LME Limitless Earth Plc

30 July 2021

LIMITLESS EARTH PLC
("Limitless" or the "Company")

Final Results for the year to 31 January 2021

The Company announces its final results for the year to 31 January 2021.

The Annual Report and Accounts for the year ended 31 January 2021 will shortly be posted to shareholders and uploaded to the Company’s website, www.limitlessearthplc.com.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

For further information, please contact:

Limitless Earth plc                                                     +44 (0) 7780 700 091     
Guido Contesso                                                            www.limitlessearthplc.com     

Cairn Financial Advisers LLP                                   +44 (0) 20 7213 0880
Nominated Adviser                                                      www.cairnfin.com         
Jo Turner/Sandy Jamieson                                         

Peterhouse Corporate Finance Limited                     +44 (0) 20 7469 0930       
Broker                                                                        www.pcorpfin.com     
Duncan Vasey / Lucy Williams / Eran Zucker                                                

Chairman’s Statement

The Company has continued to focus on investing in opportunities highlighted by demographic trends. This has governed the selection of our existing investments including cleantech (Saxa Gres), life sciences (Chronix) and technology (V-Nova and Exogenesis).

The board is aware of the importance of making the right investment in the right sector at the right time and has and will only consider investing in opportunities that fit into its investing policy.  In recent years, the board has elected to make follow-on investments into its investee companies rather than source new investment opportunities, but it continues to review and consider investment opportunities and will only invest in the best of those reviewed.

The Company has cash and cash equivalents at the reporting date of £157,310, and post yearend, the company entered into an agreement to dispose part of the investment in the Saxa Gress bonds to provide ongoing working capital. The board considers it has sufficient cash for its operations for the financial year ahead and the board will look to exit investments when the conditions are supportive.

The Company’s investing policy is to principally invest in sectors where changing demographic factors are important drivers of growth and these investments may be in either quoted or unquoted securities made directly or indirectly in partnerships or joint ventures or into individual assets and can be at any stage of development.  To date the board has made direct investments in opportunities where other investors may or may not participate.  Given the unprecedented changes in the last year and market volatility brought about by significant factors such as Brexit and the COVID pandemic, the board considers it likely that it will focus on co-investment opportunities from management's extensive, high level contacts in the areas of family wealth and asset wealth management.  It is expected this will assist in providing greater liquidity to exit and access to follow-on funding for the investee company in the event it is required, helping the board better manage its exposure to risk and divestment.

The investments made to date are in the form of equity to convertible loans and all investments are valued £1,874,083 at fair value.  To determine the fair value of each investment, the directors have reviewed all the information received from each investee company and also from publicly available information on the internet. For V- Nova International Ltd, there was a placing by the investment in October 2020 that uplifted the fair value of that investment by £100,000.   The information available on the other three investments were all positive, however insufficient information to demonstrate that the fair value is anything other than cost as a result of a lack of other inputs or evidence to suggest an uplift or impairment of the value.

The investments are:

Saxa Gres S.p.A, a turn-around circular economy company which specialises in an innovative tile production process, has been extremely successful in expanding its operations by competitor acquisitions and this has enabled it to satisfy the increasing demands for its products while attracting valuable funding from relevant institutional investors.

Saxa’s founders, management and professionals have demonstrated outstanding achievements in terms of the development of its operations, sales, product expansion and integration of its acquisitions and during the reporting period, A2A S.p.A, a €4 billion listed company took a holding in this investment of 27.7% and as a relevant industrial partner,  they could help to expand and solidify Saxa Gres’ successful business model.

Saxa’s impact investments side; it builds synthetic stone using industrial waste fulfilling a number of green economy requirements and having significant environmental benefits.

V-Nova International Ltd. is a London-headquartered technology company providing next-generation compression solutions that address the ever-growing media processing and delivery challenges. V-Nova, as an IP software company, has developed an innovative video and imaging compression technology, with a valid proof of revenues and concept also in relevant emerging markets countries.

V-Nova’s LCEVC (Low Complexity Enhancement Video Coding) is the industry’s first highly optimised implementation of MPEG-5 Part 2 LCEVC, the codec-agnostic ISO/IEC enhancement standard capable of providing higher quality at up to 40% lower bitrates than codecs used natively. Its unique low-complexity design can allow for immediately accelerated encoding by up to 4 times compared to other commonly used codecs via a simple software upgrade, producing significant transcoding cost efficiencies.

V-Nova’s management have helped ensure that the company’s technology is becoming an integrated world standard. The Company is optimistic that V-Nova may be at a stage of development where it will be able to exploit its years of hard work and, importantly, recoup the investment in it as it progresses towards reaching profitability and expanding V-Nova’s patented capabilities in as many verticals as possible.

V-Nova’s impact investment angle: significantly more efficient data processing leads to reduced power consumptions offering a valuable reduction of carbon emissions per hour of video, providing relevant environmental sustainability benefits to video workflows (source https://www.broadbandtvnews.com/2021/05/24/v-nova-lcevc-announces-licensing-terms/ )

Due to the exponential video consumption growth, it materially increase the energy savings in the near future like direct server electricity consumption, it assists in reducing hardware replacement rates or providing greater reach to using with older technology and it drives indirect savings in areas including: manufacturing costs, cooling, content transmission (CDN), storage and caching and end user decoding.

Chronix Biomedical, inc. is a privately-owned biotech company founded in 1997 which specialises in simple blood tests (liquid biopsies) for real-time monitoring of the effectiveness of cancer drugs, including immunotherapies, and rejection of transplanted organs. The cancer test is based on a patented technology whereby Chronix can identify gains and losses in cell free DNA that allow them to determine if a cancer therapy is working. The transplant test allows Chronix Company to determine if the organ that is transplanted is being accepted or rejected, and thereby allows the physician to alter the immunosuppressive drug regimen given to the patient.

In June 2018, Chronix signed its first commercial agreement with a large EU-based lab group, which already processes more than 150,000 laboratory samples daily, providing an exclusive licence for Germany, Austria, Switzerland and Belgium. The contract is for 15 years and Independent research analysts have estimated the net present value of the licensing payments to Chronix over the life of the agreement to be approximately $92 million.

In April 2021 Oncocyte, a listed Nasdaq Company, bought Chronix Biomedical allowing them to use their network to distribute Chonix’s products. As part of the terms of the acquisition, Chronix’s shareholders received rights to future revenues on products sold.

Chronix’s impact investment angle: Chronix’s tests provide the opportunity for patients and healthcare provides to avoid billions of pounds of diagnostic surgery costs, for patients to avoid invasive surgery, healthcare provides to reduce demand on resources.  Chronix’s products provide for cost effecting, surgery free treatment monitoring which could lead to more effective care and treatments, saving money and lives.

Exogenesis Corporation Headquartered Massachusetts, USA, Exogenesis is a private, venture-capital-backed company that has developed and is commercialising a proprietary technology to modify and control surfaces without applying a coating or creating sub-surface damage. Exogenesis is commercialising a platform technology, NanoAccel™, using Accelerated Neutral Atom Beam (ANAB) and Gas Cluster Ion Beam (GCIB) technologies that modify and control surfaces of materials at a nanoscale level. The company's proprietary technologies are used for surface modification and control in a broad range of biomedical, optical and semiconductor applications.

Although the Board are optimistic and recognise Exogenesis’ technological achievements, the investment is pre revenue and we look forward to further news

Exogenesis’ impact investment angle: its technology can modify materials in order to alter their behaviour or effectiveness or change their chemical and/or physical properties to replicate other, more expensive materials. 

It is the intention of the board to seek to exit the current investments which have performed well, when conditions provide for a successful exit, in order to provide funds for reinvestment.   The board looks forward to updating shareholders with any progress in the year ahead.

Guido Contesso
Chief Executive Officer

Income Statement and Statement of Comprehensive Income

for the year ended 31 January 2021

There are no items of other comprehensive income.

Statement of Financial Position

As at 31 January 2021

Statement of Changes in Equity

for the year ended 31 January 2021

Statement of Cash Flows

for the year ended 31 January 2021

Notes

1.   General information

Limitless Earth Plc is a company incorporated and domiciled in the United Kingdom. The Company is a public limited company, which is listed on the AIM market of the London Stock Exchange. The address of the registered office is Suite 2, Northside House, Mount Pleasant, Barnet, Hertfordshire, England, EN4 9EB.

The Investing Policy is to invest principally, but not exclusively, in sectors where changing demographic factors are important drivers of growth. The Company intends to focus initially on projects located in Europe but will also consider investments in other geographical regions. The Company may become an active investor, acquire controlling stakes or minority positions, in each case, as the Board considers appropriate and commercial.

The financial statements are presented in Pounds Sterling, which is the Company’s functional and presentational currency.

The summary above is an extract of the report and accounts to 31 January 2021, which should be read in full.  References to page numbers and notes are in relation to the pagination and contents of the full report and accounts, a copy of which is available from the Company’s website.

2.   Summary of Significant Accounting Policies

Basis of preparation

The financial statements have been prepared in accordance with International accounting standards (IASs) in conformity with the requirements of the Companies Act 2006. The financial statements have also been prepared under the historical cost convention, as modified by the revaluation of financial assets at fair value through profit or loss.

The preparation of financial statements in conformity with IASs requires the use of certain critical accounting estimates.  It also requires management to exercise its judgement in the process of applying the Company’s accounting policies.  The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed later in these accounting policies.

Going Concern

At the reporting date the Company had cash resources of £157,310. and the Directors have prepared cash forecasts that show that, at the time of approving the financial statements, the Company has adequate resources to continue in existence for the foreseeable future.  Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements.

3.   Financial Asset Investments

The valuation model adopted by management is explained in Note 3, Critical accounting judgements and estimations and is applicable to each of the investments listed below: 

Chronix Biomedical Inc (“Chronix”)

On 8 October 2015 the Company made an investment in Chronix of US$500,000 (approximately £329,511) in the series I round of convertible preference stock (“Series I Stock”) at a price of US$0.40 per share. On a fully diluted basis, considering all classes of common and preference stock in issue, at the date of investment, Limitless’ investment represented 0.72% of Chronix’s issued share capital and values Chronix at approximately US$69 million.

On 20 September 2019, the company announced that it made a further investment of $100,000 ( £81,526)  in form of a promissory note.

On 19th Match 2021, the company announced that Chronix had entered into an agreement  with Oncocyte Corporation Inc. (“Oncocyte”), a listed US based molecular diagnostics company, for its acquisition for cash, equity and a future revenue share consideration.

On 20^th April 2021 and after the financial year, Chronix repaid $109,460.09 which comprises of the $100,000 promissory note interest.

V Nova International Ltd (“V-Nova”)

On 18 December 2015, the Company made a cash investment of £500,000 in V-Nova, a company that specialises in Advanced Signal & Data Compression Solutions. The investment was through the acquisition of £500,000 worth of Convertible loan notes. On 4 April 2017, these notes were converted into 7,284,382 Series B1 Participating shares at a 20% discount to the preferential valuation of V-Nova at the time, of £100 million.

On 30 October 2020, V-Nova raised £16,810,410 on a series C1 funding round and the company settled unconverted loan not holders with £8,556,144 cash. V Nova raised further £5,661,027 in December 2020. These C1 shares and the company’s B1 shares rank similarity and the investment fair value uplift in note 12 is based on the increase in the placing price. A fair value uplift of £100,000 was recognised using the price per share in the October 2020 fund raise as a valuation.

Saxa Gres S.A (”Saxa”)

On 23 December 2015, the Company invested €350,000 (approximately £258,830) in Saxa.  As a first round subscriber, Limitless has also been granted an option to acquire 1.1655 per cent. of the equity in Saxa at nominal value with the intention that, once the bonds have been repaid, Limitless will be able to maintain an interest in Saxa of approximate value to the bond investment.

On 21 March 2017, Limitless announced that it had increased its investment in Saxa Gres by acquiring a further 267 Notes for a value of €267,000. These Notes were also accompanied by options to acquire shares in Saxa Gres, in this case to acquire another 1.333% of its equity share capital with each option having an exercise price of €1. In total, Limitless has options to acquire approximately 2.5% of the equity share capital of Saxa Gres at an exercise price of €1 per share.

On 16 November 2017, the company announced that it had made a further investment in Saxa Gres S.p.A. of approximately EUR €75,000 in form of a loan .  Saxa Gres was raising funds, via an increase in its share capital, in order to invest in a new production line, it required to meet a significant increase in orders. Limitless participated alongside two sizable credit funds in order to maintain its interest in Saxa Gres.

On 19th January 2021, the company announced that a recent investor in Saxagress, was A2A S.p.A., a €4 billion listed company, as a Saxa Gres shareholder (27.7%) and as a relevant industrial partner which could help to expand and solidify Saxa Gres’ successful business model.

At the request of Saxa Gres in order for it to gain better access bank financing to further its investment plans, the Board of LME, together with 96% of the existing 2023 bond holders, agreed to exchange its 617 Saxa Grs bond notes with maturity in 2023 into a similar amount of Saxa Gres notes of 7 per cent. with maturity in 2026.

Exogenesis

On 6 May 2016, the Company made an investment in Exogenesis, a nanotechnology company which has developed nanoscale surface modification technology to, inter alia, improve the safety and efficacy of implantable medical devices and is being used to develop next generation microscopy tools for DNA analysis.

The Company invested US$300,000 (approximately £200,000) in the Exogenesis senior convertible notes which accrued an 8 % annual interest (“Notes”).  The Notes, together with accrued interest, are convertible into Exogenesis series B preferred stock at a price of US$0.382 per share or, at the option of Limitless, into Exogenesis series C preferred stock at a 20 % discount to the issue price at the time of the next financing. 

On 9 June 2017, the Company extended the maturity date of the loan notes to 31 December 2017 from 30 June 2017 and lowered the conversion threshold amount to $2,500,000. Upon the cash financing being achieved and the maturity date being reached, the notes were then converted into series B preferred stock at the agreed price.

The table of investments sets out the fair value measurements using the IFRS 13 fair value hierarchy.  Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset as follows:

Level 1 – valued using quoted prices in active markets for identical assets.

Level 2 – valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1.

Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data.

The valuation techniques used by the Company are explained in the accounting policy note, “Financial asset investments”.

LEVEL 3 FINANCIAL ASSETS

Reconciliation of Level 3 fair value measurement of financial assets:

No unobservable inputs were used in the fair value measurement for assets categorised in Level 3 of the fair value hierarchy. No sensitivities have been included on the other investments, as their fair value equates to cost.

4.   Earnings Per Share

(a)  Basic

Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.

(b)  Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. There were no potentially dilutive instruments outstanding at 31 January 2021. 

5.   Post Year End Events

On 20th April 2021 and after the financial year, Chronix repaid $109,460.09 which comprises of the $100,000 promissory note and interest.

On 29th July 2021, the Company entered in to an agreement with an FCA regulated broker to dispose 30 Saxa Bonds ISIN: IT0005418436 (for a nominal value of €29,131.73 net of a 3.5% commission) and further 220 Bonds (for a nominal value of €220,000 at the prevailing market conditions and gross before a commission of 5%), in various tranches from October to 31 December 2021, with an undertaking that the further 220 Bonds will be purchased by the broker and accounted for no later than 31 December 2021.