Announcement PDF SportsHero Limited Appendix 4E Preliminary Final Statements to the Australian Securities Exchange SportsHero Limited and its controlled entities ABN 98 123 423 987 Reporting period – For the year ended 30 June 2023 Previous period – For the year ended 30 June 2022 Results for Announcement to the Market Revenue Loss for the year after tax from continuing operations Loss attributable to members of the parent entity 30 June 2023 30 June 2022 Change Change US$ 16,726 (2,155,027) US $ 42,034 (1,714,648) US$ (25,308) (440,379) % Down 60% Up 26% (2,220,751) (1,798,565) (422,186) Up 23% Dividends No Dividends have been declared or paid during the financial year ended 30 June 2023. Other significant information The Company’s goal is to become one of world’s most dynamic, engaging and largest sporting communities. Our vision is to deploy our white label digital solutions across multiple sports to sporting groups and other partners globally. In the largest esports market in the world, SportsHero Limited (SportsHero) has continued to build and deliver its China strategy. On 30 March 2023, the Company announced the execution of a 3 year legally binding terms sheet with Shanghai Fumin Sports and Culture Co. Ltd, the esports tournament and events provider of Netease Games – one of China’s largest esports game publishers. Netease Games is listed on NASDAQ: NTES and HKEX: 9999. On 27 April 2023, the Company announced an expansion into 6 new Aisa Pacific markets through an exclusive partnership with TALON Esports. SportsHero and TALON Esports have executed a 3 year intellectual property license in consideration for SportsHero receiving 50% of all revenue generated from SportsHero’s proprietary esports prediction and tournament management platform. SportsHero is positioning itself to be a world leader in the rapidly expanding esports market by introducing our artificial intelligence predictor and delivering unique esports prediction competitions. Review of operations The following is a summary of the activities of SportsHero during the year ended 30 June 2023. It is recommended that this report be read in conjunction any public announcements made by the Company during year. In accordance with continuous disclosure requirements, readers are referred to the announcements lodged with the Australian Securities Exchange regarding the activities of the Company. On 6 July 2022, the Company announced that it had entered into a mutually beneficial marketing and sponsorship agreement with Indonesia’s premier junior football leagues, Liga Top Skor. In consideration for SportsHero agreeing to sponsor the 2022-23 Liga Top Skor youth football leagues. On 7 July 2022, the Company announced that Logitech (China) Technology Co Ltd (a wholly owned subsidiary of Swiss multinational Logitech International SA) had agreed to be the first commercial sponsor for the Company’s recently launched Chinese app on Wechat. SportsHero Limited Review of operations (continued) On 18 August 2022, the Company announced the launch of its first ever tier 1 professional esports prediction tournament in Australia, which was launched on 23 August 2022. On 31 August 2022 SportsHero soft launched its co-branded initial esports tournament in partnership with Wuhan Esports Association (the 2nd largest esports association in China). On 21 September 2022, the Company announced that it had entered into a two year (with a two year automatic renewal) Australian Gift Card Supplier Agreement with digital gift card giant Prezzee Pty Ltd. Prezzee operates a leading global gifting platform with operations in North America, United Kingdom, Australia and New Zealand. On 13 October 2022, Mr Stratos Karousos was appointed as the Company’s Non-executive Chairman following the decision by John Dougall not to seek re-election at the Company’s 2022 Annual General Meeting. On 24 November 2022, the Company announced the delivery of Aim Assist Analysis (AAA), a subscription based app that has been specifically designed (using SportsHero’s proprietary artificial intelligence technology) to provide esports bettors with up to five of the highest betting recommendations per day. AAA is a dedicated esports betting guide app that leverages an enhanced betting algorithm to generate daily esports tips and analysis exclusively for esports betting. The daily betting recommendations provided target three of the largest esports titles globally and include League of Legends (LoL), Defense of the Ancients 2 (Dota 2) and Counter Strike Global Offensive (CS:GO). On 14 February 2023, the Company announced that its AAA app was approved and available for download at both Apple’s App Store and Google’s Play Store. On 30 March 2023, the Company announced the execution of a 3 year agreement with Shanghai Fumin Sports and Culture Co. Ltd, the esports tournament and event provider of Netease Games. On 27 April 2023, the Company announced an expansion into 6 new Asia Pacific markets through an exclusive partnership with TALON Esports. SportsHero and TALON Esports have executed a 3 year intellectual property license in consideration for SportsHero receiving 50% of all revenue generated from our proprietary esports prediction and tournament management platform (App). TALON Esports will white label, market and scale the App while promoting it to its 20 million plus fan base. Since the 27 April 2023 announcement, the Company has been working closely with TALON’s founders to customise our existing platform with additional features and functions to produce a completely unique product for the Southeast Asia esports market. TALON believes that this will greatly appeal to brand partners, game publishers, tournament organisers and the esports user audience. TALON, which has a proven record of revenue generation, will launch and market this product in Q2 FY 2024 to their current network of sponsors and advertisers in all their existing markets throughout Southeast Asia. Subsequent events No matter or circumstance has arisen since 30 June 2023 that has significantly affected, or may significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years. Control gained over entities and loss of control over entities During the financial year the Company gained control of the Chinese incorporated company, Zongheng (Shanghai) Esports Information Technologies Co Ltd. During the financial year the Company did not gain control of any other entity or lose control over any entity. Net Tangible Assets Net tangible assets/(liabilities) per share (US cents/share) 30 June 2023 30 June 2022 (0.08) 0.28 SportsHero Limited Audit Status This report is based on accounts which are in the process of being audited. The audited financial statements to be included in the Company’s 2023 Annual Report are expected to be released by 30 September 2023. Attachments forming part of the Appendix 4E: The Preliminary Financial Report of SportsHero Limited for the year ended 30 June 2023 is attached. Signed By Michael Higginson Director/Company Secretary Queensland 31 August 2023 SportsHero Limited Preliminary Statement of Comprehensive Income for the year ended as at 30 June 2023 Consolidated 30 June 30 June 2023 2022 US$ US$ Income Revenue Other income 16,643 84 16,783 25,251 Expenses Administration expenses Employee and consulting expenses Depreciation and Amortisation expense Interest expense Share based payments (1,093,450) (922,879) (1,037) (736) (153,652) (851,714) (635,751) (2,259) (266,958) Loss before income tax from continuing operations (2,155,027) (1,714,648) - - Loss after income tax from continuing operations (2,155,027) (1,714,648) Loss after income tax expense for the year (2,155,027) (1,714,648) (65,724) (83,917) Total comprehensive loss for the year (2,220,751) (1,798,565) Loss attributable to: Owners of the entity (2,220,751) (1,798,565) Cents Cents Income tax expense Other comprehensive income for the year Items that may be reclassified subsequently to profit and loss Foreign currency translation Basic and diluted loss per share for continued operations (cents per share) Basic and diluted loss per share (cents per share) The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes. 0.40 0.40 0.32 0.32 SportsHero Limited Preliminary Statement of Financial Position as at 30 June 2023 Consolidated 30 June 2023 US$ 30 June 2022 US$ Current assets Cash and cash equivalents Other receivables Total current assets 135,461 43,076 178,537 1,761,612 3,076 1,764,688 Non-current assets Right of use assets Plant and equipment Total non-current assets 17,476 7,669 25,145 2,122 2,122 Total assets 203,682 1,766,810 Current liabilities Trade payables Borrowings Lease liability – current Total current liabilities 304,111 331,500 4,200 639,811 182,179 182,179 Non-current liabilities Lease liability - non-current Total non- current liabilities 13,679 13,679 - Total liabilities 653,490 182,179 Net assets/(liabilities) (449,808) 1,584,631 16,299,946 342,004 (381,844) (16,709,914) 16,207,345 1,176,926 (316,120) (15,483,521) (449,808) 1,584,631 Equity Issued capital Share based payments reserve Foreign currency translation reserve Accumulated losses Total equity The above consolidated statement of financial position should be read in conjunction with the accompanying notes. SportsHero Limited Preliminary Statement of Changes in Equity for the year ended 30 June 2023 Issued Capital Share Based Payments Reserve Foreign Currency Translation Reserve Accumulated Losses Total Equity US$ US$ US$ US$ US$ Balance at 1 July 2022 16,207,345 Total comprehensive loss for the year Performance rights issued during the year Share based payments 59,941 Share based payments for settlement of liability 33,530 Shares issued during the year Share issue costs (870) Balance at 30 June 2023 16,299,946 1,176,927 (316,120) (15,483,521) 1,584,631 - (65,724) (2,155,027) (2,220,751) (834,923) - 928,634 153,652 - - - 33,530 342,004 (381,844) (16,709,914) (870) (449,808) Balance at 1 July 2021 14,161,989 Total comprehensive loss for the year Performance rights issued during the year 95,565 Share based payments 126,877 Share based payments for settlement of liability 36,435 Shares issued during the year 1,981,277 Share issue costs (194,798) Balance at 30 June 2022 16,207,345 1,083,076 (232,203) (13,768,873) 1,243,989 - (83,917) (1,714,648) (1,798,565) (95,565) 140,081 - - 266,958 - - - 36,435 49,335 1,176,927 (316,120) (15,483,521) 1,981,277 (145,463) 1,584,631 Consolidated The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes SportsHero Limited Preliminary Statement of Cash Flows for the year ended 30 June 2023 Consolidated 30 June 30 June 2023 2022 US$ US$ Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Net cash used in operating activities 16,643 (2,015,011) 84 (1,998,284) 40,768 (1,413,057) 12 (1,372,277) Cash flows from investing activities Payments for plant and equipment Net cash used in investing activities (8,068) (8,068) (2,013) (2,013) Cash flows from financing activities Proceeds from issues of shares Share issue transaction costs Borrowings Lease liability Net cash provided by financing activities (870) 331,500 (14,012) 316,618 1,981,277 (145,463) 1,835,814 Net increase in cash and cash equivalents held (1,689,734) 461,524 Cash and cash equivalents at the beginning of the financial year 1,761,612 1,377,257 Effect of exchange rate changes on cash and cash equivalents 63,583 (77,169) Cash and cash equivalents at the end of the financial year 135,461 1,71,612 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. SportsHero Limited Notes to the preliminary financial statements for the financial year ended 30 June 2023 Note 1. Basis of Preparation This preliminary final report has been prepared in accordance with ASX Listing Rule 4.3A and the disclosure requirements of ASX Appendix 4E. This report is to be read in conjunction with any public announcements made by SportsHero Limited during the reporting period in accordance with the continuous disclosure obligations arising under the Corporations Act 2001 and Australian Securities Exchange Listing Rules. The Preliminary Financial Statements of SportsHero Limited and its controlled entities (the Group), comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. New and Revised Accounting Standards and Interpretations In the current year, the Consolidated Entity has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board that are relevant to its operations and effective for the current annual reporting period. The adoption of these new and revised Standards and Interpretations has not resulted in a significant or material change to the Consolidated Entity’s accounting policies. Functional and presentation currency The preliminary financial report is presented in US dollars, which is the Group’s functional currency. Note 2. Segment reporting For management purposes the Group is organised into three strategic units: • • • Corporate head office in Australia Technology development based in Singapore – operations Operations based in Indonesia and China Such structural organisation is determined by the nature of risks and returns associated with each business segment and define the management structure as well as the internal reporting system. It represents the basis on which the Group reports its primary segment information to the Board. The operating segment analysis presented in these preliminary financial statements reflects operations analysis by business. It best describes the way the Group is managed and provides a meaningful insight into the business activities of the Group. The following table presents details of revenue and operating loss by business segment as well as reconciliation between the information disclosed for reportable segments and the aggregated information in the preliminary financial statements. The information disclosed in the table below is derived directly from the internal financial reporting system used by the Board of Directors to monitor and evaluate the performance of our operating segments separately. SportsHero Limited Note 2. Segment reporting (continued) Australia Singapore Indonesia China Total US$ US$ US$ US$ US$ 2,140 23,099 16,795 - 42,034 - - - - - (987,435) (513,964) (101,112) (112,137) (1,714,648) (987,435) (513,694) (101,112) (112,137) (1,714,648) 75 490 16,162 - 16,727 - - - - - (1,253,592) (457,251) (105,293) (338,891) (2,155,027) (1,253,592) (457,251) (105,293) (338,891) (2,155,027) 1,719,194 43,364 4,252 - 1,766,810 1,719,194 43,364 4,252 - 1,766,810 69,113 48,736 9,391 76,442 203,682 69,113 48,736 9,391 76,442 203,682 Year ended 30 June 2022 Revenue from external customers Inter-segment revenue Reportable segment loss before tax Continuing operations Year ended 30 June 2023 Revenue from external customers Inter-segment revenue Reportable segment loss before tax Continuing operations Reportable segments assets at 30 June 2022 Continuing operations Reportable segments assets at 30 June 2023 Continuing operations Note 3. Contingent assets and liabilities The Group does not have any contingent assets or contingent liabilities at the date of this report. Note 4. Controlled entities Date control gained Parent entity SportsHero Limited Name of Controlled Entity Sportz Hero Pty Ltd SportsHero Enterprise Pte Ltd PT Sport Hero Indonesia EsportsHero Pty Ltd (Zongheng (Shanghai) Esports Information Technologies Co Limited) 7 February 2017 7 February 2017 4 November 2020 17 November 2021 16 February 2022 Country of Incorporation Principal Activities Australia Parent Australia Investment holding 100% Singapore 100% Indonesia Technology development Operations Australia Operations 100% China Technology development 100% Ownership % 100%