Huuuge, Inc.

HUUUGE INC.

SEPARATE FINANCIAL STATEMENTS

as of and for the year ended December 31, 2022

prepared in accordance with International Financial Reporting Standards

as adopted by the European Union

Table of contents

Company’s separate statement of comprehensive income

Company’s separate statement of ﬁnancial position

Company’s separate statement of changes in equity

Company’s separate statement of cash ﬂows

1. General information

2. Basis for preparation of the ﬁnancial statements

3. Adoption of new and revised Standards

4. Signiﬁcant accounting policies

5. Determination of fair values

6. Revenue

7. Segment information

8. Operating expenses

9. Finance income and expense

10. Income tax

11. Investment in subsidiaries

12. Financial risk management

13. Accounting classiﬁcations of ﬁnancial instruments and fair values

14. Trade and other receivables

15. Cash and cash equivalents

16. Share capital

17. Share-based payment arrangements

18. Conversion of series C preference shares

19. Trade and other payables

20. Leases

21. Contingencies

22. Pledges and collaterals

23. Related party transactions

24. Transactions with management of the Company

25. Audit fees

26. Employment structure

27. Subsequent events

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

This version is a pdf of executed xHTML Separate ﬁnancial statements as of and for the year ended December 31, 2022. In case of any discrepancies xHTML version shall prevail

Company’s separate statement of comprehensive income

Note

Year ended

December 31, 2022

Year ended

December 31, 2021

Revenue

2,922

3,824

Cost of sales

Gross proﬁt

2,922

3,824

Sales and marketing expenses

(76)

Research and development expenses

(2,156)

(1,447)

General and administrative expenses

(8,167)

(5,206)

Other operating income/(expense), net

(16)

(80)

Operating result

(7,493)

(2,985)

Finance income

986

Finance expense

(376)

(42,205)

Proﬁt/(loss) before tax

(6,883)

(45,133)

Income tax

(829)

(73)

Net result for the year

(7,712)

(45,206)

Other comprehensive income

Total comprehensive income/(loss) for

the year

(7,712)

(45,206)

The accompanying notes are an integral part of these ﬁnancial statements.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

This version is a pdf of executed xHTML Separate ﬁnancial statements as of and for the year ended December 31, 2022. In case of any discrepancies xHTML version shall prevail

Company’s separate statement of ﬁnancial position

Note

As of

December 31, 2022

As of

December 31, 2021

Assets

Non-current assets

Property, plant and equipment

Right-of-use asset

137

Investment in subsidiaries

1, 11

29,162

26,856

Other non-ﬁnancial assets

Deferred tax asset

112

Total non-current assets

29,446

27,134

Current assets

Trade and other receivables

1,224

4,149

Corporate income tax receivable

303

Cash and cash equivalents

86,210

106,330

Other non-ﬁnancial assets

Total current assets

87,440

110,782

Total assets

116,886

137,916

Equity

Share capital

Treasury shares

(20,942)

(19,954)

Supplementary capital

304,487

321,049

Employee beneﬁt reserve

22,894

19,813

Retained earnings/(Accumulated losses)

(193,753)

(186,041)

Total equity

112,688

134,869

Non-current liabilities

Long-term lease liabilities

Total non-current liabilities

Current liabilities

Trade and other payables

4,092

2,903

Short-term lease liabilities

Corporate income tax liability

Total current liabilities

4,198

2,981

Total equity and liabilities

116,886

137,916

The accompanying notes are an integral part of these ﬁnancial statements.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

This version is a pdf of executed xHTML Separate ﬁnancial statements as of and for the year ended December 31, 2022. In case of any discrepancies xHTML version shall prevail

Company’s separate statement of changes in equity

Note

Share capital

Treasury

Supplementary

capital

Employee

beneﬁt

reserve

Retained

earnings/(acc

umulated

losses)

Equity

As of January 1, 2022

(19,954)

321,049

19,813

(186,041)

134,869

Net proﬁt (loss)

(7,712)

Total comprehensive income for the period

(7,712)

Shares issued/(repurchased)*

(20,090)

Exercise of stock options

18,791

(16,251)

2,540

Delivery of shares to former owners of Double Star Oy

16,17

311

(311)

Employee share schemes - value of employee services

3,081

As of December 31, 2022

(20,942)

304,487

22,894

(193,753)

112,688

* Shares issued/(repurchased) line includes payments for the purchase of 4,989,608 own shares under the buy-back program, which were registered at Central Securities Depository as of the date of

these ﬁnancial statements. On August 2, 2022, the Company suspended the purchase of its own shares.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

This version is a pdf of executed xHTML Separate ﬁnancial statements as of and for the year ended December 31, 2022. In case of any discrepancies xHTML version shall prevail

Note

Share capital

Treasury

Supplementary

capital

Employee

beneﬁt

reserve

Retained

earnings/(acc

umulated

losses)

Equity

As of January 1, 2021

(33,994)

14,040

8,053

(140,835)

(152,734)

Net proﬁt (loss)

(45,206)

Total comprehensive income for the period

(45,206)

Redemption of treasury shares

33,994

(33,994)

Conversion of preference shares

16,18

215,603

Shares issued/(repurchased)

(43,976)

152,929

108,953

Exercise of stock options

24,022

(22,672)

1,350

Employee share schemes - value of employee services

11,830

Earn-out consideration - value of employee services

(70)

Transaction costs of an issuance of equity instruments*

(4,857)

As of December 31, 2021

(19,954)

321,049

19,813

(186,041)

134,869

Transaction costs of an issuance of equity instruments which amounted to USD 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 as presented in the table above, and USD 2,240 thousand recognized in statements of other comprehensive income

for the year ended December 31, 2020.

The accompanying notes are an integral part of these ﬁnancial statements.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

This version is a pdf of executed xHTML Separate ﬁnancial statements as of and for the year ended December 31, 2022. In case of any discrepancies xHTML version shall prevail

Company’s separate statement of cash ﬂows

Note

Year ended

December 31, 2022

Year ended

December 31, 2021

Cash ﬂows from operating activities

Proﬁt/(loss) before tax

(6,883)

(45,133)

Adjustments for:

Depreciation and amortization

103

Non-cash employee beneﬁts expense - share-based payments

774

565

Remeasurement and other ﬁnance expenses related to preference

shares liability

38,997

Finance (income)/expense, net

(1,051)

2,622

Changes in net working capital:

Trade and other receivables

2,925

11,079

Trade and other payables

1,189

(2,249)

Other non-ﬁnancial assets

(30)

Provisions

(6,500)

Other adjustments

(4)

Cash ﬂows from operating activities

(2,977)

(499)

Income tax (paid)/received

(545)

105

Net cash ﬂows from operating activities

(3,522)

(394)

Cash ﬂows from investing activities

Acquisition of property, plant and equipment and intangible assets

(21)

(72)

Purchase of shares in subsidiaries and capital injection

(2,485)

Interest received

590

128

Repayment of loans granted to subsidiaries

1,400

Net cash ﬂows from investing activities

569

(1,029)

Cash ﬂows from ﬁnancing activities

Shares issued/(repurchased)

(20,090)

Exercise of stock options

2,540

1,350

Lease repayment

(78)

(75)

Proceeds from issuance of common shares for public subscription

152,929

Execution of stabilization option

(43,976)

Loss on foreign exchange forward contract

(2,662)

Transaction costs of issuance of equity instruments

(7,097)

Net cash ﬂows from ﬁnancing activities

(17,628)

100,469

Net increase/(decrease) in cash and cash equivalents

(20,581)

99,046

Effect of exchange rate ﬂuctuations and accrued interest

461

Cash and cash equivalents at the beginning of the period

106,330

7,284

Cash and cash equivalents at the end of the period

86,210

106,330

The accompanying notes are an integral part of these ﬁnancial statements.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

This version is a pdf of executed xHTML Separate ﬁnancial statements as of and for the year ended December 31, 2022. In case of any discrepancies xHTML version shall prevail

NOTES TO THE SEPARATE

FINANCIAL STATEMENTS

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

This version is a pdf of executed xHTML Separate ﬁnancial statements as of and for the year ended December 31, 2022. In case of any discrepancies xHTML version shall prevail

General information

Huuuge Inc. (hereinafter the “Company”) is a company registered in the United States of America. The Company’s registered

oﬃce is located in Dover, Delaware, 850 Burton Road, Suite 201, DE 19904 and the operating oﬃce is located in Las Vegas,

Nevada, 2300 W. Sahara Ave., Suite 800, NV 89102.

The Company was established with a notary deed on February 11, 2015.

These separate ﬁnancial statements (hereinafter “ﬁnancial statements”) of the Company cover the year ended December 31,

2022 and includes comparative data for the year ended December 31, 2021.

The Company has an unlimited period of operation.

The core business activity 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 Group include:

●

development of mobile games in the free-to-play model,

●

distribution and user acquisition of own mobile games.

The Company’s business activities are not subject to signiﬁcant seasonal or cyclical trends.

Identiﬁcation of consolidated ﬁnancial statements

The Company is the ultimate parent of the Huuuge Inc Group. The Company has prepared consolidated ﬁnancial statements for

the year ended December 31, 2022, which were approved on March 24, 2023 by the Board of Directors.

Composition of the Company’s Board of Directors as of December 31, 2022 and December 31, 2021 and as of the date of

signing of this ﬁnancial statements

Directors have annual terms of duty and serve until the successors are duly elected. The preference shareholders have the right

to appoint certain directors.

As of December 31, 2021, the Company’s Board of Directors consisted of the Chief Executive Oﬃcer, who was also an executive

director,

and

non-executive

directors.

The

Chief Executive Oﬃcer and executive director was Mr. Anton Gauﬃn, and

non-executive directors were:

●

Henric Suuronen, director,

●

Krzysztof Kaczmarczyk, director,

●

John Salter, director,

●

Rod Cousens, director.

On April 7, 2022, Mr. Rod Cousens was appointed as a co-CEO, and Mr. Tom Jacobsson was elected as a non-executive director.

After this change, as of December 31, 2022, the composition of the Company’s Board of Directors was the following:

●

Anton Gauﬃn, executive director, President and co-CEO

●

Rod Cousens, executive director, co-CEO

●

Henric Suuronen, non-executive director,

●

Krzysztof Kaczmarczyk, non-executive director,

●

John Salter, non-executive director,

●

Tom Jacobsson, non-executive director.

Effective on March 7, 2023, Mr. Rod Cousens, co-CEO, and the Company reached a mutual agreement to end Mr. Cousens’s

executive service with the Company. Mr. Cousens will remain a member of the Issuer’s Board of Directors. As a result, Mr. Anton

Gauﬃn will be the sole Chief Executive Oﬃcer of the Company.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

This version is a pdf of executed xHTML Separate ﬁnancial statements as of and for the year ended December 31, 2022. In case of any discrepancies xHTML version shall prevail

After these changes, as of the date of signing of these separate ﬁnancial statements the composition of the Company’s Board

of Directors is the following:

●

Anton Gauﬃn, executive director, President, and CEO,

●

Rod Cousens, non-executive director,

●

Henric Suuronen, non-executive director,

●

Krzysztof Kaczmarczyk, non-executive director,

●

John Salter, non-executive director,

●

Tom Jacobsson, non-executive director.

Financial statements approval

These ﬁnancial statements were approved on March 24, 2023 by the Board of Directors.

Investments in subsidiaries

The Company has direct and indirect an interest in share capital of the following subsidiaries:

Share in capital

Name of entity

Registered seat

Activities

As of

December 31, 2022

As of

December 31, 2021

Huuuge Games Sp. z o.o.

Szczecin, Poland

games development and

operations

100%

Huuuge Global Ltd

Limassol, Cyprus

games distribution, user

acquisition

100%

Huuuge Publishing Ltd

(formerly Fun Monkey Ltd)

Limassol, Cyprus

games distribution

100%

Huuuge Block Ltd (formerly

Coffee Break Games Ltd)

Limassol, Cyprus

games distribution

100%

Billionaire Games Limited

Limassol, Cyprus

games distribution

100%

Huuuge Digital Ltd

Tel Aviv, Israel

games development, R&D

100%

Playable Platform B.V.

Amsterdam,

Netherlands

games advertisement

100%

Double Star Oy

Helsinki, Finland

games development

100%

Huuuge UK Ltd.

London,

United Kingdom

corporate development

100%

Huuuge Mobile Games Ltd

Dublin, Ireland

games distribution, user

acquisition, in liquidation

100%

Coffee Break Games United

Ltd

Dublin, Ireland

games distribution, user

acquisition, in liquidation

100%

MDOK GmbH (formerly

Huuuge Pop GmbH.)

Berlin, Germany

games development, in

liquidation

100%

Huuuge Labs GmbH

Berlin, Germany

games development, R&D,

in liquidation

100%

Huuuge Tap Tap Games Ltd

Hong Kong

games development, user

acquisition

100%

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

This version is a pdf of executed xHTML Separate ﬁnancial statements as of and for the year ended December 31, 2022. In case of any discrepancies xHTML version shall prevail

On April 8, 2022, Coffee Break Ltd., a subsidiary wholly owned by Huuuge Global Ltd changed its name to Huuuge Block Ltd.

On April 29, 2022, Huuuge Tap Tap Games Ltd was successfully deregistered and dissolved.

On May 4, 2022, a new subsidiary wholly owned by Huuuge Global Ltd was registered under the name Billionaire Games Limited.

Basis for preparation of the ﬁnancial statements

Statement of compliance

These ﬁnancial statements of the Company have been prepared in accordance with the International Financial Reporting

Standards as adopted by the European Union (“IFRS”) and constitute the Company’s separate ﬁnancial statement prepared in

order to meet the legal requirements imposed on issuers of the securities admitted to trading on regulated markets.

The Company is the parent entity of the Huuuge Inc. Group. The annual consolidated ﬁnancial statements of the Group have

been prepared in accordance with the requirements 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 2022. The consolidated ﬁnancial statements of

the Group are prepared and published at the same time as these separate ﬁnancial statements of the Company.

Historical cost convention

These ﬁnancial statements are prepared on the historical cost basis, except for the series C preference shares, which were

measured at fair value with the gains/losses recognized in proﬁt or loss until their redemption in February 2021, and derivatives,

which were measured at fair value with the gains/losses recognized in proﬁt or loss prior to its execution during the year 2021.

Functional and presentation currency

The functional currency of the Company and the presentation currency of these ﬁnancial statements is the US dollar (“USD”).

Key judgements and estimates

The preparation of ﬁnancial statements in accordance with IFRS requires management to 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 reviewed on an ongoing

basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future

periods affected.

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 are consistent across the reported periods.

Model of revenue recognition

Agent vs principal considerations – transactions between the Company and Huuuge Global Limited

The Company purchases certain advertisement services from third parties (mostly Platform providers such as Facebook),

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 providing goods or services to a customer, the entity

evaluates the nature of its promise to the customer, whether the nature of the entity`s performance obligation 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 transferred to the customer, otherwise the entity acts as an agent arranging

for the provision of the speciﬁed goods or service for another entity`s customer. An agent recognizes revenue on a net basis

corresponding to any fee or commission to which it expects to be entitled in return for the arrangement of provision of goods or

services by another entity.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

This version is a pdf of executed xHTML Separate ﬁnancial statements as of and for the year ended December 31, 2022. In case of any discrepancies xHTML version shall prevail

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 advertisement services by Platform providers such as Facebook for

Huuuge Global Ltd, and that the Company itself does not obtain control over the goods or services provided prior to its transfer

to the customer. The Company’s management therefore assessed that the Company acts as an agent to Huuuge Global

Limited. The conclusion that the Company acts as an agent is supported mainly by the following factors: Platform providers

(such as Facebook) have the ultimate responsibility for providing the services to Huuuge Global Ltd; the Company does not set

the prices for the advertisement services, nor it has a discretion to select the Platforms, Platform providers have right to change

these prices at any time at their discretion.

The Company being an agent presents revenues from those transactions in net amounts – revenue from 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, 2022 and December 31, 2021.

For details on the accounting policies related to the revenue recognition please refer 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 market 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, government gilts and commercial paper with high ratings (mainly

A3 based on Moody’s rating). The main goals are the preservation of principal, high liquidity and a modest incremental return

over short-term interest rates or a benchmark rate.

Key judgment in applying accounting policies refers to the classiﬁcation of investments in money market 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 are subject to an insigniﬁcant risk of future changes in value, 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 have a determinable market value and they 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 to 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 insigniﬁcant. The volatility of

changes in fair value, in particular the credit and liquidity risk, is limited taking into account the level of diversiﬁcation of the

portfolio and its weighted average life of the underlying assets of the funds. The exposure to benchmark interest rate 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 current 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 consideration referred to all potential investments allowed by the investment

rules set for the fund, and not only the assets that the fund holds as of the evaluation date. It was assessed that in general the

investments’ maturity is less than three months and thus, investments qualify individually as cash and cash equivalents.

Due to the above, in the management’s opinion, the Company’s investments in money market 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 refer to Note 12

Financial risk management

, point (b)

Credit risk

. For carrying amounts as at December 31, 2022

and December 31, 2021 please refer to Note 15

Cash and cash equivalents

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

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Estimation uncertainty

The assumptions made about the future and the major sources of estimation uncertainty refer to the following areas:

Deferred tax assets and liabilities, in particular the realizability 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. Signiﬁcant management estimate is required to determine the

amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable proﬁts,

together with future tax planning strategies. The process includes evaluation of the tax results of the Company, under

consideration of local tax laws and regulations, 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 future periods through generation of taxable proﬁts.

The recognition of a deferred tax asset is based on the assumption that it will be recoverable against future taxable income. The

deterioration of tax results in the future could cause that this assumption could not be justiﬁed. When accounting for

transactions the Company takes into account uncertainties as to whether its treatment will be accepted by the tax authorities.

Estimates used for the recognition of deferred tax assets are updated annually with factors such as expected tax rates and

expected future tax results of the Company.

Deferred tax liabilities and assets are not recognized for temporary differences between the carrying amount and tax bases of

investments in subsidiaries as the Company is able to control the timing of the reversal of the temporary differences and in the

management’s assessment it is probable that the differences will not reverse in the foreseeable future.

For more details on deferred tax assets and liabilities please refer to Note 4

Signiﬁcant accounting policies

, point (c)

Income tax

and to Note 10

Income tax

Provisions and contingent liabilities

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 measured at management’s best estimate of the expenditure required to settle the obligation at the end of the

reporting period and are discounted to present value where the effect is material.

As of December 31, 2019 the Company recognized provision for a potential unfavorable outcome in the court case, presented in

the line “Provisions” in the statement of ﬁnancial position as of December 31, 2020. Subsequently the Court ordered the

Company to settle ﬁnal claims determinations, including payment and prospective relief. Payment amounting to USD 6,500

thousand was made on March 26, 2021, with the corresponding utilization of the provision. Further, Huuuge Global Ltd agreed to

participate in covering costs related to conclusion of the settlement agreement by compensating of the settlement fund

amount.

Preference shares

In September 2017, the Company issued series C preference shares to several investors. The series C preference shares were

converted into ordinary shares on February 5, 2021. For further detail please refer to Note 5

Determination of fair values

, point (a)

Preference shares liability measured at fair value through proﬁt or loss

Prior to conversion, the management concluded that the series C preference shares met the deﬁnition of a ﬁnancial liability

because they were effectively convertible into a variable 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

paragraph 16(b) and 25). Accordingly, the series C preference shares were classiﬁed as a ﬁnancial liability and measured initially

and subsequently at fair value through proﬁt or loss. As of December 31, 2022 and as of December 31, 2021, after the

conversion there was no such liability, however the ﬁnance expenses for the year 2021 include the valuation of preference

shares series C prior to conversion into common shares. For further details please refer to Note 9

Finance income and expense.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

This version is a pdf of executed xHTML Separate ﬁnancial statements as of and for the year ended December 31, 2022. In case of any discrepancies xHTML version shall prevail

Execution of stabilization option

In relation to the initial public offering, on February 5, 2021 the Company and IPOPEMA Securities S.A. (“Stabilization Manager”)

signed a Stabilization Agreement. The purpose of the Stabilization Agreement was to stabilize the price of the Huuuge Inc.

shares at a level higher than the level which would otherwise have prevailed. For the purpose of accounting for the stabilization

transaction, the Company treated the entire stabilization agreement as a ﬁnancing transaction, i.e. repurchase of own shares

from the market in the scope of IAS 32 and IFRS 9. The remuneration of the Stabilization Manager was treated as a share-based

payment in accordance with IFRS 2 because the amount of the remuneration was based on the value of the shares. For more

details, please refer to Note 16

Share capital

Adoption of new and revised Standards

New International Financial Reporting Standards and Interpretations published but not yet effective:

●

Amendments to IFRS 10 and IAS 28:

Sale or Contribution of Assets Between an Investor and its Associate or Joint Venture

(issued on September 11, 2014) – the endorsement process of these Amendments has been postponed by the EU - the

effective date was deferred indeﬁnitely by the International Accounting Standards Board;

●

IFRS 17

Insurance Contracts

(issued on May 18, 2017) including Amendments to IFRS 17 (issued on June 25, 2020) -

effective for ﬁnancial years beginning on or after January 1, 2023;

●

Amendments to IAS 1:

Presentation of Financial Statements: Classiﬁcation of Liabilities as Current or Non-curren

- Deferral

of Effective Date and Non-current Liabilities with Covenants

(issued on January 23, 2020 and July 15, 2020 and 31 October

2022, respectively) – not yet endorsed by the EU at the date of approval of these ﬁnancial statements for issue – effective

for ﬁnancial years beginning on or after January 1, 2024;

●

Amendments to IFRS 16 Leases:

Lease Liability in a Sale and Leaseback

(issued on 22 September 2022): not yet endorsed

by the EU at the date of approval of these

ﬁnancial statements for issue – effective for ﬁnancial years beginning on or

after January 1, 2024;

●

Amendments to IAS 1 and IFRS Practice Statement 2:

Disclosure of Accounting policies

(issued on February 12, 2021) –

effective for ﬁnancial years beginning on or after January 1, 2023;

●

Amendments to IAS 8:

Deﬁnition of Accounting Estimates

(issued on February 12, 2021) –

effective for ﬁnancial years

beginning on or after January 1, 2023;

●

Amendments to IAS 12:

Deferred Tax related to Assets and Liabilities arising from a Single Transaction

(issued on May 7,

2021) – effective for ﬁnancial years beginning on or after 1 January 2023;

●

Amendments to IFRS 17 Insurance contracts:

Initial Application of IFRS 17 and IFRS 9

– Comparative Information (issued

on 9 December 2021) – effective for ﬁnancial years beginning on or after 1 January 2023;

These standards and amendments are not expected to have a material impact on the Company in the current or future reporting

periods and on foreseeable future transactions.

New International Financial Reporting Standards and Interpretations effective for the ﬁrst time for ﬁnancial year 2022

During the year 2022, the following IFRS and amendments to IFRS or interpretations entered into force:

●

Amendments to IFRS 3: Reference to the Conceptual Framework (issued on May 14, 2020): effective for ﬁnancial years

beginning on or after January 1, 2022;

●

Amendments to IAS 16: Property, Plant and Equipment – Proceeds before Intended Use (issued on May 14, 2020):

effective for ﬁnancial years beginning on or after January 1, 2022;

●

Amendments to IAS 37: Onerous Contracts – Cost of Fulﬁlling a Contract (issued on May 14, 2020): effective for ﬁnancial

years beginning on or after January 1, 2022;

●

Annual Improvements to IFRS Standards 2018–2020 (issued on May 14, 2020): effective for ﬁnancial years beginning on

or after January 1, 2022.

The amendments listed above did not have any impact on the amounts recognized in prior periods and are not expected to

signiﬁcantly affect the current or future periods.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

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Signiﬁcant accounting policies

The accounting policies applied by the Company in these ﬁnancial statements have been consistently applied by the Company

and are consistent across the reported periods, unless indicated otherwise.

(a)

Foreign currency transactions – transactions and balances

Transactions in foreign currencies are translated to USD (which is the functional currency of the entity and the presentation

currency of these ﬁnancial statements) at exchange rates effective on the days of the transactions. Monetary assets and

liabilities denominated in foreign currencies are translated into USD at the applicable closing exchange rates as of the balance

sheet date. The foreign exchange rate differences arising on translation of transactions denominated in foreign currencies are

recognized in the proﬁt or loss in the statement of comprehensive income.

Non-monetary assets and liabilities that are measured at historical cost in foreign currency are translated using the exchange

rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair

value are translated at the exchange rates at the date the fair value was determined. Translation differences on assets and

liabilities carried at fair value are reported as part of the fair value gain or loss.

(b)

Revenue

The Company’s revenue is generated by services provided to the other entities in the Group. The Company’s revenue comprises

revenues from advertisement services, game design development services, and stewardship activities. In addition, revenue for

the year ended December 31, 2021 was generated from legal services.

Advertisement services

The Company purchases certain advertisement services from third parties (mostly Platform providers such as Facebook), 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. Further information on the judgment in this respect is

presented in Note 2

Basis for preparation of the ﬁnancial statements,

point (d)

Key judgements and estimates – Model of revenue

recognition.

The Company’s management identiﬁed one performance obligation which is advertisement services in gaming applications.

Revenue is recognized over time, in the period in which services are provided.

Game design development services, legal services and stewardship activities

Under each of these revenue streams, The Company’s management identiﬁed one performance obligation. Revenue is

recognized over time, in the period in which services are provided. For game design development services, legal services and

stewardship activities, the Company has a right to consideration in an amount that corresponds directly with the value to the

customer of the entity’s performance completed to date.

Management assesses that the Company does not have any contracts where the period between the transfer 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 when the consideration is unconditional because only the passage of

time is required 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 service before it is transferred to the customer. In such circumstances, the Company recognizes revenue

in the amount of gross remuneration to which it expects to be entitled in exchange for the goods or services transferred.

(c)

Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in proﬁt or loss except to

the extent that it relates to a business combination, or items are recognized directly in equity or in other comprehensive income.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

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Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or

substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized 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 temporary 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 temporary differences between the carrying

amount and tax bases of investments in subsidiaries where the company is able to control the timing of the reversal of the

temporary differences and it is probable that the differences will not reverse in the foreseeable future. In addition, deferred tax is

not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the

tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been

enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally

enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on

the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or

their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is

probable that future taxable proﬁts will be available against which they can be utilized.

Deferred tax assets are reviewed at each reporting date and are reduced to the extent it is no longer probable that the related tax

beneﬁt will be realized.

(d)

Shares in subsidiaries, associates and joint ventures

Shares in subsidiaries, associates and joint ventures not classiﬁed as held for sale in accordance with IFRS 5, are 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, transaction costs related to acquisition of

shares in subsidiaries increase the costs (the carrying amount) of the investment.

Subsidiaries are entities controlled by the Company.

The Company controls an entity when it:

●

has power to direct the relevant activities of the investees that signiﬁcantly affect their returns,

●

has exposure, or rights, to variable returns from its involvement with the investees,

●

has the ability to use its power over the investees to affect the amount of the investor’s returns.

The Company veriﬁes if it has control over entities, if an event results in a change to one or more of the control conditions listed

above.

An associate is an entity over which the Company has signiﬁcant inﬂuence. Signiﬁcant inﬂuence is the power to participate in

the ﬁnancial and operating policy decisions of the investee, but is not control or joint control over those policies. The Company

does not have any associates.

(e)

Financial instruments

The Company recognizes the non-derivative ﬁnancial instruments such as long-term and short-term deposits, trade and other

receivables, cash and cash equivalents (including investments in mutual funds and money market interest-bearing account) and

trade and other payables.

At initial recognition, the Company measures a ﬁnancial asset at its fair value plus, in the case of a ﬁnancial asset not at fair

value through proﬁt or loss (“FVPL”), transaction costs that are directly attributable to the acquisition of the ﬁnancial asset.

Transaction costs of ﬁnancial assets carried at FVPL are expensed in proﬁt or loss.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

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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 assets and the contractual terms of the

cash ﬂows. Assets that are held for collection of contractual cash ﬂows, where those cash ﬂows represent solely payments of

principal and interest (“SPPI test”), are measured at amortized cost. Interest income from these ﬁnancial assets is included in

ﬁnance income using the effective interest rate method. Any gain or loss arising on derecognition is recognized directly 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 to Note 4

Signiﬁcant

accounting policies

, point (g)

Impairment, (i) Financial assets

below.

(f)

Leases

Management assesses at the time of entering into a contract whether the contract is a lease or contains 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

consideration.

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 which 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

a statement of ﬁnancial position in a separate line as “investment property”.

Right-of-use assets are measured initially at cost comprising the following:

●

the amount of the initial measurement of the lease liability,

●

any lease payments made at or before the commencement date less any lease incentives received,

●

any initial direct costs,

●

restoration costs.

Subsequently, the right-of-use assets are measured at cost less accumulated depreciation and any accumulated impairment

losses and adjusted for remeasurement of the lease liability due to reassessment or lease modiﬁcations.

The right-of-use assets are depreciated over the shorter 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 present value of the following lease

payments for the underlying right-of-use assets during the lease term:

●

ﬁxed payments (including in substance ﬁxed payments), less any lease incentives receivable,

●

variable lease payments that are based on an index or a rate,

●

amounts expected to be payable by the entity under residual value guarantees,

●

the exercise price of a purchase option if the Company’s management is reasonably certain to exercise that option,

●

payments of penalties for terminating the lease, if the lease term reﬂects the Company would exercise that option.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

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The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined, or the

Company’s incremental borrowing rate.

Each lease payment is allocated between the liability and ﬁnance cost. The ﬁnance cost is charged to proﬁt or loss over the

lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The

carrying amount of liability is remeasured to reﬂect any 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/or 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 recognized on a straight-line basis over 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 impairment.

For trade receivables, the Company applies a simpliﬁed approach and 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 historical data on credit

losses, adjusted on an as-needed basis for the 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-impaired 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 contractual maturity, if shorter (“12Months ECL”). If the Company identiﬁes a signiﬁcant

increase in credit risk (“SICR”) since initial recognition, the asset is transferred to Stage 2 and its ECL is measured based on ECL

on a lifetime basis, that is, up until contractual maturity but considering expected prepayments, if any (“Lifetime ECL”). The

ﬁnancial assets with objective evidence of impairment are classiﬁed to Stage 3; for such assets lifetime ECL is recognized.

(ii)

Non-ﬁnancial assets

The carrying amounts of the Company’s non-ﬁnancial assets, other than inventories and deferred tax assets, are 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 required, then the asset’s recoverable amount is estimated.

The recoverable 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 future cash ﬂows are discounted to their present value using a pre-tax discount rate that

reﬂects current market assessments of the time value of money and the risks speciﬁc to the asset. For the purpose of

impairment testing, assets are grouped together into 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 recoverable amount.

Impairment losses are recognized in proﬁt or loss.

For other assets impairment losses recognized in prior periods are assessed at each reporting date for any indications that the

loss has decreased or no longer exists. An impairment loss is reversed only to 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 recognized.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

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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 level, irrespective of whether there is any indication of impairment.

As at December 31, 2022 and December 31, 2021 the Company had no intangible 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 three months or less.

The judgment relating to the classiﬁcation of the investments in money market funds as “cash and cash equivalents’ is

disclosed in Note 2

Basis for preparation of the ﬁnancial statements

, point (d)

Key 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 they are measured at amortized cost including an impairment loss determined in accordance with the

expected loss model described in Note 4

Signiﬁcant accounting policies

, point (g)

Impairment

, (i)

Financial assets

(i)

Trade and other receivables

Trade receivables are recognized initially at the fair value which is equal to the nominal amount when the contract does not

contain signiﬁcant ﬁnancing. Subsequently, they are carried at amortized cost using the effective interest method, less loss

allowance. The loss allowance is determined according to the accounting policy 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 employees and

receivables from the state budget. Other receivables that are not ﬁnancial assets as at the end of the reporting period are

measured at the amount due.

(j)

Trade and other payables

These amounts represent liabilities for goods and services provided to the group prior to the end of the ﬁnancial year which are

unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the

reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the

effective interest method.

The other payables comprise employees-related liabilities, tax other than income tax liabilities, and accrued expenses, which are

measured at the amount due.

(k)

Share capital and other components of the equity

Share capital is presented at the total nominal value of the registered shares of the Company.

As of December 31, 2022 and December 31, 2021 all ordinary shares and preference shares (series A and B) are classiﬁed as

equity. Preferences attributable to series A and B of preference shares are described in Note 16

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 transaction costs are recognized as

an expense.

Any excess of the fair value of consideration received over the nominal value of shares issued is recorded as share premium in

equity, i.e. supplementary capital.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

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In the line “Treasury shares”, the Company presents the own shares repurchased, which are recognized at costs and are

deducted from equity. No gain or loss is recognized in proﬁt 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 recognized in the supplementary

capital. Incremental costs directly attributable to the repurchase of own shares are presented as the deduction of equity, i.e. in

the line “Treasury shares”.

In accordance with Delaware General Corporation Law, the Company may declare and pay dividends upon the shares of its

capital stock either:

Out of its surplus, being the excess of its net assets over its capital (all or part of the consideration received by the

corporation in exchange for its capital stock, as determined by the Board of Directors); or

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 depreciation in the value of its property, or by losses, or otherwise,

to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes

having a preference upon the distribution of assets, the directors of such company shall not declare 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 stock of all classes having a preference upon the distribution of assets shall have been repaired.

Employee beneﬁts reserve results from the share-based payment arrangements and is described in details in Note 4

Signiﬁcant

accounting policies

, (m)

Share-based payment arrangements

and Note 17

Share-based payment arrangements

(l)

Interest-bearing loans and borrowings

Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at

amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in

proﬁt or loss over the period of the borrowings using the effective interest method.

Borrowings are derecognized 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 transferred to another party and the

consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized 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 with owners.

Borrowings are classiﬁed as current liabilities unless the Company has an unconditional right to defer settlement of the liability

for at least 12 months after the reporting period.

(m)

Share-based payment arrangements

The Company runs an award program where the employees and contractors are receiving free options which entitle them to

purchase the shares in the Company. Such a program is a share-based payment program which is classiﬁed as equity settled

due to the fact that the Company does not have an obligation to settle the obligation arising under the program by delivering

cash to the employees 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 grant date fair value of the awards is determined

using a share option pricing model.

Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 17

Share-based payment arrangements

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

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Options with the same grant date but with different periods during which all the speciﬁed vesting conditions of a share-based

payment arrangement are to be satisﬁed are treated as separate awards with a different vesting period (staged vesting).

The fair value determined at the grant date of the equity-settled share-based payments is expensed (options granted to

employees of the Company) or allocated to investments in subsidiaries (options granted to employees of the Company’s

subsidiaries) over the vesting period, 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 employee beneﬁt reserve.

IFRS 2

Share-based Payment

does not address 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 retained earnings. Such an increase is

presented in the line “Employee beneﬁt reserve”.

The amount recognized as an expense or allocated to investment in subsidiaries is adjusted to reﬂect the number of awards for

which the related service 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.

Share - based payment transactions with non-employees

Share-based payment transactions with non-employees include the transactions in which non-employees provide services to the

Company in exchange for free options which entitle them to purchase the shares in the Company.

In accordance with IFRS 2, the Company measures the services received, and the corresponding increase in equity, directly, at

the fair value of the goods or services received, unless that fair value cannot be estimated reliably. If the fair value of the

services received cannot be estimated reliably, the Company measures their value, and the corresponding increase in equity,

indirectly, by reference to the fair value of the equity instruments granted.

The Company recognizes the expense charge in the Company’s separate statement of comprehensive income over the vesting

period for which the related services are provided with the corresponding increase in equity in the line “Employee beneﬁt

reserve”.

Employee beneﬁts

(i)

Deﬁned contribution plans – retirement beneﬁts

The Company has under local laws obligations to pay retirement beneﬁts, however, as the average age of employees is low, no

provision has been recorded due to its immaterial amount.

(ii)

Other employee beneﬁts

Short-term employee beneﬁt obligations are measured on an undiscounted basis and are expensed as the related service is

provided. A liability is recognized 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 provided by the employee,

and the obligation can be estimated reliably.

(n)

Provisions

A provision is recognized when the Company, as a result of a past event, has a present obligation (legal or constructive) that can

be estimated reliably and it is probable that the Company will be required to settle that obligation (an outﬂow of economic

beneﬁts will be required). Provisions are measured at management’s best estimate of the expenditure required to settle the

obligation at the end of the reporting period and are discounted to present value where the effect is material.

HUUUGE INC.

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(o)

Research and development expenses

In the position “Research and development expenses”, the Company recognizes costs related to game design of the existing

and the new games.

(p)

Sales and marketing expenses

In the position “Sales and marketing expenses”, the Company recognizes mostly costs of remuneration.

(q)

Finance income and expense

Foreign currency gains and losses are reported on a net basis as either ﬁnance income or ﬁnance cost depending on whether

foreign currency movements are in a net gain or net loss position unless material, where separate presentation is required.

Finance income comprises mainly interest income on funds invested. Interest income is recognized as it accrues in proﬁt or

loss, using the effective interest method.

Finance expenses comprise interest expense from banks, leases and valuation of preferred shares series C classiﬁed as

non-current liabilities prior to conversion on February 5, 2021.

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 recognized in the ﬁnancial statements at fair value on a recurring basis, management

determines whether in the Company transfers have occurred between levels in the hierarchy by 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 reporting period.

The Company’s management determines the policies and procedures for fair value measurement. External valuers are involved

for

valuation

signiﬁcant

assets

and

signiﬁcant

liabilities.

Selection

criteria

include market knowledge, reputation,

independence and whether professional standards are maintained. The management decides, after discussions with the

Company’s external valuers, which valuation techniques and inputs to use for each case.

At each reporting date, the management analyzes the movements in the values of assets and liabilities which are required to be

remeasured or re-assessed as per the Company’s accounting policies. For this analysis, the management veriﬁes the major

inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant

documents.

Fair values have been determined for measurement and for disclosure purposes as explained below.

(a)

Preference shares liability measured at fair value through proﬁt or loss

On February 5, 2021 series C preference shares were converted into common shares. At the date of the conversion series C

preference 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 proﬁt or loss. For more information, please refer to Note 16

Share capital

and to Note 18

Conversion of series C preference shares

Prior to conversion, series C preference shares liability was measured at fair value initially and after initial recognition with the

gains/loss on subsequent remeasurements being recognized in proﬁt or loss.

HUUUGE INC.

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(b)

Trade and other receivables measured at amortized cost

For trade and other receivables and deposits, the Company’s management considers their carrying amounts to 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 payable, the Company’s management considers their carrying amounts to be the best estimation of their

respective fair values, determined for disclosure purposes, due to the short-term nature of these instruments. Fair value of

non-derivative ﬁnancial liabilities other than trade accounts payable, is calculated based on the present value of future principal

and interest cash ﬂows, discounted at the market rate of interest at the reporting date. For lease liabilities, an interest rate

implicit in the lease is used, if that rate can be readily determined; if that rate cannot be readily determined, the lessee's

incremental borrowing rate is used.

As of December 31, 2022 and December 31, 2021 the Company does not classify any assets or liabilities to be subsequently

measured at fair value.

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, stewardship activities and legal services. The Company as an agent presents revenues from advertisement services in

net amounts, for further details on the judgment please refer to Note 2

Basis for preparation of the ﬁnancial statements

, point (d)

Key judgements and estimates

. In the year ended December 31, 2022 the Company’s revenues amounted to USD 2,922 thousand

(USD 2,724 thousand from game design services and USD 197 thousand from stewardship services), and in the year ended

December 31, 2021, 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).

Segment information

The Company uses the exemption with respect to the disclosures of segment information in accordance with IFRS 8.4,

therefore, the analysis of the Company's operating segments has been presented in the consolidated ﬁnancial statements of the

Group

Operating expenses

For the years ended December 31, 2022 and December 31, 2021 operating expenses include:

Expenses by nature

Year ended

December 31, 2022

Year ended

December 31, 2021

Finance & legal services

5,390

3,385

Salaries and employee-related costs

3,757

2,392

Share-based payment expense

774

565

Property maintenance and external services

161

Other costs

388

226

Total operating expenses

10,399

6,729

Finance and legal services in the year ended December 31, 2022 include costs related to review of the strategic options of the

Company in the amount of USD 3,438 thousand.

HUUUGE INC.

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Finance income and expense

Finance income

Year ended

December 31, 2022

Year ended

December 31, 2021

Interest earned from banks

986

Interest earned on loans granted

Other Interest

Total ﬁnance income

986

Finance income for the year ended December 31, 2022 amounted to USD 986 thousand, which comprises interest from banks

on deposits, money market mutual fund investments and money market interest-bearing account, including interest accrued in

the amount of USD 396 thousand.

Finance expense

Year ended

December 31, 2022

Year ended

December 31, 2021

Foreign exchange losses, net

376

540

Valuation of preferred shares classiﬁed as non-current

liabilities

38,997

Loss on foreign exchange forward contract

2,662

Other

Total ﬁnance expense

376

42,205

Finance expenses for the year ended December 31, 2022 includes net foreign exchange losses in the amount of USD 376

thousand.

Finance expenses for the year ended December 31, 2021 included mainly valuation of preferred shares from series C classiﬁed

as non-current liabilities prior to conversion on February 5, 2021 (for more information please refer to Note 18

Conversion of

series C preference shares

), loss on foreign exchange forward contract and net foreign exchange losses.

Prior to the initial public offering, the Company had entered into foreign exchange forward contract contingent upon the event of

initial public offering. Upon the occurrence of the initial public offering event, the Company received proceeds from the newly

issued shares converted to USD at a ﬁxed PLN/USD exchange rate, as determined in the forward contract. The Company’s policy

choice was to present the proﬁt or loss on forward contracts as ﬁnance income or expense accordingly. Loss of USD 2,662

thousand was incurred on the forward contract settlement date, presented in the line “Finance expense” in the statement of

comprehensive income for the year ended December 31, 2021.

HUUUGE INC.

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10.

Income tax

As of

December 31, 2022

As of

December 31, 2021

Deferred tax assets

140

Deferred tax liabilities

Net deferred tax asset/(liability)

112

Year ended

December 31, 2022

Year ended

December 31, 2021

Current income tax

893

Adjustments in respect of current income tax of previous year

150

Change in deferred income tax

(64)

(77)

Income tax for the period

829

Higher current income tax in the year ended December 31, 2022 is due to the changes introduced to the U.S. tax treatment of

research and development costs. Starting from 2022, U.S. taxpayers are required to capitalize and amortize costs related to

research and development activities for the tax purposes. The changes resulted in the lower tax-deductible costs, and

consequently higher global intangible low-taxed income (“GILTI”).

The tax on the Company’s proﬁt before tax differs from the theoretical amount that would arise using the statutory tax rate

applied to its proﬁt as follows:

Effective tax rate reconciliation

Year ended

December 31, 2022

Year ended

December 31, 2021

Proﬁt/(loss) before income tax

(6,883)

(45,133)

Statutory tax rate in the United States

21%

Theoretical tax expense/(beneﬁt) according to current tax rate

in the United States

(1,445)

(9,478)

Tax impact of non-deductible costs – ESOP

163

119

Tax impact of non-deductible costs – series C shares valuation

8,189

GILTI* income net of FDII** deduction, net of foreign tax credit

2,128

1,234

Tax impact of non-deductible costs – other

(17)

(141)

Correction of the current tax relating to previous years

150

Tax charge

829

Effective tax rate

(12%)

(0.2%)

* GILTI – Global Intangible Low-Taxed Income ** FDII – Foreign-Derived 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.

HUUUGE INC.

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Deferred tax reconciliation

Deferred tax assets

As of

December 31, 2022

As of

December 31, 2021

Accrued expenses

132

Lease liabilities

Unrealized exchange rate differences

(6)

Deferred tax assets

140

Compensation with deferred tax liabilities

(28)

(44)

Deferred tax asset presented in the statement of ﬁnancial

position

112

Deferred tax assets are expected to be recovered within 12 months from the reporting date.

Deferred tax liabilities

As of

December 31, 2022

As of

December 31, 2021

Tangible assets

Right of use assets

Other differences

Deferred tax liabilities

Compensation with deferred tax assets

(28)

(44)

Deferred tax liability presented in the statement of ﬁnancial

position

Deferred tax liabilities expected to be settled within 12 months from the reporting date.

Year ended

December 31, 2022

Year ended

December 31, 2021

Net deferred tax assets/(liabilities) at the beginning of the

period

(28)

Net deferred tax assets/(liabilities) at the end of the period

112

Deferred tax assets/(liabilities) in the net proﬁt for the period

(64)

(76)

As of December 31, 2022 and December 31, 2021 there were no unused tax losses for which no deferred tax would be

recognized in the statement of ﬁnancial position.

HUUUGE INC.

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11.

Investment in subsidiaries

As of

December 31, 2022

As of

December 31, 2021

Huuuge Global Ltd

3,593

Huuuge Games Sp. z o.o.

2,326

Playable Platform B.V.

1,826

Huuuge UK

345

Huuuge Digital Ltd

Huuuge Tap Tap Games Ltd*

Impairment

Options granted to employees of the Company’s subsidiaries

under

stock

option

program

(described

the

Note

Share-based payment arrangements

)

21,072

18,765

Total

29,162

26,856

* On April 29, 2022, Huuuge Tap Tap Games Ltd was successfully deregistered and dissolved.

As at December 31, 2022 and December 31, 2021 there was no impairment of the investment in subsidiaries recognized due to

the lack of the impairment indicators. When reviewing the indicators of impairment, the Company’s management has

considered the following factors:

●

external sources, such as: observable indications that the assets’ value has declined signiﬁcantly more that would be

expected; signiﬁcant changes with an adverse effect in the technological, market, economic or legal environment;

market capitalization;

●

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 of the assets before than previously expected.

12.

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 management.

The Company is exposed in particular to the following risks arising from ﬁnancial instruments:

●

credit risk,

●

liquidity risk,

●

market risk.

HUUUGE INC.

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Risk management framework

The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management

framework. The Board of Directors continually identiﬁes, evaluates and manages the risks faced by the Company, sets

appropriate risk limits and controls 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 to cash and cash equivalents

The Company is exposed to credit risks mainly with regard to 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 transactions and deposits funds with investment grade rated ﬁnancial institutions, as well as

monitors and limits the concentration of transactions with any single party. The Company’s management uses Moody’s credit

ratings. The information about the credit risk rating grades is presented in the table below.

Moody's Rating

As of

December 31, 2022

As of

December 31, 2021

Aaa

105

86,210

106,225

Total cash and cash equivalents

86,210

106,330

Cash and cash equivalents (investments in money market mutual funds) are kept in ﬁnancial institutions with Aaa and A3 rating

only, which are investment ratings according 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 to a single counterparty,

nevertheless at each reporting date there is a signiﬁcant concentration of the credit risk.

As at December 31, 2022, the concentration of funds in two ﬁnancial institutions was respectively 82.4% and 17.6%. As at

December 31, 2021, the concentration of funds in two ﬁnancial institutions was respectively 85.6% and 14.4%.

Total gross carrying amounts of cash and cash equivalents as of December 31, 2022 and December 31, 2021 were included in

Level 1, based on assessment that credit risk has not increased signiﬁcantly since initial recognition. For ﬁnancial assets in

Level 1, the Company recognizes 12 month ECL and recognizes interest income on a gross basis – interest will be calculated on

the gross carrying amount of the ﬁnancial asset before adjusting for ECL.

Management has assessed that the Company’s provision for expected credit losses related to cash and cash equivalents would

not be material in any of the periods presented.

The carrying amount of cash and cash equivalents balance represents the maximum credit exposure.

HUUUGE INC.

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Credit risk with respect to trade receivables and other receivables

The carrying amount of trade receivables represents the maximum credit exposure. The maximum exposure to credit risk at the

reporting dates was as follows:

Carrying amount

As of

December 31, 2022

As of

December 31, 2021

Trade receivables from third parties

Trade receivables from related parties

1,100

3,893

Total

1,100

3,893

The Company’ trade receivables are trade receivables from related parties – mainly Huuuge Global Ltd. and Huuuge UK Ltd.

Transactions with related parties are described in Note 23

Related party transactions

Allowance for expected credit losses

The Company recognizes allowance for expected credit losses according to IFRS 9

Financial Instruments,

considering all

reasonable and supportive information (e.g. customer rating, historical recoverability).

The Company’s trade receivables are trade receivables 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. Taking into account that

Company’s trade receivables are only from related parties and there were no issues with historical recoverability, the related

expected 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

from loans granted.

HUUUGE INC.

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The ageing of trade receivables at the reporting dates was as follows:

As of December 31, 2022

Total

not due and overdue

up to 1 month

over 1 month to 3

months

over 3 months to 6

months

over 6 month to 1

year

over 1 year

Trade receivables from related parties

1,100

Allowance for expected credit losses/ impairment

Receivables, net

1,100

As of December 31, 2021

Total

not due and overdue

up to 1 month

over 1 month to 3

months

over 3 months to 6

months

over 6 month to 1

year

over 1 year

Trade receivables from related parties

3,893

3,466

106

321

Loans granted to the related parties

Allowance for expected credit losses/ impairment

Receivables, net

3,893

3,466

106

321

HUUUGE INC.

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(c)

Liquidity risk

Liquidity risk means the risk that the Company may encounter diﬃculty in meeting the obligations associated with its ﬁnancial

liabilities that are settled by delivering cash or another ﬁnancial asset. The Company’s management approach to managing

liquidity is to ensure, as far as possible, that it will always have suﬃcient liquidity to meet its liabilities when due, under both

normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. Liquidity

risk is assessed in conjunction with the Company’s budgeted cash ﬂows and by managing a proper current liabilities structure.

Unexpected business circumstances that may lead to deteriorating liquidity position are balanced with the demand for the

Company’s debt. The method of measuring the liquidity risk consists of the analysis of the cover of current liabilities with

available cash resources.

There are no bank loan balances and bank loan agreements in force as at December 31, 2022, December 31, 2021 and as at

date of approval these ﬁnancial statements for issue, thus also interest rate risk is remote from the Company’s perspective.

Moreover, it is not expected that the cash ﬂows included in the maturity analysis could occur signiﬁcantly earlier, or at

signiﬁcantly different amounts.

The Company’s operations, and thus its liquidity, have not been adversely affected by the global COVID-19 pandemic.

HUUUGE INC.

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The following are the contractual maturities of ﬁnancial liabilities including estimated interest payments as of respective balance sheet dates:

As of December 31, 2022

Carrying amount

Contractual

cash ﬂows

6 months or less

6 - 12 months

1 - 2 years

2 - 5 years

over 5 years

Trade payables

107

Accrued expenses (except taxes and employee-related)

2,614

Lease liabilities

Non derivative ﬁnancial liabilities

2,788

2,748

As of December 31, 2021

Carrying amount

Contractual

cash ﬂows

6 months or less

6 - 12 months

1 - 2 years

2 - 5 years

over 5 years

Trade payables

533

Accrued expenses (except taxes and employee-related)

1,733

Lease liabilities

144

Non derivative ﬁnancial liabilities

2,410

2,305

There were no derivative ﬁnancial instruments at the end of reported periods.

HUUUGE INC.

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(d)

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices may 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 exposures within acceptable parameters, while optimizing the return. The Company does not apply

hedge accounting in order to manage volatility in proﬁt 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 to variability of exchange rates and did not identify signiﬁcant

balances of accounts denominated in foreign currencies (cash and cash equivalents, trade receivables and trade payables) and

transactions carried in foreign currencies which would be associated with a signiﬁcant currency risk for the Company.

(ii)

Interest rate risk

As the Company has not entered in bank loan agreements in the presented periods till December 31, 2022, the interest rate risk

is marginal.

The Company does not have any signiﬁcant interest bearing liabilities at variable rate which would expose the Company to the

cash ﬂow risk.

The Company’s interest bearing assets are cash and cash equivalents. The deposits, and the investments in money market

funds and money market accounts are at a variable interest rate. These are investments which are either readily available, or

with a short-term maturity date. Since the expected reasonable shift of the interest rate is insigniﬁcant during the maturity

period of the investments, proﬁt or loss is not sensitive to the changes of interest rates. Therefore the interest bearing assets at

variable rate do not expose the Company to cash ﬂow risk.

(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 Directors policy is to maintain a strong capital base so as to maintain investors’ and market 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 strategic needs, with the objective to safeguard the ability to continue as a going

concern and optimize the capital structure in order to 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.

Managed capital consists of ordinary shares, preference shares of series A and B, as well as repurchased own shares and

options as of December 31, 2022. For the amounts, please refer to Note 16

Share capital,

of these ﬁnancial statements. There

are no externally imposed capital management requirements (such as covenants or similar).

The capital managed by the Company’s management included equity as of December 31, 2021 and preference shares series C,

classiﬁed as non-current ﬁnancial liabilities prior to its conversion on February 5, 2021.

The Company’s management monitors the return on capital on the basis of the basic and diluted earnings per share ratios.

Further information on calculation of earnings per share rations is presented in the Group’s consolidated ﬁnancial statements.

The objective of the Management is to maximize the return on capital to the shareholders.

HUUUGE INC.

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No dividends were declared and paid by the Company to its shareholders in the years ending December 31, 2022 and December

31, 2021.

As of

December 31, 2022

As of

December 31, 2021

Equity

112,688

134,869

Total capital

112,688

134,869

HUUUGE INC.

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13.

Accounting classiﬁcations of ﬁnancial instruments and fair values

The fair values of ﬁnancial assets and liabilities, together with the carrying amounts shown in the statement of ﬁnancial position are as follows:

As of

December 31, 2022

Financial assets measured

at amortized cost

Financial liabilities

measured at fair value

Financial liabilities at

amortized cost

Financial liabilities out of

scope of IFRS 9

Total carrying amount

Fair value

Assets

87,310

Trade receivables from related parties

1,100

Cash and cash equivalents

86,210

Liabilities

107

174

Lease liability

Trade payables

107

Total

87,310

107

87,484

As of

December 31, 2021

Financial assets measured

at amortized cost

Financial liabilities

measured at fair value

Financial liabilities at

amortized cost

Financial liabilities out of

scope of IFRS 9

Total carrying amount

Fair value

Assets

110,223

Trade receivables from related parties

3,893

Cash and cash equivalents

106,330

Liabilities

533

144

677

Lease liability

144

Trade payables

533

Total

110,223

533

144

110,900

As at December 31, 2022 and December 31, 2021 the Company’s management did not identify any ﬁnancial assets measured at fair value – neither through proﬁt or loss nor through other

comprehensive income.

The Company’s management believes that the fair values of ﬁnancial instruments do not differ signiﬁcantly from their carrying amounts.

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Series C preference shares

Prior to conversion on February 5, 2021 series C preference shares liability was measured at fair value initially with gains/losses

on subsequent remeasurements being recognized in proﬁt or loss at each reporting period. The fair value measurements of

series C preference shares was classiﬁed as Level 3 of the fair value hierarchy.

14.

Trade and other receivables

As of

December 31, 2022

As of

December 31, 2021

Trade receivables and accrued revenues from related parties

1,100

3,893

Trade accounts receivable from third parties

Other receivables

Prepaid expenses

160

Total trade and other receivables

1,224

4,149

Allowance for expected credit losses/ impairment of trade receivables is not signiﬁcant.

Transactions with related parties are described in Note 23

Related party transactions

Prepaid expenses include advance payments for services that will be received in the future. Main types of prepayments are:

subscriptions, expenses from cloud computing arrangements which do not include an intangible asset (software as a service

contracts), and administration costs.

15.

Cash and cash equivalents

As of

December 31, 2022

As of

December 31, 2021

Deposits

70,090

Money market mutual fund investments

9,967

245

Money Market Account

5,100

15,003

Cash at banks (current accounts)

1,053

91,082

Total cash and cash equivalents

86,210

106,330

Money market mutual fund investments have been classiﬁed as cash equivalents. For the reasoning, please refer to Note 2

Basis for preparation of the ﬁnancial statements

, point (d)

Key judgements and estimates

During the year ended December 31, 2022, deposits, money market mutual fund investments and money market interest-bearing

accounts generated interest income in the total amount of USD 986 thousand. This includes the accrued interest from bank

deposits in the amount of USD 396 thousand (received before the date of these ﬁnancial statements). For the details, please

refer to Note 9

Finance income and expense

As of December 31, 2022 there was restricted cash of USD 15 thousand (USD 19 thousand as of December 31, 2021) included in

Cash at banks (current accounts).

HUUUGE INC.

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16.

Share capital

As of December 31, 2022 and December 31, 2021, Company’s share capital comprised the common shares and preference shares series A and B. Below are presented movements on different

components of equity divided in the categories of shares (nominal values presented in USD, not thousand USD):

Shares classiﬁed as equity instruments as of December 31, 2022:

Common shares

Preference shares

(series A and B)

Treasury shares

allocated for the

existing share-based

payment programs

Sub-total (issued)

Shares allocated for

the existing

share-based payment

programs (not issued)

Grand total

Number of

Nominal

value

Number of

Nominal

value

Number of

Nominal

value

Number of

Nominal

value

Number of

Nominal

value

Number of

Nominal

value

Number of

Nominal

value

As of January 1, 2022

82,690,347

1,655

1,556,348

84,246,697

1,686

12,467,461

249

96,714,158

1,935

Reduction of shares allocated for the existing

share-based payment programs (not issued)

(1,459,728)

(29)

(1,459,728)

(29)

Allocation of shares to Share-based payment

program

(1,459,728)

(29)

1,459,728

Exercise of stock options

1,459,728

(1,459,728)

(29)

Delivery of shares to former owners of

Double Star Oy

23,046

(23,046)

(0)

Repurchase of common shares under Share

Buyback Scheme ("SBB")

(4,989,608)

(100)

4,989,608

100

As of December 31, 2022

79,183,513

1,584

5,063,182

102

84,246,697

1,686

11,007,733

220

95,254,430

1,906

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

This version is a pdf of executed xHTML Separate ﬁnancial statements as of and for the year ended December 31, 2022. In case of any discrepancies xHTML version shall prevail

Shares classiﬁed as equity instruments as of December 31, 2021, i.e. including preference shares of series C after conversion (see Note 12

Financial risk management

point (e)

Capital management)

Common shares

Preference shares

(incl. series C)

Treasury shares

allocated for the

existing share-based

payment programs

Sub-total (issued)

Shares allocated for the

existing share-based

payment programs

(not issued)

Grand total

Number of

Nominal

value

Number of

Nominal

value

Number of

Nominal

value

Number of

Nominal

value

Number of

Nominal

value

Number of

Nominal

value

Number of

Nominal

value

As of January 1, 2021

8,618,959

863

5,963,949

596

1,390,019

139

794,442

16,767,369

1,678

881,071

17,648,440

1,766

Redemption of treasury shares

(1,390,019)

(139)

(794,442)

(80)

(2,184,461)

(219)

(2,184,461)

(219)

Exercise of stock options

6,411

(6,411)

(1)

Allocation of shares to Share-based

payment program

794,442

All shares before share split

8,625,370

864

5,963,949

596

14,589,319

1,460

1,669,102

167

16,258,421

1,627

All shares after share split

43,126,850

864

29,819,745

596

72,946,595

1,460

8,345,510

167

81,292,105

1,627

Conversion of preference shares

29,819,745

596

(29,819,745)

(596)

Shares issued

11,300,100

226

11,300,100

226

11,300,100

226

Stabilization option

(3,331,668)

(67)

3,331,668

Preference shares issued

Reduction of shares allocated for the

existing share-based payment programs

(not issued)

(1,775,320)

(36)

(1,775,320)

(36)

Allocation of treasury shares to

share-based payment program

(1,775,320)

(36)

1,775,320

5,897,271

118

5,897,271

118

Exercise of stock options

1,775,320

(1,775,320)

(36)

As of December 31, 2021

82,690,347

1,655

1,556,348

84,246,697

1,686

12,467,461

249

96,714,158

1,935

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

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The Company is authorized to issue up to 113,881,420 shares with a par value of USD 0.00002 (113,881,418 of common shares

and 1 share of series A preferred share and 1 share of series B preferred share).

As of December 31, 2022, 3,258,094 shares were allocated to a reserve which could be issued only with majority shareholders

approval (1,775,320 as of December 31, 2021). This is a consequence of using the treasury shares for: the Group’s ESOP

obligations in the amount of 1,459,728 shares during the year 2022 and 1,775,320 shares during the year 2021, as well as the

delivery of 23,046 treasury shares to the former owners of Double Star Oy (as presented in the tables above), which otherwise

would need to be satisﬁed via issuance of new shares.

As of December 31, 2022, the share capital of the Company comprised 84,246,697 shares (fully paid) with a par value of USD

0.00002 per share and the total value of USD 1,686 (not thousand), including 79,183,513 common shares held by shareholders,

two preference shares (one preference share of series A and one preference share of series B), and 5,063,182 common shares

reacquired by the Company and not redeemed (treasury shares and treasury shares allocated to the existing share-based

payment programs).

As of December 31, 2021, the share capital of the Company comprised 84,246,697 shares (fully paid) with a par value of USD

0.00002 per share and the total value of USD 1,686 (not thousand), including 82,690,347 common shares held by shareholders, 2

preference shares (one preference share of series A and one preference share of series B), and 1,556,348 of common shares

reacquired by the Company and not redeemed (treasury shares and treasury shares allocated for the existing share-based

payment programs).

During the year 2022, the number of shares (not issued) allocated to the existing share-based payment programs was reduced

by 1,459,728 shares. This is because 1,459,728 treasury shares were delivered to employees for the options exercised during the

year ended December 31, 2022. As of December 31, 2022, 11,007,733 shares with a par value of USD 0.00002 per share were

reserved for two stock option programs established in 2015 and 2019.

During the year 2021, the number of shares (not issued) allocated for the existing share-based payment programs was reduced

by 1,775,320

shares. This is because the treasury shares were delivered to 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 employee stock option

plan was extended by additional 5,897,271 shares. After the changes, as of December 31, 2021 12,467,461 shares with a par

value of USD 0.00002 per share were reserved for two stock option programs established in 2015 and 2019 years.

Holders of the two series A and series B preference shares, which may be converted for a ﬁxed number of common shares, have

several rights additional to the ones of the common shareholders, which may vary for series A and B). These rights are

stipulated in the corporate documents of Huuuge Inc., in particular in the Fifth Amended and Restated Certiﬁcate of

Incorporation. Essentially, the rights refer to:

●

protective provisions 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 preference shares shall be entitled to be paid out

of the assets of the Company available for distribution to its shareholders before the holders of common shares,

●

election of a director for every separate class of preference shares, one per each series of preference shares (series

A,B); two by the holders of common shares.

As at December 31, 2022 and December 31, 2021, no shareholder owned over 50% of the Company’s equity or had more than

50% of voting rights. The Company's major shareholder is Mr. Anton Gauﬃn, CEO and President, who participates in the

Company’s ordinary shares indirectly (through shares of Big Bets OU).

As of December 31, 2022, the share capital of the Company amounted to USD 1,686 (USD 1,686 as of December 31, 2021).

The supplementary capital derives mainly from the difference between nominal value and the market price on issuance of

shares, or the difference between the book value and purchase price on re-issue of treasury shares.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

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In the year ended December 31, 2022 the following transactions in common and preference shares took place:

●

Share Buyback Scheme ("SBB")

On February 15, 2022, the Company decided to repurchase its common shares listed for trading on the Warsaw Stock Exchange.

The share buy-back started on March 29, 2022. The purpose of the Share Buyback Scheme is to satisfy the Company's needs

related to the exercise of options under its Employee Stock Option Plans in the foreseeable future. On May 22, 2022, the Board

of Directors adopted a resolution according to which the number of Company’s shares capable of being repurchased by the

Company under the SBB has been set to the 6,500,000 shares. On August 2, 2022, the Company indeﬁnitely suspended the

purchase of its own shares.

The common shares repurchased were presented in the treasury shares line in the statement of ﬁnancial position.

During the year ended December 31, 2022, 4,989,608 common shares were repurchased under the SBB program and were

registered at Central Securities Depository as of the date of these ﬁnancial statements. Payments made for the purchase of own

shares in the amount of USD 20,090 thousand were recognized in Equity (Treasury shares).

●

Delivery of the treasury shares for options exercised

In the year ended December 31, 2022, 2,072,355 share options held by the employees under the share-based payment program

were exercised, out of which for 1,459,728 options exercised treasury shares were delivered to employees before December 31,

2022 (the difference is due to cashless exercises).

The delivery of treasury shares was presented as a movement from treasury shares to common shares. The movement resulted

in an increase in share capital in the amount of the nominal value of the shares delivered, and the difference between the value

of treasury shares and the cash consideration received in the amount of USD 16,251 thousand was recognized in supplementary

capital. At the same time, the movement decreased the number of shares (not issued) allocated to the existing share-based

payment programs.

●

Delivery of treasury shares to the former owners of Double Star Oy

In the year ended December 31, 2022, 23,046 shares were delivered to the former owners of Double Star Oy based on the Share

Sale and Purchase Agreement, corrected by the First Amendment dated October 19, 2021. For details of the earn-out

consideration, please see Note 17

Share-based payment arrangements

. The movement resulted in an increase in share capital in

the amount of the nominal value of the shares delivered, and a decrease in supplementary capital in the amount of USD 311

thousand (amount reﬂects the value of treasury shares, since the shares were delivered with no cash consideration).

In the year ended December 31, 2021, the following transactions in preference shares took place:

●

Redemption of treasury shares

On January 15, 2021 the Board of Directors of the Company approved to retire all of the Company’s common and preferred

shares that were held as treasury shares, which were as follows:

●

common shares – 1,402,293 shares

●

series A preference shares – 257,103 shares

●

series B preference shares – 397,645 shares

●

series C preference shares – 127,420 shares.

Common shares were reverted to the status of authorized but unissued shares, preferred shares were eliminated to no longer be

issued or outstanding shares.

Redemption of treasury shares has been recognized as a decrease in supplementary capital in the amount of USD 33,994

thousand in the statement of changes in equity for the period ended December 31, 2021.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

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●

Share split

On January 18, 2021 the Board of Directors approved the split of all of the Company’s existing common and preferred shares.

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 value of USD 0.00002 per share, and

(ii) 29,819,745 preferred shares series consisting of:

8,714,485 series A preferred shares, with a par value of USD 0.00002 per share,

4,911,775 series B preferred shares, with a par value of USD 0.00002 per share, and

16,193,485 series C preferred shares, with a par value of USD 0.00002 per share.

After this amendment each one common and each one preferred share, with a par value of USD 0.0001 per share, issued and

outstanding or held by Huuuge Inc. as treasury shares was automatically reclassiﬁed as ﬁve shares of common or preferred

shares accordingly, with a par value of USD 0.00002 per share.

Split of shares required weighted average number of shares presented in Note 12

Financial risk managemen

t, point (f)

Earnings

per share

of Huuuge Inc. Group consolidated ﬁnancial statements as of and for the year ended December 31, 2021 to be

adjusted in the calculation of both basic and diluted earnings per share for the period ended December 31, 2021 presented in

accordance with IAS 33 Earnings per share.

●

Conversion of preference shares series A, B and C

On February 5, 2021 all preference shares series A, B and C were converted into common shares, as shown in the table below:

Before the conversion

After conversion

Series A preference

Series B preference

Series C preference

Common shares

Number of shares

8,714,485

4,911,775

16,193,485

29,819,745

Conversion of preference 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 preference shares

On February 5, 2021 the Board of Directors, issued one series A preference share to RPII HGE LLC (Raine Group), with a par value

of USD 0.00002 per share for cash consideration of USD 50 and one series B preference share to Big Bets OU, with a par value of

USD 0.00002 per share, for cash consideration of USD 50, for which total cash consideration amounting to USD 100 was

received in February 2021. The difference between the nominal amount and the consideration received was recognized in the

supplementary capital in the statement of changes in equity.

●

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 offering shares was determined as PLN 50 per

share (approx. USD 13.53 per share). The difference between the nominal amount of newly issued shares and the cash

consideration received was recognized 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, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

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●

Execution of stabilization option

In relation to the initial public offering, on February 5, 2021 the Company and IPOPEMA Securities S.A. (“Stabilization Manager”)

signed Stabilization Agreement. The purpose of the Stabilization Agreement was to stabilize the price of the Huuuge Inc. shares

at a level higher than the level which would otherwise have prevailed. When the Company entered the contract, the liability was

recognized in correspondence with equity. At the same time, the Company recognized a prepayment (ﬁnancial asset) in the

same amount to reﬂect the fact that the stabilization activities were funded from the proceeds from the offering. The liability

and the assets were measured at fair value through proﬁt or loss until the stabilization transactions were completed. As such,

these transactions had no net impact on proﬁt or loss.

On February 26, 2021 the Company ended the stabilization process, which started upon the initial public offering on February 19,

2021, and the above-mentioned liability and asset have been derecognized. The Company repurchased, via Stabilization

Manager, its own shares in the total number of 3,331,668 in the price range PLN 38.4000–49.9850 (USD 10.35–13.51). The

repurchased shares were recognized as a decrease in equity (treasury shares) in the total amount of USD 43,976 thousand,

calculated as the number of shares repurchased, multiplied by the price per share plus the remuneration paid to Stabilization

Manager representing the transaction cost of this capital transaction.

●

The issuance of common shares for options exercised

In the year ended December 31, 2021, before share split 6,411 share options (equivalent of 32,055 options after share split) held

by the employees under the share-based payment program were exercised, resulting in the issuance of common shares, with the

difference between the exercise price paid by the employee and the nominal amount of shares recognized as share premium

(presented within “Supplementary capital”). The exercise price was paid by the employees in cash.

●

Delivery of the treasury shares for options exercised

In the year ended December 31, 2021, after the share split, 1,851,622 share options held by the employees under the

share-based payment program were exercised, out of which for 1,775,320 options exercised treasury shares were delivered to

employees before December 31, 2021 (the difference is due to cashless exercises). The delivery of treasury shares was

presented as a movement from treasury shares to common shares. The movement resulted in an increase in share capital in the

amount of nominal value of the shares delivered, and difference between the value of treasury shares and the cash

consideration received in the amount of USD 22,672 thousand was recognized in supplementary capital. At the same time, the

movement decreased the number of shares (not issued) allocated to the existing share-based payment programs.

17.

Share-based payment arrangements

As at December 31, 2022 and as at December 31, 2021 the Company had an equity incentive plan, i.e. ESOP. The ﬁrst stock

option program (the employee stock option plan or “ESOP 2015”) was established by the Company’s Board of Directors on April

3, 2015, the second one on October 19, 2019 (“ESOP 2019”), the grant dates were determined at the dates when the contracts

with eligible employees were signed. Additionally, during the period ended December 31, 2021 stock option plan was granted to

Mr. Anton Gauﬃn as described below in this note. The program entitles employees and some consultants to purchase shares in

the Company. Each option stands for one common or treasury share of the Company.

The vesting condition of both ESOP 2015 and 2019 programs 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%

the

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 grant date.

For such share-based payments staged vesting applies i.e. each instalment with different vesting period is treated as a separate

award with a different vesting period.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

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As of December 31, 2022 there were 11,007,733 shares reserved for the ESOP that were not yet allocated to speciﬁc employees

(12,467,461 as of December 31, 2021). This is at the Company discretion whether the unallocated shares will be allocated within

the share-based program to the employees or unused or withdrawn from the program.

In 2022 the Company’s Board of Directors granted 656,971 options to its employees and consultants (4,111,765 in 2021).

Shares option expense for year 2022 amounts to USD 3,081 thousand (USD 11,830 thousand in 2021) and was booked against

equity (employee beneﬁt reserve) which amounted to USD 22,894 thousand as of December 31, 2022 (USD 19,813 thousand as

of December 31, 2021).

Details of the grants are 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

Granted in 2021

4,111,765

February 2,2028 -

September 10, 2028

January 3, 2022

322,945

January 3, 2029

February 7, 2022

28,665

February 7, 2029

August 5, 2022

305,361

August 5, 2029

Subtotal granted in 2022

656,971

Total

6,735,945

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

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Movements in share options since the ﬁrst grant date were as follows:

Year ended December 31, 2022

Number of options

Weighted average exercise price

Balance as at January 1

8,839,097

5.80

Granted during the period

656,971

3.99

Forfeited during the period

(2,345,282)

5.46

Exercised during the period

(2,072,355)

2.70

Expired during the period

(300,331)

5.56

Balance as at December 31

4,778,100

4.46*

* The weighted average exercise price of the balance outstanding as at December 31, 2022 includes the effect of modiﬁcation

of the share-based payment program as described further below in this note. The weighted average exercise price of the

balance outstanding as at January 1, 2022 is presented in the amount prior to the modiﬁcation.

Year ended December 31, 2021

Number of options

Weighted average 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

The weighted average exercise prices are presented in USD, not in thousand USD.

As at December 31, 2022 1,585,019 share options were exercisable, with weighted average exercise price of USD 3.1 per share.

As at December 31, 2021 2,836,827 share options (after share split) were exercisable, with weighted average exercise price of

USD 2.89 per share.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

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The below table presents a summary of share prices 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 (before

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 – November

20, 2020

$0.00004 –

$3.72402

$6.2348 –

$12.0319

1,851,622

Exercised in 2022

May 29, 2015 – January 3,

2022

$0.11 – $4.13

$3.5835 –

$5.6779

2,072,355

For share options outstanding at the end of the reporting periods, the range of exercise prices and weighted-average remaining

contractual life was as follows:

As at December 31, 2022:

Exercise price in USD

Number of outstanding stock options

Weighted average remaining contractual life

(in years)

0.00004 - 0.83

268,694

4.21

2.7 - 3.92

3,448,626

5.58

4.13 - 13.51

1,060,780

6.15

Total:

4,778,100

5.63

As at December 31, 2021:

Exercise price in USD

Number of outstanding stock options

Weighted average remaining contractual 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

Total:

8,839,097

4.27

The fair value of the employee share options has been measured using the Black-Scholes formula by an independent appraiser,

assuming no dividends and using the valuation assumptions summarized below. The underlying price of the common stock was

determined using the fair value as of the option grant dates. The exercise prices of the options were determined by the Board of

Directors of the Company in the contract with the employee. The risk-free rate is based on the U.S. Treasury yield curve in effect

at the time of each grant date and corresponding to expiration. In assessing the appropriate time to expiration, the appraiser

examined the expiration period, the vesting period and the option grant dates.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

(all amounts in tables presented in thousand USD, except where stated otherwise)

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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 54.2%-80.0% (55.4% – 80.0% for the year ended 31 December, 2021) was used in option

pricing model.

The inputs used in the measurement of the fair values at the grant dates of the equity-settled share-based payment plan for the

options outstanding as of December 31, 2022 and as of December 31, 2021, were as follows:

As of

December 31, 2022

As of

December 31, 2021

Fair value at grant date

0.00002 – 8.66

Share price at grant date

2.5 – 10.91

0.00004 – 10.91

Exercise price

0.00004 – 13.5146

Expected volatility (weighted average)

54.2% – 80%

55.4% – 80%

Expected life (weighted average)

2.42-6.60

3.00 – 7.30

Risk-free interest rate

0.21% – 3.27%

0.21% – 2.80%

The effect of the fair value measurement of options granted to employees of the Company is reﬂected in 2022 in the proﬁt and

loss in the amount of USD 774 thousand (USD 565 thousand in 2021). This expense includes Mr. Anton Gauﬃn’s options and the

options payable to a consultant under the advisory agreement in the total amount of USD 557 thousand, which are both

explained in detail further below.

These costs were included in the line “General and other administrative expenses” line in the statement of comprehensive

income. For details on the related employee beneﬁt expenses please refer to Note 8

Operating expenses

and to the statement of

changes in shareholders’ equity.

The effect of the fair value measurement of options granted to employees of the Company’s subsidiaries is reﬂected in 2022 in

the Company’s assets as investment in subsidiaries in the amount of USD 2,307 thousand (USD 11,266 thousand in 2021) – for

details on the increase of an investments in subsidiaries please refer to Note 11

Investment in subsidiaries.

During the year ended December 31, 2022, 2,072,355 options were exercised in total under the share-based payment program,

out of which 1,459,728 treasury shares were delivered for all options exercised (the difference of 612,627 options is due to

cashless exercises). Cash payments received for the shares delivered to employees before December 31, 2022 amounted to

USD 2,540 thousand.

During the year ended December 31, 2021, before share split, 6,411 common shares were issued (equivalent of 32,055 common

shares after share split) and 1,775,320 treasury shares were delivered from the share-based payment program as described in

Note 16

Share capital

. During the year ended December 31, 2021, the Company received cash payments for the shares that were

delivered to employees as of December 31, 2021.

Other than the share-based payment arrangements described above, as a result of the acquisition that took place on July 16,

2020, the Company accounted for the earn-out consideration payable in shares dependent on a performance condition and a

continuing employment condition as a share-based payment for the sellers of Double Star Oy. On February 21, 2022, 23,046

treasury shares were delivered to former owners of Double Star Oy, as described in Note 16

Share capital

. As at December 31,

2022, it is not expected that additional shares, except for those delivered, would vest under earn-out consideration.

Modiﬁcation of the share-based payment program

On July 25, 2022, the Company’s Board of Directors adopted a resolution on the voluntary modiﬁcation of the terms of the

grants that took place between August 2021 and February 2022.

HUUUGE INC.

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Effectively, for 1,633,702 options under the Company’s employee stock option plan, i.e., “ESOP 2019,” the vesting schedule was

extended and the exercise price was decreased. For 713,713 options under the Company’s employee stock option plan, i.e.

“ESOP 2019,” the exercise price was decreased without changes to the vesting schedule.

As of the date of approval of these ﬁnancial statements, the process of the voluntary choice by the employees was ﬁnalized and

resulted in the modiﬁcation for 2,347,415 options in total. Total expense related to modiﬁcation of options for the year ended

December 31, 2022 amounted to USD 20 thousand.

CEO options

The remuneration of Mr. Anton Gauﬃn, holding the positions of the President and Chief Executive Oﬃcer of the Company, for the

period ending at the 2022 Annual General Meeting of the Company, consisted solely of share options. All options can be

exercised at a price of PLN 50, i.e., the price of the Company’s shares in the initial public offering.

The vesting conditions for the options is the following:

●

50,000 options with a vesting condition to provide the service continuously for about four years from the service

commencement date. The Group’s management expects Mr. Anton Gauﬃn to fulﬁll the service condition.

●

75,000 options with a vesting condition to provide the service continuously for about four years from the service

commencement date and to meet 2021 EBITDA target. These options were forfeited since the performance condition was not

met.

●

375,000 options with a variable vesting period due to the market condition, i.e., condition to meet the Company’s

market capitalization milestones. The Group’s management estimated that a total of six years of continuous service from the

service commencement date will be required for options to vest.

Similar to other share-based payments in the Company, for this program, staged vesting applies, i.e., each installment has a

different vesting period and is treated as a separate award with a different vesting period.

Advisory agreement

Based on the contract executed on September 27, 2021, beginning from January 3, 2022 until October 31, 2024, the advisor shall

provide to the Company’s CEO consulting services for the consideration payable in options, i.e., options to purchase 206,250

shares in total vesting on a straight-line basis during the period of the agreement. This is a transaction with a non-employee, and

the Company measures the fair value of the services received and the corresponding increase in equity indirectly, by reference to

the fair value of the equity instruments granted when the services are performed.

18.

Conversion of series C preference shares

On February 5, 2021, all preference shares series C were converted into common shares. For more information, please refer to

Note 16

Share capital.

As a result of the conversion, ﬁnancial liability arising from preference shares was decreased with the

corresponding increase in supplementary capital as presented in the statement of changes in equity as of December 31, 2021.

HUUUGE INC.

Separate ﬁnancial statements as of and for the year ended December 31, 2022

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19.

Trade and other payables

As of

December 31, 2022

As of

December 31, 2021

Trade accounts payable including:

107

533

- trade accounts payable to third parties

- trade accounts payable to related parties

528

Accrued expenses

3,918

2,187

Tax payables other than from corporate income taxes

182

Other accounts payable

Trade and other payables*

4,092

2,903*

As of December 31, 2022 accrued expenses mainly included ﬁnance and legal services expenses (including the costs related to

the review of the Company’s strategic options), expenses related to bonuses for employees and consultants and accrual for

remuneration. As of December 31, 2021, accrued expenses balance was mainly comprised of marketing and advertising

expenses, expenses related to bonuses for employees and consultants, unused vacation and the audit.

* Difference between the change of trade payables in the statement of ﬁnancial position and the change of trade and other

payables presented in the statement of cash ﬂows for the year ended December 31, 2021 was due to the deferred payment

related to acquisition of subsidiary.

20.

Leases

The table below presents the carrying amounts of recognized right-of-use assets and the movements over the years 2022 and

2021.

Year ended

December 31, 2022

Year ended

December 31, 2021

as at January 1

137

211

remeasurement due to indexation and other

additions (new leases)

lease modiﬁcations

depreciation

(75)

(74)

as at December 31

137

HUUUGE INC.

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The table below presents the book values of lease liabilities and movements over the year 2022 and 2021.

Year ended

December 31, 2022

Year ended

December 31, 2021

as at January 1

144

218

additions (new leases)

lease modiﬁcations

remeasurement due to indexation and other

interest expense on lease liabilities

lease payments

(78)

(75)

as at December 31

144

long-term

short-term

The Company classiﬁes in statements of cash ﬂows cash payments of the capital component of lease liabilities in 2022

amounting USD 78 thousand (USD 75 thousand in 2021) and cash payments of interest on a lease liability in 2022 amounting

USD 1 thousand (USD 1 thousand in 2021) as part of ﬁnancing activities (Lease repayment).

The table below presents the amounts of income, costs, gains and losses resulting from leases which are recognized in the

statement of comprehensive income for year 2022 and 2021.

Year ended

December 31, 2022

Year ended

December 31, 2021

Depreciation expense of right-of-use assets

Interest expense on lease liabilities

Foreign exchange differences

Total amount recognized in the statement of

comprehensive income

21.

Contingencies

Tax contingent liabilities

Tax settlements are subject to review and investigation by tax authorities, which are entitled to impose severe ﬁnes, penalties

and interest charges. Tax 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 create uncertainties and conﬂicts.

Tax authorities may examine accounting records 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 record any provisions for known and

quantiﬁable risks in this regard as in their assessment there are no such uncertain tax positions for which it would be probable

that the taxation authority will not accept the tax treatment applied by the Company.

HUUUGE INC.

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22.

Pledges and collaterals

During the reporting periods and till the date of issuing these ﬁnancial statements the Company did not enter in a pledge or

collateral agreement on its assets.

HUUUGE INC.

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23.

Related party transactions

The table below presents transactions with related parties during the reporting and comparative periods.

related parties

Sales to a related party

Other operating income

Purchase from a related

party

Interest income

on loans

granted

Huuuge Global Ltd

2022

13,850

2021

32,259

Huuuge Digital Ltd

2022

2021

Huuuge Games Sp. z o.o.

2022

2021

486

Coffee Break Games United

Ltd

2022

2021

396

Huuuge UK

2022

661

2021

100

2022

13,850

761

2021

32,259

982

HUUUGE INC.

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The table below presents aggregated balances of transactions with related parties during the reporting and comparative periods.

related parties

Trade receivables from a related party

Trade liabilities to a related party

Huuuge Global Ltd

31-Dec-22

648

31-Dec-21

3,893

Huuuge Digital Ltd

31-Dec-22

31-Dec-21

Huuuge Games Sp. z o.o.

31-Dec-22

31-Dec-21

459

Huuuge UK

31-Dec-22

449

31-Dec-21

100

Coffee Break Games United Ltd

31-Dec-22

31-Dec-21

(31)

Total as of December 31, 2022

1,100

Total as of December 31, 2021

3,893

528

The Company is the ultimate parent to its Group. Information regarding main shareholders are disclosed in Note

16 Share capital

. Transactions between related parties took place on terms equivalent

to those that apply to transactions concluded on market terms.

HUUUGE INC.

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The Company purchases certain advertisement 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 judgements and estimates

–

Model of revenue recognition

The Company recognizes revenue when services are transferred to the customer, at a value that reﬂects the price expected by

the entity, in exchange for the transfer of those goods and services.

Therefore, total gross revenue in the years ended December 31, 2022 and December 31, 2021 amounted to USD 13,850

thousand and USD 32,259 thousand respectively.

Cost of re-invoiced sales and marketing services in years ended December 31, 2022 and December 31, 2021 amounted to USD

10,839 thousand and USD 28,435 thousand respectively, cost of re-invoiced back-oﬃce services in the year ended December 31,

2022 amounted to USD 89 thousand (no such costs in 2021), fully netted in the statement of comprehensive income. For more

details regarding revenue generated by game design, stewardship and legal services in the total amount of USD 2,922 thousand

in the year ended December 31, 2022 (USD 3,824 thousand in the year ended December 31, 2021) please refer to Note 6

Revenue.

In addition, related parties’ transactions include transactions with the management of the Company. For more details, please

refer to Note 24

Transactions with management of the Company

to the ﬁnancial statements for the period ended December 31,

2022.

24.

Transactions with management of the Company

Transactions with management of the Company for the years ended December 31, 2022 and December 31, 2021 was as

follows:

Year ended

December 31, 2022

Year ended

December 31, 2021

Base salaries

1,156

366

Bonuses and compensation based on the Group’s ﬁnancial

result for the previous year

271

Share-based payment

417

399

Total

1,844

814

On March 7, 2023 the agreement was concluded between the Company and Mr. Rod Cousens, governing his board service and

executive service as co-Chief Executive Oﬃcer of the Company during the current board term, providing for a 12-month early

notice period for termination. This agreement terminated Mr. Rod Cousens’s executive service by mutual agreement, the

Company conﬁrmed Mr. Cousens’s entitlement to payment in lieu of advance notice.

25.

Audit fees

Year ended

December 31, 2022

Year ended

December 31, 2021

Audit of ﬁnancial statements

238

225

Voluntary audit of ﬁnancial statements

130

Total

238

355

HUUUGE INC.

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For the years ended December 31, 2022 and December 31, 2021 audit of ﬁnancial statements relates to the audit of separate

ﬁnancial statements of the Company and the audit of the Group’s consolidated ﬁnancial statements prepared in accordance

with IFRS.

In the year ended December 31, 2021 the voluntary audit of ﬁnancial statements relates to the audit of the Group’s consolidated

ﬁnancial statements prepared in accordance with Generally Accepted Accounting Principles in the United States.

26.

Employment structure

Average Company’s number of employees for the years ended December 31, 2022 and December 31, 2021 was as follows:

Year ended

December 31, 2022

Year ended

December 31, 2021

Executive and business management

Sales and marketing

Administration

Games development

Total

27.

Subsequent events

After December 31, 2022 and up to the date of approval of these ﬁnancial statements for issue no signiﬁcant events except the

following have occurred.

Delivery of treasury shares for the options exercised

After December 31, 2022 and up to the date of approval of these separate ﬁnancial statements for issue the Company delivered

to its employees 439,835 treasury shares for 839,748 options exercised after December 31, 2022.

Any difference between shares delivered and options exercised is due to the cashless exercises. The delivery took place under

the stock option plan presented in Note 17

Share-based payment arrangements

The delivery of shares will be presented as a movement from treasury shares to common shares. The movement will result in an

increase in share capital in the amount of nominal value of the shares delivered, and any difference between the value of

treasury shares delivered and the cash consideration received will be recognized in supplementary capital. At the same time, the

movement will decrease the number of shares (not issued) allocated for the existing share-based payment programs.

Completion of review of strategic options

On February 15, 2023, the Board of Directors decided to conclude the previously announced review of strategic options for the

future of the Company. The Board has concluded that a portion of the Company’s cash reserves should be distributed to its

stockholders while leaving adequate cash reserves for the Company’s ongoing and anticipated operational needs and to support

publishing projects and future growth plans. The Company’s Board has resolved to allocate a maximum amount of USD 150

million from the Company’s reserves for the purpose of purchasing the Company’s common shares listed for trade on the

Warsaw Stock Exchange (the “SBB”), subject to the Board’s discretion to increase or decrease the aforementioned amount.

HUUUGE INC.

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Dividend declared by Huuuge Global Limited

On February 3, 2023, the Board of Directors of Huuuge Global Limited declared to pay a dividend of USD 94,693 thousand to

Huuuge Inc., sole shareholder of Huuuge Global Limited. The dividend will be paid out of the proﬁts for the years 2019, 2020 and

2021, which are now available for distribution. As of the date of signing of these ﬁnancial statements USD 8,590 thousand were

transferred from Huuuge Global Ltd. to Huuuge Inc.

Exposure to Silicon Valley Bank and cash balance of the Company

On March 10, 2023, the Federal Deposit Insurance Corporation (“FDIC”) announced that the Silicon Valley Bank (“SVB”) was

closed by the California Department of Financial Protection and Innovation, and the FDIC was appointed as receiver. To protect

insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB). At the time of closing, the FDIC

as receiver immediately transferred to the DINB all the insured deposits of Silicon Valley Bank.

On March 12, 2023, a joint statement was released by the US Secretary of the Treasury, Federal Reserve Board Chair and the

FDIC Chairman informing that the US Secretary of the Treasury approved actions enabling the FDIC to complete its resolution of

Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors.

On March 13, 2023, The FDIC transferred all deposits, both insured and uninsured, and substantially all the assets of the former

Silicon Valley Bank of Santa Clara, California, to a newly created, full-service FDIC-operated ‘bridge bank’ in an action designed to

protect all depositors of Silicon Valley Bank. Depositors and borrowers automatically became customers of Silicon Valley Bridge

Bank, N.A.

This event does not have any impact on the cash and cash equivalents balance of the Company as of December 31, 2022. This

event after the reporting period is only indicative of a condition that arose after the end of the reporting period and is considered

as a non-adjusting event after the reporting period.

As of December 31, 2022, USD 15,162 thousands of cash and securities were held at SVB, out of which USD 5,194 thousand

were held in operating and money market accounts and USD 9,968 thousand were held in money market funds. Please, refer to

Note 15

Cash and cash equivalents

As of the date of signing of these ﬁnancial statements for issue USD 225 thousand is still held in SVB, in operating accounts.

Change in the scope of services

It was decided that the Company will no longer provide game design development services. After this change, the Company’s

revenue will continue to be generated by services provided to the other entities in the Group. The Company’s operations will

continue to comprise facilitating the advertising services on behalf of Huuuge Global Ltd., and stewardship activities.

HUUUGE INC.

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Filed complaint

On March 8, 2023, a plaintiff ﬁled a complaint in the Circuit Court of Franklin County Alabama as a private attorney general

to recover money for Alabama residents who made purchases in the Company’s “slot machine, other casino-style games,

card games and other games of chance.” The complaint alleges that those games violate Alabama state laws.

The Company intends to defend itself in this matter vigorously and believes that there are meritorious legal and factual

defenses against the plaintiff's allegations and requests for relief. As the case is in preliminary stages, the Company is

unable to reasonably estimate the loss or range of loss, if any, arising from this litigation. As of the date of signing of these

ﬁnancial statements, to the best of the Company's knowledge, this litigation is not expected to have a material impact on

the Company's operations, ﬁnancial condition or cashﬂows.

Electronically signed

Anton Gauﬃn

President of Huuuge Inc., CEO

March 27, 2023

HUUUGE INC.

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HUUUGE, INC.

2300 W Sahara Ave.,

Suite #680, Mailbox #32,

Las Vegas, NV 89102

United States of America

Contact for Investors

investor@huuugegames.com

https://ir.huuugegames.com

http://huuugegames.com