TIDMBRSD
RNS Number : 6522E
Brandshield Systems PLC
03 July 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED
UNDER THE UK VERSION OF THE MARKET ABUSE REGULATION NO 596/2014
WHICH IS PART OF ENGLISH LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL)
ACT 2018, AS AMED. ON PUBLICATION OF THIS ANNOUNCEMENT VIA A
REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO
BE IN THE PUBLIC DOMAIN.
3 July 2023
BrandShield Systems Plc
("BrandShield" or the "Company")
Final Results for the year ended 31 December 2022
BrandShield Systems plc (AIM: BRSD), a leading provider of
cybersecurity solutions for brand oriented digital risk protection
("DRP"), announces its final results for the year ended 31 December
2022 ("FY 2022").
BrandShield specialises in the monitoring, detection and removal
of online threats such as phishing attempts, scams, impersonation,
fraud, counterfeit products and trademark infringements. The
business was established to revolutionise the way companies can
protect their digital assets outside their security perimeter. Ever
since launch, BrandShield has introduced ground-breaking innovative
technologies for Digital Risk Protection powered by artificial
intelligence ("AI"), machine learning and big data analysis to
provide the most automated and relevant solutions for the 21st
century.
Financial highlights
-- 55% increase in revenues to $6.39m ($4.13m in 2021)
-- 61% increase in ARR to $8.42m ($5.22m in 2021)
-- Cash of $2.6m ($1.194m in 2021)
Operational highlights
-- 53 new customers signed in 2022 (53 clients in 2021)
-- Generated strong new business impetus, expanding its presence
in the financial, healthcare, consumer products, and media spaces
via a number of key customer acquisitions
-- Bolstered reputation as a go-to DRP company of choice for
brands operating in the financial services market
-- Prioritised the expansion of its market presence globally via
strategic marketing and sales initiatives, and accordingly entered
new geographies in FY 2022
-- Gained a number of new clients in the crypto space, including
an online gaming client focused on the crypto gaming sub-sector
-- Delivered a strategic partnership with The Sandbox, a leading
decentralised gaming virtual world and a subsidiary of Animoca
Brands, to safeguard the crypto and HFT digital ecosystem
-- Secured a new business mandate with one of the world's
largest consumer electronics brands to protect the business from
illicit trade and unauthorised online sales
Post Period End
-- Strengthened its collaboration with the Pharmaceutical
Security Institute ("PSI") and subsequently published its findings
from its annual pharma fraud disruption programme:
o From January 2022 to January 2023, BrandShield successfully
detected and removed over 430 rogue pharmacies and 7,500 fraudulent
marketplace listings
-- Strong growth trend has continued into 2023 with the May 2023
ARR figure standing at $9.3m, a 47.6% increase in ARR relative to
May 2022
Outlook
The Group is focused on expanding BrandShield's market presence
and bolstering its position as a leading provider of cutting-edge
DRP solutions through securing new mandates to diversify its
growing portfolio of clients alongside targeting further ARR
growth. At a time when cyber-related threats continue to grow, the
importance of Digital Risk Protection has become a necessity for
businesses as they continue to navigate significant technological
and social changes.
BrandShield is committed to building upon the strong customer
traction it delivered in FY 2022 and the Company believes it is
well-placed to meet its future growth objectives.
Yoav Keren, Chief Executive Officer of BrandShield, commented :
"We are pleased to report a strong performance across 2022, with
the Company making significant financial and operational progress.
In addition to generating strong revenues and expanding our
customer base, we also further strengthened our team with a number
of strategic hires as we continue to explore further commercial
opportunities to consolidate our position at the forefront of the
digital risk protection market.
As cyber-related crimes continue to evolve and new threats
emerge, demand for digital risk protection services continues to
rise in tandem, and our highly sophisticated AI-powered solutions
have ensured we remain a go-to choice for brands across the globe
looking to safeguard their online reputations.
Looking ahead, BrandShield remains confident in meeting
expectations for the full year 2023 and in the Company's future
growth prospects."
For further information please visit https://www.brandshield.com/ or contact:
BrandShield Systems plc +44 (0)20 3143
Yoav Keren, CEO 8300
Spark Advisory Partners Limited (Nominated
Adviser) +44 (0)20 3368
Neil Baldwin / Andrew Emmott / James Keeshan 3554
Shore Capital (Broker) +44 (0)20 7408
Toby Gibbs / James Thomas / Rachel Goldstein 4090
(Corporate Advisory)
Henry Willcocks (Corporate Broking)
Vigo Consulting (Financial Public Relations)
Jeremy Garcia / Kendall Hill +44 (0)20 7390
brandshield@vigoconsulting.com 0237
The full Group Annual Report and Financial Statements will be
sent to shareholders later today and is available at
www.brandshield.com .
Extracts from the Annual Report are set out below:
CHAIRMAN'S STATEMENT
Introduction
BrandShield Systems Plc. ("BrandShield" or the "Company") is a
leading cybersecurity company that provides brand oriented digital
risk protection. The Company specialises in the monitoring,
detection and removal of online threats such as phishing attempts,
scams, impersonation, fraud, counterfeit products and trademark
infringements. The business was established to revolutionise the
way companies can protect their digital assets outside their
security perimeter. Ever since launch, BrandShield has introduced
ground-breaking innovative technologies for online brand protection
powered by artificial intelligence ("AI"), machine learning and big
data analysis to provide the most automated and relevant solutions
for the 21st century.
The Group delivered a strong performance during the period,
generating revenues of $6.39m , up 55% from $4.13m in 2021,
underpinned by solid business momentum, including multiple customer
wins across a diverse range of sectors. BrandShield strengthened
its financial foundations during the period, ending FY 2022 with
available cash reserves of $2.6m, which will facilitate its
continued expansion by enhancing the Group's R&D, marketing,
and sales capabilities.
During the period, BrandShield raised a total of GBP4.25m in new
equity and the Company has focused on deploying new capital to
target profitability by increasing investment in marketing and
sales initiatives and accelerating the growth of its customer
footprint as well as Annual Recurring Revenues ("ARR"), a key
performance indicator. BrandShield delivered on its ARR growth
aspirations during the period, with the ARR as at the end of FY
2022 at $8.42m, representing a 61% increase from FY 2021 ($5.22m).
This, alongside the significant expansion of its customer base to
183 (FY 2021: 130), demonstrates the robust operational progress
achieved by the Company in FY 2022.
BrandShield hired 20 new employees across key departments in the
period, including sales directors in the US and UK, to accelerate
client growth in those regions. Expansion in the US remains a
strategic priority for the Group, and North America now constitutes
c.70% of BrandShield's total client base, spanning industries
including financial services, healthcare, consumer goods and media
and entertainment. Moreover, BrandShield recruited a sales director
with the primary responsibility of developing partnership
distribution channels to scale its client base.
Given a very strong Life Time Value to Customer Acquisition Cost
("LTV to CAC") ratio, the Board has been clear in its desire for
the Company to continue to grow aggressively whilst ensuring
profitability is pursued, and it remains a key intention to hit
cash flow positive within our existing resources in 2024.
BrandShield offers a superior product in a largely underserved
market and, therefore, the priority must be on marketplace
consolidation and achieving a leading position in the online brand
protection competitive environment.
BrandShield has minority interests in assets inherited as a
result of the Reverse Takeover ("RTO") transaction conducted with
Two Shields Investments Plc in December 2020. These include
holdings in WeShop Ltd (now renamed Community Social Investment
Ltd) and legacy mining assets, namely Kalahari Key Mineral
Exploitation Company (Pty) Ltd, Leopard Lithium Pty Ltd and
International Geosciences Limited ("IGS"). These assets are
considered non-core and we remain focused on the orderly disposal
of these legacy investments where value can be realised for our
shareholders.
BrandShield's core activities
BrandShield is a fast-growing provider of cyber solutions,
delivering an end-to-end brand oriented digital risk protection
solution to its global customer base. Its software protects
customers from the financial costs and reputational damage caused
by an increasing number of online threats including online scams,
phishing, impersonation, and sale of counterfeit goods. Unlike
traditional solutions, BrandShield's Software as a Service ("SaaS")
operates outside of an organisation's perimeter and therefore
requires no integration. BrandShield's highly developed software
works by detecting potential threats, analysing them, prioritising
them and then taking them down. BrandShield has developed a suite
of proprietary AI-powered software that largely automates the
analysis and prioritisation of fraudulent online cases. The
technology uses big data and algorithms to find networks of
fraudulent online activity and clusters of scammers.
BrandShield's software monitors millions of datapoints across
many types of online platforms including websites, marketplaces,
social media, mobile apps and Pay Per Click ads. The AI and machine
learning nature of the software means that it is continually
improving as it adds new datapoints and identifies new types of
threats. In response to customer demand, BrandShield established
its own in-house online hunting and enforcement team, consisting
mostly of qualified lawyers with experience in IP law. The service
is customised to the requirements of BrandShield's customers and
experiences high success rates.
Strategy
Leveraging capital raised during the period, BrandShield is
committed to driving the continued expansion of its offering
globally, the keystone of the Board's overarching growth strategy.
BrandShield is prioritising achieving profitability and cash flow
positivity and continues to explore opportunities to expand its
customer base, which already includes SMBs and large enterprises
across five continents, demonstrating that the need for brands to
secure external online brand protection services transcends
international borders. As previously mentioned, the number of
clients increased from 130 at year end 2021 to 183 at year end
2022, representing a significant period of growth.
The Company's ARR figure increased from $5.22m for FY 2021 to
$8.42m in the period, a 61% increase year on year, and that upward
trajectory has continued through the start of 2023 with the May
2023 ARR standing at $9.3m.
Cybersecurity is an ever-evolving sector, and this year we
witnessed the emergence of a number of new and highly sophisticated
cyberthreats which have the potential to tarnish the reputation of
brands across the globe and disrupt their day-to-day operations.
BrandShield is focused on ensuring it is positioned at the
forefront of innovation in the digital risk protection services
arena by investing in sales promotion, marketing and R&D
activities to stay ahead of market trends, whilst strategically
recruiting new employees with robust sector knowhow and
experience.
BrandShield demonstrated the effectiveness of the Company's
existing strategy by delivering significant operational and
financial progress across FY 2022. Funding raised during the period
will enable the Company to build on this momentum as it pursues
further commercial opportunities to protect brands worldwide from a
host of digital threats. Alongside this the Company has delivered
significant cost savings as a result of increased efficiencies
delivered through the adoption of the 'BrandShield 3.0' platform by
our clients. This has enhanced automation within the Company's
enforcement processes and allowed a re-structuring to be carried
out within the enforcement function which continues. Cloud based
costs have also been reduced since the period end which has reduced
the Company's operational cash burn significantly.
Across the year, the Company raised a total of GBP4.25m
($5.45m), which will enable BrandShield to continue to execute its
strategy of aggressively targeting client growth whilst aiming for
profitability in the medium to long term. Further, this investment
will allow BrandShield to expand its marketing and sales efforts
and to continue to drive ARR forwards. Given BrandShield's highly
scalable SaaS platform, the Company is focused on the top line
whilst customer conversion continues to be of paramount importance
for 2023. That said, the Company believes it will get cash flow
positive during 2024 without the need for further funding.
Outlook
As we look to the future, BrandShield is focused on securing new
mandates to diversify its growing multi-sector portfolio of clients
alongside targeting further ARR growth. In a time of rapid
technological and social change where more emphasis is placed on a
brand's online identity than ever before, an increasing number of
companies recognise that securing external threat prevention and
elimination assistance, such as that BrandShield offers, is now a
necessity.
From e-commerce and crypto companies to businesses in the
fashion and hospitality spaces, a fast-growing number of brands are
trusting BrandShield to safeguard their reputations by providing
comprehensive digital risk protection from a broad range of
prevalent cyberthreats. With ARR and overall commercial revenue up,
in addition to continued strong backing from investors, BrandShield
is well-placed to deliver on our medium to long term growth
aspirations.
Azriel Moscovici
Chairman
2 July 2023
Introduction
We are pleased to report a strong performance across FY 2022,
with BrandShield delivering excellent financial and operational
progress. Integral to our success is the progress the Company has
made in delivering ARR of $8.42m as at year end, a 61% increase
from FY 2021 ($5.22m), continuing the very strong growth trend.
Encouragingly, that strong growth trend has continued into 2023
with the May ARR figure standing at $9.3m.
This was underpinned by the acquisition of clients across a
number of sectors and the ongoing investment in, and expansion of,
the Company's marketing and sales functions. The Company now
services over 200 clients, adding 53 across 2022, and a further 21
so far in 2023.
Given a very strong LTV to CAC ratio, we have been clear that
BrandShield will continue to focus on aggressive growth within
existing resources with a view to achieving positive cash flow in
Q1 2024. Management believes BrandShield offers a superior product
in a largely unserved market and, therefore, the priority must be
on marketplace consolidation and achieving a leading position in
the digital risk protection competitive environment.
Revenues for FY 2022 increased 55% to $6.39m, compared to FY
2021 $4.13m, with the Group reporting a loss of $7.33m (FY 2021:
loss of $6.30m), which was in-line with management's expectations.
$1.7m of the loss (2021 was $1.9m) can be attributed to share based
payments calculations which do not reflect the actual operating
loss of the Company from its operations of $5.77m (2021:
$4.4m).
The Company added 53 new customers in FY 2022, built across a
growing list of sectors and market-leading brands. These have
included new or extended contracts with companies operating in the
financial services, pharmaceutical, crypto, entertainment, fashion,
sports, and cosmetics sectors.
BrandShield has delivered significant customer traction during
the period, and whilst confidentiality agreements prevent the
Company from disclosing all our successes, including some of the
world's largest and well-known brands, the Company has been able to
announce the following:
-- Delivered a strategic partnership with The Sandbox, a leading
decentralised gaming virtual world and a subsidiary of Animoca
Brands, to safeguard the crypto and HFT digital ecosystem
-- Secured a new business mandate with one of the world's
largest consumer electronics brands to protect the business from
illicit trade and unauthorised online sales
-- Strengthened its collaboration with the Pharmaceutical
Security Institute ("PSI") and subsequently published its findings
from its annual pharma fraud disruption programme:
o From January 2022 to January 2023, BrandShield successfully
detected and removed over 430 rogue pharmacies and 7,500 fraudulent
marketplace listings
-- Gained a number of new clients in the crypto space, including
an online gaming client focused on the crypto gaming sub-sector
-- Generated strong new business impetus, expanding its presence
in the financial, healthcare, consumer products, and media spaces
via a number of key customer acquisitions
-- Bolstered reputation as a go-to digital risk protection
("DRP") company of choice for brands operating in the financial
services market
-- Prioritised the expansion of its market presence globally via
strategic marketing and sales initiatives, and accordingly entered
new geographies in FY 2022
The value that BrandShield can add to our clients was reinforced
by the post period end publication of the Company's annual pharma
fraud report, which was carried out in cooperation with PSI.
Over the 12-month period, BrandShield took down more than 7,500
fraudulent pharmaceutical listings across social media platforms,
websites, and marketplaces, accounting for hundreds of thousands of
dollars' worth of counterfeit drugs.
With the majority of fraudulent marketplace listings originating
in regions including Indonesia, China, and India, and removed
listings containing medicines relating to cancer, diabetes, and
Covid-19 among others, the report highlights both BrandShield's
global reach and the instrumental role the Company performs to
protect individuals from potentially life-threatening online
scams.
Market dynamics
According to global business consultancy group Frost &
Sullivan ("F&S"), the DRP market is on a high growth trajectory
as the number of cyberattacks on organisations' brands, customers,
and employees continues to rise. The DRP market is increasing at a
compound annual growth rate of 39.7% from 2021 to 2026, whilst
F&S expects it to reach $917.7 million by 2026.
Against this favourable macroeconomic backdrop, BrandShield's
prudent strategy is designed to ensure the Company is well poised
to capitalise on the projected long-term global demand for reliable
DRP services. As evidenced by the diverse nature of our new
customer wins in 2022, this surge in demand is sector agnostic, and
BrandShield intends to proactively explore further commercial
opportunities across a range of industries as digital threat
protection grows in importance for brands.
BrandShield has been recognised as the third best provider of
cybersecurity solutions for brand oriented DRP globally in F&S'
2023 Global Digital Risk Protection New Product Innovation and Best
Practices Award. BrandShield scored highly for its ability to stay
sensitive to emerging trends and challenges in the technology
space, and was also praised for its expansion into new markets and
industry verticals, such as blockchain and gaming. F&S'
industry experts commended BrandShield for its comprehensive brand
protection capabilities, noting the highly adaptable features of
the Company's AI-powered technology.
Our unique proposition
We believe that our technology is well placed to lead this
transition as enterprises increase their online protection and move
from focusing on internal cybersecurity to requiring solutions for
external threats, providing comprehensive brand oriented digital
risk protection solutions. BrandShield's market-leading solutions
are underpinned by:
-- A mature product, creating higher barriers to entry;
-- Ongoing investment in R&D to ensure market leadership is maintained;
-- AI/ML powered technology;
-- Strong threat network detection capabilities;
-- Unique image recognition and Optical Character Recognition
("OCR") - focusing on detection of emerging threats on websites,
social media and e-commerce marketplaces; and
-- Big data investigation tools with multi-brand and platform capabilities.
In addition, BrandShield adopts a multi-layered approach to the
detection and mitigation of online threats, which includes Data
Detection, Automated Analysis and Prioritisation, Easy-to-Use
Interface and Highly Automated Takedown Actions.
Strategy
The further expansion of BrandShield's global customer footprint
remains a core growth priority as the Company seeks to increase ARR
from clients in a variety of sectors. This is being primarily
achieved through the expansion of the marketing and sales
activities.
Key pillars of the Company's long-term growth plan include the
following strategic priorities:
-- Continue to invest in and grow the sales and marketing teams;
-- Specific expansion of the sales teams in the US and UK;
-- Establishing a broader marketing footprint;
-- Expansion of advertising, sales promotion and digital marketing campaigns; and
-- Ongoing Business-to-Business public relations and brand building activities.
Product development
Throughout 2022, the Company developed capability enhancements
to its existing platform and expanded its AI protection solution to
provide security against a range of new and evolving threats to
digital assets.
BrandShield 3.0 version was launched during 2022, providing an
enhanced layer of protection against external digital threats such
as web fraud, phishing, social media scams, impersonations and
online-counterfeiting.
BrandShield 3.0 is a completely new version of the BrandShield
platform which was developed in accordance with the latest market
requirements and to meet the most recent digital risk protection
and brand protection challenges. The SaaS technology includes a
completely new and robust infrastructure, and its innovative user
interface is both intuitive and enables more ways to detect threat
networks and carry out immediate takedowns whilst covering more
threats in less time.
In addition, the Company launched NFT Shield(TM) in October
2022, a bespoke AI solution aimed at detecting and removing
illegitimate digital assets. With NFTs now playing a prominent role
in the digital economy, the risk of online asset fraud has become
more evident. In turn, BrandShield, in order to help safeguard an
NFT economy currently worth approximately $3 billion, developed an
AI solution to counter the growing number of fake listings, scams,
and impersonations across NFT marketplaces.
Key hires
The US is an important market for BrandShield, where c.70% of
the Group's clients are based. In 2021, the Company established
physical sales presences in the US as well as the UK, and
BrandShield continued to build on this progress during 2022 by
recruiting sales directors with considerable experience in both
territories to further accelerate growth.
Outlook
The Company performed strongly throughout 2022, achieving
significant financial and operational growth and augmenting its
already strong DRP capabilities through innovative product
launches. Strategic hires have already enabled the Company to
enhance its marketing and sales functions in key regions, and once
fully integrated, will facilitate new business development.
BrandShield's talented employees are the backbone of the
business, and I would like to express my profound thanks to all
staff for their continued hard work and tenacity throughout the
year, which has been pivotal in helping the Company consolidate its
position as a leading provider of cutting-edge DRP solutions.
With a significant and fast-growing global footprint, in
addition to clients across a range of verticals, BrandShield is
well positioned to continue to deploy its highly automated SaaS
offering to capitalise on the high demand for DRP services.
Looking ahead, the Company remains confident in meeting
expectations for the full year 2023 and in the Company's future
growth prospects.
Yoav Keren
Chief Executive Officer
2 July 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2022
As restated
31 December 31 December 2021
2022
Note $ $
Revenue from contracts with
customers 4 6,396,157 4,127,247
Cost of sales (2,945,050) (1,864,512)
------------- -----------------
Gross profit 3,451,107 2,262,735
Research and Development expenses 6 (2,996,276) (2,721,553)
Sales and Marketing expenses 6 (4,150,684) (2,950,617)
Operating expenses 6 (3,266,657) (2,818,102)
(10,413,617) (8,490,272)
------------- -----------------
Operating loss (6,962,510) (6,227,537)
Depreciation (29,201) (42,464)
Depreciation of the right
of use (249,369) -
Impairment loss (46,952) -
Net finance (expense)/ income 10 (51,874) (33,372)
Loss before income tax (7,339,906) (6,303,373)
------------- -----------------
Income tax expense 11 - -
Loss from continuing operations
attributable to owners (7,339,906) (6,303,373)
Other comprehensive income:
Items that will or may be
reclassified to profit or
loss:
Exchange differences on translation (49,869) (102,319)
------------- -----------------
Total comprehensive loss
attributable to owners (7,389,775) (6,405,692)
============= =================
Basic and diluted earnings
per share attributable to
owners 12 (0.04) (0.05)
============= =================
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
As Restated
31 December 2022 31 December
2021
Note $ $
NON-CURRENT ASSETS
Property, plant and equipment 13 180,777 47,839
Right of use asset - office
lease 25 1,080,599 -
Financial assets at fair
value through profit or
loss 14 3,663,072 4,112,107
------------------- -------------
4,924,448 4,159,946
CURRENT ASSETS
Trade and other receivables 15 2,791,518 825,066
Financial assets at fair
value through profit or
loss 16 18,220 20,534
Other financial assets 14,447 16,218
Cash and cash equivalents 17 2,605,605 1,194,275
Restricted cash 372,707 191,770
Assets classified as held
for sale 18 254,023 337,870
------------------- -------------
6,056,520 2,585,733
------------------- -------------
TOTAL ASSETS 10,980,968 6,745,679
=================== =============
CURRENT LIABILITIES
Short term loan and bank
overdraft 23 2,278,645 1,626,357
Trade and other payables 24 5,969,822 2,807,924
Lease liability- current 25 321,727 -
------------------- -------------
8,570,194 4,434,281
NON-CURRENT LIABILITIES
Lease liability- non current 25 795,557 -
Other payables 30,079 32,230
------------------- -------------
825,636 32,230
------------------- -------------
TOTAL LIABILITIES 9,395,830 4,466,511
------------------- -------------
NET ASSETS 1,585,138 2,279,168
=================== =============
EQUITY
Share capital 21 9,929,842 9,299,228
Share premium 21 32,060,989 27,686,289
Reverse acquisition reserve (20,653,597) (20,653,597)
Other reserves 22 4,685,025 3,214,775
Retained earnings (24,437,121) (17,267,527)
------------- -------------
TOTAL EQUITY 1,585,138 2,279,168
============= =============
The Financial Statements were approved and authorised for issue
by the Board of Directors on July 2, 2023 and were signed on its
behalf by:
........................................................................
A Moscovici - Chairman
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
31 December 31 December 2021
2022
Note $ $
ASSETS
NON-CURRENT ASSETS
Financial assets at fair value
through profit or loss 14 3,663,072 4,112,107
Investment in subsidiary 19 22,958,375 25,772,709
Loans to related party 20 4,625,778
Property, plant and equipment 13 923 2,072
31,248,148 29,886,888
CURRENT ASSETS
Other receivables and prepayments 15 17,947 215,827
Loans to related parties 20 - 216,240
Financial assets at fair value
through profit or loss 16 18,220 20,534
Other financial assets 14,447 16,218
Cash and cash equivalents 17 230,324 68,721
Restricted cash 1,510 -
Assets classified as held
for sale 18 254,023 337,870
------------ -----------------
536,471 875,410
TOTAL ASSETS 31,784,619 30,762,298
============ =================
EQUITY
Share capital 21 9,929,842 9,299,228
Share premium 21 32,060,989 27,686,289
Other reserves 22 2,003,479 3,863,028
Retained earnings (12,385,406) (10,257,078)
------------ -----------------
TOTAL EQUITY 31,608,904 30,591,467
------------ -----------------
CURRENT LIABLILITIES
Trade and other payables 24 175,715 170,831
------------ -----------------
TOTAL LIABILITIES 175,715 170,831
------------ -----------------
TOTAL EQUITY AND LIABILITIES 31,784,619 30,762,298
============ =================
BrandShield Systems PLC has used the exemption granted under
s408 of the Companies Act 2006 that allows for the non-disclosure
of the Income Statement of the parent company. The after-tax loss
attributable to BrandShield Systems PLC for the twelve months 31
December 2022 was $2,298,640 (2021: $2,352,527). The Financial
Statements were approved and authorised for issue by the Board of
Directors on July 2, 2023 and were signed on its behalf by:
................................................... A Moscovici
- Chairman
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2022
Reverse
Share Share acquisition Other Retained Total
capital premium reserve reserves earnings equity
$ $ $ $ $ $
Balance at 1
January 2021 9,246,267 27,353,294 (20,653,597) 3,101,442 (12,646,446) 6,400,960
--------------- ---------- ----------- ------------- ------------ ------------- ------------
Loss for the
year - - - - (6,303,373) (6,303,373)
Exchange
differences
on
translation - - - 1,023,680 - 1,023,680
--------------- ---------- ----------- ------------- ------------ ------------- ------------
Total
comprehensive
income for
the year - - - 1,023,680 (6,303,373) (5,279,693)
--------------- ---------- ----------- ------------- ------------ ------------- ------------
Exercise of
options - - - (648,132) 648,132 -
Expiry of
options - - - (1,034,160) 1,034,160 -
Share based
payments - - - 1,897,944 - 1,897,944
Issue of share
capital 52,961 332,995 - - - 385,956
--------------- ---------- ----------- ------------- ------------ ------------- ------------
Balance at 31
December 2021 9,299,228 27,686,289 (20,653,597) 4,340,774 (18,393,526) 2,279,168
--------------- ---------- ----------- ------------- ------------ ------------- ------------
Prior year adjustment - - - (1,125,999) 1,125,999 -
-------------------------- ----------- ------------ -------------- ------------- ------------- ------------
Balance at 31 December
2021 as restated 9,299,228 27,686,289 (20,653,597) 3,214,775 (17,267,527) 2,279,168
-------------------------- ----------- ------------ -------------- ------------- ------------- ------------
Loss for the year - - - - (7,339,906) (7,339,906)
Exchange differences
on translation - - - (49,869) - (49,869)
-------------------------- ----------- ------------ -------------- ------------- ------------- ------------
Total comprehensive
income for the year - - - (49,869) (7,339,906) (7,389,775)
-------------------------- ----------- ------------ -------------- ------------- ------------- ------------
Share based payments
cancellation - - - (170,312) 170,312 -
Share based payments - - - 1,690,431 - 1,690,431
Transaction costs - (111,261) - - - (111,261)
Issue of share capital 630,614 4,485,961 - - - 5,116,575
Balance at 31 December
2022 9,929,842 32,060,989 (20,653,597) 4,685,025 (24,437,121) 1,585,138
========================== =========== ============ ============== ============= ============= ============
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2022
Share Share Other Retained
capital premium reserves earnings Total equity
$ $ $ $ $
Balance at 1
January
2021 9,246,267 27,353,294 3,949,949 (9,586,843) 30,962,667
--------------- ---------- ----------- -------------- ------------- -------------
Loss for the
year - - - (2,352,527) (2,352,527)
Exchange
differences
on
translation - - (302,573) - (302,573)
--------------- ---------- ----------- -------------- ------------- -------------
Total
comprehensive
income for
the year - - (302,573) (2,352,527) (2,655,100)
--------------- ---------- ----------- -------------- ------------- -------------
Exercise of
options - - (648,132) 648,132 -
Expiry of
options - - (1,034,160) 1,034,160 -
Issue of share
capital 52,961 332,995 - - 385,956
Share based
payments - - 1,897,944 - 1,897,944
--------------- ---------- ----------- -------------- ------------- -------------
Balance at 31
December
2021 9,299,228 27,686,289 3,863,028 (10,257,078) 30,591,467
--------------- ---------- ----------- -------------- ------------- -------------
Loss for the
year - - - (2,298,640) (2,298,640)
Exchange
differences
on
translation - - (3,379,668) - (3,379,668)
--------------- ---------- ----------- -------------- ------------- -------------
Total
comprehensive
income for
the year - - (3,379,668) (2,298,640) (5,678,308)
--------------- ---------- ----------- -------------- ------------- -------------
Exercise of
options - - - - -
Transaction
costs - (111,261) - - (111,261)
Issue of share
capital 630,614 4,485,961 - - 5,116,575
Share based
payments
cancellation - - (170,312) 170,312 -
Share based
payments - - 1,690,431 - 1,690,431
--------------- ---------- ----------- -------------- ------------- -------------
Balance at 31
December
2022 9,929,842 32,060,989 2,003,479 (12,385,406) 31,608,904
=============== ========== =========== ============== ============= =============
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2022
Year ended Year ended
31 December 31 December
2022 2021
Note $ $
Cash flows from operating activities
Loss for the year (7,339,906) (6,303,373)
Adjustments for:
Depreciation 13 29,201 42,464
Depreciation of the right of use 249,369
Fair value adjustment of financial
assets 46,952 -
Share based payment expense, net 27 1,690,431 1,897,944
Net finance expense, from lease 10 51,874 -
Foreign exchange on operations 49,770 (56,515)
Increase in trade and other receivables (1,921,486) (550,924)
Increase in trade and other payables 3,204,713 1,006,810
------------
Net cash outflow from operating activities (3,938,982) (3,963,594)
------------ ------------
Investing activities
Purchase of property, plant and equipment 13 (197,943) (52,970)
Net cash (outflow) / inflow/ from
investing activities (197,943) (52,970)
------------ ------------
Financing activities
Proceeds from issue of exercising warrants
and options 25 - 385,957
Proceeds from issue of ordinary shares 21 5,116,574 -
Share issue costs (111,261) -
Repayment of right of use lease obligations (246,309) -
Proceeds from loans and borrowings 652,288 1,626,357
Net cash inflow from financing activities 5,411,292 2,012,314
------------ ------------
Net (Decrease) / Increase in cash
and cash equivalents 1,274,267 (2,004,250)
Cash and cash equivalents at beginning
of year 1,194,375 3,198,525
Foreign exchange differences on cash 136,963 -
------------ ------------
Cash and cash equivalents at end of
year 17 2,605,605 1,194,275
============ ============
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2022
Year ended Year ended
31 December 31 December
2022 2021
Note $ $
Cash flows from operating activities
Loss before income tax (2,298,640) (2,352,527)
Adjustment for:
Depreciation 1,149 -
Fair value adjustment of financial
assets 46,952 -
Share based payments 27 1,690,431 1,897,944
Foreign exchange on operations (76,828) 4,768
(Increase) in trade and other receivables 197,880 (203,256)
Increase in trade and other payables 4,884 10,873
------------- -------------
Net cash outflow from operating
activities (434,172) (642,198)
------------- -------------
Cash flows from investing activities
Purchase of property, plant and equipment - (2,072)
Loans to related parties 20 (4,409,538) -
------------- -------------
Net cash outflow from investing
activities (4,409,538) (2,072)
------------- -------------
Cash flows from financing activities
Proceeds from issue of exercising
warrants and options 21 - 385,957
Share issue costs (111,261) -
Proceeds from issue ordinary shares 21 5,116,574 -
Net cash inflow from financing activities 5,005,313 385,957
------------- -------------
Net decrease in cash and cash equivalents 161,603 (258,313)
Cash and cash equivalents at beginning
of year 68,721 327,034
Foreign exchange differences on cash - -
------------- -------------
Cash and cash equivalents at end
of year 17 230,324 68,721
============= =============
There were no significant non-cash transactions in the year.
Basis of preparation
The consolidated financial statements of BrandShield Systems Plc
have been prepared in accordance with UK-adopted international
accounting standards and in accordance with the requirements of the
Companies Act 2006.
The preparation of consolidated financial statements in
accordance with UK adopted international accounting standards
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Company's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial
statements are disclosed in Note 3.
The consolidated financial statements present the results for
the Group and for the Parent Company for the year ended 31 December
2022. The comparative period for the Group and for the Parent
Company is for the twelve months ended 31 December 2021.
The principal accounting policies are set out below and have,
unless otherwise stated, been applied consistently in the financial
statements. The presentational currency of the consolidated
financial statements is US Dollars. The functional currency of the
parent and the subsidiary is Pounds Sterling and New Israeli Shekel
respectively.
Basis of consolidation
Subsidiaries are all entities over which the Group has control.
The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated
from the date that control ceases. Please refer to note 4 for
information on the consolidation of BrandShield Limited and the
application of the reverse acquisition under accounting principles
IFRS 10. Under IFRS 10, inter-company transactions, balances and
unrealised gains on transactions between group companies are
eliminated. Unrealised losses are also eliminated. When necessary,
amounts reported by subsidiaries have been adjusted to conform with
the Group's accounting policies.
1. ACCOUNTING POLICIES - continued
Going concern
The financial statements have been prepared on the assumption
that the Group will continue as a going concern. Under the going
concern assumption, an entity is ordinarily viewed as continuing in
business for the foreseeable future with neither the intention nor
the necessity of liquidation, ceasing trading or seeking protection
from creditors pursuant to laws or regulations. In assessing
whether the going concern assumption is appropriate, the Directors
take into account all available information for the foreseeable
future, in particular for the twelve months from the date of
approval of the financial statements.
Following the review of ongoing performance and cash flows, the
Directors have a reasonable expectation that the Group has adequate
resources to continue operational existence for the foreseeable
future.
During 2022 the Company raised a total of GBP4.25m in new
equity. The Company has focused on deploying new capital to target
profitability by increasing investment in marketing and sales
initiatives and accelerating the growth of its customer footprint
as well as Annual Recurring Revenues. However, an increased
emphasis has been placed on achieving a cash flow generative
position in 2024. The operational cash burn has been significantly
reduced through various initiatives including the roll out of the
enhanced 'BrandShield 3.0' platform to the Company's clients. This
has allowed greater automation to be achieved leading to wider
re-structuring within certain areas of the Company, particularly
within the enforcement division. Other cost cutting has been
achieved including a reduction in cloud based costs. The Company
also holds legacy investment assets that it is seeking to dispose
of in an orderly way. Opportunities may arise to dispose of these
however the Company is not reliant on this in a going concern
scenario. In addition, the directors have undertaken sensitivity
reviews of the forecasts to model the effects of lower than
budgeted growth and believe that cost reductions would be
achievable if needed (albeit to the detriment of the Group's long
term strategy) if required to avoid the need for a fundraise within
the next 12 months. These measures would include if required the
Directors deferring an element of their salaries. As such, the
Directors consider that the Group will have access to adequate
resources to meet operational requirements for at least 12 months
from the date of approval of these financial statements. On this
basis, the Directors have formed a judgement, at the time of
approving the Financial Statements, that there is a reasonable
expectation that the Group has access to adequate resources to
continue in operational existence for the foreseeable future. For
this reason, the Directors have adopted the going concern basis in
preparing the Financial Statements.
EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
Diluted earnings per share is calculated using the weighted
average number of shares adjusted to assume the conversion of all
dilutive potential ordinary shares.
In accordance with IAS 33 the share options and warrants in
issue do not have a dilutive impact on the earnings per share for
the year ended 31 December 2022 and the year ended 31 December
2021. The total number of potentially dilutive securities are
130,550,399 (2021: 36,786,285).
The weighted average number of shares is adjusted for the impact
of the reverse acquisition as follows:
- Prior to the reverse takeover, the number of shares is based
on BrandShield Limited, adjusted using the share exchange ratio
arising on the reverse takeover; and
- From the date of the reverse takeover, the number of shares is based on the Company
On 4 February 2022, the Company issued 10,714,286 ordinary
shares at 1 pence per share by way of placement raising
GBP1,500,000.
In May 2022, the Company issued 12,500,000 ordinary shares at 1
pence per share by way of placement raising GBP1,000,000.
In November 2022, the Company issued 29,166,667 ordinary shares
at 1 pence per share by way of placement raising GBP1,750,000.
Reconciliations are set out below:
31 December
2022
Weighted
average Per-share
Earnings number of amount
$ shares $
Basic and Diluted EPS (7,339,906) 170,331,874 (0.04)
============ =========== ==========
31 December
2021
Weighted
average Per-share
Earnings number of amount
$ shares $
Basic and Diluted EPS (6,303,373) 116,812,529 (0.05)
============ =========== ==========
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END
FR SSEFAEEDSESW
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July 03, 2023 02:00 ET (06:00 GMT)
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