mysquar acc 29-11-17 (final) (clean) acc 29... · 2017. 11. 30. · annual report and non-statutory...

MySQUAR Limited

Annual Report and Non-Statutory Financial Statements For the year ended 30 June 2017


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Contents

1. Corporate Information 2

2. Highlights 3 – 4

3. Chairman’s Statement 5 – 6

4. Chief Executive’s Review 7 – 9

5. Biographies of Directors 10

6. Directors’ Report 11 – 13

7. Statement of Directors’ Responsibilities 14

8. Independent Auditor’s Report 15 – 19

9. Consolidated Statement of Comprehensive Income 20

10. Consolidated Statement of Financial Position 21

11. Consolidated Statement of Changes in Equity 22

12. Consolidated Cash Flow Statement 23

13. Notes to the Consolidated Financial Statements 24 – 53


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Corporate Information Directors Piers Julian Dominic Pottinger, Chairman

Eric Alfred Schaer, Chief Executive Officer Pham Dang Hung, Finance Director Ross David Marsh, Non-Executive Director (Resigned 16 November 2017) Neil Frank Osborn, Non-Executive Director

Audit Committee Neil Frank Osborn, Chairman Piers Julian Dominic Pottinger

Nomination and Remuneration Committee

Piers Julian Dominic Pottinger, Chairman Neil Frank Osborn

Registered Office

PO Box 957 Offshore Incorporations Centre Road Town Tortola British Virgin Islands

Nominated Adviser

SP Angel Corporate Finance LLP Prince Frederick House 35-39 Maddox Street London, W1S 2PP United Kingdom

Brokers Beaufort Securities Limited

131 Finsbury Pavement London, EC2A 1NT United Kingdom

Legal Advisers Kerman & Co LLP

200 Strand London, WC2R 1DJ United Kingdom Walkers Global 6 Gracechurch Street London, EC3V 0AT United Kingdom Morgan Lewis Stamford LLC 10 Collyer Quay 27-00 Ocean Financial Centre Singapore

DFDL Vietnam Limited Liability Law Company 9th Floor, BIDV Tower 194 Tran Quang Khai Street Hoan Kiem District, Hanoi Vietnam

Independent Auditor

PKF Littlejohn LLP 1 Westferry Circus, Canary Wharf, London, E14 4HD United Kingdom


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MySQUAR, the Myanmar-language social media, entertainment and payments platform whose principal activity is to design, develop and commercialise Myanmar-focused internet-based mobile applications, announces its annual report for the year ended 30 June 2017. Highlights • Revenue for the year ended 30 June 2017 was US$ 1,057,383 (2016: US$ 795,191). • Total expenses for the year were US$ 3,057,831 (2016: US$ 2,560,783) including US$ 267,778 of

share-based payment expenses. • The Group made significant progress this year across gaming and app product releases. During the

year four hard core games, one casual game and a casual gaming platform with a total of six mini-games were released. Across apps the VOIP app was released on a trial basis along with updated versions of MyChat and the mobile marketplace. The mobile money application (in cooperation with MyPay Ltd) remains pending as MyPay awaits its operating license in Myanmar.

• MyChat released its first premium content this year with a sticker store in April 2017 and a dating feature in June 2017. The sticker store has both free and paid stickers with new sticker sets added monthly. Date is becoming increasingly popular and is regularly enhanced with both free and paid features.

• As of 12 January 2017, the Group’s registered users across all applications and games were approximately 7.5 million.

• The integration of Telenor Myanmar’s billing services was finalised on 21 March 2017 which allowed users to make purchases by deducting from their phone balance.

• Lucky Wingabar, a casual gaming platform, launched on 29 March 2017 with five games and will have new games added periodically.

• The VOIP app, CallHome, was launched on 31 March 2017 allowing users to make affordable calls to 190+ countries.

• The convertible loan note (CLN) with Sandabel was terminated on 10 April 2017 with an undrawn amount of US $900,000 remaining and £2 million was raised through an oversubscribed placing.

• The Group reached significant revenue milestones during the year of US $5,000 per day during the first week of May 2017, US $7,000 per day in early June 2017 and reached run rate operating breakeven revenue of US $8,500 per day in the last days of June 2017. This was achieved due to the integration with Telenor Myanmar and revenue from gaming and third-party application development services.

Post-period end highlights • The Group further diversified its product offerings on 6 July 2017 with the launch of Mingalarbar

Morning, a news aggregator in Myanmar language. • On 31 July 2017, the Company completed a placing of 32,188,671 shares at 3.75 pence per share

for £1,207,075. • On 10 August 2017, the Company released Land of Magic, the first mobile MMORPG (massively

multiplayer online role-playing game) in Myanmar. • The fish hunting game MyFish celebrated its one-year anniversary on 22 August 2017. • A sleeker, redesigned website was launched on 1 September 2017 providing visitors more detail

and visuals about the Group and its products. • The integration of Ooredoo Myanmar’s billing services was finalised on 19 September 2017 which

allowed users to make purchases by deducting from their phone balance. • An MoU with Sealand Capital Galaxy Limited (London stock ticker: SCGL) was announced on 10

October 2017 to enter into a partnership for the mobile games of MySQUAR to be distributed under Sealand’s (through its subsidiaries) licence agreement on the Huawei inTouch platform and for Sealand’s mobile games to be distributed in Myanmar through the MySQUAR platform.

• An MoU was announced on 19 October 2017 to enter into a partnership with other service providers for the financing and delivery of Wi-Fi services and digital content on Myanmar Railways.

• The number of registered users grew by approximately 167% from 7.5 million on 12 January 2017 to over 20 million by 31 October 2017.


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• A new casual game FishHunter – Kotanger 3D was launched on 16 November 2017.


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Chairman’s Statement

Dear Shareholders, MySQUAR is building a platform in mobile VAS where inter-related products and services can be easily integrated to create a deeper user experience. I am delighted to report that MySQUAR Limited (“MySQUAR” or “the Group”) has achieved key targets for financial year 2017 and generated significantly higher revenue compared to last year. A significant milestone of achieving run rate operating breakeven occurred (based on the revenue and cost structure at that time) in the last days of June 2017. The Group has now forayed into the news industry with the release of its newest product, Mingalarbar Morning, a news aggregator. Over the course of the year, the Group focused on optimising operations of the gaming and apps divisions so that the technology and workflow processes are more streamlined to reduce the cost structure. Teams have deepened their understanding of the Myanmar market and consumer preferences, leading to more efficient and targeted product development and releases. Through its diversified product offerings, MySQUAR has developed an established user base of over 20 million registered users. The Group remains committed to our strategy of building an ecosystem of products that can be integrated and cross-promoted to our users. Last year our revenue was mainly derived from third-party application development services while this year the Group has established multiple revenue streams from games, third-party application development services and trials from advertising. MySQUAR has become the internet of everything in Myanmar with several leading brands including MyGame, MyChat and Mingalarbar Morning. Myanmar Overview Myanmar’s economy continues its strong growth with a forecasted GDP of 7.7% in FY2017 and 8.0% in FY2018 per the ADB (Asian Development Bank). The market fundamentals remain strong with a population of almost 53 million where nearly half the population is under the age of 24 and a GDP per capita of US $1,275 in 2016 which has been increasing every year over the last 10 years by at least 5%. With such a young population that can learn quickly and is eager to access localised media and entertainment, it presents an excellent opportunity for MySQUAR’s products and services. Smartphones are widespread in urban areas with the majority of people already owning one. Mobile penetration has reached about 93% with some remaining first-time buyers from rural areas. The business environment is constantly improving with three major telcos offering nationwide 3G and 4G coverage that is quickly expanding. A fourth telco will enter an almost saturated market in early 2018, which should force the telco environment to become more competitive, and force pricing levels for data down. Competition is also making the market more favorable whereby telcos are seeking additional ways to enhance their subscription base and revenue through value added services. Telenor Myanmar and Ooredoo Myanmar have been receptive to integrating their phone billing services with us, making payments easier for our users that are also their respective subscribers, giving MySQUAR additional channels for revenue and distribution. The government has remained stable and open to the international community to accelerate growth, however since September 2017 the Country has faced challenges in regard to civil unrest that is receiving global media attention. While this is an unfortunate situation, it is not our place to offer commentary, other than to reassure investors that it does not and should not directly impact the business or strategy of the Group in any capacity.


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Chairman’s Statement (continued) Changes to the Board of Directors Our corporate governance has been further enhanced this year due to the addition of Neil Osborn to the Board in June 2016. Ross Marsh, a non-executive director, stepped down from the Board of Directors in November 2017 to pursue other business interests and will be replaced by existing board member, Neil Osborn, non-executive director, for his duties as the Chair of the Group’s Audit and AIM Compliance committees. Outlook – Become the Internet of Everything in Myanmar During the fiscal year 2018, MySQUAR remains committed to growing revenue and solidifying our position as a market leader within media and entertainment, particularly within the gaming, social media and news space. The Group will continue to enhance the synergies among apps and games, utilise data it has collected to create targeted promotions and advertising through a database called DeepMind and launch its own mobile money app within the next few months. Development of new products and services may impact our profitability in the short run, but will benefit the Group over the long term. The financial year ended 30 June 2018 is off to a good start with the release of the first MMORPG game in Myanmar that set a record among our games for earning the highest revenue on the first day of release. Revenue has been stabilising, reaching approximately US $189,113 in October 2017 and US $140,000 in the first 3 weeks of November 2017. The monthly revenue levels in October and November 2017 marked an increase of 35.5% as compared to US $135,000 average monthly revenue during July – September 2017 on average. The Group has built a strong foundation of providing our users accessible payment options across all products and anticipates accelerated monetisation upon the addition of more payment options (as we have initiated discussions with the remaining two telco providers). While the Company could certainly be profitable at the current revenue levels by cutting costs the board feels it is prudent to invest in new products and expand the user base to provide a better foundation for future growth and to continue to secure our first mover advantage. I remain grateful to the shareholders for their continued support and remain cognizant of delivering shareholder value. Piers Pottinger Chairman 29 November 2017


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Chief Executive’s Review Dear Shareholders, This has been a rather productive financial year as the Group solidified its position as a leading consumer technology company in the Myanmar market. We have streamlined our processes and optimised our products throughout the value chain. Two of our games are in the top three free game downloads on the Google Play store. We continue to be recognised as a pioneer in Myanmar with the only local chat app to include a dating feature, launching the first news aggregator and offering the largest variety of hard core mobile games. This has been reflected by the increase in registered user numbers from 7.5 million in January 2017 to over 20 million in October 2017. Our Strategy The Group’s strategy, to leverage our first mover advantage to be a leading media and entertainment company in Myanmar, has become more defined over time. We will use our existing user base to drive users across our ecosystem through brand integrations and product placements where possible to increase RPU and create greater synergy. Mobile money remains compelling and a key part of our strategy is to create an infrastructure across all our products and services to facilitate online and offline transactions. Operations MyGame made tremendous progress this past year in operations and branding. As sim cards and mobile phones only became widespread in 2014, it should not be surprising that there is a high degree of digital illiteracy. However, as the majority of the country is young with half of the population under the age of 24, Myanmar people are curious and able to learn quickly. MyGame made great strides towards educating players in digital and mobile game literacy ranging from registration to payment to guiding players throughout the game on how to play. Casual games have been the most appealing, with a wide user base from ages 18-45, as they are easy to understand so anyone can play. Hard core games, which generate greater revenue, are more complex and players range from ages 24-35 with 80% being male. This past year, MyGame released four hard core games, one casual game and a casual gaming platform with six mini-games. We continue to test the market with various genres to see what gamers find more appealing. Lucky Wingabar, MyFish and Hawk Hero are our top three titles. Meanwhile, Land of Magic set a record for generating the highest revenue on its launch date with a second server needed after a few hours to keep up with demand. We hope to convert players of our other games to Land of Magic. Gamers are aware of what is trending and interested in global titles, however these are mainly in English, which is spoken by only about 5% of the population. Therefore, MyGame’s key strategy is to continue licensing international games that are localised and released on a frequent basis. We will put more emphasis to offer local games that further integrate Myanmar culture for broader appeal and may consider developing these local games ourselves. The Group sees significant potential within the mobile gaming industry in Myanmar and will also release new genres, such as a dancing game, and a new casual fish hunting game in 3D was released on 16 November 2017, to attract the largely untapped female user base. MyGame will continue building on last year’s momentum by increasing our user base and putting more emphasis on marketing this year to increase awareness of all our game offerings with the launch of a game portal. The portal will centralise all gamers onto one platform with a universal login, making it easier and more cost effective to promote new games to existing users and monitor spend to offer VIP privileges to our most loyal users. The first phase, targeted for year-end 2017, will have basic functionalities including game downloads, cross-promotion and payment while the second phase will include a VIP program with bonus money when players top-up and a rewards program targeted for April 2018. MyGame currently has monthly online marketing events and will seek to host more offline events to educate and attract new players. To prepare for the integration with Ooredoo Myanmar, the Group had slowed the release of new titles


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Chief Executive’s Review (continued) and products during the first couple of months of the current financial year in anticipation of the enhanced monetisation this relationship would bring. Third-party application development services contributed a significant portion to the Group’s revenue through the development of both Android and iOS payment apps for a few third-party financial services clients located in South East Asia, the Middle East and India. These projects have enhanced the third-party application development services team’s technical expertise in C2C money transfers, especially with security as each region has its own requirements, and in turn will benefit the Group. The Company expects to achieve approximately US $350,000 in third-party app revenue for calendar year 2017 and anticipates achieving US $500,000 in third-party app revenue for calendar year 2018. US $310,000 has been achieved YTD 2017. The third-party application development services team will develop the mobile money app, which will be released in three phases. Phase 1 of the app will have basic features of a digital wallet including C2C money transfers and B2C online purchasing capabilities using a cash in/cash out agent network. Phases 2 and 3 are contingent upon the outcome of Phase 1, however may include integration with credit cards and bank accounts or additional B2C features. Phase 1 has been initiatedwith a beta release planned for early 2018. Our flagship chat app, MyChat, made a lot of headway this year with the platform being further optimised and more cost efficient resulting in an 80% reduction in infrastructure costs, and the first trial premium content including paid stickers and a dating feature was added. MyChat is now less reliant on native features, whereby outside apps and content can be integrated, making it easier to create a media platform. MyChat’s strategy has changed from a pure SNS (social networking service) app to creating a diversified media and entertainment platform with multiple monetisation opportunities. This will be achieved through integrating our other products where possible to achieve greater economies of scope. For example, Mingalarbar Morning was integrated into MyChat in September with the ability to choose topics of interest for a customised news feed and soon Mingalarbar Morning will add monetisable features like classifieds. Additional content has been or will be added to create an online community such as single-player arcade games, a mobile marketplace, media content (music, videos, etc.) tailored to local preferences and a private feed where users can share their activity such as what articles they are reading or a high score in a game. In addition, a spin-off MySQUAR sticker store will launch in December 2017 on the Apple store where existing sticker sets with international appeal and newly designed sticker sets will be sold individually. The VOIP app, CallHome, evolved from an app meant for Myanmar diaspora working in another city or abroad to stay connected with friends and family at home to having the capability to provide low cost calls to 190+countries. This change in strategy was due to the lack of a payment gateway being available as a Myanmar only app. CallHome experienced many problems during its initial build out, but is now performing well technically with clear call quality, less dropped calls, better display features, competitive pricing and flexible calling package. Our strategy now with CallHome is to focus on marketing in target countries with low acquisition cost, where we have competitive pricing with rates lower than Viber Out and sometimes Skype. Last year, the Group partnered with Fastsell to bring a mobile marketplace app to Myanmar. While this allowed us to offer a new product with minimal spend and resources, it has also proved prohibitive as we do not control the product development of the app. This has led to the decision to discontinue the partnership and for the Group to develop its own marketplace app in-house that may be integrated into MyChat and Mingalarbar Morning to leverage its user base. Our newest product, Mingalarbar Morning is a news aggregator that is gaining traction since its launch on 4 July 2017 and we are pleased with the organic growth of the user base. The site will compete by offering the most relevant news curated by our editor, who in about four months has added over 8,000 articles. The most popular sections to date are Celebrities, Sports and Lifestyle. We will continue to enhance the site over time and add new features to increase stickiness. For example, in September we updated the site with coding that enables it to load almost instantly and appear at the top of Google’s search rankings as well as adding arcade games. We will also add a Q&A section, community-sourced reviews of local businesses and classifieds. Monetisation will come from advertising once we have a larger use base and in the meantime, ads on the site will feature MySQUAR products.


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Chief Executive’s Review (continued) Across all our products, we have collected data about users that we will now utilise for deeper engagement with our users. Our vision is to essentially track the user journey across all apps and games to cross-promote products. This internal ecosystem that is being developed in-house, called Deep Mind, would enhance the user experience, allow for more forms of native advertising and offer promotions based on individual preferences while reducing marketing costs and providing a glimpse into user and revenue trends across products. Our intent is to deploy Deep Mind in the next 3-6 months. Financial Review Revenue for the financial year 2017 was US $1,057,383 (2016: US $795,161). Total expenses in the same period were US $3,057,831 (2016: US$ 2,560,783) including US $267,778 of share-based payment expenses. The Group’s loss before tax was US $1,997,678 for the financial year 2017 (2016: US $1,750,242). In the current year, the Group elected to change its accounting policy to capitalise certain product development costs as intangible assets which resulted in prior year adjustments. Outlook We are pleased with the progress we have made by expanding our payment channels through the integration of the phone billing services of Telenor Myanmar and Ooredoo Myanmar which make up about 60% of the market. Both integrations make purchases seamless for our users and bring enhanced distribution and marketing opportunities. The Group is undertaking discussions with the remaining two telcos, MPT and MyTel, in Myanmar and looks forward to providing further updates in due course. With the exception of CallHome which targets a global market, the biggest impediment across our products continues to be the cost of data. While the cost has decreased over time, it remains relatively expensive. Due to this limitation the Group must be cognizant of the data download required for any app, game or release update and we have developed each app or licenced games with this in mind. At this stage, all our products are “light” and technically efficient with high performance capabilities that minimise data usage. We anticipate that data costs for users will become more affordable in the near term and look forward to the increased competition with the entry of the fourth international carrier, MyTel. There is the potential that a 4.5G or 5G network will be available next year which would further reduce the cost of 4G and 3G data for users. The Group is undertaking discussions with its current telco partners to offer our users reduced pricing or packaged data rates. Another key consideration is that we enlarge our partnership network and are in discussions with leading Asian companies and organisations such as Sealand Capital Galaxy Limited and Myanmar Railways. While the third-party application development services is currently fully dedicated to developing our mobile money app, we expect to achieve higher revenue in calendar year 2018 as noted above. We believe that MySQUAR has cemented its position as a leading media and entertainment provider in Myanmar with a substantial product portfolio meeting the interests and needs of Myanmar people. Our key objective for MySQUAR this year will be to achieve profitability as soon as possible. To achieve this the Group is building out a strong management team for this anticipated growth and in November 2017 appointed Steven Chong as COO, who brings a strong background in operations management and helping companies grow across the region. In addition, the Group will appoint a Marketing Director to secure more partnerships and heighten our visibility in Myanmar. I would like to thank all of my colleagues throughout the business for their hard work and commitment during the year. Eric Schaer Chief Executive Officer 29 November 2017


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Biographies of Directors Piers Julian Dominic Pottinger, Chairman Piers J. D. Pottinger has been a leading figure in the public relations field for more than 35 years and founded one of the world’s leading agencies. During the last four years, Mr. Pottinger has resided in Asia as Chairman of Klareco Communications. He has advised clients from major corporations, governments and individuals, on an international basis. Mr. Pottinger has provided counsel on many UK mergers and acquisitions, government privatisations, IPOs and has advised boards on corporate governance best practices. Mr. Pottinger has held numerous executive and non-executive board positions for public companies.

Eric Alfred Schaer, Chief Executive Officer

Eric Alfred Schaer serves as the chairman and CEO of Rising Dragon Limited. Rising Dragon Limited is a private investment firm with holdings in technology, e-payments, real estate, and mining. It focuses exclusively on investments in Asia. Previously, he has consulted for various companies and investment groups specialising in structuring various debt and equity investments. These have included arranging financing for various corporate and private acquisitions and re-financings. Mr. Schaer has consulted on several successful acquisitions, including turnarounds of distressed businesses. This has included financing and acquisitions of software services and development firms, and both domestic and “near-shore” technology outsourcing businesses.

Pham Dang Hung, Finance Director

Pham Dang Hung has over 15 years of working experience in the private equity investment, financial advisory and corporate operations. He has been a Director in charge of Private Equity Investments at Rising Dragon Holdings (Singapore), an investment company in Southeast Asia. Before that, Mr. Pham was with Saigon Asset Management, a Vietnam-based investment fund management company with $150 million AUM (“assets under management”), as Director being responsible for the Investment Banking Division. Prior to joining Saigon Asset Management, Mr. Pham was a Founding Director of ASEAN Merchant Partners, a boutique Financial Advisory Firm where he headed the Advisory Division. During the period with ASEAN Merchant Partners, Mr. Pham provided Corporate Finance and M&A advisory services to a number of Vietnamese leading companies and projects in Consumer & Retail, Distribution, Hospitality Property, Manufacturing and Agriculture; successfully raising approximately $60 million for his clients through various financial products such as Corporate Bonds, Convertible Bonds, Bank Debt and Equity. Before that, Mr. Pham worked as Senior Investment Manager for Indochina Capital Corporation, one of the largest fund management companies in Vietnam managing over $1 billion of funds investing in equity, real estate and infrastructure. Mr. Pham holds an MBA in Finance from the Mihaylo School of Business and Economics, California State University, Fullerton, USA.

Ross David Marsh, Non-Executive Director

Ross David Marsh is a Chartered Accountant having graduated from the University of Western Australia with a Bachelor of Commerce. Mr. Marsh has worked in chartered accounting, commercial banking, and corporate finance, and as Managing Director of an international export consulting firm. Ross has significant experience with Initial Public Offering (IPO) and Reverse Takeover management particularly in London. This extends to public capital raisings and advisory services to London based companies. Mr. Masrsh has acted as both an Executive and Non-executive Director for listed public companies and is currently Managing Director of a company specialising in managing AIM market listings.

Neil Frank Osborn, Non-Executive Director

Neil Osborn is chairman of Thoburns Communications Ltd, London, and serves on advisory boards in the US, Russia, China and Switzerland. He was an executive member of the board of Euromoney Institutional Investor PLC from 1988 to 2016. He was editor of Euromoney magazine from 1986 to 1990 and then Group Publisher for the company until this year. He was a non-executive director of RBC Information Systems OJSC, the Russian business news television company, from 2002 to 2014 . Mr. Osborn graduated in Modern History from Oxford University.


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Directors’ Report The Directors present their report, together with the audited non-statutory Financial Statements of MySQUAR Limited (“the Company”) and its subsidiaries (together the Group) for the year ended 30 June 2017.

The Company

MySQUAR Limited is a public company limited by shares, incorporated under the laws of the British Virgin Islands. The Company was admitted to trading on the AIM market of the London Stock Exchange (“AIM”) on 1 July 2015.

The Group

The Company has a wholly owned subsidiary in Singapore, Squar Pte., Ltd which in turn has established wholly owned subsidiaries in Vietnam, Squar Company Limited, and in Myanmar, MySQUAR Limited. The Subsidiaries are wholly-owned. The business activities of the Group are carried out mainly at Squar Company Limited in Vietnam, which is the centre for technology, platform and product developments. MySQUAR Limited (Myanmar) is responsible for front-line activities including sales, marketing and business development.

Principal activities

The principal activities of the Group are to design, develop and commercialise Myanmar focused internet-based mobile services, mobile messaging applications, including social networks, digital content, mobile gaming and to extend functionality to include in-app advertising, news aggregation, transaction-based monetisation and e-commerce.

Results and dividends The results are set out in the primary statements on pages 20 to 23 of the financial statements. The Directors do not recommend payment of a dividend for the year (2016: nil).

Directors’ indemnities The Group has made qualifying third party indemnity provisions for the benefit of its Directors which were made during the year and remain in force at the date of this report. Directors’ Remuneration Directors’ Remuneration for the year ended 30 June 2017 was as follows:

2017 Salary and short-term benefits

Share options Warrants

$ No No Eric Alfred Schaer 292,500 3,916,665 - Pham Dang Hung 180,000 3,916,665 - Piers Julian Dominic Pottinger 51,000 958,333 - Ross David Marsh 43,500 1,846,152 - Neil Frank Osborn 30,000 - 571,429 597,000 10,637,815 571,429

2016 Salary and short-term benefits

Share options Warrants

$ No No Eric Alfred Schaer 292,500 1,916,665 - Pham Dang Hung 180,000 1,916,665 - Piers Julian Dominic Pottinger 51,000 958,333 - Ross David Marsh 43,500 958,333 - Neil Frank Osborn - - - 567,000 5,749,996 -


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Directors’ Report (continued)

Directors’ Interests – Shares

The Directors who held office in the period up to the date of approval of these Financial Statements and their beneficial interests in the Company’s issued share capital are:

Directors’ interests - Share options Details of Directors’ options over Ordinary Shares are as follows:

Major shareholdings

Directors and Shareholders holding more than 3% of the shares of the Company at the date of this report were: Ordinary

shares

% Warrants or

options Imperium Ltd 90,000,000 14.61% - Rising Dragon Singapore Pte Ltd 41,577,778 6.75% - Rising Dragon Holdings Pte Ltd 36,844,422 5.98% -

Share capital and reserves

Details of the issued share capital, together with details of the movements in the Company’s issued share capital during the year, are shown in Note 19. During the financial year ended 30 June 2017, the Company raised additional capital (net of expenses) of US$ 4,837,740 (30 June 2016: US$ 2,023,433). Going concern

Based on the Group’s current expectations and projected cash flows, the Board believes that the Group will be able to satisfy its working capital requirements for at least the next twelve months from the date of these Financial Statements. The Board has therefore concluded that it is appropriate to continue to adopt the going concern basis in preparing the Financial Statements.

Ordinary Shares Interest at Percentage of end of financial year

No. issued share

capital Eric Alfred Schaer* - - Pham Dang Hung 6,863,062 1.11% Piers Julian Dominic Pottinger 2,382,382 0.39% Ross David Marsh** 2,646,058 0.43% Neil Frank Osborn 1,171,429 0.19%

* Eric Schaer serves as Chairman and CEO of Rising Dragon Singapore Pte Ltd, who own 6.75% of shares in the Company as at the date of this report.

** held by Meddip., Ltd.

Total No. of Ordinary

Shares Subject to

Existing Options New Share Options in financial year

Share Options

Date of Grant

No. Exercise Price

Date of Grant

No. Exercise Price

Eric Alfred Schaer 3,916,665 29/06/2015 1,916,665 £0.10 06/02/2017 2,000,000 £0.035 Pham Dang Hung 3,916,665 29/06/2015 1,916,665 £0.10 06/02/2017 2,000,000 £0.035 Ross David Marsh 1,846,152 29/06/2015 958,333 £0.10 06/02/2017 887,819 £0.10 Piers Julian Dominic Pottinger 958,333 29/06/2015 958,333 £0.10 - - -

Neil Frank Osborn 571,429 15/08/2016 571,429 £0.055 - - -


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Directors’ Report (continued)

Details regarding the Group’s use of financial instruments and their associated risks are given in Note 2 to the Financial Statements. Disclosure of information to auditor Each of the persons who is a Director at the date of approval of this annual report confirms that: (i) so far as the Director is aware, there is no relevant audit information of which the Group’s

auditors are unaware; and (ii) the Director has taken all the steps that he ought to have taken as a Director to make himself

aware of any relevant audit information and to establish that the Group’s auditors are aware of that information.

Auditor PKF Littlejohn LLP has expressed its willingness to continue in office as auditor. Other Legislation in the British Virgin Islands governing the preparation and dissemination of the Financial Statements may differ from legislation in other jurisdictions.

This report was approved by the Board and signed on its behalf by; Eric Alfred Schaer, Executive Director Pham Dang Hung, Executive Director

29 November 2017


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Statement of Directors’ Responsibilities The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations including the AIM Rules for Companies. The Directors are required to prepare Financial Statements for each financial year. The Directors have elected to prepare the Group Financial Statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that year. In preparing these Financial Statements, the Directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgments and accounting estimates that are reasonable and prudent; and

- state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the Financial Statements.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and Group. They are also responsible for safeguarding the assets of the Company and Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the Company’s website, www.mysquar.com. The Company is compliant with the AIM Rule 26 regarding the Company’s website. This report was approved by the Board and signed on its behalf by: Eric Alfred Schaer, Executive Director

29 November 2017


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Independent Auditor’s Report

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MYSQUAR LIMITED

Opinion

We have audited the Consolidated Financial Statements of MySQUAR Limited for the year ended 30 June 2017 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the Company’s members, as a body. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

In our opinion, the Consolidated Financial Statements:

• give a true and fair view of the state of the Group’s affairs as at 30 June 2017 and of the Group’s loss for the year then ended;

• have been properly prepared in accordance with IFRSs as adopted by the European Union; and

• have been prepared in accordance with the requirements of the AIM Rules for Companies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the Consolidated Financial Statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the directors’ use of the going concern basis of accounting in the preparation of the Consolidated Financial Statements is not appropriate; or

• the directors have not disclosed in the Consolidated Financial Statements any identified material uncertainties that may cast significant doubt about the Group’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the Financial Statements are authorised for issue.

Our application of materiality

The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. Group materiality was US$95,000 based on revenue, results before tax and net assets. For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality.


16

Independent Auditor’s Report (continued)

An overview of the scope of our audit

As part of designing our audit we determined materiality, as above, and assessed the risk of material misstatement in the Financial Statements. In particular, we looked at areas requiring the directors to make subjective judgements, for example in respect of significant accounting estimates including share based payment transactions and impairment of intangible assets, and considered future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud. A full scope audit was performed on the complete financial information of the Group’s three operating components located in Vietnam, Singapore and Myanmar, with the Group’s key accounting function for all being based in Vietnam. All three companies are audited by a PKF network firm operating under our instruction. The Senior Statutory Auditor visited their offices in Vietnam, interacted regularly with the component auditor during all stages of the audit, and was responsible for the scope and direction of the audit process. This, in conjunction with additional procedures performed which included on site audit work in Vietnam, gave us sufficient appropriate evidence for our opinion on the consolidated financial statements. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial Statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.


17


Key Audit Matter How the scope of our audit responded to the key audit matter

Carrying Value of Intangible Assets and Prior Year Adjustment on Capitalisation of Product Development Costs

In the current year the Group elected to change their accounting policy to capitalise certain product development costs as Intangible Assets. This resulted in a prior period adjustment and a material carrying value at 30 June 2017 of $1.773 million. Intangible assets not subject to amortisation must be tested for impairment on an annual basis.

We instructed the component auditors to undertake substantive audit procedures on capitalised development costs and the accuracy of the prior year adjustment.

Our work in this area also included:

- Enquiring of management on the technical and commercial feasibility of the capitalised assets;

- Checking the calculation of the prior year adjustment and enquiries into management’s assumptions used in the calculation;

- Assessing the eligibility of expenditure for capitalisation in accordance with IAS 38;

- Reviewing the expenditure incurred and the allocation basis provided by management and assessment of the appropriateness of asset classifications; and

- Reviewing the impairment assessments undertaken by management for each project and discussed the key assumptions.


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Other information

The other information comprises the information included in the Annual Report, other than the Financial Statements and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the Consolidated Financial Statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the Consolidated Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Consolidated Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the Consolidated Financial Statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Key Audit Matter How the scope of our audit responded to the key audit matter

Revenue Recognition

The Group has new revenue streams during the period with different recognition criteria.

Our testing covered:

- Updating our understanding of the internal control environment in operation for the significant revenue streams and undertaking a walk-through to ensure that the key controls within these systems have been operating in the period under audit; - Substantive transactional testing of revenue recognised in the Financial Statements across the different streams; - Reviewing the key contractual terms and terms of business with customers to identify the material performance obligation;

- Reviewing post-year end invoices, credit notes and cash receipts to ensure completeness of income recorded in the accounting period; and

- Considering the application of the Group’s accounting policies and their appropriateness to the revenues being incurred.


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Responsibilities of directors

As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the Consolidated Financial Statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.

In preparing the Consolidated Financial Statements, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the Consolidated Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Consolidated Financial Statements.

A further description of our responsibilities for the audit of the Consolidated Financial Statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditors/audit-assurance/auditor-s-responsibilities-for-the-audit-of-the-fi/description-of-the-auditor%E2%80%99s-responsibilities-for. This description forms part of our auditor’s report.

Joseph Archer (Senior Statutory Auditor) 1 Westferry Circus For and on behalf of PKF Littlejohn LLP Canary Wharf Statutory Auditor London E14 4HD 29 November 2017


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Consolidated Statement of Comprehensive Income For the year ended 30 June 2017 Note Year ended

30 June 2017 Year ended

30 June 2016 (Restated)

$ $ Revenue 5 1,057,383 795,191 Cost of sales (811,490) (46,230)

Gross profit 245,893 748,961 Marketing and selling expenses 8 (393,672) (420,895) Administration expenses 9 (1,759,403) (2,031,501) - Other income 8,120 2,443 - Depreciation expense (30,379) (23,287) - Share-based payments (267,778) (501,214) - Other administrative costs (1,469,366) (1,509,443)

Operating loss (1,907,182) (1,703,435) Finance income 6 2,770 15,350 Finance costs 7 (93,266) (62,157) Loss before income tax (1,997,678) (1,750,242) Income tax 10 - - Loss for the year attributable to owners of the parent (1,997,678) (1,750,242) Other comprehensive income - -

Total comprehensive income for the year attributable to owners of the parent

(1,997,678) (1,750,242)

Earnings per share attributable to owners of the parent during the year (expressed in US dollars per share)

- -

Basic and diluted 12 $(0.007) $(0.009)

All operations of the Group are continuing. The notes on pages 24 to 53 form part of these Financial Statements.


21

Consolidated Statement of Financial Position For the year ended 30 June 2017 Note 30 June

2017 30 June

2016 (Restated)

1 July 2015

(Restated) $ $ $ ASSETS

Non-current Assets Property, plant and equipment 13 18,453 17,655 11,937 Intangible assets 14 1,773,077 1,044,693 361,141 Trade and other receivables 15 485,970 661,631 820,852

Total non-current assets 2,277,500 1,723,979 1,193,930 Current Assets Inventories 24,469 3,171 - Trade and other receivables 16 873,606 408,482 143,363 Cash and cash equivalents 742,005 2,192 30,701

Total current assets 1,640,080 413,845 174,064

Current liabilities

Trade and other payables 17 (315,514) (560,128) (404,106)

Total current liabilities (315,514) (560,128) (404,106) Net current assets 1,324,566 (146,283) (230,042) Non-current liabilities Borrowings

18

-

(908,043)

(926,688)

NET ASSETS 3,602,066 669,653 37,200 EQUITY Share capital 19 7,583,429 2,745,689 522,256 Shares to be issued 19 - - 200,000 Share option reserve 422,946 432,529 73,267 Reconstruction reserve 1,783,075 1,783,075 1,783,075 Retained loss (6,187,384) (4,291,640) (2,541,398)

TOTAL EQUITY 3,602,066 669,653 37,200 The notes on pages 24 to 53 form part of these Financial Statements.

These Financial Statements were approved by the Board of Directors and authorised for issue on 29 November 2017.

Signed on behalf of the Board of Directors Pham Dang Hung


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Consolidated Statement of Changes in Equity For the year ended 30 June 2017

Share capital and reserves comprise the following: Share Capital - Amount subscribed for share capital (share capital has no par value) Shares to be issued – Amount subscribed for unissued share capital Share Option Reserve – Comprises the fair value of options and share rights recognised as an expense Reconstruction Reserve – Arose from the difference between the carrying value of the investment and the nominal value of subsidiaries upon consolidation Retained Loss – Cumulative net losses recognised in the consolidated statement of comprehensive income

The notes on pages 24 to 53 form part of these Financial Statements.

Share capital

Shares to be issued

Share option reserve

Reconstruction reserve

Retained loss

Total Equity

Note $ $ $ $ $ $

Balance as at 1 July 2015 522,256 200,000 73,267 1,783,075 (2,902,539) (323,941) Prior year adjustment 14 - - - - 361,141 361,141

Balance as at 1 July 2015 (Restated) 522,256 200,000 73,267 1,783,075 (2,541,398) 37,200 Loss for the year - - - - (1,750,242) (1,750,242) Other comprehensive income for the year - - - - - - Total comprehensive income for the year - - - - (1,750,242) (1,750,242) Issue of shares 2,588,776 - - - - 2,588,776 Share based payments 200,000 (200,000) 359,262 - - 359,262 Share issuance costs (565,343) - - - - (565,343) Total transactions with owners, recognized directly in equity 2,223,433 (200,000) 359,262 - (1,750,242) 632,453

Balance as at 30 June 2016 (Restated) 2,745,689 - 432,529 1,783,075 (4,291,640) 669,653

Loss for the year - - - - (1,997,678) (1,997,678) Other comprehensive income for the year - - - - - - Total comprehensive income for the year - - - - (1,997,678) (1,997,678) Issue of shares 5,712,054 - - - - 5,712,054 Share based payments - - 92,351 - - 92,351 Transfer of share based payments reserve charge on exercise and lapse of options - - (101,934) - 101,934 - Share issuance costs (874,393) - - - - (874,393) Exercise of share options 79 - - - - 79 Total transactions with owners, recognized directly in equity 4,837,740 - (9,583) - (1,895,744) 2,932,413

Balance as at 30 June 2017 7,583,429 - 422,946 1,783,075 (6,187,384) 3,602,066


23

Consolidated Cash Flow Statement For the year ended 30 June 2017

30 June 2017 30 June 2016

(Restated) $ $ Cash Flows from Operating Activities Loss for the year before income tax (1,997,678) (1,750,242) Depreciation of property, plant and equipment 30,379 17,374 Charge for share based payments 267,778 501,214 Changes in working capital: Increase in work in progress (21,298) (3,171) Increase in trade and other receivables (464,890) (247,850) (Decrease) / Increase in trade and other payables (295,469) 115,200 Cash used in operations (2,481,178) (1,367,475) Interest paid 50,855 40,822 Net cash used in operating activities (2,430,323) (1,326,653) Cash Flows generated used in Investing Activities Purchase of property, plant and equipment (31,177) (23,092) Purchase of intangible assets (728,384) (683,552) Net cash used in investing activities (759,561) (706,644) Cash Flows from Financing Activities Proceeds from borrowings - 908,043 Repayment of borrowings (908,043) (926,688) Proceeds from the issue of shares (net of expenses) 4,837,740 2,023,433 Net cash generated from financing activities 3,929,697 2,004,788 Net increase / (decrease) in cash and cash equivalents 739,813 (28,509) Cash and cash equivalents at beginning of year 2,192 30,701 Cash and cash equivalents at end of year 742,005 2,192 The notes on pages 24 to 53 form part of these Financial Statements.


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Notes to the Consolidated Financial Statements For the year ended 30 June 2017 1. Accounting policies

The principal accounting policies applied in the preparation of the Consolidated non-statutory Financial Statements are set out below. These policies have been consistently applied to all financial periods presented, unless otherwise stated. a) General information The Company is registered in the British Virgin Islands under the BVI Business Companies Act 2004 with registered number 1857565. The Company’s ordinary shares are held on the AIM Market which is operated by the London Stock Exchange. The principal activities of the Group are to design, develop and commercialise Internet-based and mobile services, including social networks, mobile messaging applications, digital contents, mobiles gaming, online advertising, online news aggregation, mobile payment services and ecommerce. b) Basis of preparation The Consolidated non-statutory Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRSIC) Interpretations as adopted by the European Union. The Consolidated non-statutory Financial Statements are presented in US Dollars rounded to the nearest US Dollar and have been prepared under the historical cost convention. The preparation of the Consolidated non-statutory Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires Management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant in the preparation of the Consolidated Financial Statements are disclosed in Note 3. c) Going concern The Consolidated non-statutory Financial Statements have been prepared on a going concern basis which contemplates the continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. The Group reported US$1,057,383 in revenue and a net loss after tax of US$1,997,678 for the financial year ended 30 June 2017 (30 June 2016: loss of US$1,750,242) and as of that date. Management’s assessment of the ability of the Group to continue as a going concern has considered cashflow forecasts, including assumptions regarding revenue growth, the timing of bringing new products to market and the Group’s ability to settle liabilities as they fall due. Following the year end the Group has raised US$ 1,728,389 in the form of equity and the cashflow forecasts have been prepared including the cash inflows that have arisen from these successful raises. The Group also has zero debt and full access to the 1.0 million US$ credit facility provided by Rising Dragon Singapore Pte Ltd. Based on the above, the Directors consider there are reasonable grounds to believe that the Group will be able to fund the Group’s future operating expenses. Should the Group not be able to continue trading, adjustments would have to be made to reduce the value of assets to their recoverable amounts, to provide for further liabilities which might arise and to re-classify non-currents assets as current. The Financial Statements do not include any adjustments that may be required should the Group be unable to continue as a going concern.


25

Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2017 1 Accounting policies (continued)

d) Basis of consolidation The consolidated Financial Statements of MySQUAR Limited and the audited Financial Statements of its subsidiary undertakings made up to the consolidated Financial Statements as at 30 June 2017. Subsidiaries are 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 investee 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 de-consolidated from the date that control ceases. Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Where locally adopted accounting policies of subsidiaries are inconsistent with the policies adopted by the Group, Group policies have been adopted for the purposes of the Consolidated Financial Statements. The following 100% owned subsidiaries have been included within the Consolidated Financial Statements and represent all entities controlled by the Company as at 30 June 2017:

Principal Activities Country of

Incorporation Ownership %

2017 Squar Pte., Ltd Build consumer databases Singapore 100% Squar Company Limited Develop and produce software

and applications Vietnam 100%

MySQUAR Limited Publish, distribute software and applications

Myanmar 100%


26

Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2017 1. Accounting policies (continued)

e) Standards and interpretations

(i) New and amended standards adopted by the Group There were no IFRSs or IFRIC interpretations relevant to the Group that were effective for the first time for the financial year beginning 1 July 2016 that had a material impact on the Group.

(iii) New and amended standards and interpretations issued but not yet effective or not yet endorsed for the financial year beginning 1 July 2016 and not early adopted

At the date of authorisation of these Financial Statements, the Group has not applied the following new and revised IFRSs that have been issued but are not yet effective and (in some cases) have not yet been adopted by the EU. The Group intend to adopt these standards, if applicable, when they become effective. Standard / Interpretation Title Effective date IAS 7 (Amendments) Results of the Disclosure Initiative *1 January 2017 IAS 12 (Amendments) Recognition of Deferred Tax Assets for

Unrealised Losses *1 January 2017

IFRS 2 (Amendments) Classification and Measurement of Share Based Payment Transactions

*1 January 2018

IFRS 9 Financial Instruments 1 January 2018 IFRS 10 (Amendments) Consolidated Financial Statements: Applying

the Consolidation Exception Postponed

IFRS 15 Revenue from Contracts with Customers 1 January 2018 IFRS 16 Leases *1 January 2019 IFRS 15 (Clarifications) Revenue from Contracts with Customers *1 January 2018 Annual Improvements Annual Improvements to IFRS Standard 2014-

2016 Cycle *1 January 2017 / 1 January 2018

IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration

*1 January 2018

* Subject to EU endorsement The Group is evaluating the impact of the new and amended standards above. The Directors do not expect that these new and amended standards will have a material impact on the Group’s results or shareholders’ funds. Particular attention will be paid to the impact of IFRS 15, IFRS 16 and amendments to IFRS 2 on the Group’s Financial Statements.


27


e) Standards and interpretations (continued)

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group. f) Change in accounting policy

Previously, the Group was expensing all product development expenditure to profit or loss. The Group has now elected to capitalise such costs and details of the new accounting policy can be found in Note 1i). The Group believes this will align its accounting policy to that of its international peers and provide a better reflection of the results of its financial activities as well as its financial position.

The change in accounting policy has been accounted for retrospectively and the comparative statements for 30 June 2016 and 1 July 2015 have been restated. Intangible assets, cost of sales, marketing and selling expenses, and administration expenses have been restated for all periods presented as a result. The effect of the change is presented below: At as 30 June 2016 As previously

reported As Restated/

reclassified Net Change

$ $ $ Consolidated Statement of comprehensive income

Cost of sales (449,208) (46,230) 402,978 Marketing and selling expenses (521,836) (420,895) 100,941 Administration expenses (2,211,134) (2,031,501) 179,633 Total comprehensive income for the year attributable to owners of the parent

(2,433,794) (1,750,242) 683,552

Consolidated Statement of financial position

Intangible assets - 1,044,693 1,044,693 Retained loss (5,336,333) (4,291,640) 1,044,693 At as 1 July 2015 As previously

reported As Restated/

reclassified Net Change

Consolidated Statement of comprehensive income

Marketing and selling expenses (126,781) (92,373) 34,408 Administration expenses (1,970,877) (1,644,144) 326,733 Total comprehensive income for the year attributable to owners of the parent (2,220,256) (1,859,115) 361,141 Consolidated Statement of financial position

Intangible assets - 361,141 361,141 Retained loss (2,902,539) (2,541,398) 361,141


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g) Foreign currency transactions

(i) Functional and presentational currency Items included in the Financial Statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“functional currency”), being US Dollar, British Pound Sterling, Singapore Dollar, Vietnamese Dong and Burmese Kyat. The Consolidated Financial Statements are presented in US Dollar which is the Group’s presentational currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the Statement of Financial Position date. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in the Statement of Comprehensive Income. h) Revenue recognition

Revenue comprises mobile gaming revenue derived from sales of in-game virtual items, software development services and others. Revenue is recognised to the extent that its probable economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is recognised in the accounting periods in which the transactions occur.


29


(i) Intangible assets development costs Research and development expenditure Research expenditure is recognised as an expense when it is incurred. Development expenditure is recognised as an expense except when such expenditure is expected to generate future economic benefits in which case it is capitalised as an intangible asset. Any internally generated development costs (including software development) are recognised as an asset only if the following can be demonstrated:

• Ability to measure reliably the expenditure attributable to the asset under development; • The project is technically and commercially feasible; • Its future economic benefits are probable; • Ability to use or sell the developed asset; • The availability of adequate technical, financial and other resources to complete the asset

under development.

Amortisation and impairment Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses, if any. The development expenditure is amortised on a straight line basis over a period of 5 years when the products are ready for sale or use. Useful lives are based on management’s estimates of the period over which the assets will generate revenue, with such periods being periodically reviewed for continued appropriateness. In the event that the expected future economic benefits are no longer likely to be recovered, the development expenditure is written down to its recoverable amount. The amortisation charged is included under cost of sales. The Group assesses the impairment of intangible assets subject to amortisation whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered important that could trigger an impairment review include the following:

• significant underperformance relative to historical or projected future operating results; • significant changes in the manner of the use of the acquired assets or the strategy for the

overall business; and • significant negative industry or economic trends.

The complexity of the estimation process and issues related to the assumptions, risks and uncertainties inherent in the application of the Group’s accounting estimates in relation to intangible assets affect the amounts reported in the Financial Statements, especially the estimates of the expected useful economic lives and the carrying values of those assets. If business conditions were different, or if different assumptions were used in the application of this and other accounting estimates, it is likely that materially different amounts could be reported in the Group’s Financial Statements.


30

Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2017

1. Accounting policies (continued)

j) Financial instruments Financial assets The Group classifies its financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Group’s loans and receivables comprise Trade and Other Receivables and Cash and Cash Equivalents. Recognition and measurement Regular purchases and sales of financial assets are recognised on the trade date – the date on which the Group commits to purchasing or selling the asset. After initial measurement, loans and receivables are carried at amortised cost using the effective interest method less any allowance for impairment. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred, and the Group has transferred substantially all of the risks and rewards of ownership. Impairment of financial assets At the end of each reporting period, the Group assesses whether there is objective evidence that a financial instrument has been impaired; if so, the Group performs a detailed impairment calculation to determine whether an impairment loss should be recognised. A financial asset, or a group of financial assets, is impaired, and impairment losses are incurred, only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can be reliably estimated. Evidence of impairment may include indications that the receivables or a group of receivables is experiencing significant financial difficulty, default or delinquency in interest or principal repayments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. For the loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset’s original effective interest rate. The asset’s carrying amount is reduced, and the loss is recognised in the income statement.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated statement of comprehensive income.


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j) Financial instruments (continued) Financial liabilities Financial liabilities are classified as other financial liabilities and include trade and other payables and borrowings. Financial liabilities are initially measured at fair value, net of transaction costs. Financial liabilities are subsequently measured at amortised cost using effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payment through the expected life of financial liability, or, where appropriate, a shorter period. k) Property, plant and equipment Property, plant and equipment is measured on the cost basis and therefore stated at historic cost less accumulated depreciation. Historic cost includes expenditure that is directly attributable to the acquisition of the items. All repairs and maintenance expenditure is charged to the Statement of Comprehensive Income during the financial period in which they are incurred. Depreciation Depreciation is calculated using the straight-line method to allocate their cost over their estimated useful lives, as follows: Computer equipment 12 - 15 months Office furniture 15 - 60 months The assets’ residual values and useful lives are reviewed, and, if appropriate, asset values are written down to their estimated recoverable amounts, at each reporting date. Gains and losses on disposals are determined by comparing proceeds with the carrying amounts, and are included in profit or loss. l) Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits held at call with banks.


32


1 Accounting policies (continued)

m) Share based payments The Group provides benefits to senior personnel, consultants and advisors of the Group in the form of share-based payments, whereby such parties render services in exchange for shares or rights over shares (equity-settled transactions). The cost of these equity settled transactions with such parties is measured by reference to the fair value of the equity instruments at the date at which they are granted. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the share of MySQUAR Limited (market conditions) if applicable. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant party become fully entitled to the award (the vesting period). The cumulative expense recognised 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 Group’s best estimate of the number of equity instruments that will ultimately vest.

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. The charge to the Income Statement for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. n) Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings, using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period. Borrowing costs are recognised as an expense in the period in which they are incurred except borrowing costs that are directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period to get ready for its intended use or sale. In this case the borrowing costs are capitalised as part of the cost of such a qualifying asset. o) Current and deferred income tax

Income tax comprises current and deferred tax. Current income tax is recognised in the Income Statement, except to the extent that it relates to items recognised directly in equity. In this case the tax is also recognised directly in other comprehensive income or directly in equity, respectively.

Current income tax is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.


33


o) Current and deferred income tax (continued)

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Consolidated Financial Statements. However, the deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects either accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted, or substantially enacted, by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. p) Leases Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease. q) Employee benefits Salaries, wages, paid annual leave, bonuses and non-monetary benefits are accrued in the year in which the associated services are rendered by the employees of the Group. r) Share 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. s) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers. The chief operating decision maker (“CODM”), who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer and the Chief Financial Officer.


34

Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2017 2 Financial risk management

Financial risk factors The Group’s activities expose it to a variety of financial risks as below. The Board’s overall risk management strategy seeks to assist the Group in meeting its financial targets, while minimising potential adverse effects on financial performance. Its functions include the review of future cash flow requirements. (i) Interest rate risk

The Group’s exposure to interest rate risk relates primarily to interest bearing financial assets and interest bearing financial liabilities. Interest bearing financial assets Cash is invested in deposit accounts which provide a modest return on the Group’s resources whilst ensuring there is limited risk of loss to the Group. Cash is held in banks with strong credit ratings per credit rating agencies. Interest bearing financial liabilities Interest bearing financial liabilities includes borrowings from Rising Dragon Singapore Pte Ltd., where the interest rate fixed upon drawdown date is closely aligned to the market rate of interest. The rates and terms of repayment of the interest-bearing bank loans of the Group are disclosed in Note 7. The Group manages the net exposure to interest rate risks by maintaining sufficient lines of credit to obtain acceptable lending costs and by monitoring the exposure to such risk on an ongoing basis. At the statement of financial position date, the interest rate profile of the Group's interest bearing financial instruments was: 30 June 2017 30 June 2016 $ $ Fixed rate instruments Borrowings

-

908,043

Variable instruments Cash in bank 740,684 329 Any change in interest rate for cash in bank at the reporting date would not have a material impact in profit or loss and as such is not disclosed. (ii) Foreign exchange risk

Foreign exchange risk arises because the Group has operations located in various parts of the world whose functional currency is not the same as the functional currency in which other Group companies are operating, which primarily relates to the US Dollar, British Pound Sterling, Singapore Dollar, Vietnamese Dong and Burmese Kyat. The Group’s net assets arising from such overseas operations are exposed to currency risk resulting in gains and losses on retranslation into US$. Only in exceptional circumstances will the Group consider hedging its net investments in non US$ operations as generally it does not consider that the reduction in foreign currency exposure warrants the cash flow risk created from such hedging techniques. It is the Group’s policy to manage working capital requirements as a function of the Parent Company treasury activities. The Group considers this policy minimises any unnecessary foreign exchange exposure and allows risk to be managed on a Group wide basis.


35

Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2017 2. Financial risk management (continued) (ii) Foreign exchange risk (continued) In order to monitor the continuing effectiveness of this policy, the Board go through their approval of both corporate and capital expenditure budgets, and review the currency profile of cash balances and management accounts and considers the effectiveness of the policies in place on an ongoing basis. No split of the bank accounts held by the Group by currency has been made on the grounds of materiality. (iii) Liquidity risk

The purpose of liquidity risk management is to ensure the availability of funds to meet present and future financial obligations. Liquidity is also managed by ensuring that the excess of maturing liabilities over maturing assets in any period is kept to manageable levels relative to the amount of funds that the Group believes can generate within that period. The Group policy is to regularly monitor current and expected liquidity requirements to ensure that the Group maintains sufficient reserves of cash, borrowings and adequate committed funding from its owners to meet its liquidity requirements in the short and longer term.

The following table details the Group’s remaining contractual maturity for its non-derivative financial assets and liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets, if any, and undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. The inclusion of information on non-derivative financial assets is necessary in order to understand the Group’s liquidity risk management as the liquidity is managed on a net asset and liability basis.


36


2. Financial risk management (continued) (iii) Liquidity risk (continued)

The tables below reflect an undiscounted contractual maturity analysis for financial assets and liabilities.

Less than 1

year Between 2-5

years After 5

years Total

$ $ $ $ 30 June 2017 Cash and cash equivalents 742,005 - - 742,005 Trade and other receivables 873,606 485,970 - 1,359,576 1,615,611 485,970 - 2,101,581 Borrowings - - - - Trade and other payables 119,371 -

- 119,371

Accruals 190,395 - -

190,395 Payables to related parties 5,748 -

- 5,748

315,514 - - 315,514 Net liquidity gap 1,300,097 485,970 - 1,786,067

Less than 1

year Between 2-5

years After 5 years

Total

$ $ $ $ 30 June 2016 Cash and cash equivalents 2,192 - - 2,192 Trade and other receivables 408,482 661,631 - 1,070,113 410,674 661,631 - 1,072,305 Borrowings - 908,043 - 908,043 Trade and other payables 305,243 -

- 305,243

Accruals 254,885 - -

254,885 560,128 908,043 - 1,468,171 Net liquidity gap (149,454) (246,412) - (395,866)


37

Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2017 2. Financial risk management (continued) (iii) Liquidity risk (continued) The Board of Directors assess the liquidity risk at a high level. The Board of Directors believes, based on current projections, that the Group will be able to generate sufficient funds to meet its financial obligations as and when they fall due. The Board of Directors believes that the Group can negotiate with its related parties to extend the due date to a longer term, if required. (iv) Credit risk

Credit risk is the risk of loss associated with the counterparty’s inability to fulfil its obligations. The Group’s credit risk is primarily attributable to other receivables and cash and bank balances with the maximum exposure being the reported balance in the consolidated statement of financial position. The Group’s significant debtors are with related parties and large telco’s and as such the Group believes that the credit risk to these is minimal. The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk. (v) Market risk

Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The Group does not hedge these risk exposures due to the lack of any market to purchase financial instruments. (vi) Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of net debt, which includes the borrowings disclosed in Note 18, net of cash and cash equivalents; and equity attributable to equity holders of the Group, comprising capital and accumulated losses as disclosed in the statement of changes in equity. The Board controls the capital of the Group in order to ensure that the Group can fund its operations and continue as a going concern. The Group’s capital includes ordinary share capital. There are no externally imposed capital requirements. The Board effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels and share issues. There have been no changes in the strategy adopted by the Board to control the capital of the Group in the year ended 30 June 2017. This strategy is to maintain share capital as dictated by operational requirements and market conditions. The gearing ratio for the year ended 30 June 2017 is as follows:

30 June 2017 30 June 2016

Note $ $

Total borrowings 18 - 908,043 Less cash and cash equivalents (742,005) (2,192) Net debt (742,005) 905,851 Total capital 19 7,583,429 2,745,689 Gearing ratio - 33%


38

Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2017 3 Critical accounting judgements and key uncertainties of estimation uncertainty Key estimates The Directors make estimates and judgements incorporated into the Consolidated Financial Statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Following their review in relation to this, the Directors consider the following to be the critical estimate and judgement that has a significant risk of causing a material adjustment within the Consolidated Financial Statements. Share-based payment transactions The Group 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. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and model for estimating fair value for share - based payment transactions are set out in Note 20 to the Consolidated Financial Statements. Impairment of intangible assets The Group test annually whether intangible assets, which have a carrying value as at 30 June 2017 of US$1,773,077, have suffered any impairment, in accordance with the accounting policy. Where applicable, the recoverable amounts of cash generating units have been determined based on value in use calculations. The value in use calculations require the entity to estimate future cash flows expected to arise from the cash generating unit and apply a suitable discount rate in order to calculate present value. The recoverable amount of the product platforms has been determined based on value in use calculations. These calculations require the use of estimates (Note 14). The directors have concluded that no impairment charge is necessary. Intangible assets comprise capitalised development costs in respect of three projects. These costs are based on management’s view of the development team’s time spent on the projects, supported by internal time recording systems and considering the requirements of IAS 38 “Intangible Assets”. Development costs are amortised over the life of the project once a product has entered commercial phase and it may be that a project is released to the market on trial before it is classified as commercial. Management base a project’s commerciality on when revenues can be generated from the platform’s internally generated software. The projected useful lives of intangible assets are based on management estimates of the period that the asset will be able to generate revenue. The carrying value is tested for impairment when there is an indication that the value of the assets might be impaired. Impairment tests are based upon future cash flow forecasts and involve managements judgement in relation to the software. Future events could cause the assumptions to change and therefore could impact the future results of the Group.


39


4. Staff costs The average number of employees, including Directors, employed by the Group was: 2017 2016 No No Marketing and sales 22 14 Technology and product development 94 51 Administration 16 15 132 80

Staff costs Staff costs, including Directors’ costs comprise: 2017 2016 $ $

Wages, salaries and other staff costs 1,408,981 806,608 Social security costs 63,022 11,780 1,472,003 818,388

Staff costs capitalised as intangible assets 2017 2016 $ $

Wages, salaries and other staff costs 231,515 579,416 Social security costs 38,109 73,400 269,624 652,816


40

Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2017 4. Staff costs (continued) Key Management Remuneration The Directors’ emoluments in respect of qualifying services, which all related to short-term employee benefits, were as follows:

Share options Salary and

fees Total

2017 US$ US$ US$

Eric Alfred Schaer – Chief Executive Officer 14,270 292,500 306,770

Pham Dang Hung – Finance Director 14,270 180,000 194,270

Piers Julian Dominic Pottinger – Chairman - 51,000 51,000

Ross David Marsh – Non-Executive Director 6,335 43,500 49,835

Neil Frank Osborn – Non-Executive Director - 30,000 30,000

34,875 597,000 631,875

Share options Salary and

fees Total 2016 US$ US$ US$

Eric Alfred Schaer – Chief Executive Officer

- 292,500 292,500

Pham Dang Hung – Finance Director

- 180,000 180,000

Piers Julian Dominic Pottinger – Chairman

- 51,000 51,000

Ross David Marsh – Non-Executive Director

- 43,500 43,500

Neil Frank Osborn – Non-Executive Director

- - -

- 567,000 567,000 Key management comprises Executive and Non-Executive Directors.


41


5. Segment revenues and results IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision-maker (“CODM”), being the Chief Executive Officer and the Chief Financial Officer, to allocate resources to segments and to assess their performance. For these purposes, the Group is currently organised into three operating divisions, being technical integration, mobile gaming and advertising. These divisions are the basis on which the Group reports its primary segment information. The Group is organised into four geographical business units as at end of the year: Vietnam, Myanmar, Singapore and British Virgin Islands. The Vietnam business unit is to develop and produce software and applications, Myanmar business unit is to publish, distribute software and applications, Singapore is to build consumer databases. The British Virgin Islands business unit is the holding company. Management monitors these business units separately for resource allocation, decision-making and performance assessment.

Principal activities are as follows: - Sales of technical integration - Sales of mobile gaming - Sales of advertising

Technical Integration

Mobile gaming

Others

Inter Segment Eliminations

Total

$ $ $ $ $ a) 2017

Revenue External sales 310,829 723,197 23,357 - 1,057,383 Inter-segment sales 1,102,900 509,927 - (1,612,827) - Total revenue 1,413,729 1,233,124 23,357 (1,612,827) 1,057,383 Result Segment profit 160,336 (319,958) (244,149) - (403,771) Unallocated expenses (1,511,531) Operating loss (1,915,302) Investment revenues 2,770 Other income 8,120 Finance costs (93,266) Loss before tax (1,997,678) Income tax expense - Loss for the year (1,997,678)

Technical

Integration Mobile

gaming Others

Inter Segment

Eliminations Total

$ $ $ $ $ b) 2016

Revenue External sales 750,000 6,353 38,838 - 795,191 Inter-segment sales 478,000 - - (478,000) - Total revenue 1,228,000 6,353 38,838 (478,000) 795,191 Result Segment profit 713,659 (2,919) 38,838 - 749,578 Unallocated expenses (2,455,456) Operating loss (1,705,878) Investment revenues 15,350 Other income 2,443 Finance costs (62,157) Loss before tax (1,750,242) Income tax expense - Loss for the year (1,750,242)


42


5. Segment revenues and results (continued)

Geographical segments

Vietnam

Myanmar Singapore

British Virgin

Islands

Inter-segment

eliminations

Total 2017 $ $ $ $ $ $ Revenue 1,167,900 831,642 1,413 669,255 (1,612,827) 1,057,383 Cost of sales (616,679) (611,087) - (432,425) 848,701 (811,490) Gross profit 551,221 220,555 1,413 236,830 (764,126) 245,893 Marketing and selling expenses (49,802)

(133,091) (53,157) (157,622) - (393,672)

Administration expenses (284,504)

(161,811) (140,272) (1,172,816) -

(1,759,403)

Financial income 689 891 - 1,190 - 2,770 Financial expenses (3,324) (7,739) (11,191) (71,012) - (93,266) Profit (loss) for the year 214,280

(81,195) (203,207) (1,163,430) (764,126)

(1,997,678)

Vietnam

Myanmar Singapore

British Virgin

Islands

Inter-segment

eliminations

Total 2016 $ $ $ $ $ $ Revenue 478,000 7,353 - 787,838 (478,000) 795,191 Cost of sales (363,637) (9,889) - (36,341) 363,637 (46,230) Gross profit 114,363 (2,536) - 751,497 (114,363) 748,961 Marketing and selling expenses (85,124) (60,693) (268,100) (78,107) 71,129 (420,895) Administration expenses (182,981) (149,568) (314,810) (1,384,392) 78 (2,031,673) Financial income 1,634 381 3,495 10,012 - 15,522 Financial expenses (774) (1,080) (14,717) (45,586) - (62,157) Profit (loss) for the year (152,882) (213,496) (594,132) (746,576) (43,156) (1,750,242)

Balance sheets

Vietnam Myanmar Singapore British Virgin

Islands Inter-

segment eliminations

Total

2017 $ $ $ $ $ $ Segment assets 187,816 255,475 1,755,160 2,365,263 (646,134) 3,917,580 Inter-receivables 249,268 107,125 371,414 3,422,549 (4,150,356) - Inter-investment - - 265,572 - (265,572) - Segment liabilities (94,488) (30,099) (17,831) (173,096) - (315,514) Inter-payables (370,035) (676,725) (3,103,596) - 4,150,356 - Share capital - - - (7,583,429) - (7,583,429) Inter-capital investment (255,572) (10,000) - - 265,572 - Share option reserve - - - (422,946) - (422,946) Reconstruction reserve - - (1,783,075) - - (1,783,075) Retained loss 283,011 354,224 2,512,356 2,391,659 646,134 6,187,384


43


5. Segment revenues and results (continued)

Geographical segments

Balance sheets

Vietnam Myanmar Singapore British Virgin Islands

Inter-segment

eliminations

Total

2016 $ $ $ $ $ $ Segment assets 53,562 162,821 687,576 1,117,294 116,571 2,137,824 Inter-receivables 4,700 - 337,339 1,955,153 (2,297,192) - Inter-investment - - 30,500 - (30,500) - Segment liabilities (125,675) (23,634) (95,891) (1,222,971) - (1,468,171) Inter-payables (409,378) (402,214) (1,485,600) - 2,297,192 - Share capital - - - (2,745,689) - (2,745,689) Inter-capital investment (20,500) (10,000) - - 30,500 - Share option reserve - - - (432,529) - (432,529) Reconstruction reserve - -

(1,783,075) - -

(1,783,075)

Retained loss 497,291 273,027 2,309,151 1,328,742 (116,571) 4,291,640 The following customers accounted for more than 10% of the Group’s revenue: 2017 2016 $ $ Customer A 263,140 - Customer B 261,072 - Customer C 186,631 - Customer D 278,329 - Customer E 32,500 750,000

6. Finance income 2017 2016

$ $ Bank interest receivable 2,770 15,350

2,770 15,350

7. Finance costs 2017 2016 $ $

Loan interest expenses 50,855 40,822 Other financial costs 42,411 21,335 93,266 62,157


44

Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2017 8. Marketing and selling expenses

2017 2016 $ $

Staff costs 54,122 1,497 Out-sourced services and other expenses 339,550 419,398

393,672 420,895 9. Administrative expenses

2017 2016 $ $

Employee salary and benefit expense 786,006 759,235 Depreciation 30,379 23,287 Share based payments (Note 20) 267,778 501,214 Audit fees 41,489 36,682 Out-sourced services, consultancy and professional fees 503,386 388,058 Other expenses 130,365 323,025

1,759,403 2,031,501

10. Income tax The total tax charge for the year is nil (2016: nil).

A reconciliation of income tax expense applicable to the loss before taxation at the statutory tax rate to the income tax expense at the effective tax rate of the Group are as follows: 2017 2016 $ $

Group Loss before tax (1,997,678) (1,750,242)

Tax at the effective rate of 17% (2016: 17%) (339,605) (297,541) Effect of: Temporary difference - 8,080 Expenses not deductible in determining taxable profit 10,287 20,766 Effect of different jurisdiction corporate tax rates 59,930 52,507 Tax losses for the year for which no deferred tax has been provided 269,388 216,188

- - Potential deferred tax assets of approximately $586,000 (2016: $504,000) have not been recognised due to uncertainty as to when taxable profits will be generated.

The Group is not subject to taxation in the British Virgin Islands.


45


11. Income tax expense Under the provisions of the Subsidiary’s Investment Certificate, Squar Company Limited in Vietnam is obligated to pay income tax at the rate of 20% on its taxable income. No corporate income tax has been provided for during the period as the Company has no assessable income. Under the provisions of the Subsidiary’s Incorporation Certificate, MySQUAR Limited in Myanmar is obligated to pay income tax at the rate of 25% on its taxable income. No corporate income tax has been provided for during the period as the Company has no assessable income.

12. Earnings per share Basic earnings per share has been calculated by dividing the loss attributable to equity holders of the company after taxation by the weighted average number of shares in issue during the year. There is no difference between the basic and diluted earnings per share as the effect on the exercise of options and warrants would be to decrease the loss per share. Details of share options that were anti-dilutive but may be dilutive in the future are set out in Note 20. 2017 2016 Basic and Diluted $ $

Loss after taxation (1,997,678) (1,750,242) Weighted average number of shares 304,029,816 187,329,352 Earnings per share (dollars) (0.007) (0.009)

13. Property, plant and equipment Office equipment Computer equipment Total

$ $ $ Cost At 1 July 2016 36,340 30,025 66,365 Additions 9,819 21,358 31,177

At 30 June 2017 46,159 51,383 97,542 Accumulated depreciation At 1 July 2016 28,101 20,609 48,710 Charge for the year 13,708 16,671 30,379

At 30 June 2017 41,809 37,280 79,089 Net book value

At 30 June 2017

4,350

14,103

18,453 At 30 June 2016

8,239

9,416

17,655


46

Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2017 14. Intangible assets

MyCHAT Callhome Fastsell Total $ $ $ $ Balance as at 1 July 2015 - - - - Additions 361,141 - - 361,141 Balance as at 1 July 2015 (restated) 361,141 - - 361,141 Additions 683,552 - - 683,552 Balance as at 30 June 2016 (restated) 1,044,693 - - 1,044,693 Additions 554,418 119,307 54,659 728,384 Balance as at 30 June 2017 1,599,111 119,307 54,659 1,773,077 MyCHAT – mobile messaging Callhome – VoIP system Fastsell – mobile sales platform Previously, the Group was expensing development expenditure. The Group has now elected to capitalise such costs and details of the new accounting policy can be found in Note 1i. The Group believes this will align its accounting policy to that of its international peers and provide a better reflection of the results of its financial activities as well as its financial position. The change in accounting policy has been accounted for retrospectively and the comparative statements for 30 June 2016 and 1 July 2015 have been restated. Intangible assets have been restated for all periods presented, as a result. The current estimate of the useful economic life of intangible assets development costs is five years from the date in which the projects become commercially available. The intangible assets are reviewed for impairment annually and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverable amount of intangible assets is determined based on a value in use calculation using cash flow forecasts derived from the most recent financial model information available. The recoverable amounts of all the above have been determined from value in use calculations based on cash flow projections from formally approved budgets covering a five year period to 30 June 2022. The key assumptions used in these calculations include discount rates (15%) and turnover projections. Management estimates the discount rates using pre-tax rates that reflect current market assessments of the time value of money and risks specific to expected future projects. As of 30 June 2017, no impairment was recorded. The discount factor would have to be more than double before an impairment would be triggered. None of the revenue generated during the year or in the prior year was in relation to these intangible assets.


47

Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2017 15. Non-current trade and other receivables 2017 2016 $ $ Share based payment for The Credit Facility from Rising Dragon Singapore Pte Ltd.*

464,006 651,673

Rental deposits 13,339 9,721 Other deposit 8,625 237 485,970 661,631

* According to the facility agreement dated 13 May 2015 with Rising Dragon Singapore Pte Ltd., the Group issued 18,751,535 shares to Rising Dragon Singapore Pte Ltd. with the fair value of US$0.051999 per share (resulting in US$975,065 in share capital). The amount of US$975,065 is accounted as share based payment to Rising Dragon Singapore Pte Ltd., and is amortised as share based payment expenses over the 5-year term of the facility. 16. Trade and other receivables 2017 2016 $ $ Share based payment for The Credit Facility from Rising Dragon Singapore Pte Ltd within one year

187,667 163,189

Trade receivables 435,954 59,850 Other receivables due from related parties 82,830 57,667

Other receivables 167,155 127,776 873,606 408,482

All trade receivables are payable within 30 days in line with standard credit terms given to customers. As at 30 June 2017, trade receivables of US$ 206,006 (2016: US$ 37,500) were past due but not impaired. These relate to a number of customers for whom there is no history of default. The ageing analysis of these trade receivables is as follows: Ageing of past due but not impaired receivables: 2017 2016 $ $ 30 days 206,006 37,500

206,006 37,500

The carry amounts of the Group’s trade and other receivables are denominated in the following currencies: 2017 2016 $ $ US Dollar 731,996 404,659 Kyats 141,610 3,823

873,606 408,482 The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security.


48


17. Trade and other payables 2017 2016 $ $

Trade payables 72,910 230,437 Accruals 190,395 254,885 Other payables 52,209 74,806

315,514 560,128

18. Borrowings 2017 2016 $ $

Loan from Rising Dragon Singapore Pte. Ltd - 908,043 - 908,043

On 13 May 2015 and as varied pursuant to a deed of variation dated 25 May 2015, the Group and Rising Dragon Singapore Pte Ltd (“Rising Dragon), entered into a term facility agreement under which Rising Dragon agreed to make available, subject to the terms therein, a credit facility for a sum of up to US$ one million (the “Facility Agreement”) in consideration for an arrangement fee satisfied by the allotment and issue of 18,751,535 Shares to Rising Dragon. The facility under this agreement is repayable on the date being the earlier of 30 June 2020 and the completion of a fund raise in the sum of US$ one million or more by the Group subject to the unanimous approval of the Board. The interest rate payable under this agreement is 12% per annum, payable monthly in advance.

19. Share capital

2017

2016 No. of

shares $ No. of

shares $

Allotted and fully paid:

Ordinary shares 581,292,909 7,583,429 187,784,668 2,745,689

7,583,429 2,745,689 Share Capital No. of Ordinary

Shares Share

premium $

Net Share Capital

$

At 1 July 2016 187,784,668 (1,427,807) 2,745,689

Proceeds from share issue 15 August 2016 13,571,429 (99,745) 513,005

Proceeds from share issue 10 April 2017 56,477,660 (60,131) 541,183

Proceeds from share issue 28 April 2017 128,816,460 (153,816) 1,251,211

Proceeds from share issue 4 May 2017 50,000,000 (52,088) 478,738

Converting loan to share capital 132,063,100 (508,613) 1,591,386 Share based payments 2,664,886 - 12,198 Exercise of share options 9,914,706 - 450,019 At 30 June 2017 581,292,909 (2,302,200) 7,583,429


49


20. Share based payments 2017

$ 2016

$

Share Options 92,351 359,261

Rising Dragon Singapore Pte Ltd (amortisation of the shares issued for the US$1.0 million Credit Facility)

175,427 141,953

At 30 June 2017 267,778 501,214 Warrants At 30 June 2017, warrants for 148,571,522 new Ordinary Shares in the Company were in issue as follows: 2017 2016 No. of

warrants Weighted

average price (£)

No. of warrants

Weighted average price

(£)

At 30 June 2016 2,936,995 0.1000 2,936,995 0.1000

Granted during the year 155,549,233 0.0665 - -

Exercised during the year (9,914,706) 0.0350 - - At 30 June 2017 148,571,522 0.0737 2,936,995 0.1000 Share options At 30 June 2017, options to subscribe for 13,140,998 new Ordinary Shares in the Company were in issue as follows: 2017 2016

No. of options

Weighted average

exercise price (£)

No. of options

Weighted average

exercise price (£)

At 30 June 2016 9,476,848 0.0116 12,792,137 0.0001

Granted during the year 2,400,000 0.0240 1,550,767 0.07

Granted during the year to Directors 4,887,819 0.0478 - -

Lapsed during the year (1,227,691) 0.0452 (1,696,577) 0.038

Exercised during the year (2,395,978) 0.00001 (3,169,479) 0.00001 At 30 June 2017 13,140,998 0.0645 9,476,848 0.0116


50


20. Share based payments (continued)

The outstanding options are exercisable as follows: Staff options issued:

No. of options

Exercise price (£)

Exercisable

12 June 2015 703,183 0.00001 Exercisable from 31 August 2017 and expiring on 30 August 2022

29 June 2015 5,749,996 0.10 Exercisable from 29 June 2015 and expiring on 28 June 2020

06 February 2017

1,800,000 0.024 Exercisable from 06 February 2017 and expiring on 05 February 2022

06 February 2017

4,000,000 0.035 Exercisable from 06 February 2017 and expiring on 05 February 2022

06 February 2017

887,819 0.10 Exercisable from 06 February 2017 and expiring on 05 February 2022

At 30 June 2017 13,140,998 The options outstanding at 30 June 2017 had a weighted average remaining contractual life of 4 years, 96 days (2016: 5 years, 311 days).

Fair value of options The fair value of the share options issued during 2017 was determined using the Black Scholes valuation model. The assumptions used in applying the Black Scholes pricing model were as follows:

Range across grants

Share price at the date of grant £0.05 Expected volatility 50% Expected option life 5.14 to 7.22 years Dividend yield 0% Risk free rate 1%


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21. Financial commitments Operating leases

Current year Previous year

$

$ Minimum lease payments under operating leases recognised in the income statement for the year

158,997 82,071

The Group had outstanding commitments for future minimum lease payments on its office premises under non-cancellable operating leases which fall due as follows:

2017 2016 $ $

No later than one year 171,162 77,268

Later than one year but no later than 5 years 252,303 119,120 Total future aggregate minimum lease payments 423,465 196,388

22. Financial instruments by category The totals for each category of financial instruments is as follows: 30 June 2017 30 June 2016 $ $ Financial Assets at Amortised Cost

Trade and other receivables 1,359,576 1,070,113 Cash and cash equivalents 742,005 2,192 2,101,581 1,072,305 Financial Liabilities at Amortised Cost Trade and other payables 315,514 560,128 Borrowings - 908,043 315,514 1,468,171


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23. Related party transactions The transactions during the financial period (excluding key management compensation which is included in Note 4) with related parties were:

2017 2016 $ $ Rising Dragon Singapore Pte Ltd Office lease 11,291 30,282 Loans 5,025 908,043 Repayment of loans 913,068 926,688 Interest expenses 50,855 40,822 MyPAY Ltd Revenue 32,500 750,000 Amounts paid on behalf of

MyPAY Ltd by MySQUAR

22,171

8,298

The balances with outstanding related parties as at 30 June 2017 were:

30 June 2017 $

30 June 2016 $

Rising Dragon Singapore Pte. Ltd - Other payables 5,748 24,084 - Other receivables

60,660 30,282 MyPAY Ltd - Trade receivables 32,500 - Other receivables

22,171 8,298

Ross David Marsh - Salary 10,875 3,625 Piers Julian Dominic Pottinger - Salary 12,750 4,250 Eric Alfred Schaer - Salary

24,375 24,375 - Other payables 3,750 - Neil Frank Osborn - Salary 7,500 - Pham Dang Hung - Salary - 30,000 - Other payables - 23,847 - Other receivables

9,153

The Directors consider there to be no ultimate controlling party.


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24. Events after the reporting period • The Group further diversified its product offerings on 6 July 2017 with the launch of Mingalarbar

Morning, a news aggregator in Myanmar language that has been quickly gaining traction. • On 31 July 2017, the Company completed a placing of 32,188,671 shares for £1,207,075.15 to

establish a mobile payments platform and to evaluate potential acquisitions and strategic investments.

• On 10 August 2017, the Company released Land of Magic, the first mobile MMORPG (massively multiplayer online role-playing game) in Myanmar.

• The fish hunting game MyFish, is the second most popular game based on the number of registered users and revenue, celebrated its one-year anniversary on 22 August 2017.

• A sleeker, redesigned website was launched on 1 September 2017 providing visitors more detail and visuals about the Group and its products.

• The integration of Ooredoo Myanmar’s billing services was finalised on 19 September 2017 which allows their 9+ million customers to make purchases by deducting from their phone balance.

• An MoU with Sealand Capital Galaxy Limited (London stock ticker: SCGL) was announced on 10 October 2017 to enter into a partnership for the mobile games of MySQUAR to be distributed under Sealand’s (through its subsidiaries) licence agreement on the Huawei inTouch platform and for Sealand’s mobile games to be distributed in Myanmar through the MySQUAR platform.

• An MoU was announced on 19 October 2017 to enter into a partnership with other service providers for the financing and delivery of Wi-Fi services that will be free for passengers and the Group’s freemium digital content on Myanmar Railways.

• The number of registered users grew by about 167% from 12 January 2017 to over 20 million by 31 October 2017.

• A new casual game FishHunter – Kotanger 3D, a spin-off from MyFish, was launched on 16 November 2017 with some RPG (role-playing game) elements that allow for potentially higher monetisation opportunities and a broader audience.

mysquar acc 29-11-17 (final) (clean) acc 29... · 2017. 11. 30. · annual report and non-statutory...

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