HUUGE INC.
SEP
ARA
TE FINANCI
AL ST
A
TEMENT
S
as of and for the year ended December 31, 2021
prepared in accor
dance with International Financial Repor
ting Standards
as adopted by the Eur
opean Union
T
able of contents
Company’
s separ
ate statement of comprehensive income
5
Company’
s separ
ate statement of financial position
6
Company’
s separ
ate statement of changes in equity
7
Company’
s separ
ate statement of cash flows
9
1. General information
11
2. Basis for preparation of the financial statements
13
(a) Statement of compliance
13
(b) Historical cost convention
13
(c) Functional and presentation curr
ency
13
(d) Key judgements and estimates
13
3. Adoption of new and revised Standards
16
4. Significant accounting policies
17
(a) Foreign curr
ency transactions – transactions and balances
17
(b) Revenue
18
(c) Income tax
18
(d) Shares in subsidiaries, associates and joint ventures
19
(e) Financial instruments
19
(f) Leases
20
(g) Impairment
21
(i) Financial assets
21
(ii) Non-financial assets
21
(h) Cash and cash equivalents
22
(i) T
rade and other receiv
ables
22
(j) T
rade and other pay
ables
22
(k) Share capital and other components of the equity
22
(l) Series C prefer
ence shares
23
(m) Interest-bearing loans and borrowings
24
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
2
(n) Share-based payment arr
angements
24
(o) Employee benefits
25
(i) Defined contribution plans – retirement benefits
25
(ii) Other employee benefits
25
(p) Provisions
25
(q) Research and development expenses
25
(r) Finance income and expense
25
5. Determination of fair values
25
(a) Prefer
ence shares liability measured at fair value through pr
ofit or loss
26
(b) T
rade and other receiv
ables measured at amortized cost
26
(c) Non-derivative financial liabilities measured at amortized cost
26
6. Revenue
27
7. Segment information
27
8. Operating expenses
28
9. Other operating income and expense
28
10. Finance expense
28
11. Income tax
29
12. Investment in subsidiaries
31
13. Loans granted
32
14. Financial risk management
33
(a) Introduction
33
(b) Credit risk
33
(c) Liquidity risk
36
(d) Market risk
38
(i) Currency risk
38
(ii) Interest r
ate risk
38
(e) Capital management
38
15. Accounting classifications of financial instruments and fair values
40
16. T
rade and other receivables
41
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
3
17. Cash and cash equivalents
41
18. Share capital
41
19. Share-based payment arr
angements
48
20. Conversion of series C prefer
ence shares
53
21. T
rade and other payables
54
22. Leases
54
23. Cash Flow reconciliation
55
24. Contingencies
56
25. Pledges and collaterals
56
26. Related party transactions
57
27. T
ransactions with management of the Company
59
28. Audit fees
59
29. Employment structure
60
30. Subsequent events
60
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
4
Company’
s separ
ate statement of comprehensiv
e income
for the year ended December 31, 2021
Note
Y
ear ended
December 31, 2021
Y
ear ended
December 31, 2020
Revenue
6
3,824
2,817
Cost of sales
-
Gross pr
ofit
3,824
2,817
Sales and marketing expenses
8
(76)
-
Research and develop
ment expenses
8
(1,447)
(906)
General and administr
ative expenses
8
(5,206)
(5,885)
Other operating income/(ex
pense), net
9
(80)
6,536
Operating result
(2,985)
2,562
Finance income
57
166
Finance expense
10
(42,205)
(128,309)
Profit/(loss) befor
e tax
(45,133)
(
125,581
)
Income tax
11
(73)
(96)
Net result for the year
(45,206)
(125,677)
Other comprehensive income
-
-
T
otal comprehensive income/
(loss) for the year
(45,206)
(125,677)
The accompanying notes are an integr
al par
t of these financial statements.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
5
Company’
s separ
ate statement of financial position
as of December 31, 2021
Note
As of
December 31, 2021
As of
December 31, 2020
Assets
Non-current assets
Property
, plant and equipment
87
36
Right-of-use asset
22
137
211
Investment in subsidiaries
1, 12
26,856
13,633
Loans granted
13
-
1,487
Other non-financial assets
6
6
Deferred tax asset
11
48
-
T
otal non-current assets
27,134
15,373
Current assets
T
rade and other receiv
ables
16
4,149
15,228
Corporate income tax r
eceivable
303
583
Loans granted
13
-
-
Cash and cash equivalents
17
106,330
7,284
T
otal current assets
110,782
23,095
T
otal assets
137,916
38,468
Equity
Share capital
18
2
2
T
reasury shares
18
(19,954)
(33,994)
Supplementary capital
18
321,049
14,040
Employee benefit re
serve
19
19,813
8,053
Retained earnings/(Accumulated losses)
(186,041)
(140,835)
T
otal equity
134,869
(152,734)
Non-current liabilities
Prefer
ence shares
20
-
176,606
Long-term lease liabilities
22
66
142
Deferred tax liability
11
-
28
T
otal non-current liabilities
66
176,776
Current liabilities
T
rade and other pay
ables
21
2,903
7,850
Short-term lease liabilities
22
78
76
Provisions
4p), 9
-
6,500
T
otal current liabilities
2,981
14,426
T
otal equity and liabilities
137,916
38,468
The accompanying notes are an integr
al par
t of these financial statements.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
6
Company’
s separ
ate statement of cash flows
for the year ended December 31, 2021
Note
Y
ear ended
December 31,
2021
Y
ear ended
December 31,
2020
Cash flows from oper
ating activities
Profit/(loss) befor
e tax
(45,133)
(125,581)
Adjustments for:
Depreciation and amortization
95
28
Non-cash employee benefits expense - sh
are-based payments
19
565
180
Remeasurement and other finance expenses r
elated to prefer
ence
shares liability
20
38,997
128,249
Finance (income)/expense, net
10
2,622
(154)
Changes in net working capital:
T
rade and other receiv
ables
16
11,079
(6,094)
Other non-financial assets
-
3
T
rade and other pay
ables
21
(2,249)
4,713
Provisions
4p)
(6,500)
-
Other adjustments
25
-
Cash flows from oper
ating activities
(499)
1,344
Income tax refund receiv
ed
105
-
Net cash from oper
ating activities
(394)
1,344
Cash flows from inv
esting activities
Acquisition of property
, plant and equipment and intangible assets
(72)
(25)
Purchase of shares in subsidi
aries and capital injection
1, 12
(2,485)
(2,328)
Interest receive
d
128
347
Repayment of loans gr
anted to subsidiaries
13
1,400
2,000
Loans granted t
o subsidiaries
13
-
(600)
Net cash from inv
esting activities
(1,029)
(606)
Cash flows from financing activ
ities
Proceeds from issue of com
mon shares for public subscription
18
152,929
-
Execution of stabilization option
18
(43,976)
-
Loss on foreign exchange fo
rward contract
10
(2,662)
-
T
ransaction costs of an issuance of equity instrum
ents
(7,097)
(275)
Exercise of st
ock options
18
1,350
202
Proceeds from issue of com
mon shares and shares series A and B
18
-
8,234
Proceeds from issue of sha
res series C
18
-
1,447
Repurchase of own shares se
ries A and B
18
-
(6,255)
Repurchase of own shares se
ries C
18
-
(1,444)
Lease repayment and inter
est paid
22
(75)
(13)
Net cash from financing activiti
es
100,469
1,896
Net increase/(decrease) in ca
sh and cash equivalents
99,046
2,634
Cash and cash equivalents at the beginning of the perio
d
17
7,284
4,650
Cash and cash equivalents at the end of the period
106,330
7,284
The accompanying notes are an integr
al par
t of these financial statements.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
9
Notes t
o the separ
ate
financial statements
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
10
1.
General inform
ation
Huuuge
Inc. (hereinafter the “Company”) is a company r
egistered in the United States of America. The Company’
s regis
tered
office
is
located
in
Dover
,
Delaware,
850
Burton
Road,
Suite
201, DE 19904 and the operating office is locate
d in Las Vegas,
Nevada, 2300 W
. Sahara Av
e., Suite 800, NV 89102.
The Company was established with a notary deed on February 11, 2015.
These
separate
financial
statements
(her
einafter
“financial
statements”)
of
the
Company
cover
year
ended
December
31,
2021 and includes compara
tive data for the year ended December 31, 2020.
The Company has an unlimited period of oper
ation.
The
core
business
activities
of
Huuuge
Inc.
is
holding
activity
for
the
Huuuge
Inc.
Group
(the
“Group
”),
for
which
the
Company is the ultimate parent.
The core business activities of the Gr
oup include:
●
development of mobile games in the fr
ee-to-play model,
●
distribution and user acquisition of own mobile games.
Identification of consolidated financial statements
The
Company
is
the
ultimate
parent
of
the
Huuuge
Inc
Group.
The
Company
has
pr
epared
a
consolidated
financial
statements for the year ended December 31, 2021, which w
ere approved on Mar
ch 25, 2022 by the Board of Direct
ors.
Composition
of
the
Company’
s
Board of Direct
ors as of December 31, 2021 and
December 31, 2020 and
as of the date of
signing of this financial statements
The Company’
s Board of Dir
ectors consists of Chief Executive Officer
, who is also director
, and non-executive directors.
Directors
hav
e
annual
terms
of
duty
and
serve
until
the
successors
are duly elected. The preference shar
eholders have the
right to appoint certain directors.
As
of
December
31,
2021
and
as
of
the
date of signing of these financial statements Chief Executive Officer and
director is
Mr Anton Gauffin.
As of December 31, 2020 non-executiv
e directors were:
●
Henric Suuronen, direct
or
,
●
Sang-Ho Park, direct
or
,
●
John Salter
, direct
or
,
●
Rod Cousens, director
.
On
February
3,
2021
the
following
directors
were
elected,
and
after
this
change, as of December 31, 2021
as of the date of
signing of these financial statements non-executiv
e directors were:
●
Henric Suuronen, direct
or
,
●
Krzysztof Kaczmarczyk, dir
ector
,
●
John Salter
, direct
or
,
●
Rod Cousens, director
.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
11
Financial statements appro
val
These financial statements were appr
oved on March 25, 2022 by the Bo
ard of Directors.
Investments in subsidiaries
The Company has direct and indir
ect an interest in share capital of the following subsidiaries:
Share in capital
Name of entity
Registered seat
Activities
As of
December 31,
2021
As of
December 31,
2020
Huuuge Games Sp. z o.o.
Szczecin, Poland
games development and
operations
100%
100%
Huuuge Global Ltd
Larnaca, Cyprus
games distribution, user
acquisition
100%
100%
Huuuge Publishing Ltd
(formerly Fun Monke
y Ltd)
Larnaca, Cyprus
games distribution
100%
100%
Coffee Break Games Ltd
Larnaca, Cyprus
games distribution
100%
100%
Huuuge Digital Ltd
T
el Aviv
, Israel
games development, R&D
100%
100%
Playable Platform B.V
.
Amsterdam,
Netherlands
games advertisement
100%
100%
Double Star Oy
Vantaa, Finland
games development
100%
100%
Huuuge UK Ltd.*
London,
United Kingdom
corporate de
velopment
100%
-
Huuuge Mobile Games Ltd
Dublin, Ireland
games distribution, user
acquisition, in
organization
100%
100%
Emanon Ltd (formerly
Billionaire Games Ltd)
Dublin, Ireland
games distribution, user
acquisition
-
**
100%
Coffee Break Games Un
ited
Ltd
Dublin, Ireland
games distribution, user
acquisition, in
organization
100%
100%
Cireneg Ltd (formerly Fun
Monkey Games Ltd)
Dublin, Ireland
games distribution, user
acquisition
-
**
100%
MDOK GmbH (formerly
Huuuge Pop GmbH.)
Berlin, Germany
games development
100%
100%
Huuuge Labs GmbH
Berlin, Germany
games development, R&D
100%
100%
Huuuge T
ap T
ap Games Ltd
Hong Kong
games development, user
acquisition
100%
100%
*On
July
1,
2021
new
entity
Huuuge
UK
Ltd.
(incorporated
in
the
United
Kingdom)
was established. 100% of shares of this
entity
were
taken
up
by
Huuuge
Inc.
The
entity
was
established
with
a
share
capital
amounting to
GBP 250 thousand. The
new entity was established in the United Kingdom for the purposes of ext
ension of international presence of the Group.
On
November
18, 2021, the Billionair
e Games Ltd changed its name to Emanon Ltd, and Fun Mon
key Games Ltd changed its
name to Cireneg Ltd.
**On
December
20,
2021
100%
of
the
shares
in
Emanon
Ltd,
and
100%
of
the
shares
in
Cireneg
Ltd
were
sold
for
t
otal
consideration EUR 2.
The shares were dir
ectly held by Huuuge Global Ltd.
As
of
December
31,
2021
and
December
31,
2020
share
in voting rights owned by the Company in its subs
idiaries, is equal
to Company’
s share in equi
ty of those entities.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
12
2.
Basis for prepar
ation of the financial statements
(a)
Statement of compliance
These
financial
statements
of
the
Company
have
been
prepar
ed
in
accordance
with
the
International
Financial
Repor
ting
Standards
as
adopted
by
the
European
Union
(“IFRS”)
and
constitute the
Company’
s separate financ
ial statement prepared
in order to meet the legal r
equirements imposed on issuers of the securities admitted t
o trading on regulated ma
rkets.
The
Company
is the parent entity of the Huuuge Inc. Gr
oup. The annual consolidated financial statements of the Group ha
ve
been
prepared
in
accordance
with
the
r
equirements
of
IFRS.
In
order
to
fully
understand
the
financial
situation
and
the
results
of
operations
of
the
Company
as
the
parent
company
in
the
Group,
these
financial
statements
should
be
read
together
with
the
annual
consolidated
financial
statements
for
the
period
ended
on
31
December
2021.
The
consolidated
financial
statements
of
the
Group
are
prepar
ed
and
published
at
the
same
time
as
these
separate
financial statements of
the Company
.
(b)
Hist
orical cost convention
These
financial
statements
are
prepared
on
the hist
orical cost basis, except for derivative
s including the preferred shar
es C
series,
which
were
measured
at
fair
value
with
the gains/losses r
ecognized in profit or loss in the year ended De
cember 31,
2021.
(c)
Functional and presentation currency
The
functional
currency
of
the
Company
and
the
presentation
currency
of
these
financial
statements
is
the
US
dollar
(“USD”).
(d)
K
ey judgements and estimates
The
preparatio
n
of
financial
statements
in accordance with IFRS requires management t
o make judgements, estimates and
assumptions
that
affect
the
application
of
accounting
policies
and
the
reported
amounts
of
assets,
liabilities, income and
expenses.
Actual
results
may
differ
from
those
estimated.
Estimates
and
underlying
assumptions
are
re
viewed
on
an
ongoing
basis.
Revisions
to accounting estimates ar
e recognized in the period in which the estimates ar
e revised and in any
future periods affected.
In
preparing
these
financial
statements,
the
significant
judgements
and
estimates
made
by
management
in
applying
the
Company’
s
accounting
policies
have
been
consistently
applied
by
the
Company
and
ar
e
consistent
across
the
reported
periods.
Model of revenue r
ecognition
Agent vs principal considera
tions – transactions between the Company and Huuuge Global L
imited
The
Company
purchases
certain
advertisement
ser
vices
from
third
parties
(mostly
Platform providers such as F
acebook),
which
are
subsequently
recharged
to Huuuge Global Ltd. The Company’
s management has determined that in its relation to
the platforms the Company acts as an agent on behalf of Huuuge Global
Ltd.
In
accordance
with
IFRS
15.B34,
when
another
entity
is
involved
in
pro
viding
goods
or
services
to
a
customer
,
the
entity
evaluates
the
nature
of
its
promise
t
o
the
customer
,
whether
the nature of the entity`s performance obligatio
n is to provide
the
specified
goods
or
services
to
the
customer
itself
(in
this
case
the
entity
is
a
principal)
or
to
arrange
for
them
to
be
provided
by
another
entity
(in
this
case
the
entity
is
an
agent).
In
accordance
with
IFRS
15.B35,
the
entity
acts
as
the
principal,
if
it
obtains
control
of
the
specified
good
or
service
before
it
is
transferr
ed
to
the
customer
,
otherwise
the entity
acts
as
an
agent
arranging
for
the
pro
vision
of
the
specified
goods
or
service
for
another
entity`s
customer
.
An
agent
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
13
recognizes
re
venue on a net basis corresponding to an
y fee or commission to which it expects t
o be entitled in return for the
arrangement of pr
ovision of goods or services by another entity
.
The
Company’
s
management
assessed
that,
taking
into
account
the
IFRS
15
guidance
,
the
nature
of
the
Company’
s
performance
obligation
is
to
ensure
the
provision
of
adv
er
tisement
services
by
Platform
providers
such
as
F
acebook
for
Huuuge
Global
Ltd,
and
that
the
Company
itself
does
not
obtain
control
over
the
goods
or
services
provided
prior
to
its
transf
er
to
the
customer
.
The
Company’
s
management
therefor
e
assessed
that
the
Company
acts
as
an agent to Huuuge
Global
Limited.
The
conclusion
that
the
Company
acts
as
an
agent
is
suppor
ted
mainly
by the following fact
ors: Platform
providers
(such
as F
acebook) have the ultimate responsibility for p
roviding the services to Huuuge Global Ltd; the Company
does
not
set
the
prices
for
the
advertisement
ser
vices
nor
it
has
a
discretion
to
select
the
Platforms,
Platform
pr
oviders
have right to chang
e these prices at any time at their discretion.
The
Company
being an agent presents re
venues from those tr
ansactions in net amounts – revenue fr
om Huuuge Global Ltd
for
the
provision
of
these
services
was
fully
netted
with
related
costsin
the
statement
of
comprehensive
income
for
the
years ended December 31, 2021 and December 31, 2020.
For
details
on
the
accounting
policies
related
to
the
revenue
recognition
please
r
efer
to
Note
4
Significant
accounting
policies
, point (b)
Revenue
.
Money market mutual funds
As
part
of
its
liquidity
management,
the
Company
makes
overnight
deposits
of
its
daily
cash
surpluses
in
money
mark
et
mutual
funds.
The
money
market
fund
is
an
open-ended
mutual
fund
that invests in short-term debt instruments (typically
one
day
to
one
year)
such as treasury bills, certificates of deposit, bonds, governmen
t gilts and commercial paper with high
ratings
(mainly
A3
based
on
Moody’
s
r
ating).
The
main
goals
are
the
preservation
of principal, high liquidity and a modest
incremental return o
ver short-term interest rates or a benchmark r
ate.
Key
judgement
in
applying
accounting
policies
ref
ers
to
the classification of investments in money mar
ket mutual funds as
“Cash
and
cash
equivalents” and not as “Other financial assets”. The units of the
funds held by the Company are short-term,
highly
liquid, readily convertible to known amounts of cash and ar
e subject to an insignificant risk of future changes in v
alue,
thus
they
meet
the
critical
criteria
indicated
in
IAS
7
Statement
of
Cash
Flows
and
have
been
considered
in
substance
as
cash equivalents.
Investments
in
money
market
funds ha
ve a determinable market value and the
y are puttable, with a short notice period. The
Company
can
dispose
the
investments
in
funds
at
its
discretion
any
time
(same-day
access),
funds
are
not
closed
for
a
selected
group of participants. They are convertible into a cash and the cash amount t
o be received on redemption is known
at
the
time
of
the
investment
because
at
the
time
of the initial investment, the risk of changes in value is insign
ificant.
The
volatility
of
changes
in
fair
value,
in
par
ticular
the
credit
and
liquidity
risk,
is
limited
taking
into
account
the
level
of
diversification
of
the
por
tfolio
and
its
weighted
aver
age
life
of
the
underlying
assets
of
the
funds.
The
exposure
to
benchmark
interest
rat
e
risk
is also assessed to be low because of short period of time until the next repricing of the assets
held by the fund to curr
ent benchmark interest rates.
These facts support the view that the investment is liquid.
In
addition,
the
Company
considered
the
assets
held
by
the
fund
to
establish
whether
substantially
all
of
its
investments
qualify
individually
as
cash
and
cash
equivalents.
The
considera
tion
referred
to
all
potential
investments
allowed
b
y
the
investment
rules
set
for
the fund, and not only the assets that the fund holds as of the e
valuation date. It was assessed that
in
general
the
investments’
maturity
is
less
than
three
months
and
thus,
inves
tments
qualify
individually as cash and cash
equivalents.
Due
to
the above, in the manageme
nt’
s opinion, the Company’
s investments in money mark
et funds have the attributes to be
considered
a
cash
equivalent.
This
analysis
is
performed
at
each
reporting
period. For details on the funds and their credit
ratings
please
ref
er
to
Note
14
Financial
risk
management
,
point
(b)
Credit
risk
.
For
carrying
amounts
as
at
December
31,
2021 and December 31, 2020 please ref
er to Note 17
Cash and cash equivalents
.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
14
Prefer
ence shares
Classification and measurement
In
September
2017,
the
Company
issued
series
C
preference
shar
es
to
several
inv
estors.
The
series
C
preference
shar
es
were
converted
into
ordinary
shares
on
February
5,
2021.
Details
of
the
transaction
is
presented
in
Note
20
Conv
ersion of
series C prefer
ence shares
.
The
management
has
concluded that the series C pref
erence shares meet the definition of a financial liability as of
year-end
December 31, 2020 because they are
effectively conve
r
tible into a v
ariable number of ordinary shares upon occurrence of an
uncertain
future
events,
such
as
share
split,
combination
or
issuance
of
shares
which
are
genuine
and
outside
of
the
Company'
s control (IAS 32 paragr
aph 16(b) and 25).
Accordingly
,
the
series
C
pref
erence
shares
are
classified
as
a
financial
liability
and measured initially and subse
quently at
fair value through pr
ofit or loss.
This
liability
was
presented
as
a
non-current
liability
as
of
year-end
December
31,
2020
based
on
IAS
1
para
69(d)
which
states
that
the
terms
of
a
liability
that
could,
at
the
option
of
the
counterpar
ty
,
result
in
settlement
by
the
issue
of
equity
instruments
do
not
affect
its
classification.
The
settlement
in
(variable
number
of)
ordinary
shares
was
not
result
in
an
outflow from the entity'
s working capital and hence the classification as a non-curr
ent liability under IAS 1.69(d).
The
further information on the fair value measurement of this liability is pro
vided in Note 5
Determination of fair values,
point
(a)
Preferen
ce
shares
liability
measured
at
fair
value
thro
ugh
profit
or
loss
.
The
fair value gains/losses are pr
esented within
“Finance expense”.
Estimation uncertainty
The assumptions made about the future and the ma
jor sources of estimation uncertainty refer to the following ar
eas:
Deferred tax assets and
liabilities, in par
ticular the rea
lizability of deferred tax assets
In
order
to
determine
deferred
tax
assets
and
deferred
tax
liabilities
the
management
needs
to
make
estimates
and
judgments,
especially
in
the
valuation
of
deferred
tax
assets
and liabilities. Signific
ant management estimate is required to
determine
the
amount
of
deferred
tax
assets
that
can
be
recogniz
ed,
based
upon
the
likely
timing
and
the
level
of
future
taxable
profits,
together
with
future
tax
planning
strategies.
The
proces
s
includes
evaluation
of
the
tax
results
of
the
Company
,
under
consideration
of
local
tax
laws
and
regulati
ons,
assessment
of
the
actual
tax
exposure
and of temporary
differences
as
well
as
assessment
of
the
likelihood
that
deferred
tax
assets
can
be
utilized
in
futur
e
periods
through
generation of taxable pr
ofits.
The
recognition
of
a deferre
d tax asset is based on the assumption that it will be recov
erable against future taxable income.
The
deterioration
of
tax
results
in
the
future
could
cause
that
this
assumption
could
not
be
justified. When accounting f
or
transactions
the
Company
takes
into
account
uncer
tainties
as
to
whether
its
treatment
will
be
accepted
by
the
tax
authorities.
Estimates
used
for
the
recognition
of
deferred
tax
assets
ar
e
updated
annually
with
factors
such
as expected
tax rates and expected futu
re tax results of the Company
.
Deferred
tax
liabilities
and
assets
are
not r
ecognized for temporary diff
erences between the carrying amount and tax bases
of
investments
in
subsidiaries
as
the
Company is able to contro
l the timing of the reversal of the tempor
ary differences and
in the management’
s assessment it is pr
obable that the differences will not r
everse in the foreseeable futur
e.
For
more
details
on
deferr
ed
tax assets and liabilities please refer t
o Note 4
Significant accounting policies
, point (c)
Income
tax
and to Note 11
Income tax
.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
15
Provisions and contingent liabilitie
s
Determination
of
provisions
and
contingent
liabilities
is
based
on
management’
s
assessment
of
the
probability
of
the
outflow
of
resources
embodying
economic
benefits,
according
to
guidelines
included
in
IAS
37
Provisions,
Contingent
Liabilities and Contingent Assets
.
Provisions
are
measur
ed
at
management’
s
best
estimate
of
the
expenditure
required
t
o
settle
the
obligation
at
the end of
the reporting period and are discounted to pr
esent value where the effect is material.
As
of
December
31,
2019
the
Company
recognized
pr
ovision
for
a
potential
unfavourable
outcome
in
the
court
case,
presented
in
the
line
“Provisions”
in
the
statements
of
financial
position.
On
or
about
April
6,
2018, a putative class action
complaint
was
filed
against
the
Company
in
the
U.S.
District
Court
for
the
Western
District
of
Washington
by
a
playe
r
plaintiff.
The
complaint
sought
damages
for
alleged
violations
of
Washington
law associated wit
h plaintiff’
s alleged in-app
purchases within one or more
of the Company’
s games. Specifically
, the plaintiff alleged violations for the recovery of money
lost
in
gambling
and
for
violations
of
the
Washington
Consumer
Protection
Act.
The
plaintiff additio
nally sought damages
for
unjust
enrichment.
The
Company
denied
the plaintiff’
s allegations, denied that it violated any laws or r
egulations, denied
that
the
suit
should
be
treated
as
a
class
action,
denied
the
plaintiff’
s damages claims, and has been vigorously def
ending
itself
against
the
plaintiff’
s
claims.
The
Company
filed
a
motion
to
compel
arbitration
on
July
2,
2018,
which
the
District
Court denied on November 13, 2018. The Company timely filed a notice of appeal on December 6,
2018, and filed its opening
brief
in
the
Ninth
Circuit
Court
of
Appeals
on
March
6,
2019.
The
Company
also
filed
a
motion
to
stay
the
district
cour
t
proceedings
pending
a
decision
on
its
appeal,
which
was
granted
on
March
1,
2019.
The pr
ovision of USD 6,500 thousand
was
recognized
in
2019
in
the
separat
e
line
item
in
the
statement
of
the
financial position as “Other provisions” and in the
“Other
operating
income/(expense),
net”
line item in the state
ment of comprehensive income. The Company’
s management
estimated
that
the
costs
would
be
realized
within
a
period
for
which
the
discounting
effect
would
not
be
material
and
accounts for the provision in an u
ndiscounted amount. The parties mediated on June 15, 2020 and reached agreement on a
term
sheet
on
a
class
action
basis
on
June
16,
2020.
On
August
23,
2020,
a
class
action
settlement
agreement
was
concluded
between
the
class
representative
s,
including
the
plaintiff,
and
filed
with
the
cour
t,
intending
to
fully
,
finally
and
forever
r
esolve,
discharge
and
settle
the
claims
related
to
this
suit.
The
United
States
District
Court
finally
approved
the
Settlement Agreement on F
ebruary 11, 2021.
The
Court
finds
that the settlement is fair
, reasonable and adequate and it is a re
sult of extensive, arm
’
s-length negotiations.
Subsequently the Court ordered the Company to settle final claim
s determinations, including payment and prospective
relief.
Payment was made on Mar
ch 26, 2021, with the corresponding utilization of the pro
vision.
Further
,
Huuuge
Global
Ltd
agreed
to
participate
in
covering
costs
related
to
conclusion
of
the
settlement
agree
ment
by
compensating
of
the
settlement
fund
amount.
The
Company
has
recognized
income related t
o the compensation received
amounting USD 6,500 thousand in line “Other oper
ating income/(expense) net” in statement of comprehensiv
e income.
3.
Adoption of new and re
vised Standards
New International Financial Reporting Standards and Interpretations published but no
t yet effective:
●
IFRS
14
Regulatory
Deferr
al
Accounts
(issued on January 30, 2014) – The European Commission has decided not
to
launch
the
endorsement
process
of
this
interim
standard
and
to
wait for the final standard – not yet en
dorsed
by
EU
at
the
date
of
approval
of
these
financial
statements
for issu
e – effective for financial years beginning on
or after January 1, 2016;
●
Amendments
to
IFRS
10
and
IAS
28:
Sale or Contribution of Assets Between an Investor and
its Associate or Joint
Ventur
e
(issued
on
September
11,
2014)
–
the
endorsement
process of these Amendments has been postponed
by EU - the effectiv
e date was deferred indefinitely by Internationa
l Accounting Standards Board;
●
IFRS
17
Insurance
Contr
acts
(issued
on
May
18,
2017)
including
Amendments
to
IFRS
17
(issued
on
June
25,
2020) - effective for financial y
ears beginning on or after January 1, 2023;
●
Amendments
to
IAS
1:
Presentation of Financial Statements: Classification of Liabil
ities as Current or Non-curren
t
-
Deferr
al
of
Effective
Date
(issued
on
January
23,
2020
and
July 15, 2020) – not yet endorsed by EU at the d
ate of
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
16
approval
of
these
financial
statements
for
issue
–
eff
ective
for
financial
years
beginning
on
or
after
January
1,
2023;
●
Amendments
to
IAS
1
and
IFRS
Practice
Statement
2:
Disclosure
of
Accounting
policies
(issued
on
F
ebruary 12,
2021) – effective for financial y
ears beginning on or after January 1, 2023;
●
Amendments
to
IAS
8:
Definition
of
Accounting
Estimates
(issued
on
February 12, 2021) –
effective for fi
nancial
years beginning on or after January 1, 2023;
●
Amendments
to
IAS
12:
Deferred
T
ax
related
to
Assets
and Liabilities arising from a Single T
r
ansaction
(issued on
May
6,
2021)
–
not
yet
endorsed
by
EU
at
the
date
of
approv
al
of
these
financial
statements
–
effective
for
financial years beginning on or after 1 January 2023;
●
Amendments
to
IFRS
3:
Reference
t
o the Conceptual Fr
amework
(issued on May 14, 2020)
- effective for financial
years beginning on or after January 1, 2022;
●
Amendments to IAS 16:
Property
, Plant and Equipment – Pr
oceeds before Intended Use
(issued on May 14, 2020) –
effective for financial y
ears beginning on or after January 1, 2022;
●
Amendments
to
IAS
37:
Onerous
Contr
acts
–
Cost of Fulfilling a Contract
(issued on Ma
y 14, 2020) – effective for
financial years beginning on or after January 1, 2022;
●
Annual
Improvements
t
o
IFRS
Standards
2018–2020
(issued
on
14
May
2020)
–
effective
for
financial
years
beginning on or after 1 January 2022;
●
Amendments
to
IFRS
17
Insurance con
tracts: Initial Application of IFRS 17 and IFRS 9 – Compar
ative Information
(issued
on
9
December
2021)
-
not
yet
endorsed
by
EU
at
the
date
of
approval
of
these
financial
statements –
effective for financial y
ears beginning on or after 1 January 2023;
These
standards
and
amendments
are
not
expected
to
ha
ve
a
material
impact
on
the
Company
in
the
current
or
future
reporting periods and on foreseeable future tr
ansactions.
New International Financial Reporting Standards and Interpretations eff
ective for the first time for financial year 2021
During the year 2021, the following IFRS and amendments
to IFRS or interpretations entered int
o force:
●
Amendments to IFRS 16 Leases:
Co
vid-19-Related Rent Concessions
beyond 30 June 2021
●
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Inter
est Rate Benchmark Reform – Phase 2
●
Amendments to IFRS 4 Insur
ance Contracts – def
erral of IFRS19.
The
amendments
listed
above
did
not
have any impact on th
e amounts recognized in prior periods and are
not expected to
significantly affect the curr
ent or future periods.
4.
Significant accounting policies
The
accounting
policies
applied
by
the
Company
in
these
financial
statements
have
been
consistently
applied
by
the
Company and are consistent acr
oss the reported periods, unless indicated otherwise.
(a)
Foreign curr
ency transactions – transactions
and balances
T
ransactions
in
foreign
currencie
s
are
translated
to
USD (which is the functional curr
ency of the entity and the presentation
currency
of
these
financial
statements)
at
exchange
r
ates
effective
on
the
days
of
the
transactions.
Monetary
assets
and
liabilities
denominated
in
foreign
currencies
ar
e
translated
into
USD
at
the
applicable
closing
exchange
r
ates
as
of
the
balance
sheet
date.
The
foreign
exchange
r
ate
differences
arising
on
tr
anslation
of
transactions
denominated
in
foreign
currencies are r
ecognized in the profit or loss in the statement of compr
ehensive income.
Non-monetary
assets
and
liabilities
that
are
measured
at
historical
cost
in
foreign
currency
are
tr
anslated
using
the
exchange
rat
e
at
the
date
of the transaction
Non-monetary assets and liabilities denominated in foreign curr
encies that are
stated
at fair value are tr
anslated at the exchange r
ates at the date the fair value was determined. T
ranslati
on differences on
assets and liabilities carried at fair value ar
e reported as par
t of the fair value gain or loss.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
17
(b)
Re
venue
The
Company’
s
revenue
is
generated
by
services
provided
to
the
other
entities
in
the
Group.
The
Company’
s
revenue
comprises
revenues
fr
om
adver
tisement
services,
game
design
development
services,
and
stewardship
activities.
In
addition, revenue for t
he year ended December 31, 2020 was generate
d from legal services.
Advertisement services
The
Company
purchases
certain
advertisement
ser
vices
from
third
parties
(mostly
Platform
providers such as F
acebook),
which
are
subsequently
recharged
t
o Huuuge Global Ltd. The Company’
s management has determined that in its r
elation to
the
platforms
the
Company
acts
as
an
agent
on
behalf
of
Huuuge
Global
Ltd.
Further information on the judgment in this
respect
is
presented
in
Note
2
Basis
for
prepar
ation
of
the
financial
statements,
point
(d)
Key
judgements
and estimates –
Model for revenue r
ecognition.
The Company’
s management identified one performance obligation which is adv
er
tisement services in gaming applications.
Revenue is recogniz
ed over time, in the period in which services are pr
ovided.
Game design development services, legal services and stewards
hip activities
Under
each
of
these
revenue
str
eams,
The
Company’
s
management
identified
one
performance
obligation.
Revenue
is
recognized
ov
er
time,
in
the
period
in
which
ser
vices
are
pr
ovided.
For
game
design
development
services, legal services
and
stewardship
activities.
the
Company
has
a
right
to
consider
ation in an amount that corresponds directly with the v
alue
to the customer of the entit
y’
s performance completed to date.
Management
assesses
that
the
Company
does
not
have
any
contracts
where
the
period
between
the
tr
ansfer
of
the
promised
goods
or
services
and
payment
exceeds
one
year
.
As
a
consequence,
the
Company
does
not
adjust
any
of
the
transaction
prices
for
the
time
value
of money
. A receivable is recognized wh
en the consideration is unconditional because
only the passage of time is requir
ed before the payment is due.
In
relation
to
these
services,
the
Company’
s
management
has
determined
that
the
Company
acts
as
the
principal
as
it
controls
the
specified
good
or
ser
vice
before
it
is
transferr
ed
to
the
customer
.
In
such
circumstances,
the
Company
recognizes
re
venue
in
the
amount
of
gross
remuner
ation
to
which
it
expects
to
be
entitled
in
exchange
for
the
goods
or
services transferr
ed.
(c)
Income tax
Income
tax
expense
comprises
current and deferr
ed tax. Current tax and deferr
ed tax are recognized in pr
ofit or loss except
to
the
extent
that
it
relates
to
a
business
combination,
or
items
are r
ecognized directly in equity or in other compr
ehensive
income.
Current
tax
is
the
expected
tax
payable
or
receiv
able
on
the
taxable
income
or
loss for the year
, using tax rates en
acted or
substantively enacted at the reporting date, and any adjustment to tax
payable in respect of pre
vious years.
Deferred
tax
is
recogniz
ed
in
respect
of
temporary
differences
arising
between
the
tax
bases
of
assets
and
liabilities and
their
carrying
amounts
in
the
financial
statements.
Deferred
tax
is
not
recognized
for
tempor
ary differences arising on the
initial
recognition
of
assets
and
liabilities
in
a
transaction
that
is
not
a
business
combination
and
that
affects
neither
accounting
nor
taxable
profit
or
loss.
Deferred
tax
liabilities
and
assets
are
not
recognized
for
tempor
ary
differences
between
the
carrying
amount
and
tax
bases
of investments in subsidiaries where the company is able t
o control the timing
of
the
reversal
of
the
tempor
ary
differences
and it is probable that the diff
erences will not reverse in t
he foreseeable future.
In
addition,
deferred
tax
is
not
recogniz
ed
for
taxable
temporary
differences
arising
on
the
initial
recognition
of
goodwill.
Deferred
tax
is
measured
at
the
tax
r
ates
that
are
expected
to
be
applied
to
the
tempora
ry
differences
when they revers
e,
based
on
the
laws
that
have been enacted or substantively enacted b
y the reporting date. Deferred tax assets and liabilities
are
offset
if
there
is
a
legally
enforceable
right
to
offset
curr
ent
tax
assets
and
liabilities,
and
they
relate
to
income taxes
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
18
levied
by
the
same
tax
authority
on
the
same
taxable
entity
,
or
on
different tax entities, but the
y intend to settle current tax
liabilities and assets on a net basis or their tax assets and liabilities will b
e realized simultaneously
.
A
deferred tax asset is r
ecognized for unused tax losses, tax credits and deduct
ible temporary differences, t
o the extent that
it is probable that future taxa
ble profits will be available against which the
y can be utilized.
Deferred
tax
assets
are
r
eviewed
at
each
reporting
date
and
are
reduced
to
the
extent
it
is
no
longer
probable
that
the
related tax benefit will be reali
zed.
(d)
Shar
es in subsidiaries, associates and joint ventures
Shares
in
subsidiaries,
associates and joint ventur
es not classified as held for sale in accordance with IFRS 5, ar
e measured
at
historical
cost
in
accordance
with
IAS
27
reduced
by
impairment
losses,
if
any
arise
in
accordance
with
IAS
36.
The
impairment
test
is
carried
out
if there are any indications of impairment
. The amount of the impairment loss is assessed by
comparing
the
carrying
amount
to
the
higher
of
fair
value
less
costs
to
sell
and
value
in
use.
Usually
transactio
n
costs
related to acquisition of shar
es in subsidiaries increase the costs (the carrying amount) of the inves
tment.
Subsidiaries are entities contr
olled by the Company
.
The Company controls an entity when it:
●
has power to direct the r
elevant activities of the investees that signifi
cantly affect their returns,
●
has exposure, or rights, to v
ariable returns from its involv
ement with the investees,
●
has the ability to use its power ov
er the investees to affect the
amount of the investor’
s returns.
The
Company
verifies
if
it
has
control
over
entities,
if
an
event
r
esults
in a change to one or more of the contr
ol conditions
listed above.
An
associate
is
an
entity
over
which the Company has significant influence. Significant influ
ence is the power to participate
in
the
financial
and
operating
policy
decisions
of
the
investee,
but
is
not
control
or
joint
contr
ol
over
those
policies.
The
Company does not have any associate.
(e)
Financial instruments
The
Company
recognizes
the
non-derivative
financial
instruments
such
as
other
long-term
financial
assets
(mostly
long-term
deposits),
trade
and
other
receiv
ables,
cash
and cash equivalents (including investments in mutual funds), loans
and borrowings, and tr
ade and other payables.
At
initial
recognition, the Company measur
es a financial asset at its fair value plus, in the case of a financial asset not a
t fair
value
through
profit
or
loss
(“FVPL
”),
tr
ansaction
costs
that
are directly attributable to the acquisit
ion of the financial asset.
T
ransaction costs of financial assets carried at FVP
L are expensed in profit or loss.
The
Company
classifies
its
financial
assets
to
the
measurement
category:
debt
instruments
to
be
measured
at amortized
cost.
The
classification
depends on the entity’
s business model for managing the financial asset
s and the contractual terms
of
the
cash
flows.
Assets
that
are
held
for
collection
of
contractual
cash
flows,
where
those
cash
flows
re
present
solely
payments
of
principal
and
interest
(“SPPI
test”),
are
measur
ed
at
amor
tized
cost.
Inter
est
income
from
these
financial
assets
is
included
in
finance
income
using
the
effective
interest
r
ate
method.
Any
gain
or
loss
arising
on
derecognition is
recognized dir
ectly in profit or loss.
Management
assesses
the
Company
’
s
expected
credit
losses
(“ECLs”)
associated
with
debt
instruments
measured
at
amortized
cost,
regardless
of
whether
or
not there has been any indication of impairment. Please
refer t
o Note 4
Significant
accounting policies
, point (g)
Impairment, (i) Financial assets
below
.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
19
(f)
Leases
Management
assesses
at
the
time of entering into a contr
act whether the contract is a lease or conta
ins a lease. A contract
is
a
lease
or
contains
a
lease
if
it
conveys
the
right
to
control
the
usage
of
an
identifiable
asset
for
a
given
period
in
exchange for consider
ation.
The
Company
applies
a
uniform
approach
to
the
recognition
and
measurement
of
all
lease
agreements
except
for
short-term
leases
and
low
value
asset
leases.
On
the
commencement
date
of
a
lease,
the
Company
recognizes
a
right-of-use asset and a lease liability
.
Right-of-use assets
The
Company
recognizes
right-of-use
assets
on
the
date
of commencing a lease i.e. at the date at w
hich the leased assets
are
available
for
use
by
the
Company
.
The
right-of-use
assets
are
presented
in
a separate line in the statement of financial
position.
The
Company
does
not
have
any
right-of-use
assets
that
meet
the
definition
of investment property which would
be presented in statement of financial position in a
separate line as “investment pr
oper
ty”.
Right-of-use assets are measur
ed initially at cost comprising the following:
●
the amount of the initial measurement of the lease
liability
,
●
any lease payments made at or befor
e the commencement date less any lease incentives receiv
ed,
●
any initial direct costs,
●
restor
ation costs.
Subsequently
, the right-of-use assets ar
e measured at cost less accumulated depreciation and any accu
mulated impairment
losses and adjusted for remeasur
ement of the lease liability due to reassessment or lease mo
difications.
The
right-of-use
assets
are
depreciated
ov
er
the shor
ter of the asset’
s useful life and the lease term on a straight-line basis.
The amortization periods for the right-of-use assets are as follows:
right of use for vehicles
3 years
right of use for offices
1 – 5 years
Lease liabilities
At
the
commencement
date
lease
liabilities
are
measured
at
an
amount
equal
to
the
pr
esent
value
of
the
following
lease
payments for the underlying right-of-use assets during t
he lease term:
●
fixed payments (including in subs
tance fixed payments), less any lease incentives r
eceivable,
●
variable lease payments that ar
e based on an index or a rate,
●
amounts expected to be pay
able by the entity under residual value guar
antees,
●
the
exercise
price
of
a
purchase
option
if
the
Company’
s
management
is
reasonably
cer
tain
to
exer
cise
that
option,
●
payments of penalties for terminating the lease, if the le
ase term reflects the Company would exer
cise that option.
The
lease
payments
are
discounted
using
the
interest
r
ate implicit in the lease, if that rate can be
readily determined, or the
Company’
s incremental borr
owing rate.
Each
lease
payment
is
allocated
between
the liability and finance cost. The finance cost is char
ged to profit or loss ov
er the
lease
period
so
as
to
produce
a
constant
periodic
rate
of
inter
est
on
the
remaining
balance
of the liability for each period.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
20
The
carrying
amount
of
liability
is
remeasured to reflect a
ny reassessment, lease modification or revised in
-substance fixed
payments.
The
lease
term
includes
the
non-cancellable
period
of
a
lease
plus
periods
covered
by
options
to extend and/o
r terminate
the lease if it is reasonably certain that the lease will be extended or terminated.
The
Company
applies
the
exemptions
for
short-term
leases
and
leases
of
low-value
assets.
Payments
associated
with all
short-term leases, i.e. with lease terms of 12 months or less, and certain leases of low-value assets, for which the underlying
value
is
settled
at
USD 5 thousand or less, are r
ecognized on a straight-line basis o
ver the lease term as an expense in profit
or loss.
(g)
Impairment
(i)
Financial assets
Management
assesses
the
Company’
s
ECLs
associated
with
debt
instruments
measured
at
amortized
cost, regardless of
whether or not there has been any indication of imp
airment.
For
trade
r
eceivables, the Company applies a simplified approach an
d measures a loss allowance for expected credit losses
at
the
amount
equal
to
the
expected
credit
losses
over
the
instrument'
s
lifetime.
The
Company
uses
its
hist
orical
data on
credit losses, adjusted on an as-needed basis for th
e impact of forward-looking statements.
For
other
financial
assets
the
Company
applies
a
three-stage
model
for
impairment,
based
on
changes
in
credit
quality
since
initial
recognition.
A
financial
instrument
that
is
not
credit-impair
ed
on
initial
recognition
is
classified
in
Stage
1.
Financial
assets
in
Stage
1
have
their
ECL
measured
at
an
amount
equal
to
the
portion
of
lifetime
ECL
that
results
from
default
events
possible
within
the next 12 months or until contr
actual maturity
, if shorter (“12Months ECL
”). If the Company
identifies
a
significant
increase
in
credit risk (“SICR”) since initial r
ecognition, the asset is transf
erred to Stage 2 and its ECL
is
measured based on ECL on a lif
etime basis, that is, up until contractual maturity but consider
ing expected prepayments, if
any
(“Lifetime
ECL
”).
The
financial
assets
with
objective
evidence
of
impairment
are
classified
t
o
Stage
3;
for such assets
lifetime ECL is recogniz
ed.
(ii)
Non-financial assets
The
carrying
amounts of the Company’
s non-financial assets, other than invent
ories and deferred tax assets, ar
e reviewed at
each
reporting
date
to
determine
whether
there
is
any
indication
of
impairment.
If
any
such
indication
exists,
or
annual
impairment testing for an asset is requir
ed, then the asset’
s recove
rable amount is estimated.
The
recover
able
amount
of
an
asset
or
cash-generating
unit
is
the
greater of its value in use
and its fair value less costs to
sell.
In assessing value in use, the estimated futur
e cash flows are discounted to their pr
esent value using a pre-tax discount
rate
that
reflects
curr
ent
market
assessments
of
the
time
value
of
money
and
the
risks
specific
to
the
asset.
F
or
the
purpose
of
impairment
testing,
assets
are
grouped
together
int
o
the
smallest
group
of
assets
that generates cash inflows
from
continuing
use
that
are
largely
independent
of
the
cash
inflows
of
other
assets
or
groups
of
assets
(the
“cash-
generating unit”).
An
impairment
loss
is
recognized
if
the
carrying
amount
of
an
asset
or
its
cash-generating
unit
exceeds
its
r
ecoverable
amount. Impairment losses are r
ecognized in profit or loss.
For
other
assets
impairment
losses
recognized
in
prior periods ar
e assessed at each reporting date for any indications that
the
loss
has
decreased
or
no
longer
exists.
An
impairment
loss
is
reversed
only
t
o
the
extent
that
the
asset’
s
carrying
amount
does
not
exceed
the
carrying
amount
that
would
have
been
determined,
net
of
depreciation
or
amortization,
if no
impairment loss had been recogniz
ed.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
21
At
the
end
of
each
reporting
period,
management assesses whether there is any indication that any Company’
s assets may
be
impaired.
Intangible
assets
with
indefinite
useful
lives
are
tested
for
impairment
annually
as
at
December
31
at
the
cash-generating unit le
vel, irrespective of whether ther
e is any indication of impairment.
As at December 31, 2021 and December 31, 2020 the Company had no in
tangible assets with an indefinite useful life.
(h)
Cash and cash equivalents
Cash
and
cash
equivalents
comprise
cash
balances,
call
deposits
and
highly
liquid
investments
(including
money
market
funds) with maturities at initial recognition of thr
ee months or less.
The
judgement
relating
to
the
classification
of
the
investments
in
money
mark
et
funds
as
“cash
and
cash
equivalents’
is
disclosed in Note 2
Basis for prepar
ation of the financial statements
, point (d)
Ke
y judgements and estimates – Money market
mutual funds
.
Cash
on
bank
accounts
and
investments
in
money
market
mutual
funds
meets
the
SPPI test and the business model test
"held
to
collect",
therefore
the
y
are
measured
at
amortized
cost
including
an
impairment
loss
determined
in
accordance
with the expected loss model described in Note 4
Significant accounting p
olicies
, point (g)
Impairment
, (i)
Financial assets
.
(i)
T
rade and other receivables
T
rade
receivables
ar
e
recognized
initially
at
the fair value which is equal t
o the nominal amount when the contract does not
contain
significant
financing.
Subsequently
,
they are carri
ed at amor
tized cost using the e
ffective interest method, less loss
allowance.
The
loss
allowance
is
determined
according to the accounting polic
y presented in Note 4
Significant accounting
policies,
point (g)
Impairment
(i)
Financial assets
.
Other
receivables
include
deposits
made
to
purchase
property
,
plant
and
equipment,
receivables
from
emplo
yees
and
receivables
from
the
state
budget.
Other
r
eceivables
that
are
not
financial
assets
as
at
the end of the reporting period are
measured at the amount due.
(j)
Tr
ade and other payables
These
amounts
represent
liabilities
for goods and services pr
ovided to the group prior t
o the end of the financial year which
are
unpaid.
T
rade
and
other
payables
ar
e
presented
as
current
liabilities
unless payment is not due within 12 mont
hs after
the
reporting
period.
They
are recognized initially at their fair v
alue and subsequently measured at amortized cost using the
effective inter
est method.
The
other
payables
comprise
employ
ees
related
liabilities,
tax
other
than
income
tax
liabilities,
and
accrued
expenses,
which are measured at the am
ount due.
(k)
Share capital and other components of the equity
Share capital is presented at t
he total nominal value of the register
ed shares of the Parent Company
.
As
of
December
31,
2021
all
ordinary
shares
and
2
preference s
hares (series A and B) are classified as equity
. Preferences
attributable to series A and B of pr
eference shares ar
e described in Note 18
Share capital
.
Incremental
costs
directly
attributable
to
the
issue
of
new
shares
are
presented
as
the
deduction
of
equity
,
i.e.
supplementary
capital.
Qualifying
transaction
costs
incurred
in
anticipation
of
an
issuance
of
equity
instruments
are
also
deducted
from
the
equity
,
i.e.
supplementary
capital.
If
the
equity
instruments are not subsequently issued, the tr
ansaction
costs are recogniz
ed as an expense.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
22
Any
excess of the fair value of consider
ation received o
ver the nominal value of shares issued is r
ecorded as share premium
in equity
, i.e. supplementary capital.
As
of
December
31,
2020,
and up to February 5, 2021, i.e. the date of the conv
ersion, the preference shar
es of series C were
classified
as
financial
liability
under
IAS
32
–
the
accounting
policy
for
those
preference
shares
is
pr
esented
in
Note
4
Significant
accounting
policies,
point
(l)
Series
C
Preference
Shares.
The
judgement
r
egarding
the
classification
of
the
prefer
ence
shares
as
debt
or
equity
instrument is disclosed in Note 2
Basis for prepar
ation of the financial statements,
point
(d)
Key
judgements
and
estimates
.
Details
regarding
the
conversion
are
disclosed
in
Note
20
Conversion
of
series
C
prefer
ence shares.
In
the
line
“T
reasury
shares”,
the
Company
presents
the
own
shares
repur
chased,
which
are
recognized
at
costs
and
are
deducted
from
equity
.
No
gain
or
loss
is
recognized
in
pr
ofit
or
loss
on
the
purchase,
sale,
issue
or
cancellation
of
the
Company
shares.
Any
difference
between
the
carrying
amount
and
the
consideration,
if
reissued,
is
recogn
ized
in
the
supplementary capital.
In
accordance
with
Delaware
Gener
al
Corporation
Law
,
the
Company
may
declare and pay dividends upon the shares of its
capital stock either:
1.
Out
of
its
surplus,
being
the
excess
of
its
net
assets
over
its
capital
(all
or
part
of
the
consideration
re
ceived
by the
corporation in ex
change for its capital stock, as determined by the Boar
d of Directors); or
2.
In
case
there
shall
be
no
such
surplus,
out
of its net profits for the fiscal year in which the
dividend is declared and/or
the preceding fiscal year
.
If
the
capital,
as
defined
above,
shall
have
been
diminished
by
depr
eciation
in
the
value
of
its
property
,
or
by
losses,
or
otherwise,
to
an
amount
less
than
the
aggregate
amount
of the capital represent
ed by the issued and outstanding stock of
all
classes
having
a
prefer
ence
upon
the
distribution of assets, the directors of such company shall not decla
re and pay out
of
such
net
profits
any
dividends
upon
any
shares
of
any
classes
of
its
capital
stock
until
the
deficiency
in
the amount of
capital
represented
by
the
issued
and
outstanding
sto
ck
of
all
classes
having
a
preference
upon the distribution of assets
shall have been rep
aired.
Employee
benefits
reserve
results
from
the
share-based
payment
arrangements
and
is
described
in
details
in
Note
4
Significant accounting policies
, (n)
Share-based pa
yment arrangements
and Note 19
Shar
e-based payment arrangements
.
(l)
Series C prefer
ence shares
As
of
December
31,
2020
and up to February 5, 2021 (i.e. the date of the conv
ersion) series C convertible preference shares
represented
a
financial
instrument,
which
was
classified
as
the
financial
liability
measure
d
at
fair
value
through
profit
or
loss.
The
judgement
regarding
the
classification
of
these
preference
shar
es
as
debt
is
disclosed
in
Note
2
Basis
for
prepar
ation of the financial statements,
point (d)
Key judgements and estima
tes.
On
issuance
of
the
preference
shar
es,
the
liability
was
measured
at
fair
value.
For
this
instrument
issued
in
2017,
the
fair
value
was
determined
to
equal
the
proceeds
fr
om
shares
issuance.
This
amount was classified as a financial liability as of
year-end
December
31,
2020,
measured
at
fair
value
through
profit
or
loss
until
it
was
extinguished
on
conversion
of
prefer
ence
shares.
The
liability
was
remeasured to fair v
alue reflecting the fair value of underlying or
dinary shares for which
series
C
shares
were
converted
on
February
5,
2021,
based
on
contractual
conversion
fact
or
.
Remeasurement
gains
and
losses
are
presented
in
profit
or
loss
(finance
income
or finance costs). F
ur
ther information on the fair v
alue measurement
of this liability is presented in Note 5
Determination
of the fair value.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
23
(m)
Interest-bearing loans and
borrowings
Borrowings
are
initially
recogniz
ed at fair value, net of transa
ction costs incurred. Borrowings are subs
equently measured at
amortized cost. Any difference between the pr
oceeds (net of transaction costs) and the r
edemption amount is recognized in
profit or loss over
the period of the borrowings using the effectiv
e interest method.
Borrowings
are
derecogniz
ed
when
the
obligation
specified
in
the
contract
is
discharged,
cancelled
or
expired.
The
difference
between
the
carrying amount of a financial liability that has
been extinguished or transf
erred to another party and
the
consideration
paid,
including
any
non-cash
assets
tr
ansferred
or
liabilities
assumed,
is
recogniz
ed
in
profit
or
loss
as
other income or finance costs.
Modifications
of
liabilities
that
do
not
result
in
derecognition
are accounted for as a
change in estimate using a cumulative
catch
up
method,
with
any
gain
or
loss
recognized
immediately
in
profit
or
loss,
unless
the
economic
substance
of
the
difference in carrying values
is attributed to a capital transaction wit
h owners.
Borrowings
are
classified
as
curre
nt
liabilities
unless
the
Company
has
an
unconditional
right
to
defer
settlement
of
the
liability for at least 12 months after the reporting period.
(n)
Share-based payment arr
angements
The
Company
runs
an
award progr
am where the employees and contr
actors are r
eceiving free options which entitle them to
purchase
the
shares
in
the
Company
.
Such progr
am is a share-based payment progr
am which is classified as equity settled
due
to
the
fact that the Company does not hav
e an obligation to settle the obligation arising under the prog
ram by delivering
cash to the employ
ees or contractors.
Equity-settled
share-based
payments
to
employees
of
the
Company
and
its
subsidiaries
and
others
providing
similar
services
are
measured
at
the fair value of the equity instruments at
the grant date. The gr
ant date fair value of the award
s is
determined using a share option pricing model.
Details
regarding
the
determination
of
the
fair
value
of
equity-settled
share-based
transactions
ar
e
set
out
in
Note
19
Share-based payment arr
angements
.
Options
with
the
same
grant
date
but
with
different
periods
during
which
all
the
specified
vesting
conditions
of
a
share-based
payment
arr
angement
are
to
be
satisfied
are
treate
d
as
a
separate
awards
with
a
different
v
esting
period
(staged vesting).
The
fair
value
determined
at
the
grant
date
of
the
equity-settled
shar
e-based
payments
is
expensed
(options
granted
to
employees
of
the
Company)
or
allocated
to
investments
in
subsidiaries
(options
gr
anted
to
employees
of
the
Company’
s
subsidiaries)
over the vesting perio
d, based on the Company’
s estimate of equity instruments that will eventually
vest, with a
corresponding
increase
in
equity
.
At
the
end
of
each
period
the
Company
revises
its
estimate
of
the
number
of
equity
instruments
expected
to
vest.
The
impact
of
the
revision
of
the
original
estimates,
if
any
,
is
recognized
in profit or
loss, or
investment
in
subsidiaries,
such
that
the
cumulative
expense
reflects
the
revised
estimate,
with
a
corresponding
adjustment to the equity-settled emplo
yee benefit reserve.
IFRS
2
Share-based
Payment
does
not
addr
ess
whether
an
increase
in
equity
recognized
in connection with a share-based
payment
transaction
should
be
presented
in
a
separate
component
within
equity
or
within
r
etained
earnings.
Such
an
increase is presented in emplo
yee benefit reserve.
The
amount recognized as an expense or
allocated to investment in subsidiari
es is adjusted to reflect the number of awar
ds
for
which
the
related
ser
vice
and
non-market
performance
conditions
are
expected
to
be
met,
such
that
the
amount
ultimately
recognized
is
based
on
the
number
of
awards
that
meet
the
related
service
and
non-market
performance
conditions at the vesting date.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
24
(o)
Employee benefits
(i)
Defined contribution plans – retir
ement benefits
The
Company
has
under
local
laws
obligations to pay retir
ement benefits, however
, as the average age of employ
ees is low
,
no provision has been r
ecorded due to its immaterial amount.
(ii)
Other employ
ee benefits
Short-term
employee
benefit obligations are measured on an undiscoun
ted basis and are expensed as the related service is
provided.
A
liability
is
recogniz
ed
for
the amount expected to be paid under short-term cash bonus or profit-sharing plans if
the
Company
has
a
present
legal
or
constructive
obligation
to
pay
this
amount
as
a
result
of
past service pro
vided by the
employee, and the obligation can be estim
ated reliably
.
(p)
Provisions
A
provision
is recogniz
ed when the Company
, as a result of a past ev
ent, has a present obligation (legal or constructive) that
can
be
estimated
reliably
and
it
is
probable
that
the
Company
will
be
requir
ed
to
settle
that
obligation
(an
outflow
of
economic
benefits
will
be
required). Pro
visions are measured at management’
s best estimate of the expenditure required t
o
settle the obligation at the end of the reporting period and are discounted t
o present value where the eff
ect is material.
(q)
Research and development expens
es
In
the position “Research and dev
elopment expenses”, the Company recognizes costs r
elated to game design of the existing
and the new games.
(r)
Finance income and expense
Finance income comprises interest income on fund
s invested and loans granted.
Interest income is recogniz
ed as it accrues in profit or loss, using the eff
ective interest method.
Finance
expenses
comprise
interest
expense
on
borrowings, leases and v
aluation of preferred shar
es series C classified as
non-current liabilities prior to
conversion on February 5, 2021.
Borrowing
costs
that
are
not
directly
attributabl
e
to
the
acquisition,
construction
or
production
of
a
qualifying
asset
are
recognized in pr
ofit or loss using the effective interest m
ethod.
Foreign
curre
ncy
gains
and
losses
are
reported
on
a
net
basis
as
either
finance
income
or
finance
cost
depending
on
whether
foreign
currency
mov
ements
are
in
a
net
gain
or
net
loss
position
unless material, where separate pr
esentation is
required.
5.
Determination of fair values
A
number
of
the
Company’
s
accounting
policies
and
disclosures
require
the
determination
of
fair
value,
for
both financial
and non-financial assets and liabilities.
For
assets
and
liabilities
that
are
recogniz
ed
in
the
financial
statements
at
fair
value
on
a
recurring
basis,
management
determines
whether
in
the
Company transf
ers have occurred between lev
els in the hierarchy b
y re-assessing categorization
(based
on
the
lowest
level
input
that
is
significant
to
the
fair
value
measurement
as
a
whole) at the end of each r
eporting
period.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
25
The
Company’
s
management
determines
the
policies
and
procedures
for
fair
v
alue
measurement.
External
valuers
are
involved
for valuation of significa
nt assets and significant liabilities. Selection criteria include market knowledge, r
eputation,
independence
and
whether
professional
standar
ds
are
maintained.
The
management
decides,
after
discussions
with
the
Company’
s external valuers, which va
luation techniques and inputs to use for each case.
At
each
reporting
date,
the
management
analyses
the
movements
in
the values of assets and liabilities which ar
e required
to
be
remeasured
or
r
e-assessed
as
per
the
Company’
s accounting policies. For this analysis, the management verifies th
e
major
inputs
applied
in
the
latest
valuation by agreeing the information i
n the valuation computation to contr
acts and other
relevant documents
.
Fair values ha
ve been determined for measurement and for disclosur
e purposes as explained below
.
(a)
Prefer
ence shares liability measured at fair value
through profit or loss
On
February
5,
2021 series C prefer
ence shares were converted into common shares. A
t the date of the conversion series C
prefer
ence
shares
liability
was
measured
to
fair
value
based
on
the
value
of
shares
established
for
the
Company'
s
initial
public
offering,
with
the
loss
recognized
in
pr
ofit
or
loss. For more information, please ref
er to Note 18
Share capital
and t
o
Note 20 C
onversion of series C pref
erence shares
.
Prior
to
conversion,
series
C
pref
erence
shares
liability
was
measured
at fair value initially and aft
er initial recognition with
the gains/loss on subsequent remeasur
ements being recognized in profit or
loss.
The
Company’
s
ordinary
shares
and
prefe
rence
shares
as
of
December 31, 2020 were not yet tr
aded on any public market.
Since
the prefer
ence shares had the right to dividends and the
y were convertible at any time, their fair value was determined
based on the fair value of the Company’
s ordinary shares on a non-marketable, minority
, per shar
e basis.
At
the
year-end
December
31,
2020,
no trans
actions took place in its shares (e.g. repur
chase of ordinary shares), the prices
of
which
could
be
used
by
the
Company
to
determine
the
fair
value
at
the
year-end
December
31,
2020.
In
this
case,
the
Company’
s
management
determined
the
fair
value
of
the
non-listed common shares of the Compan
y which were the basis
for
valuation
of
liability
resulting
from
issuance
of
series
C pref
erence shares using val
uation techniques,
in par
ticular
, the
Option-Pricing Method.
As
of
December
31,2020,
the
fair
value
measurements
of
series
C
prefer
ence
shares
were
classified
in
Level
3
of the fair
value
hierar
chy
.
The
significant
unobservable
inputs
used
in
the
fair
value measurements categorized within Le
vel 3 of the
fair
value hierar
chy as of December 31, 2020 were the following: EBI
TDA multiple, discount for lack of marketabil
ity
, revenue
multiple, discount rate, pr
obability of the initial public offering.
(b)
Tr
ade and other receivables measur
ed at amor
tized cost
For
trade
and
other
r
eceivables
and
deposits,
the
Company’
s
management
considers
their
carrying
amounts
be
the
best
estimates
of
fair
values,
due
to
the
short-term
nature
and
high
liquidity
of
these instruments. This fair value is determined
for disclosure purposes.
(c)
Non-derivative financial liabilities measured at amortized cost
For
trade
accounts p
ayable, the Company’
s management considers their carrying amounts t
o be the best estimation of their
respective
fair
values,
determined
for
disclosur
e
purposes,
due
to
the
shor
t
term
nature of these instrum
ents. Fair value of
non-derivative
financial
liabilities
other
than
tr
ade
accounts
payable,
is
calculated
based
on
the
present
value
of
future
principal
and
interest
cash
flows,
discounted
at
the
market
r
ate
of
interest
at
the
reporting
date.
For
lease
liabilities,
an
interest
rate
implicit
in
the
lease
is
used,
if that r
ate can be readily determined; if that r
ate cannot be readily determined, the
lessee'
s incremental borrowing
rate is used.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
26
As
of December 31, 2021 and December 31, 2020 the Company does not classify
any assets or liabilities to be subsequently
measured
at
fair value excep
t for the preference shar
es (prior to its conversion on February 5, 2021) as indicated
in point (a)
above.
6.
Revenue
The
Company’
s
revenue
is
generated
by
services
rendered
to
the
other
entities
in
the
Group.
The
Company’
s
revenue
comprises
revenues
from
facilitating
the
advertisement
services
on
behalf
of
Huuuge
Global
Ltd.
and
delivering
game
design
development
services,
legal
services
and
stewardship
activities.
The
Company
as an agent presents r
evenues from
advertisement
services
in
net
amounts,
for
fur
ther
details
on
the
judgement
please
refer
to Note 2
Basis for pr
eparation of
the
financial
statements
,
point
(d)
Key
judgements
and
estimates
.
In
the
y
ear
ended
December
31,
2021
the
Company’
s
revenues
amounted
t
o
USD
3,824
thousand
(USD
2,681
thousand
from
game
design
services,
USD
820
thousand
from
stewardship
services
and
USD
323
thousand
from
legal
services),
and
in
the
year
ended
December
31, 2020, – USD 2,817
thousand (USD 1,673 thousand from game design
services and USD 1,144 thousand from legal services).
7.
Segment information
The
Company
uses
the
exemption
with
respect
to
the
disclosur
es
of
segment
information
in
accordance
with
IFRS
8.4,
therefore, the analysis of the C
ompany's oper
ating segments has been presented in the consolidated finan
cial statements of
the Group
.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
27
8.
Operating expe
nses
For the years ended December 31,
2021 and December 31, 2020 operating expenses include:
Expenses by nature
Y
ear ended
December 31, 2021
Y
ear ended
December 31, 2020
Salaries and employee-r
elated costs including:
2,957
2,215
- Share-based payment expense
565
180
- Other employee-re
lated costs
189
92
- Social security contributions
73
75
- Salaries
2,130
1,868
Finance & legal services
3,385
2,407
Legal services related to acquisition of shar
es in subsidiaries
-
234
Legal
services
incurred
in
anticipation
of
the Company’
s initial
public offering
-
1,788
Property maintenance and external services
161
67
Other costs
226
80
T
otal operating expenses
6,729
6,791
9.
Other operatin
g income and expense
Y
ear ended
December 31, 2021
Y
ear ended
December 31, 2020
Compensation for court case received
6,500
Other operating income/(ex
pense) net
(80)
36
T
otal other operating income/(ex
pense) net
(80)
6,536
For
more
information
related
t
o
recognition
of
court
case
provision
and compensation for court case received please refer
to Note 2
Basis for prepar
ation of the financial statements,
point (d)
K
ey judgements and estimates.
10.
Finance expense
Finance expense
Finance
expenses
include
mainly
valuation
of
pref
erred
shares
from
series
C
classified
as
non-current
liabilities
prior
t
o
conversion
on
February
5,
2021
(for more information please r
efer to Note 20
Conversion of
series C prefer
ence shares
) and
net foreign exchange losses.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
28
Y
ear ended
December 31, 2021
Y
ear ended
December 31, 2020
Valuation of pr
eferred shares classifi
ed as non-current liabilities
38,997
127,768
Loss on foreign exchange fo
rward contract
2,662
-
Finance expense recognized on r
epurchase of series C pref
erence
shares
-
481
Foreign ex
change losses, net
540
22
Other
6
38
T
otal finance expense
42,205
128,309
Prior
to
the
initial
public
offering,
the
Company
had
entered
int
o
foreign
exchange
forward
contract
contingen
t
upon
the
event
of
initial
public
offering.
Upon
the occurr
ence of the initial public offering event, the Compa
ny received proceeds from
the
newly
issued
shares
converted
to
USD
at
a
fixed
PLN/USD
exchange
rate,
as
determined
in
the
forward
contr
act.
The
Company’
s
policy
choice
is
to
present
the
profit
or
loss
on
forward
contr
acts
as
finance
income
or
expense
accordingly
.
Loss
of
USD
2,662
thousand
was
incurred
on
the forward contract settl
ement date, presented in the line “Finance expense”
in the statement of comprehensive in
come.
11.
Income tax
As of
December 31, 2021
As of
December 31, 2020
Deferred tax assets
92
132
Deferred tax liabilities
44
160
Net deferred tax asset/(
liability)
48
(28)
Y
ear ended
December 31, 2021
Y
ear ended
December 31, 2020
Current income tax
-
-
Adjustments
in
respect
of
current
income
tax
of
prev
ious
year
150
Change in deferred inco
me tax
(77)
96
Income tax for the period
73
96
The
tax
on
the
Company’
s
profit
before
tax
differs
fro
m
the theoretical amount that would arise using the statutory tax r
ate
applied to its profit as follow
s:
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
29
Effective t
ax rate reconciliation
Y
ear ended
December 31, 2021
Y
ear ended
December 31, 2020
Profit/(loss) before income t
ax
(45,133)
(125,581)
Statutory tax rate in the U
nited States
21%
21%
Theoretical
tax
expense/(benefit)
according
to
current
tax
rate
in
the United States
(9,478)
(26,372)
T
ax impact of non-taxable re
venues
-
-
T
ax impact of non-deductible costs – ESOP
119
38
T
ax impact of non-deductible costs – series C shar
es valuation
8,189
26,831
GIL
TI* income net of FDII** deduction, net of foreig
n tax credit
1,234
-
T
ax
impact
of
non-deductible
costs
–
provision
for
Washington
court case
-
(1,365)
T
ax impact of non-deductible costs – other
(141)
370
Non-deductible withholding tax
-
2
T
emporary differ
ences with no deferred tax r
ecognized
-
592
Correction of the current tax r
elating to previous y
ears
150
-
T
ax charge
73
96
Effective t
ax rate
(0.2%)
(0.1%)
* GIL
TI - Global Intangible Low-T
axed Income
** FDII - Foreign-Deriv
ed Intangible Income
This
is
a
reconciling
item
since
the
Company
cannot
recognize
tax
benefit
on
the
tax
loss
due
to
the
foreign-derived
intangible income.
Deferred tax r
econciliation
Deferred tax assets
As of
December 31, 2021
As of
December 31, 2020
Accrued expenses
62
86
Lease liabilities
30
46
Deferred tax assets
92
132
Compensation with deferr
ed tax liabilities
(44)
(132)
Deferred
tax
asset
presented
in
the
statement
of
financial
position
48
-
Deferred tax assets ar
e expected to be recov
ered within 12 months from the r
epor
ting date.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
30
Deferred tax liabilities
As of
December 31, 2021
As of
December 31, 2020
T
angible assets
15
8
Right of use assets
29
44
Other differences
-
108
Deferred tax liabilities
44
160
Compensation with deferr
ed tax assets
(44)
(132)
Deferred tax liability pr
esented in the statement of financial
position
-
28
Deferred tax liabilities ex
pected to be settled within 12 months from the r
epor
ting date.
Y
ear ended
December 31, 2021
Y
ear ended
December 31, 2020
Net deferred tax assets/
(liabilities) at the beginning of the
period
(28)
68
Net deferred tax assets/
(liabilities) at the end of the period
48
(28)
Deferred tax in the net p
rofit for the period
(76)
96
As
of
December
31,
2020
the
Company
has
incurred
tax
loss,
unrecogniz
ed
in
statements
of
comprehensive
income
deferred tax r
elated to the loss amounts USD 592 thousand.
As
of
December 31, 2021 there was no unused tax losses for which
no deferred tax would be
recognized in the statement of
financial position.
12.
Investment in subsidiaries
As of
December 31, 2021
As of
December 31, 2020
Investment in subsidiaries:
Huuuge Games Sp. z o.o.
2,326
2,326
Huuuge Global Ltd
3,593
6
Huuuge Digital Ltd
-
-
Huuuge T
ap T
ap Games Ltd
1
1
Playable Platform B.V
.
1,826
1,588
Double Star Oy
-
2,143
Huuuge UK
345
-
Impairment
-
-
Options
granted
to
emplo
yees
of
the
Company’
s
subsidiaries
under
stock
option
pr
ogram
(described
in
the
Note
19
Share-based payment arr
angements
)
18,765
7,569
T
otal
26,856
13,633
On
July
1,
2021
new
entity
Huuuge
UK Ltd. (incorporated in United Kingdom) was esta
blished. 100% of shares of this entity
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
31
were
taken
up
by
Huuuge
Inc.
The
entity
was
established
with
a
share
capital
amounting
to
GBP
250
thousand.
The
new
entity was established in United Kingdom for the purposes of extension o
f international presence of the Group.
Increase
in
the investments in Play
able Platform B.V
. is due to the additional capital injection during period ended December
31,
2021
in
the
amount
of
USD
238
thousand.
The
difference
between
the
consider
ation
paid
for
the
acquisition
of
the
shares
of
Playable
Platform B.V
. presented in the statement of cash-flow for
the period ended December 31, 2020 in the line
“Purchase
of
shares
in
subsidiaries”
and
the
carrying
value
of
the
investments
in
this
subsidiary
is
due
to
the
fact
that
payments for the tr
ansaction were partially settled in the form of equity consideration.
Increase
in
the
investments
in
Double
Star
Oy
(before
tr
ansfer
to
Huuuge
Global
Ltd.)
is
due
to the capital injection during
period
ended
December
31,
2021,
earn-out
consideration
paid
in
cash
in
the
amount
of
USD
426
thousand
and
due to the
deferred
payme
nt
in
the
total
amount
of
USD
1,000
thousand (paid in January 2021) subject to the continuing employment
claw
back
condition
for
the sellers of Double Star Oy
, which is recogniz
ed as an increase of the investment on a str
aight-line
basis throughout the period of one y
ear after the acquisition date.
On
December
31,
2021,
investment
in
Double
Star
Oy
was
transferr
ed
to
Huuuge
Global Ltd.
On December 31, 2021 share
capital
of
Huuuge
Global Ltd. was increased by 1000 or
dinary shares with the nominal value of USD 1.13 USD per shar
e (not
in
thousand)
and
the
share
premium
of
USD
3,804.87
per
share
(not
in
thousand).
The
new shares issued wer
e allotted to
Huuuge
Inc.
The
consideration
for
the
newly
issued
shares
in
the
amount
of
USD 3,806 thousand was r
eceived by Huuuge
Global
Ltd.
in
the
form
of
all
of
the
investment
made
from
Huuuge
Inc
to
Double
Star
Oy
,
incorpor
ated
under
the
Laws
Finland
with its registered office in Hel
sinki, Itamerentori 2, 00180, Helsinki, Finland with r
egistration number 75919524. As a
result
of
this
transaction,
Huuuge Globa
l Ltd. is 100% owned and controlled by Huuuge Inc, and Huuuge Global Lt
d. is a sole
shareholder
of
Double
Star
Oy.Th
e
transaction
has
not
impacted
on
both
Huuuge
Inc.
financial
result
and
equity
,
i.e.
carrying
amount
of
investment
in
Double Star Oy in the amount of USD 3,806 thousand was tr
ansferred to the in
vestment in
Huuuge Global Ltd.
As
at December 31, 2021 and December 31, 2020 there was
no impairment of the investment in subsidiaries r
ecognized due
to
the
lack
of
the
impairment
indicators.
When
re
viewing
the
indicators
of
impairment,
the
Company’
s
management
has
considered the following fact
ors:
●
external
sources,
such as: observable indications that the assets’ v
alue has declined significantly more that would
be
expected;
significant
changes
with
an
adverse
effect
in
the
technological,
market,
economic
or
legal
environment; market capita
lization;
●
internal
sources,
such
as:
evidence
of
obsolescence
or
physical
damage
of
the
assets;
evidence
that
economic
performance
of
the
assets
is
or
will
be
worse
than
expected;
plans
to
discontinue
or
restructure
the
operation,
plans to dispose the assets befor
e than previously expected.
13.
Loans granted
Loans granted t
o Huuuge Digital Ltd.
In
2018,
the
Company
granted
four
loans
to
Huuuge
Digital
Ltd.
at the total
amount of USD 800 thousand with interest r
ate
of
5%.
Purpose
of
the
loan
granted
was
to
finance
curr
ent
operational
activities
of
Huuuge
Digital
Ltd.
The
loans
were
granted
on
market
condit
ions
with
payment
term
of
270
days
from
date
of
transf
er
of
the
relevant
tranche.
In
2020,
the
Company
granted
Huuuge
Digital
Ltd
a
loan
of
USD
600
thousand
with
an
interest
r
ate
of
2%
with
maturity
of
5 years. On
December 31, 2020 the balance of loans amounted t
o USD 1,487 thousand.
The
principal
of
the
loans in amount of USD 1,400 thousand and due interests in amo
unt of USD 128 thousand were paid on
December 29, 2021.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
32
14.
Financial risk management
(a)
Introduction
Risk
management
performed
by
the
Company
is
aimed
at
reducing
the
impact
of
adverse
factors
on
the
financial
statements.
This
note
presents
information
about
the
Company’
s
exposure
to
specific
risks
arising
from
financial
instruments as well as the Company’
s objectives aimed
at maintaining effective process for risk ma
nagement.
The Company is exposed in particular to the following risks arising from financial ins
truments:
●
credit risk,
●
liquidity risk,
●
market risk.
Risk management framework
The
Board
of
Directors
has
o
verall
responsibility
for
the
establishment
and
ov
ersight
of
the
Company’
s
risk
management
framework.
The
Boar
d
of
Directors
continually
identifies,
evaluates
and
manages
the
risks
faced
by
the
Company
,
sets
appropriate risk limits and contr
ols and monitors risks.
The
Company’
s
management
monitors
financial
risks
regarding
the
Group
as
a
whole
for
the
purpose
of
making
risk
management related decisions.
(b)
Credit risk
Credit risk relating t
o cash and cash equivalents
The
Company
is
exposed
to
credit
risks
mainly
with
regard
t
o
cash
and
cash
equivalents,
that
include
bank
deposits
and
investments
in
money
market
funds,
which
could
arise
if
a
counterparty
becomes
insolvent
and
accordingly
is
unable
to
return
the
deposited
funds
or
execute
the
obligations
as
a
result
of
the
insolvency
. To mitigate this
risk, wherever possible
the Company’
s management conducts tr
ansactions and deposits funds with investment gr
ade rated financial institutions, as
well
as
monitors
and
limits
the
concentration
of
tr
ansactions
with
any
single
party.
The
Company’
s
management
uses
Moody’
s credit r
atings. The information about the cr
edit risk rating gr
ades is presented in the table below
.
Moody'
s Rating
As of
December 31, 2021
As of
December 31, 2020
Aaa
105
3,635
Aa3
-
3,649
A3
106,225
-
T
otal cash and cash equivalents
106,330
7,284
Cash
and
cash
equivalents
(investments
in
money
market
mutual
funds)
ar
e
kept
in
financial
institutions with Aaa and A3
rating only
, which are investment ratings accor
ding to Moody’
s.
Cash
and
cash
equivalents
are
kept
at
a
limited
number
of
major
financial
institutions.
The
Company’
s
management
monitors
the
creditworthiness
of
the
institutions
and
mitigates
concentration
risk
by
not
limiting
the
exposure
t
o
a
single
counter party
, nevertheless at each reporting date there is a significant concentration of the cr
edit risk.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
33
As
at
December
31,
2021,
the
concentration
of
funds
in
two
financial
institutions
was
respectively 85.6% and
14.4%. As at
December
31,
2020,
the
largest
concentration
of
funds
in
two
financial
institutions
was
respec
tively 49.9% and 49.9% with
the remaining funds not being concentr
ated more than 0.2% in a single financial institution.
T
otal
gross
carrying
amounts of cash and cash equivalents as of Decembe
r 31, 2021 and December 31, 2020 were included
in
Stage
1,
based
on assessment that credit risk has not increas
ed significantly since initial recognition. For financial assets
in
Stage
1,
the
Company
recognizes
12
month
ECL
and
recogniz
es
interest
income
on
a
gross
basis
–
interest
will
be
calculated on the gross carrying amount of the financial asset befor
e adjusting for ECL.
Management
has
assessed
that
the
Company’
s
provision
for
expected
credit
losses
r
elated
to
cash
and
cash equivalents
would not be material in any of the periods presente
d.
The carrying amount of cash and cash equivalents balance r
epresents the maximum credit exposur
e.
Credit risk with respect t
o trade receiv
ables and other receivables
The
carrying
amount
of trade receiv
ables represents the maximum credit expo
sure. The maximum exposure to cr
edit risk at
the reporting dates was as follows:
Carrying amount
As of
December 31, 2021
As of
December 31, 2020
T
rade receiv
ables from third parties
-
-
T
rade receiv
ables from related parties
3,893
15,071
T
otal
3,893
15,071
The
Company
has
trade
receiv
ables
only
from
one
related
party – Huuuge Global Ltd. Tr
ansactions with related parties are
described in Note 26
Related party transactions
.
Allowance for expected credit losses
The
Company
recognizes
allowance
for
expected
credit
losses
accor
ding
to
IFRS
9
Financial
Instruments,
considering
all
reasonable and supportive information (e.g. customer r
ating, historical reco
verability).
The
Company
has
trade
receiv
ables
only
from
its
related
party for each period presented therefore,
the Company does not
apply
the
portfolio
approach,
and
instead performs the analysis on the individual basis. T
aking into account that Company’
s
trade
receiv
ables
are only from one related party and there wer
e no issues with historical recov
erability
, the related expecte
d
credit losses had been assessed as immaterial.
There
are
no
trade
receivables
which
are
overdue
more
than
90
days
or
individually
identified
as
impaired,
nor
any
receivables fr
om loans granted.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
34
(d)
Market risk
Market
risk
is
the
risk
that changes in market prices, such as for
eign exchange rates, inte
rest rates and equity prices ma
y affect
the
Company’
s
income
or
the
value
of
the
financial
instruments
held.
The
objective
of
market
risk
management
is
to manage
and
control
market
risk
exposure
s
within
acceptable
parameters,
while
optimizing
the
return.
The
Company
does
not
apply
hedge
accounting
in
order
to
manage
volatility
in
pr
ofit
or
loss
and
so
far
neither
has
entered
into
derivatives
nor
incurred
external financial liabilities.
(i)
Currency risk
Management
of
the
Company
has
analyzed
currency
risk
related
t
o variability of exchange r
ates and did not identify significant
balances
of
accounts
denominated
in
foreign
currencies (cash and cash equiv
alents, trade receiv
ables and trade pay
ables) and
transactions carried in for
eign currencies which would be associated with a significant curr
ency risk for the Company
.
(ii)
Interest rate risk
As
the Company has not entered in bank loan agr
eements in all presented periods till December 31, 2021, the inter
est rate risk is
marginal.
The
Company
does not have any significant inter
est bearing liabilities at variable ra
te which would exposure the Company to the
cash flow risk.
The
Company’
s
interest
bearing
assets
are
cash
and
cash
equivalents.
The
cash
at
banks
is
on
current
account
at
v
ariable
interest
rate.
The
inv
estments
in
money
market
funds
are
at
variable
interest
r
ate.
The
interest
bearing
assets
at variable rat
e
expose the Company to cash flow risk.
T
aking
into
account
the
level
of
the
inter
est
rates
on
the
bank
accounts
and
on
the
short
term
investments
in
money
market
funds
(i.e.
interest
income gener
ated in 2021 amounts to USD 53 thousand, in 2020: USD 166 thousand) the Compan
y’
s profit or
loss is not sensitive to r
easonably possible changes in interest r
ates therefore the detailed sensitivity analysis is not pr
esented.
(e)
Capital management
The
Board
of
Directors
manages
the
Company’
s
capital
structure
and
makes
adjustments
in
light
of
changes
in
economic
conditions.
The
Board’
s
of
Direct
ors
policy
is
to
maintain
a
strong
capital
base
so
as
to
maintain
investors’ and mark
et confidence and to
sustain
future
development
of
the
business.
The
Company’
s
management
seeks
to
maintain
a
sufficient
capital
base
for
meeting
the
Company’
s
operational
and
str
ategic
needs,
with
the
objective
to
safeguar
d
the
ability
to
continue
as
a
going
concern
and
optimize
the
capital
structure
in
order
t
o
reduce
the
cost
of
capital
and
maximize
the
return
on
capital
to
the
shareholders.
The amount of capital maintained in each reporting period (see table below) met management’
s objectives.
The
capital
managed
by
the
Company’
s
management
includes
equity
and
prefer
ence shares series C, classified as non-current
financial
liabilities
as
of
December
31,
2020
and
further
converted
on
February
5,
2021.
As
such,
managed capital consists of
ordinary
shares,
preference
shares
of
series
A
and
B,
as
well
as
repurchased
own
shares
and
options
as
of
year-ended
December
31,
2021.
For
the
amounts
please
refer
t
o
respective
Note
18
Share capital,
of these financial statements. Ther
e are
no externally imposed capital management requir
ements (such as covenants or similar).
The
Company’
s
management
monitors
the
return
on
capital
on
the
basis
of
the
basic
and
diluted
earnings
per
share
r
atios.
Further
information
on
calculation
of
earnings
per
share
rations
is
presented
in
the Group
’
s consolidated financial statements.
The objective of the Management is t
o maximize the return on capital to the shar
eholders.
HUUUGE INC.
Financial statements as of and for the year ended December 31, 2020
(all amounts in tables presented in thousand USD
, except where stated otherwise)
38
No
dividends
were
declared
and paid by the Compa
ny to its shareholders in the years ending Decem
ber 31, 2021 and December
31, 2020.
As of
December 31, 2021
As of
December 31, 2020
Equity
134,869
(152,734)
Prefer
ence shares series C
(non-current liability)
-
176,606
T
otal capital
134,869
23,872
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
39
Series C prefer
ence shares
Prior
to
conversion
on February 5, 2021 series C pr
eference shares liability
was measured at fair value initially
with gains/losses
on
subsequent
remeasurements
being
r
ecognized
in
profit
or
loss
at
each
reporting
period.
The
fair
value
measurements
of
series C prefer
ence shares was classified as Level 3 of the f
air value hierarchy
.
Further
information
regarding
the
gain/loss
recognized
in
pr
esented
period
on
the
remeasurement
of
the
prefer
ence
shares
liability is presented in Note 20
Conv
ersion of series C preference shar
es
.
16.
T
r
ade and other receivables
As of
December 31, 2021
As of
December 31, 2020
T
rade receiv
ables and accrued revenues from r
elated parties
3,893
15,071
T
rade accounts receiv
able from third parties
-
-
Prepaid expenses
160
157
Other receivables
96
-
T
otal trade and other r
eceivables
4,149
15,228
Allowance for expected credit losses/ impairment o
f trade receivables is no
t significant.
T
ransactions with related parties are described in Note 26
Related party transactions
.
Prepaid
expenses
include
advance
payment
s
for
services
that
will
be
received
in
the
future.
Main
types
of
prepa
yments
are:
subscription
of
Internet
services,
expenses
from
cloud
computing
arra
ngements
which
do
not
include
an
intangible
asset
(software as a service contr
acts) and domain costs.
17.
Cash and cash equivalents
As of
December 31, 2021
As of
December 31, 2020
Cash at banks (current accounts)
106,330
15
Money market mutual fund inv
estments
-
7,269
T
otal cash and cash equivalents
106,330
7,284
Money
market mutual fund inv
estments have been classified as cash equivalents. F
or the reasoning please ref
er to Note 2
Basis
for prepar
ation of the financial statements
, point (d)
Key judgements an
d estimates
.
As of December 31, 2021 there was r
estricted cash of USD 19 thousand (USD 15 thousand as of December 31, 2020).
18.
Share capital
Starting
from
February
5,
2021,
Company's
share
capital
comprised
of
common
shar
es
and
preference
shares series A a
nd B.
Before
February
5,
2021,
Company'
s
share
capital
comprised
of
common
and
preferr
ed
shares
series
A,
B
and
C.
Below
are
presented
movements
on
diff
erent
components
of
equity
divided in the categories of shares (nominal v
alues presented in USD
,
not thousand USD):
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
41
The
Company
is
authorized
to issue up to 1
13,881,420 shares with a par value of USD 0.00002 (113,881,418 of c
ommon shares
and
1
share
of
series
A
preferre
d
share
and
1
share
of
series
B
preferred
share).
As
of
December
31,
2021,
1,775,320
shar
es
were
allocated
to
a
reserve
which
could
be
issued
only
with
majority
shareholders
appr
oval.
This
is
a
consequence
of
using
1,775,320 treasury shares for the Company’
s ESOP obligations (as described below), which otherwise would need to be satisfied
via issuance of new shares.
As
of
December
31,
2021,
the
share
capital
of
the
Company
comprised 84,246,697 shares with a par valu
e of USD 0.00002 per
share
and
the
total
value
of
USD 1,686 (not thousand), includin
g 82,690,347 common shares held by shareholders,
2 prefer
ence
shares
(one
prefer
ence
share
of
series A and one prefer
ence share of series B), and 1,556,348 of common shar
es reacquired by
the
Company
and
not
redeemed
(treasury
shares
and
treasury
shares
allocated
for
the
existing
share-based
payment
progr
ams).
As
of
December
31,
2020
there
were
ordinary
and
pref
erence
shares,
including
shares
r
eacquired
by
Huuuge
Inc.
and
not
redeemed
(so-called
treasury
shares)
of
the
nominal
value
of
USD
0.0001
per
shar
e
and
the
total
value
of
USD
1,598
(not
thousand).
9,226,810
ordinary
shares
include:
8,618,959
ordinary
shares
held
by
shar
eholders
and
607,851
of
ordinary
shares
reacquired by the
Company and not redeemed.
As
of
December
31, 2020 there were 6,746,117 pr
eference shares, out o
f which 782,168 were reacquired b
y Huuuge Inc. and not
redeemed
(treasury
stock),
including
257,103
pr
eference
shares of series A, 397,645 pr
eference shares of serie
s B and 127,420
shares of series C (presented
in the financial statements within financial liabilities).
During
the
year
2021,
the
number
of
shares
(not
issued)
allocated
for
the
existing
share-based
payment
program
s
was
reduced
by
1,775,320
shares.
This
is
because the tr
easury shares were delivered t
o employees for the part of options exercised
during
the
year
ended
December
31,
2021.
On
August
9,
2021
the
number
of
shares allocated (not issued) for employ
ee stock
option
plan
was
extended
by
additional 5,897,271 shares. After the changes, as o
f December 31, 2021 12,467,461 shares with a
par value of USD 0.00002 per shar
e were reserved for two stock option pr
ograms established in 2015 and 2019 y
ears.
As
of
December
31,
2020
1,675,513
shares
were
reserved
for
two
stock
option
pr
ograms:
881,071
shares for the st
ock option
progr
am established in year 2015 and 794,442 shares for the st
ock option program establishe
d in 2019.
In
2021
and 2020, some share options held by the empl
oyees under the share based payment
progra
m were exercised, re
sulting
in
the
issue
of
ordinary
shares
or
the
delivery
of
treasury
shares
with
the
difference
between
the
ex
ercise
price
paid
by
the
employee
and
the
nominal
amount
of
shares
recognized
as
share
premium
(pr
esented
within
“Supplementary
capital”),
as
described
below
in
this
note.
Further
information
on
the
share-based
program
is
pr
esented
in
Note
19
Share-based
payment
arrangements
.
In the year ended December 31, 2021 the following tr
ansactions in prefe
rence shares took place:
●
Redemption of treasury shares
On
January
15,
2021
the
Board
of
Directors
of
the
Company
approv
ed
to
retire
all
of
the
Company’
s
common
and
prefer
red
shares that were held as tr
easury shares, which were as follows:
●
common shares – 1,402,293 shar
es
●
series A prefer
ence shares – 257,103 shares
●
series B prefer
ence shares – 397,645 shares
●
series C prefer
ence shares – 127,420 shares.
Common
shares were r
everted to the status of authorized but unissued shares, pr
eferred shares wer
e eliminated to no longer be
issued or outstanding shares.
HUUUGE INC.
Financial statements as of and for the year ended December 31, 2020
(all amounts in tables presented in thousand USD
, except where stated otherwise)
44
Redemption
of
treasury
shares
has
been
recognize
d
as
a
decrease
in
supplementary
capital
in
the
statement
of
changes
in
equity in the amount of USD 33,994 thousand.
●
Share split
On
January
18,
2021
the
Board
of
Directors
approv
ed
the
split
of
all
of
the
Company’s existing com
mon and preferred shar
es.
The Certificate of Incorporation of Huuuge Inc. was amended as following:
The
total
number
of
shares
of
all
classes
of
stock
which
Huuuge
Inc.
has authority to issue is
118,063,540 shares, which shall
be divided into:
(i) 88,243,795 common shares, with a par v
alue of USD 0.00002 per share, and
(ii) 29,819,745 preferr
ed shares series consisting of:
a)
8,714,485 series A prefe
rred shares, with a par value of USD 0.00002 per
share,
b)
4,911,775 series B pr
eferred shares, with a par v
alue of USD 0.00002 per share, and
c)
16,193,485 series C preferred shar
es, with a par value of USD 0.00002 per share.
After
this
amendment
each
one
common
and
each
one
preferred
shar
e,
with
a
par
value
of
USD
0.0001 per share, issued and
outstanding
or
held
by
Huuuge
Inc.
as
treasury
shares
was
automatically
reclas
sified
as
five
shares
of
common
or
preferred
shares accordingly
, with a par value of USD 0.00002 per share.
Split
of
shares
required
weighted
a
verage
number
of
shares
presented in
Note 12
Financial risk managemen
t, point (f)
Earnings
per
share
of
Huuuge
Inc.Group consolidated financ
ial statement as of and for the year ended December 31, 2021 to be ad
justed
in
the
calculation
of
both
basic
and
diluted
earnings
per share for all periods presented in accor
dance with IAS 33 Earnings per
share.
●
Conversion of pref
erence shares series A, B and C
On February 5, 2021 all pref
erence shares series A, B and C were
converted into common shares, as shown in the table below:
Before the conversion
After conversion
Series A prefer
ence
shares
Series B prefer
ence
shares
Series C prefer
ence
shares
Common shares
Number of shares
8,714,485
4,911,775
16,193,485
29,819,745
Conversion
of
prefer
ence
shares
A,B
and
C
has
been
recognized
as
an
increase
in
supplementary
capital
in
the
statement
of
changes in equity in the amount of USD 215,603 thousand.
●
Issuance of series A and series B pref
erence shares
On February 5, 2021 the Board of Dir
ectors, issued one series A pref
erence share to RPII HGE LL
C (Raine Group), with
a par value
of USD 0.00002 per share for cash consider
ation of USD 50 and one series B pref
erence share to Big Bets O
U, with a par value of
USD
0.00002
per
share,
for
cash
considerati
on
of
USD
50,
for
which
total
cash
consideration
amounting
to
USD
100
was
received
in
February
2021.
The
differ
ence
between
the
nominal
amount
and
the
consideration
received
was
recogni
zed
in the
supplementary capital in the statement of changes in equity
.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
45
●
Initial public offering
On
January
27,
2021
Huuuge
Inc.
published
its
prospectus
and
launched
its
initial
public
offering.
The
offering
comprised
a
public
subscription
for
11,300,100
newly
issued
shares.
The final share price for off
ering shares was determined as PLN 50 per
share
(approx.
USD
13.53
per
share).
Difference
between
the
nominal
amount
of
newly
issued
shares
and
the
cash
consideration
r
eceived
was in the supplementary capital in the statement of changes in equity
. Proce
eds from issue of common
shares
for
public
subscription
amounted
to
USD 152,929 thousand. Net pr
oceeds from the issuance of the newly issued shar
es
amounted
to USD 101.434 thousand after deduction costs
and expenses associated with the offering, and
after execution of the
stabilization process as described below
.
Funds
obtained
from
issuance
of
shares
ar
e
planned
to
be
spent
on
acquisition
of
entities
and
assets
to
expand
the
Group’
s
offer
and
competences.
Prior
to
the
offering,
Huuuge,
Inc.
has enter
ed into foreign exchang
e forward contract contingent upon
the
event
of
initial
public offering. In accor
dance with the agreement, upon the occurrence of
the initial public offering ev
ent, the
amount of PLN 379,000 thousand (out of net proc
eeds from the newly issued shares) will be converted to the USD at a fix
ed rate
at
the
date
of
settlement
of
the
contract.
The
Company
recogniz
ed
the
finance
costs
resulting
from
this
transaction
in
the
amount of 2,662 thousand USD
. Please ref
er to Note 10
Finance expense
for details.
On
April
6,
2021
current
Report
11/2021 was issued about the information on the costs of the offering and stabilization actions
incurred by Huuuge Inc. The t
otal costs incurred in connection with the offe
ring amounted to USD 7,372 thousand. The total cost
of the public offering has been accounted for
by:
-
a
charge
to
current
period
expenses
of
USD
1,651
thousand
of
which USD 1,526 thousand was r
ecorded in the year 2020 and
USD 125 thousand was record
ed in the year 2021, and
-
a
decrease
in
equity
of
USD
5,721
thousand
of
which
USD
864
thousand
decreased
equity
in
the
year
2020,
and
USD
4,857
thousand
decreased
equity
in
the
year
2021,
which
reflects
the
portion
of
costs
associated
with obtaining a funding form new
issuance.
●
Execution of stabilization option
In
relation
to
the
initial public offeri
ng, on February 5, 2021 the Company and IPOPEMA Securities S.A. (“Stabilization Manager”)
signed
Stabilization
Agreement.
The purpose of the Stabilization Agr
eement was to stabilize the price of the Huuuge Inc. s
hares
at a level higher than the lev
el which would otherwise have prev
ailed.
In
accordance
with
the
Stabilization
Agreement,
the
Stabilization Manager withhold a portion of the proceeds fr
om the Huuuge,
Inc.
IPO
.,
i.e.
PLN
166,583
thousand
(calculated
as
3,331,668
shares
x
PLN
50/
per
share).
At
the
same
time,
based
on
the
Stabilisation
Agreement
the
Company
was
obliged
to
buy
from
the
Stabilization
Manager
the
shares
purchased
by
the
Stabilization
Manager
as
a
result
of
the
conducting
the
Stabilization
transactions. In addit
ion, the par
ties agreed on sp
lit of the
profit
in
respect
of
the
Stabilization
tr
ansactions
(resulted
from
the
difference
between
the
off
er
price
per
share
and the price
actually paid by the Stabilization Manager for each shar
e, after deducting the transaction costs).
For
the
purpose
of
accounting
for
the
stabilisation
transac
tion,
the
Company
treated
the
entire
stabilisation
agreement
as
a
financing
transaction,
i.e. r
epurchase of own shares from the mar
ket in the scope of IAS 32 and IFRS 9. Accordingly
, at inception
of
the
stabilisation
transactions,
the
Company
re
corded
a
prepayment
to
reflect
the
fact
that
the
stabilisation
activities
wer
e
funded
from
the
proceeds
from
the
off
ering.
The
prepayment
represented
a
financial
asset
in
the
scope
of
IFRS
9
because
it
could
be
settled
either
in
cash
or
in
a
variable
number
of
own
shares,
at
discretion
of
the
Stabilisation
Manager
.
At
the
same
time,
when
the
Company
entered
the
contract,
the
liability
was
r
ecognised
in
correspondence
with
equity
resulted
from
the
obligation to repur
chase own shares (the put option) at the amount that is the pr
esent value of the redemption amount.
The liability and the assets were measur
ed at fair value through profit or los
s until the stabilisation transactions were
completed.
As such, these transactions
had no net impact on profit or loss.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
46
On
February
26,
2021
the
Company
ended
the
stabilization
process,
and
the
above-mentioned
liability
and
asset
ha
ve
been
derecognized.
The
Company
repur
chased
via
Stabilization
Manager
its own shares in the total number of 3,331,6
68 in the price
range PLN 38.4000 – 49.98
50 (USD 10.35 – USD 13.51).
The
remunerat
ion
of
the
Stabilization
Manager
was
treated
as
a
share-based
payment
in
accordance
with
IFRS 2 because the
amount
of
the
remuner
ation
was
based
on
the
value
of
the
shares.
Nevertheless,
the
remuneration
incurr
ed
was
directly
attributable and incremental t
o repurchase of own shares (a capital tr
ansaction); therefore, i
t was recorded directly in equity
.
As
a
result
of
the
Stabilization
Agreement,
the repur
chased shares were recogniz
ed as a decrease in equity (treasury shares) in
the
total
amount
of
USD
43,976
thousand,
calculated
as
the
number
of
shares
repurchased,
multipli
ed
by
the
price
per
share
plus
the
remuneration
paid
t
o
Stabilization
Manager
representing
tra
nsaction
cost
of
this
capital
transaction.
The
transaction
did not have impact on pr
ofit and loss.
●
The issuance of common shares for options ex
ercised
In
the
year
ended December 31, 2021, before shar
e split 6,411 share options (equivalent of 32,055 options afte
r share split) held
by
the
employees under the shar
e-based payment progr
am were exercised, r
esulting in the issuance of common shares with the
difference
between
the
exe
rcise
price
paid
by
the
employee
and
the
nominal
amount
of
shares
recognized
as
shar
e
premium
(presented
within
“Supplementary
capital”)
of
USD
3
thousand
(USD
202
thousand
in
the
year ended December 31, 2020). The
exercise price was paid b
y the employees in cash.
●
Delivery of the treasury shares for options ex
ercised
In
the
year
ended
December
31,
2021,
after
share
split
1,851,622
share
options
held
by
the
employees
under
the shar
e-based
payment
progr
am
were
exercised,
out
of
which
for
1,775,320
options
exer
cised
treasury
shares
were
delivered
t
o
employees
before
December
31,
2021
(the
differ
ence
is
due
to
cashless
exercises).
The
delivery
of
treasury
shares
was
presented
as
a
movement
from
tr
easury
shares
to
common
shares.
The
movement
resulted
in
an
incr
ease
in
share
capital
in
the
amount
of
nominal
value
of
the
shares
delivered,
and
diff
erence between the value of tre
asury shares and the cash consideration r
eceived
in
the
amount
of
USD
22,672
thousand
was
recognized
in
supplementary
capital.
At
the
same
time,
the movement decr
eased
the number of shares (not issued) allocated for the
existing share-based payment progr
ams.
Holders
of
the
2
preference
shar
es
series
A
and
series
B,
which
may be converted for a fixed number of common shares, have
sever
al rights additional to the ones of the common sharehold
ers which may vary for series A and B). These rights are stipulated
in
the
corporate
documents
of
Huuuge
Inc.,
in
par
ticular
in
the
Fifth
Amended
and
Restated
Certificate
of
Incorporation.
Essentially
, the rights ref
er to:
●
protective
pro
visions in case of liquidation, dissolution, winding up, certain mergers, consolidations and sale of assets
of
Huuuge
Inc.
or
conversion
to
common
shares
–
the
holders
of
series A or B pref
erence shares shall be entitled t
o
be
paid
out
of
the
assets
of
the
Company available for distribution to its shar
eholders before the holders of common
shares,
●
election
of
a
director
for
every
separ
ate
class
of
preference
shares
1
per
each
series of pr
eference shares (series A,
B); 2 by the holders of common shares
.
As
at
December
31,
2021
and
December
31,
2020
no
shareholder owned over 50% of Company’
s equity or had more than 50%
of
voting
rights.
Company’
s
major
shareholder
is
Mr
Anton
Gauffin,
CEO
and
the
Founder
,
who
par
ticipates
in
the
Company’
s
ordinary shares indirectly (t
hrough shares of Big Bets OU).
The supplementary capital derives mainly from the shar
e premium gained on issuance of shares, or
re-issue of treasury shares.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
47
19.
Share-based pa
yment arrangements
As
at
December
31,
2021
and
as
at
December
31,
2020
the
Company
had
an
equity
incentive
plan,
i.e.
ESOP
.
The
first
stock
option
progra
m
(the
employee
stock
option
plan or “ESOP 2015”) was established by the Compa
ny’
s Board of Directors on April
3,
2015,
the
second
one
on
October
19,
2019
(“ESOP
2019”),
the
grant
dates
were determined at the d
ates when the contracts
with
eligible
employees
were
signed.
Additionally
,
during the period ended December 31, 2021 stock option plan was gr
anted to
Mr
.
Anton
Gauffin
as
described below in this note. Th
e program entitles emplo
yees and some consultants to purchase shar
es in
the Company
. Each option stands for one common or tr
easury share of the Company
.
The
vesting
condition
of
both
ESOP 2015 and 2019 progr
ams is to provide the
service continuously for at least 4 years from the
grant date and the following
vesting schedule is applicable depending on the particular grant:
●
about
25%
of
the
shares
options
vest
and
become
exercisable
on
a
12-month
anniversary
of
the
vesting
commencement
date
and
then
after
end
of
each
consecutive
month
1/36
of
the
remaining
shares
options vest and
become exercisable; or
●
the
options
vest
and
become
exercisable
with
respect
to
1/48th
of
the
total
option
shares
when
the
optionee
completes each full month of continuous service after the gr
ant date.
For
such
share-based paym
ents staged vesting applies i.e. each instalment with differ
ent vesting period is treated as a separ
ate
award with a differ
ent vesting period.
As
of
December
31,
2020
there
were
1,675,513
shares
rese
rved
for
the
ESOP
,
out
of
which
239,929
were
not
yet
allocated
to
specific employee and 1,435,584 attribute
d to specific option holders. This is at the Company discretion w
hether the unallocated
shares
will
be
allocated
within
the
share-based
progr
am
to
the
employees
or
unused
or
withdr
aw
from
the
progr
am.
As
of
December 31, 2021 there were
12,467,461 shares reserved for the ESOP that wer
e not yet allocated to specific employ
ees.
In
2021
the
Company’
s
Board
of
Directors
gr
anted
4,111,765
options to its employees and
consultants (738,024 in 2020). Each
option
can
be
exercised
at
a
weighted
exer
cise
price
of
USD
9.70
(not
in
thousand).
Shares
option
expense
for
year
2021
amounts
to
USD
11,830
thousand
(USD
3,469
thousand
in
2020)
and
was
booked
against
equity
(employee
benefit
r
eserve)
which amounted to USD 19,813 thousand as of De
cember 31, 2021 (USD 8,052 thousand as of December 31, 2020).
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
48
Details of the grants ar
e presented in the table below:
Grant date
Number of instruments granted
Expiry date
Granted in 2015
293,292
June 1, 2025
Granted in 2016
175,058
June 1, 2026 –
December 1, 2026
Granted in 2017
386,310
February 1, 2027 –
December 1, 2027
Granted in 2018
131,000
December 1, 2024
Granted in 2019
243,525
December 1, 2024 –
November 6, 2025
Granted in 2020
738,024
April 1, 2027 –
November 11, 2027
February 2, 2021
235,000
February 2, 2028
August 9, 2021
3,376,765
August 9, 2028
September 10, 2021
500,000
September 10, 2028
Subtotal gr
anted in 2021
4,111,765
T
otal
6,078,974
Movements in share
options since the first grant date were a
s follows:
Y
ear ended December 31, 2021
Number of options
Weighted av
erage exercise price
Balance as at January 1
1,435,584
12.01
Exercised during the period
(6,411)
0.45
Forfeited during the period
(2,056)
4.15
All options before share split
1,427,117
All options after share split
7,135,585
Granted during the period
4,111,765
9.70
Forfeited during the period
(518,371)
7.44
Exercised during the period
(1,851,622)
1.02
Expired during the period
(38,260)
2.03
Balance as at December 31
8,839,097
5.80
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
49
Y
ear ended December 31, 2020
All options before share split
Number of options
Weighted av
erage exercise
price
Balance as at January 1
919,010
6.21
Granted during the period
738,024
16.75
Forfeited during the period
(25,066)
9.81
Exercised during the period
(176,009)
1.15
Expired during the period
(20,375)
5.83
Balance as at December 31
1,435,584
12.01
The weighted aver
age exercise prices ar
e presented in USD
, not in thousand USD
.
As at December 31, 2021 2,836,827 share options w
ere exercisable, with weighted a
verage exer
cise price of USD 2.89 per share.
As at December 31, 2020 565,508 share options we
re exercisable, with weighted a
verage exer
cise price of USD 6.33 per share.
The below table presents a summary of share pric
es at the exercise dates:
Exercise date
Grant date
Exercise price
Fair Market
Value
on exercise date
Number of stock
options exercised
Exercised in 2020
May 29, 2015
–
November
6, 2019
$0.0002 –
$13.500
$15.0300 –
$18.6200
176,009
Exercised in 2021 (befor
e
share split)
May 29, 2015 – December
1, 2016
$0.0002 – $0.79
$54.53
6,411
Exercised in 2021 (after
share split)
May 29, 2015 – Novemb
er
20, 2020
$0.00004 –
$3.72402
$6.2348 –
$12.0319
1,851,622
For
share
options
outstanding
at
the
end
of
the reporting periods, the range of ex
ercise prices and weighted-aver
age remaining
contractual lif
e was as follows:
As at December 31, 2021:
Exercise price in USD
Number of outstanding stock options
Weighted av
erage remaining contr
actual life
(in years)
0.00004 - 0.83
495,579
4.18
2.7 - 3.72
4,776,838
2.85
9.55 - 13.51
3,566,680
6.18
T
otal:
8,839,097
4.27
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
50
As at December 31, 2020:
Exercise price in USD
Number of outstanding stock options
Weighted av
erage remaining contr
actual life
(in years)
0.0002 – 0.79
196,744
5.27
4.15
184,160
6.91
13.5 – 18.62
1,054,680
5.86
T
otal:
1,435,584
5.91
The
fair
value
of
the
employee
share
options has been measu
red using the Black-Scholes formula by an independent appr
aiser
,
assuming no dividends and using the valuation assump
tions summarized below
. The underlying price of the comm
on stock was
determined
using
the
fair
value as of the option gr
ant dates. The exercise prices of the options wer
e determined by the Board of
Directors
of
the
Company
in
the contr
act with the employee. The risk-free r
ate is based on the U.S. T
reasury yield curve in effect
at
the
time
of
each
grant
date
and
corresponding
to
expir
ation.
In
assessing
the
appropriate
time
to
expir
ation,
the
appraiser
examined the expiration per
iod, the vesting period and the option grant date
s.
Expected
volatility
was
based
on
historic
volatility
of
a similar industry sector
. Based on the analysis and the factors specific to
the
Company
,
an
equity
volatility
of
55.4%
-
80.0%
(60.0%
–
80.0%
for
the
year
ended
31 December
, 2020) was used in option
pricing model.
The
inputs
used
in
the
measurement
of
the
fair
values
at
grant
date
of
the
equity-settled
shar
e-based
payment
plan
are
as
follows:
Y
ear ended
December 31, 2021
Y
ear ended
December 31, 2020
Fair value at gr
ant date
0.00002 – 8.66
0.0001 – 31.64
Share price at gr
ant date
0.00004 – 10.91
0.0002 – 44.26
Exercise price
0.00004 – 13.5146
0.0002 – 18.62
Expected volatility (weighted av
erage)
55.4% – 80%
60% – 80%
Expected life (weighted av
erage)
3.00 – 7.30
3.00 – 7.30
Risk-free interest r
ate
0.21% – 2.80%
0.27% – 2.80%
The
effect
of
the
fair
value
measurement
of
options
gr
anted to employees of the Company
is reflected in 2021 in the profi
t and
loss
in
the
amount
of
USD
565
thousand
(USD
180
thousand
in
2020).
This
expense
includes
USD
381
thousand of Mr Anton
Gauffin ESOP that explained in detail further below
.
These
costs
were
included
in
the
line
“General
and
other administr
ative expenses” line in statement of compr
ehensive income.
For details on the related em
ployee benefit expenses please ref
er to Note 8
Operating expenses
and t
o the statement of changes
in shareholders’ equity
.
Earn-out consideration in th
e amount of USD 70 thousand was recognized as a decr
ease in the line “Investments in subsidiaries”
in
the
statement
of
financial
position
as
at
December
31,
2021
and
as
a
decrease
in
the
employee
benefit
reserve.
Earn-out
consideration
in
the
amount
of
USD 289 thousand was r
ecognized as an increase in the line “Investme
nts in subsidiaries” in the
statement of financial position as at December 31, 2020 and as an incr
ease in the employee benefit reserve.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
51
The
effect
of
the
fair
value
measurement
of
options gr
anted to employees of the C
ompany’
s subsidiaries is reflected in 2021 in
the
Company’
s
assets
as
investment
in
subsidiaries in the amount of USD 11,266 thousand (USD 3,289 tho
usand in 2020) – for
details on the increase of an investm
ents in subsidiaries please refer to N
ote 12
Investment in subsidiaries.
During
the
year
ended
December 31, 2021, before shar
e split, 6,411 common shares were issued (equiv
alent of 32,055 common
shares
after
share
split)
and
1,775,320
treasury
shares
wer
e
delivered
from
the
share-based paym
ent program as described in
Note
18
Share capital
. During the year ended Decemb
er 31, 2021, the Company received cash payments for t
he shares that were
delivered to em
ployees as of December 31, 2021.
During
the
year
ended
December
31,
2020,
i.e.
before
share
split
–
176,009
common
shares
wer
e
issued
resulting
from
the
equity-settled stock option pr
ogram.
Other
than
the
share-based
payment
arr
angements
described
above,
as
a
result
of
the
acquisition
that
took
place
on
July
16,
2020,
the
Company
accounts
for
the
earn-out
consideration
pay
able
in
shares
dependent
on
performance
condition
and
the
continuing
employment condition as a shar
e-based payment for the sellers of Double Star Oy
. As at December 31, 2020 t
he total
number
of
shares
to
be
vested
during
the
period
of
3
years
after
the
transaction
was
estimated
at
46,213
shares.
As
at
December
31,
2021
the
total
number
of
shares
to
be
vested
during
the
period
of
3
years
after
the
tr
ansaction
is
estimated at
23,046
shares
as
at
December
31,
2021.
After
December
31,
2021,
23,046
treasury
shares
were
deliver
ed to former owners of
Double Star Oy
, as described in the Note 30
Subsequent e
vents.
The sensitivity of the total numbers of shar
es to be transf
erred to the sellers, during the period of 3 y
ears after the transaction, to
the
change
of
the
fair
value
of
the
share
price
in
future
or
estimated
amount
of
earn-out
consideration is pr
esented below (all
other inputs remain constant):
Input
Assumptions
Rational change +10%/(-10%)
Share price
The estimated future fair value of
the share price (calculated
based on the Sale and Purchase Agr
eement and referring to the
USD value of Huuuge Inc.) which will be used as a basis
for
calculation of the number of shares t
o be vested.
As at December 31, 2021 share price of USD 9.52 is
used as a
basis for calculation of the number of shares t
o be vested.
+10% = (2,096) shares – decre
ase
in number
-10% = 2,562 shares – increas
e in
number
Estimated amount
of earn-out
consideration
Based on the estimation as at December 31, 2021 the futur
e
earn-out consideration is es
timated at USD 219 thousand.
+10% = 2,304 shares – increa
se
in number
-10% = (2,304) shares –
decrease in number
In
addition,
on
March
19,
2021
the
Board
of
Directors
adopted
recommendation
from
the
Nomination
and
Remuner
ation
Committee
on executive and non-ex
ecutive compensation (“Proposal”).
This date is the date when Mr
. Gauffin started rendering
the
services
in
respect
of
that
grant
(“
service
commencement
date”),
thus
relevant
costs
ha
ve
been
recognized
starting
from
March 19,2021.
The
final
executive
compensation
agreement
between
Mr
. Gauffin and the Company was approved b
y the Board of Directors on
September 9, 2021 and was executed b
y the par
ties on September 10, 2021.
In
accordance
with
the
adopted
Proposal
and
the
compensation
agreement,
the r
emuneration of Mr Anton Ga
uffin, holding the
positions
of
the
President,
Chief Executive Offic
er and Secretary of the Company
, will consist solely of share options. All
options
can be exercised at a price o
f PLN 50, i.e., the price of the Company’
s shares in the initial public off
ering.
The vesting conditions for the options is the following:
●
50,000
options
with
a
vesting
condition
to
provide
the
service
continuously
for
about
4
years
from
service
commencement date. The C
ompany’
s management expects Mr Anton Gauffin to fulfil the
service condition.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
52
●
75,000
options
with
a
vesting
condition
to
provide
the
service
continuously
for
about
4
years
from
service
commencement
date
and
to
meet
2021
EBITD
A
target.
The
Company’
s
management
expects
Mr
Anton
Gauffin
to
fulfil the service condition, and the estimated cost reflects the 2021 EBI
TDA target r
ealisation.
●
375,000
options
with
a
variable
vesting
period
due
to
the
marke
t
condition,
i.e.,
condition
to
meet
the
Company’
s
market
capitalization
milestones.
The
Company’
s
management
estimates
that
6
years
of
continuous
ser
vice
will
be
required for options t
o vest.
Similar
to
other
share-based
payments
in
the
Company
,
for
this
program
staged
v
esting
applies,
i.e.,
each
instalment
has
different v
esting period and is treated as a separat
e award with a different v
esting period.
20.
Conversion of series C pr
eference s
hares
The
series
C
preference
shar
es
were
classified
as
liability
and
presented
in
the
separate
line item in the statement of fi
nancial
position
within
non-current
liabilities
as
of
December
31,
2020.
Changes
in
financial
liability
arising
from
pr
eference
shares,
including
both
changes
arising
from
cash
flows
and
non-cash
changes, presented as a r
econciliation between the opening and
closing balances in the statement of financial position:
As at January 1, 2020
48,354
Repurchase of series C pref
erence shares
(1,444)
Finance expense recognized on r
epurchase of series C pref
erence shares
481
Reissue of series C pref
erence shares
1,447
Remeasurement
recogniz
ed
in
statement
of
profit
or
loss
during
the period in
(finance income)/finance expense
127,768
As at December 31, 2020
176,606
Further
information
about
the
classification
and
the
measurement
of
this
liability
is
provided
in
Note 2
Basis for prepar
ation of
the
financial
statements
,
point
(d)
Key
judgements
and
estimates
–
pr
eference
shares
and
Note
15
Accounting classificat
ion of
financial instruments and fair values.
On
January
29,
2020,
RP
II
HGE
LLC
(Raine) purchased fr
om Huuuge Inc. 73,265 series C prefer
ence shares for total amount of
USD
1,447
thousand.
These
shares
had
been
earlier
purchased
and
not
redeemed
b
y
Huuuge
Inc.
from
the
Korean
funds
in
December 2019 by the same price USD 19.75.
On
July
2,
2020
Huuuge
Inc.
entered
into
an
agreement
to
r
epurchase
shares from the Kiwoom Cultur
al Ventur
e Fund 1 for the
cash
consideration
of
USD
1,444
thousand
(USD 27.91 per shar
e). Under the agreement Huuuge Inc. repur
chased 51,739 series
C prefer
ence shares.
As at January 1, 2021
176,606
Remeasurement recogniz
ed in statement of profit or loss during the period in (finance
income)/finance expense
38,997
As at February 5, 2021 before conv
ersion
215,603
Conversion of pref
erence shares into common shar
es
(215,603)
As at December 31, 2021
-
On
February
5,
2021
all
preference
shar
es
series
C
were
converted
into
common
shares
with
the price per share of 13.31 USD
(share
price
for
initial
public
offering
as
PLN
50
per
share).
For
mor
e
information,
please
refer
to
Note
18
Share
capital
.
As
a
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
53
result
of
the
conversion,
financial
liability
arising
from
preference
shares
decreased
with
the
corresponding
increase
in
supplementary capital as presented in the statement of changes in equi
ty
.
21.
T
r
ade and other payables
As of
December 31, 2021
As of
December 31, 2020
T
rade accounts pay
able including:
533
2,822
- trade accounts pa
yable to third parties
5
2,820
- trade accounts pa
yable to related parties
528
2
Accrued expenses
2,187
4,441
Accounts payable r
elated to acquisition of subsidiary
-
558
T
ax payables other
than from corporate income tax
es
182
28
Other accounts payable
1
1
T
rade and other payables
2,903
7,850
22.
Leases
In
2020
the
Company have entered int
o office rent agreement, accor
ding to which lease payments need to be m
ade over 3 years
period.
The
table
below
presents
the
carrying
amounts
of
recognized
right-of-use
assets
and
the
movemen
ts
over
the
years
2021 and 2020.
Y
ear ended
December 31, 2021
Y
ear ended
December 31, 2020
as at January 1
211
-
Remeasurement due to index
ation and other
-
-
additions (new leases)
-
230
lease modifications
-
-
Depreciation
(74)
(19)
as at December 31
137
211
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
54
The table below presents the book v
alues of lease liabilities and movements ov
er the year 2021 and 2020.
Y
ear ended
December 31, 2021
Y
ear ended
December 31, 2020
as at January 1
218
-
additions (new leases)
-
230
lease modifications
-
-
Remeasurement due to index
ation and other
-
-
interest expense on lease liabilities
1
1
lease payments
(75)
(13)
as at December 31
144
218
long-term
66
142
short-term
78
76
The
Company
classifies
in
statements
of
cash
flows
cash
payments
of
the
capital
component
of
lease
liabilities
in
2021
amounting
USD
75
thousand
(USD
12
thousand
in
2020)
and
cash
payments
of
interest
on
a lease liability in 2021 amounting
USD 1 thousand (USD 1 thousand in 2020) as part of financing activities (Lease repayment)
.
The
table
below
presents
the
amounts
of
income,
costs,
gains
and
losses
resulting
from
leases
which
are
r
ecognized
in
the
statement of comprehensive income
for year 2021 and 2020.
Y
ear ended
December 31, 2021
Y
ear ended
December 31, 2020
Depreciation expense of right-of-use assets
74
18
Interest expense on lease liabilities
1
1
Foreign ex
change differences
-
-
T
otal amount recognized in
the statement of comprehensive income
75
19
23.
Cash Flow reconciliation
T
ransaction
costs
of
an
issuance
of
equity instruments which amounted to US
D 7,097 thousand as presented in the cash flows
from
financing
activities
in
the
statement
of
cash
flows
for
the
year
ended
December
31,
2021
comprise
USD 4,857 thousand
deducted
from
equity
,
and
USD
2,240
thousand
recogniz
ed
in
statements
of
other
comprehensive
income
for
the
year
ended
December
31,2020.
Difference
between
the
change
of
tr
ade
payables
in
the
statement
of
financial
position
and
the change of
trade
and
other pay
ables presented in the statement of cash flows for the year end
ed December 31, 2021 and 2020 is due to the
deferred
payme
nt
related
to
acquisition
of subsidiary
. In addition, the differ
ence for the year ended December 31, 2020 includes
the
transaction
costs
incurred
in
issuance
of
equity
instruments,
but
not
yet
paid,
which
amounted
t
o
USD
589
thousand
and
have been recogniz
ed as decrease in equity
.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
55
24.
Contingencies
T
ax contingent liabilities
T
ax
settlements
are
subject
to
r
eview
and
investigation
by
tax
authorities,
which
are
entitled
to
impose
sever
e fines, penalties
and
interest
charges.
T
ax
regulations
in
the
United
States
have
been
changing
recently
,
which
may
lead
to
lack
of
their clarity
and
integrity
.
Furthermore,
frequent
contradictions
in
tax
interpretations,
both
within
government
bodies
and
between
companies and government bodies cr
eate uncertainties and conflicts.
T
ax
authorities
may
examine
accounting
recor
ds
retrospectively:
for
3
years
in
the
United
States
(and
up
to
6 years in case of
substantial
errors).
Consequently
,
the
Company
may
be
subject
to
additional
tax
liabilities,
which
may
arise
as
a
result
of
tax
audits.
The
Board
of
Directors
of
the
Company
believes
that
there
was
no
need
to
r
ecord
any
provisions
for
known
and
quantifiable
risks
in
this
regard
as
in
their
assessment
there
are no suc
h uncer
tain tax positions for which it would be pr
obable
that the taxation authority will not accept the tax tre
atment applied by the Company
.
25.
Pledges and collater
als
During
the
reporting
periods
and
till
the
date
of
issuing
these
financial
statements
the
Company
did
not
enter
in
a
pledge
or
collateral agr
eement on its assets.
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
56
The
Company
purchases
certain
adver
tisement
services
from
third
parties
(mostly
Facebook),
which
are
subsequently
recharged
to
Huuuge
Global
Limited.
For
more
information
please
refer
to
Note
2
Basis
for
preparation
of
the
financial
statements
, point (d)
Key jud
gements and estimates
–
Model of revenue r
ecognition
.
The
Company
recognizes
re
venue
when
services
are
transf
erred
to
the customer
, at a value that reflects the price expected by
the entity
, in exchange for the tr
ansfer of those goods and services.
Therefore,
total
gr
oss
revenue
in
years
ended
December
31,
2021
and
December
31,
2020
amounted
to
USD 32,259 thousand
and USD 33,303 thousand respective
ly
.
Cost
of
re-invoiced
sales
and
marketing
services
in
years
ended
December 31, 2021 and December 31
, 2020 amounted to USD
28,435
thousand
and
USD
30,486
thousand
respectively
,
fully
netted
in
the
statement
of
comprehensive
income.
For
more
details
regarding
re
venue
generated
by
game design, stewar
dship and legal services in the total amount of USD 3,824 thousand
in
the
year
ended
December
31,
2021
(USD
2,817
thousandin
the
year
ended
December
31,
2020)
please
ref
er
to
Note
6
Revenue.
The
Company
is
also
rendering
legal
services to Huuuge Global Limited. Due t
o the international scope of the Group’
s activities,
the
Group’
s
legal
depar
tment
operating
in
the
organiz
ational
structure
of
the
Company
seeks
highly
qualified
people with high
competences in this area, and the costs of legal services pr
ovided by the Company are char
ged to Huuuge Global Limited.
The
amount
of
USD
6,500
thousand
during 2020 results from co
vering costs related to court case. For more information pl
ease
refer t
o Note 2 Basis for preparation of the
financial statements, point (d)
Key judgements and estimates.
In
addition,
related
parties’
transactions
include
transactions
with
the
management
of
the
Company
.
For
more
details,
please
refer
to
Note
27
T
r
ansactions
with
management
of
the
Company
to
the
financial
statements
for
the
period
ended
December
31,2021.
27.
T
r
ansactions with management of the Company
T
ransactions
with
management
of
the
Company
for
the
years
ended
December
31,
2021
and
December
31,
2020
was
as
follows:
Y
ear ended
December 31, 2021
Y
ear ended
December 31, 2020
Base salaries
366
55
Bonuses and compensation based on the Group
’
s financial
result for the pre
vious year
49
43
Share-based payment
399
108
T
otal
814
206
28.
Audit f
ees
Y
ear ended
December 31, 2021
Y
ear ended
December 31, 2020
Audit of financial statements
225
184
Voluntary audit of financial statements
130
195
Remuneration for additiona
l services
-
289
T
otal
385
668
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
59
For
the
year
ended
December
31,
2021
and
December
31,2020
audit
of
financial
statements
relates
to
the
audit
of
separ
ate
financial
statements
of
the
Company
and
the
audit
of
the
Group’
s
consolidated
financial
statements
prepared
in
accordance
with IFRS.
The
voluntary
audit
of
financial
statements
relates
to
the
audit
of
the
Group
’
s
consolidated
financial
statements
prepared
in
accordance with Gener
ally Accepted Accounting Principles in the United States.
29.
Employment structur
e
Av
erage Company’
s number of employ
ees for the years ended December 31, 2021 and December 31, 2020 was as follows:
Y
ear ended
December 31, 2021
Y
ear ended
December 31, 2020
Board of direct
ors and Company’
s key management
-
-
Administration
-
1
Games development
8
5
T
otal
8
6
30.
Subsequent events
After
December
31,
2021
and
up
to
the date of approv
al of these financial statements for issue no significant events ex
cept the
following have occurr
ed.
Notification on Share Buyback Scheme (“SBB”)
On
February
15,
2022
the
Company`s
Board
of
Directors
adopted
a
r
esolution
for
the
Company
to
repurchase
its
common
shares
listed
for
trading
on
the
W
arsaw
Stock
Exchange.
The
purpose
of
the
SBB
is
to
satisfy the Company'
s needs related to
the
exercise
of
options
under
its
Employee St
ock Option Plans in the foreseeable future. T
otal number of the Company’
s shares
to be repur
chased under the SBB will be up to 2,500,000 shares.
There were no shar
es repurchased yet as of date of appr
oval of these financial statements for issue.
Delivery of the treasury shares t
o former owners of Double Star Oy
As
of
31
December
2021, 23,046 shares vested under earn-out conside
ration payable in shar
es to former owners of Double Star
Oy
based
on
the Share Sale and Purchase Agr
eement, corrected by the First Amendment dated Oct
ober 19, 2021. Consequently
,
on February 21, 2022, 23,046 treasury shares w
ere delivered to former own
ers of Double Star Oy
.
War in Ukr
aine
On
February
24,
2022,
Russian
troops
crossed
the
eastern,
southern
and
northern
borders
of
Ukraine,
attacking
Ukr
aine.
In
connection
with the hostilities of Russia, the repr
esentatives of the European Union impos
ed sanctions on Russia. The Company
had
also
made
a
decision
to
stop
distribution
of
new
games
in
Russia
and
Belarus.
Russia
and
Belarus
markets
were
responsible
for
less
than
1%
of
total
rev
enue
generated
by
Huuuge
Group
in
2021
which
means
the
currently
ongoing
war
in
Ukraine
should
not
have
a
material
impact
on
Huuuge'
s
performance
and
operations.
Huuuge
Group
has
analyz
ed
and
is
continuously
monitoring
the
impact
of
the
political
and
economic
situation
in
Ukraine
on
its
and
the
Grou
p'
s
operations
and
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
60
financial
results.
The
Company
is
not
able
to
reliably
determine
the
impact which the situation in Uk
raine will have on the state
of the European economy and,
consequently
, on the activity of the Group.
As
of
March
10,
2022
Google
Play
due
to
payment
system
disruption
informed
about
pausing
Google
Play'
s billing system for
users
in
Russia.
This
means
users
will
not
be
able
to
purchase
apps
and
games,
make
subscription payments or conduct an
y
in-app purchases of digital goods using Google Pla
y in Russia.
Electronically signed
Anton Gauffin
President of Huuuge Inc., CEO
March 28, 2022
HUUUGE INC.
Separate financial statements as of and for the year ended December 31, 2021
(all amounts in tables presented in thousand USD
, except where stated otherwise)
61