitments
The
Company has no material Commitments at 31 March 2023 (nil- 30 June 2023).
Note
20. Loss per share
| | |
March 31, 2024 | | |
March 31, 2023 | |
| | |
| | |
| |
| Reconciliation of loss after tax | |
| (10,903,028 | ) | |
| (13,244,649 | ) |
| | |
| | | |
| | |
| Weighted average number of Ordinary Shares outstanding during the period used in calculating loss per share | |
| 10,267,686 | | |
| 3,918,750 | |
| | |
| | | |
| | |
| Loss per share attributable to the owners of Alta Global Group Limited | |
| | | |
| | |
| Basic loss per share | |
$ | (1.06 | ) | |
$ | (3.38 | ) |
| Diluted loss per share | |
$ | (1.06 | ) | |
$ | (3.38 | ) |
Note
21. Events after the reporting period
On
April 2, 2024, the Company received net proceeds of US$5,767,887 (A$8,842,460) after deducting underwriting discounts and offering expenses
from a successful initial public offering.
In
May 2024, we completed the acquisition of the assets of Hype Kit, Inc, a Delaware corporation (“Hype”), an all-in-one digital
marketing platform, designed to help small businesses grow in today’s age of social media. Hype’s software platform strengthens
the Company’s vision to convert 640 million MMA fans to participants by providing invaluable tools to our gym owner, coach, and
athlete partners to not only grow their revenues, but also operate more efficiently, save costs and enhance the offerings to their members
and community. This acquisition is expected to accelerate Alta’s technology roadmap, bringing forward new subscription revenue
opportunities for us, whilst creating cost synergies by materially reducing product development overhead and bringing valuable technology
expertise, skills and talent into the business. The acquisition was completed, and the asset purchased for consideration of USD$100,000.
In
July 2024, at the discretion of the Board under the Company’s Employee Incentive Plan (EIP), 40,000 share rights have fully vested
and converted into Ordinary Shares.
In
September 2024, various employees and consultants were issued an aggregate of 139,500 share rights (subject to vesting conditions) which
may be converted into Ordinary Shares under the Company’s Employee Incentive Plan. All share rights granted will vest and become
exercisable in three tranches between May 2025 and August 2027.
In
September 2024, the Company announced a revenue share agreement with U Gym, LLC (“UFC Gym Group”) in relation
to the intention of rolling out the Warrior Training Program and Hype across UFC Gym Group’s global network of gyms,
consisting of both corporate-owned and franchise locations (with over 150 locations in 40 countries, including 80 in the United
States). In addition, UFC Gym Group has hundreds of gyms in development. In the initial phase, these programs are expected to be
introduced in locations across the United States, the Middle East, the UK, Germany, Mexico, India and Central Asia. Any revenue from
the Warrior Training Program will be shared, with the UFC Gym Group receiving 70% and the Company receiving 30%. The
agreement is effective for three years and either party may terminate the agreement upon written notice to the other of a breach of
the agreement if such breach is not cured within 10 days following receipt of written notice of the breach. In addition, UFC
Gym Group can terminate the agreement upon 60 days written notice to us. While the Company can provide no assurances, it
believes, based on historical operating data, that this partnership has the potential to produce gross revenue of over $7 million
per annum, with the ability to grow with UFC Gym Group as they develop additional locations.
In
September 2024, Conor McGregor was appointed as a global ambassador (“Ambassador Agreement”) and will provide services
customarily associated with such roles for a company in the mixed martial arts and technology sector (“Services”).
The term of the Ambassador Agreement shall be effective for three years and either party may terminate the agreement upon 10 days
prior written notice if the other party breaches the agreement and does not cure such breach within such time period. In consideration
for providing these Services under the Ambassador Agreement, and pursuant to the exemption from registration provided for in Regulation S promulgated under the Securities Act, Mr. McGregor received 700,000 performance share rights that will vest once the 30-day volume-weighted average
price (VWAP) achieves the following trigger: 150,000 shares on execution of the Ambassador Agreement; 100,000 shares when the share price
reaches $7.50; 150,000 shares when the share price reaches $10.00; 150,000 shares when the share price reaches $15.00 and 150,000 shares
when the share price reaches $20.00. Aligned with the three (3) year term of the Ambassador Agreement, Mr. McGregor is restricted from
selling shares within three (3) years of issuance unless specific conditions are met, such as the Company’s written consent, a sale or
liquidation of the Company, or if the Company breaches the agreement.
Up
to 1,529,052 Ordinary Shares
Up
to 1,529,052 Pre-Funded Warrants to Purchase up to 1,529,052 Ordinary Shares
Up
to 1,529,052 Ordinary Shares underlying such Pre-Funded Warrants
Alta
Global Group Limited
ThinkEquity
,
2024
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
| Item
6. |
Indemnification
of Directors and Officers |
Australian
law. Australian law provides that a company or a related body corporate of the company may provide for indemnification of officers
and directors, except to the extent of any of the following liabilities incurred as an officer or director of the company:
| |
● |
a
liability owed to the company or a related body corporate of the company; |
| |
● |
a
liability for a pecuniary penalty order made under section 1317G or a compensation order under section 961M, 1317H, 1317HA, 1317HB,
1317HC or 1317HE of the Corporations Act; |
| |
● |
a
liability that is owed to someone other than the company or a related body corporate of the company and did not arise out of conduct
in good faith; or |
| |
● |
legal
costs incurred in defending an action for a liability incurred as an officer or director of the company if the costs are incurred: |
| |
○ |
in
defending or resisting proceedings in which the officer or director is found to have a liability for which they cannot be indemnified
as set out above; |
| |
○ |
in
defending or resisting criminal proceedings in which the officer or director is found guilty; |
| |
○ |
in
defending or resisting proceedings brought by the Australian Securities & Investments Commission or a liquidator for a court
order if the grounds for making the order are found by the court to have been established (except costs incurred in responding to
actions taken by the Australian Securities & Investments Commission or a liquidator as part of an investigation before commencing
proceedings for a court order); or |
| |
○ |
in
connection with proceedings for relief to the officer or a director under the Corporations Act, in which the court denies the relief. |
Constitution.
Our Constitution provides, that to the extent permitted by law, the Company indemnifies every director, executive officer or company
secretary of the Company against a liability to another person, other than the Company or a related body corporate of the Company, provided
that the provisions of the Corporations Act are complied with in relation to the giving of the indemnity and the liability does not arise
in respect of conduct involving a lack of good faith on the part of the officer.
Indemnification
Agreements. Pursuant to our form of deed of access, insurance and indemnity which is filed as Exhibit 10.4 to this registration statement,
we have agreed to indemnify our directors. Alta has agreed to indemnify each of its directors to the extent permitted by law against
all liabilities incurred while holding office, including indemnifying directors for any legal expenses incurred in defending proceedings
relating to their directorship of Alta. Any indemnified amounts must be repaid to Alta to the extent that a director is reimbursed from
an insurance policy maintained by Alta for the directors. Alta has also agreed to obtain and pay the premiums for insurance policies
for each of its directors, which include run-off cover for each director for a period of seven years after they cease to hold office.
Pursuant
to the underwriting agreement for this offering, the form of which is filed as Exhibit 1.1 to this registration statement, the underwriters
will agree to indemnify our directors and officers and persons controlling us, within the meaning of the Securities Act, against certain
liabilities that might arise out of or are based upon certain information furnished to us by any such underwriter.
| Item
7. |
Recent
Sales of Unregistered Securities |
In
September 2024, Conor McGregor was appointed as a global ambassador (“Ambassador Agreement”) and will provide services
customarily associated with such roles for a company in the mixed martial arts and technology sector (“Services”).
The term of the Ambassador Agreement shall be effective for three years and either party may terminate the agreement upon 10 days
prior written notice if the other party breaches the agreement and does not cure such breach within such time period. In consideration
for providing these Services under the Ambassador Agreement, and pursuant to the exemption from registration provided for in Regulation S promulgated under the Securities Act, Mr. McGregor received 700,000 performance share rights that will vest once the 30-day volume-weighted average
price (VWAP) achieves the following trigger: 150,000 shares on execution of the Ambassador Agreement; 100,000 shares when the share price
reaches $7.50; 150,000 shares when the share price reaches $10.00; 150,000 shares when the share price reaches $15.00 and 150,000 shares
when the share price reaches $20.00. Aligned with the three (3) year term of the Ambassador Agreement, Mr. McGregor is restricted from
selling shares within three (3) years of issuance unless specific conditions are met, such as the Company’s written consent, a sale or
liquidation of the Company, or if the Company breaches the agreement.
| Item
8. |
Exhibits
and Financial Statement Schedules |
| * |
Previously
filed. |
| + |
Indicates
management contract or compensatory plan. |
| # |
Pursuant
to Item 601(b)(10) of Regulation S-K, certain confidential portions of this exhibit were omitted by means of marking such portions
with an asterisk because such information is both not material and is the type that the Company treats as private or confidential. |
| (b) |
Financial
Statement Schedules |
All
schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the Consolidated
Financial Statements or the Notes thereto.
The
undersigned hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to the registration statement:
(i)
To include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration
Fee” table in the effective registration statement.
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2)
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4)
To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F
at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by
Section 10(a)(3) of the Securities Act need not be furnished, provided that the registrant includes in the prospectus, by means of a
post-effective amendment, financial statements required pursuant to this paragraph (4) and other information necessary to ensure that
all other information in the prospectus is at least as current as the date of those financial statements.
(5)
That, for the purpose of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of
the time it was declared effective.
(6)
That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering thereof.
(7)
That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution
of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant
to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to
the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule
424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by
the undersigned registrant;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Manly, New South Wales on September 20, 2024.
| |
Alta
Global Group Limited |
| |
|
|
| |
By: |
/s/
Nick Langton |
| |
Name: |
Nick
Langton |
| |
Title: |
Founder
and Chief Executive Officer
(Principal
Executive Officer) |
| |
|
|
| |
By: |
/s/
Neale Java |
| |
Name: |
Neale
Java |
| |
Title: |
Chief
Financial Officer
(Principal
Financial Officer and Principal Accounting Officer) |
POWER OF ATTORNEY
Each person whose signature appears
below does hereby constitute and appoint Nick Langton and Neale Java and each of them singly (with full power to act alone), as his true
and lawful attorneys-in-fact and agents, each with full power of substitution and re-substitution, for him and in his name, place and
stead, in any and all capacities, in connection with this registration statement, including to sign and file in the name and on behalf
of the undersigned as director or officer of the registrant, any and all amendments and supplements (and any and all prospectus supplements,
stickers and post-effective amendments) to this registration statement with all exhibits thereto, and sign any registration statement
for the same offering covered by this registration statement that is to be effective upon filing pursuant to Rule 462(b) under the Securities
Act of 1933, as amended, and all post-effective amendments thereto and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, and any applicable securities exchange, securities self-regulatory
body or other regulatory entity, granting unto said attorneys-in-fact and agents, and each of them (with full power to act alone) full
power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith and in and
about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities
and on the dates indicated.
| Signature |
|
Title |
|
Date |
| |
|
|
|
|
| /s/
Nick Langton |
|
Founder,
Chief Executive Officer and Director |
|
|
| Nick
Langton |
|
(Principal
Executive Officer) |
|
September
20, 2024 |
| |
|
|
|
|
| /s/
Neale Java |
|
Chief
Financial Officer |
|
|
| Neale
Java |
|
(Principal
Financial Officer and Principal Accounting Officer) |
|
September
20, 2024 |
| |
|
|
|
|
| /s/
Jonathan Hart |
|
Company
Secretary and Director |
|
|
| Jonathan
Hart |
|
|
|
September
20, 2024 |
| |
|
|
|
|
| /s/
Vaughn Taylor |
|
Chairman
of the Board of Directors |
|
|
| Vaughn
Taylor |
|
|
|
September
20, 2024 |
| |
|
|
|
|
| /s/
Hugh Williams |
|
Director |
|
|
| Hugh
Williams |
|
|
|
September
20, 2024 |
SIGNATURE
OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES
Pursuant
to the Securities Act of 1933, as amended, the undersigned, the duly authorized representative in the United States of Alta Global Group
Limited, has signed this registration statement on September 20, 2024.
| |
Authorized
U.S. Representative |
| |
|
|
| |
WIMP
2 WARRIOR LLC |
| |
|
|
| |
By: |
/s/
Nick Langton |
| |
Name: |
Nick
Langton |
| |
Title: |
Manager
and Authorized Officer |
Exhibit 5.1
Exhibit
5.2
 |
Sheppard,
Mullin, Richter & Hampton LLP
30
Rockefeller Plaza
New
York, New York 10112-0015
212.653.8700
main
212.653.8701
fax
www.sheppardmullin.com |
September
20, 2024
VIA
ELECTRONIC MAIL
Alta
Global Group Limited
Level
1, Suite 1, 29-33 The Corso
Manly,
New South Wales 2095
| Re: |
Registration
Statement on Form F-1 |
Ladies
and Gentlemen:
We
are acting as United States counsel to Alta Global Group Limited (the “Company”) in connection with its registration
statement on Form F-1 (the “Registration Statement”) filed with the Securities and Exchange Commission (the “Commission”)
under the Securities Act of 1933, as amended (the “Act”), relating to the proposed public offering of up to $5,000,000
of ordinary shares of the Company, no par value (the “Ordinary Shares”) and/or pre-funded warrants (the “Pre-Funded
Warrants”) to purchase Ordinary Shares, and up to an additional $750,000 of Ordinary Shares and/or Pre-Funded Warrants if the
underwriters exercise their over-allotment option. The Registration Statement will also cover the
offer and sale to the representative of the underwriters of warrants to purchase 5.0% of the total number of Ordinary Shares and Pre-Funded
Warrants sold in the offering with an exercise price equal to 125% of the public offering price (the “Representative Warrants,”
and together with the Pre-Funded Warrants, the “Warrants”). We understand that the Ordinary Shares, Pre-Funded Warrants
and Representative Warrants are to be sold to the underwriters as described in the Registration Statement and pursuant to an underwriting
agreement, substantially in the form filed as an exhibit to the Registration Statement, to be entered into by and among the Company and
the underwriters. This opinion letter is furnished to you at your request to enable you
to fulfill the requirements of Item 601(b)(5) of Regulation S-K in connection with the Registration Statement.
In
connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents,
corporate records, certificates of public officials and other instruments as we have deemed necessary for the purposes of rendering this
opinion.
In
our examination, we have assumed the genuineness of all signatures, including endorsements, the legal capacity and competency of all
natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents
submitted to us as facsimile, electronic, certified or photocopy, and the authenticity of the originals of such copies. As to any facts
relevant to the opinions stated herein that we did not independently establish or verify, we have relied upon statements and representations
of officers and other representatives of the Company and others and of public officials. In rendering
this opinion, we have relied on the opinion of K&L Gates, being filed as an exhibit to the Registration Statement, that all necessary
corporate action on the part of the Company has been taken under the laws of Australia with regard to the due authorization, execution,
and delivery of the Ordinary Shares, Pre-Funded Warrants and Representative Warrants.
Based
upon, subject to and limited by the foregoing, we are of the opinion that:
| |
1. |
Upon
the issuance of the Warrants, the Warrants will constitute valid and binding obligations of the Company, enforceable in accordance
with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, concepts
of reasonableness and equitable principles of general applicability. |
We
also hereby consent to the reference to our firm under the caption “Legal Matters” in the prospectus which forms part of
the Registration Statement. In giving this consent, we do not admit that we are within the category of persons whose consent is required
under Section 7 of the Act, the rules and regulations of the Commission promulgated thereunder or Item 509 of Regulation S-K.
|
Sheppard,
Mullin, Richter & Hampton LLP
30
Rockefeller Plaza
New
York, New York 10112-0015
212.653.8700
main
212.653.8701
fax
www.sheppardmullin.com |
We
express no opinion herein as to the laws of any state or jurisdiction other than the laws of the State of New York (including the statutory
provisions and all applicable judicial decisions interpreting those laws) and the federal laws of the United States of America.
No opinion is expressed herein with respect to the qualification of the Ordinary Shares or Pre-Funded Warrants under the securities or
blue sky laws of any state or any foreign jurisdiction.
This
opinion letter is rendered as of the date first written above and we disclaim any obligation to advise you of facts, circumstances, events
or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinion expressed herein. Our
opinion is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any
other matters relating to the Company, the Ordinary Shares, the Pre-Funded Warrants, the Representative Warrants or any other agreements
or transactions that may be related thereto or contemplated thereby. We are expressing no opinion as to any obligations that parties
other than the Company may have under or in respect of the Ordinary Shares, the Pre-Funded Warrants or the Representative Warrants or
as to the effect that their performance of such obligations may have upon any of the matters referred to above. No opinion may be implied
or inferred beyond the opinion expressly stated above.
Very
truly yours,
/s/
SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
SHEPPARD,
MULLIN, RICHTER & HAMPTON LLP
Exhibit
23.1
 |
Tel:
+61 2 9251 4100
Fax:
+61 2 9240 9821
www.bdo.com.au |
Level
11, 1 Margaret St
Sydney
NSW 2000
Australia
|
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Alta
Global Group Limited
Level
1, Suite 1, 29-33 The Corso
Manly,
New South Wales 2095
We
hereby consent to the use in the Prospectus constituting a part of this Registration Statement of our report dated November 17, 2023,
except for the effects of the reverse share split as described in Note 17, as to which the date is January 24, 2024, relating to the
consolidated financial statements of Alta Global Group Limited and Controlled Entities (the “Company”), which is contained
in that Prospectus. Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.
We
also consent to the reference to us under the caption “Experts” in the Registration Statement.
/s/
BDO Audit Pty Ltd
BDO
Audit Pty Ltd
Sydney,
Australia
September
20, 2024
BDO
Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia
Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International
Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms.
Exhibit
107
Calculation
of Filing Fee Tables
Form
F-1
(Form
Type)
Alta
Global Group Limited
(Exact
Name of Registrant as Specified in its Charter)
Table
1: Newly Registered Securities
| | |
Security Type | |
Security Class Title | |
Fee Calculation Rule | |
Amount Registered | | |
Proposed Maximum Offering Price Per Unit | | |
|
Maximum Aggregate Offering Price(1) | |
Fee Rate | | |
Amount of Registration
Fee(2) | |
| Fees to be Paid | |
Equity | |
Ordinary Shares, no par value | |
457(o) | |
| — | | |
| — | | |
$ |
5,750,000 | |
| 0.00014760 | | |
$ | 848.70 | |
| | |
Other | |
Pre-funded warrants to purchase Ordinary Shares (2)(3) | |
457(g) | |
| — | | |
| — | | |
|
Included above | |
| — | | |
| — | |
| | |
Equity | |
Ordinary Shares issuable upon exercise of the pre-funded warrants (2)(3) | |
457(o) | |
| — | | |
| — | | |
|
Included above | |
| — | | |
| — | |
| | |
Equity | |
Ordinary Shares issuable upon exercise of the Representative’s warrants (4) | |
457(o) | |
| — | | |
| — | | |
$ |
359,375 | |
| 0.00014760 | | |
$ | 53.05 | |
| | |
Other | |
Representative’s warrant to purchase Ordinary Shares (2)(3) | |
457(g) | |
| — | | |
| — | | |
|
Included above | |
| — | | |
| — | |
| | |
| |
| |
| |
| | | |
| | | |
|
| |
| | | |
| | |
| | |
Total Offering Amounts | | |
| | | |
$ |
6,109,375 | |
| | | |
$ | 901.75 | |
| | |
Total Fees Previously Paid | | |
| | | |
|
| |
| | | |
$ | 2,434.71 | (5) |
| | |
Total Fee Offsets | | |
| | | |
|
| |
| | | |
| — | |
| | |
Net Fee Due | | |
| | | |
|
| |
| | | |
$ | N/A | |
| |
(1) |
Estimated
solely for purposes of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act. Includes
additional Ordinary Shares that the underwriters have the option to purchase. |
| |
|
|
| |
(2) |
The
proposed maximum aggregate offering price of the Ordinary Shares proposed to be sold in the offering will be reduced on a dollar-for-dollar
basis based on the aggregate offering price of the pre-funded warrants offered and sold in the offering (plus the aggregate exercise
price of the Ordinary Shares issuable upon exercise of the pre-funded warrants), and as such the proposed aggregate maximum offering
price of the Ordinary Shares and pre-funded warrants (including Ordinary Shares issuable upon exercise of the pre-funded warrants),
if any, is $5,750,000. |
| |
|
|
| |
(3) |
No
separate fee is required pursuant to Rule 457(g) under the Securities Act. |
| |
|
|
| |
(4) |
Estimated
solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act. The warrants have an
exercise price equal to 125% of the public offering price. As estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(g) under the Securities Act, the proposed maximum aggregate offering price of the shares underlying the Representative’s
warrants is equal to $359,375 (which is equal to 5% of the proposed maximum aggregate offering price for the Ordinary Shares of $5,750,000
multiplied by 125%). |
| |
|
|
| |
(5) |
The
Registrant previously paid registration fees of $2,434.71 in connection with the initial filing of this Registration Statement on
Form F-1 on September 5, 2024. |
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