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DJ World High Life PLC Interim Results & Intention to List on the CSE

TIDMLIFE

RNS Number : 7357P

World High Life PLC

12 June 2020

12 June 2020

WORLD HIGH LIFE PLC

("World High Life" or the "Company")

World High Life Plc files Interim Results and announces filing of preliminary non-offering prospectus to list on the Canadian Securities Exchange

World High Life Plc (AQSE: LIFE) (OTCQB: WRHLF), an investment company with a focus on developing business opportunities in the CBD, health and wellness and regulated cannabis industry in Europe, is pleased to announce its interim results for the nine months ended 31 March 2020.

These results have been prepared in connection with the filing of a preliminary non-offering prospectus with the intent to list the Company's ordinary shares on the Canadian Securities Exchange (" CSE "), which if accepted will result in World High Life shares being listed in the UK on the AQSE Growth Market, in Canada on the CSE and in the USA on the OTCQB, providing shareholders throughout the UK and North America with access to invest in World High Life.

On behalf of the board:

David Stadnyk

Chairman

12 June 2020

For further information please contact:

 
David Stadnyk 
 Founder & CEO 
 World High Life PLC 
 North America 1 ( 236) 521-7211 
 North America toll-free, 1 (888) 
 616-WRHLF (9745) 
 +44 (0) 7926 397 675 
 info@worldhighlife.uk 
 
AQSE Corporate Adviser             Financial PR 
 Mark Anwyl/Allie Feuerlein         Camilla Horsfall/Megan Ray 
 Peterhouse Capital Limited         Blytheweigh 
 +44 (0) 20 7469 0930               +44 (0) 20 7138 3224 
 ma@peterhousecap.com               Camilla.horsfall@blytheweigh.com 
 af@peterhousecap.com               Megan.Ray@blytheweigh.com 
 
   For more information on World High Life please visit:      www.worldhighlife.uk 

Market Abuse Regulation (MAR) Disclosure

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

Cautionary Note Regarding Forward Looking Information

We seek safe harbour. Some statements contained in this news release are "forward looking information" within the meaning of securities laws. Forward looking information include, but are not limited to, statements regarding the use of proceeds of the non-brokered private placement and payment of the debt settlements. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "believes" or variations of such words and phrases (including negative or grammatical variations) or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative connotation thereof. Investors are cautioned that forward-looking information is inherently uncertain and involves risks, assumptions and uncertainties that could cause actual results to differ materially. There can be no assurance that future developments affecting the Company will be those anticipated by management. The forward-looking information contained in this press release constitutes management's current estimates, as of the date of this press release, with respect to the matters covered thereby. We expect that these estimates will change as new information is received. We do not undertake to update any estimate at any particular time or in response to any particular event, except as required by law.

WORLD HIGH LIFE PLC

CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

EXPRESSED IN POUNDS STERLING

UNAUDITED

 
 
                                                                       31 March                     30 June 
                                                                           2020                        2019 
                                               Note                         GBP                         GBP 
--------------------------------------------  -----  --------------------------  -------------------------- 
 
 ASSETS 
 
 Current 
   Cash                                                          102,482                 1,307,456 
   Trade receivables and other                  6               214,605                              286 
   Inventory                                    7        420,979                                          - 
--------------------------------------------  -----  --------------------------  -------------------------- 
                                                                        738,066                   1,307,742 
 Non-current 
   Property and equipment                       8                     1,276,615                           - 
   Goodwill and intangible assets               9                     2,700,000                           - 
--------------------------------------------  -----  --------------------------  -------------------------- 
 Total assets                                                         4,714,681                   1,307,742 
============================================  =====  ==========================  ========================== 
 
 LIABILITIES AND EQUITY 
 
 Current 
   Accounts payable and accrued liabilities     10                    1,257,175                      33,731 
   Lease liability - current                    8                       131,841                           - 
   Deferred consideration                       9                     4,000,000                           - 
   Loans payable - current                      11                      462,072                           - 
   Derivative liability                         12                      870,744                           - 
--------------------------------------------  -----  --------------------------  -------------------------- 
                                                                      6,721,832                      33,731 
 Non-current 
   Lease liability                              8                861,116                                  - 
   Loans payable                                11               215,194                                  - 
   Convertible debentures                       12                    2,203,333                           - 
   Deferred tax liability                                                28,900                           - 
--------------------------------------------  -----  --------------------------  -------------------------- 
 Total liabilities                                                   10,030,375                33,731 
 
 Equity 
   Share capital                                13                    1,424,090              886,413 
   Share premium                                13                    4,374,328              291,233 
   Shares to be issued                          13                            -              175,493 
   Reserves                                     13               241,963                                  - 
   Deficit                                                         (11,356,075)             (79,128) 
--------------------------------------------  -----  --------------------------  -------------------------- 
 Total equity                                                       (5,315,694)                   1,274,011 
 Total liabilities and equity                                         4,714,681                   1,307,742 
============================================  =====  ==========================  ========================== 
 
 

Nature and continuance of operations (Note 1,2)

Subsequent events (Note 17)

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

WORLD HIGH LIFE PLC

CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

EXPRESSED IN POUNDS STERLING

UNAUDITED

 
 
                                                                          Three months                     Nine months 
                                                                                 ended                           ended 
                                                                              31 March                        31 March 
                                                                                  2020                            2020 
                                              Note                                 GBP                             GBP 
-------------------------------------------  -----  ----------------------------------  ------------------------------ 
 
 Revenue                                                                626,730                              1,053,195 
 Cost of goods sold                                                     315,253                             532,114 
-------------------------------------------  -----  ----------------------------------  ------------------------------ 
 Gross profit                                                           311,477                             521,081 
 
 Expenses 
                                               5, 
   Selling, general, and administrative        14                       640,748                              1,412,869 
   Salaries and wages                          14                       424,069                             566,486 
   Consulting                                                           259,572                             488,420 
   Professional fees                                                    162,825                             567,253 
   Transaction costs                                                                 -                      201,407 
   Depreciation                                8                          16,983                              22,210 

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DJ World High Life PLC Interim Results & Intention -2-

   Share-based compensation                    13                       218,919                             241,963 
   Interest and accretion                     8,12                        98,417                            163,944 
   Foreign exchange                                                            (5,109)                        41,237 
-------------------------------------------  -----                                      ------------------------------ 
 Total expenses                                                              1,816,424                       3,705,789 
-------------------------------------------  -----  ----------------------------------  ------------------------------ 
 Loss before other items                                          (1,504,947)                         (3,184,708) 
  Impairment - intangible assets                                                     -                (7,473,831) 
  Derivative fair value adjustment                                        63,551                         (618,408) 
-------------------------------------------  ----- 
 Net and comprehensive loss for the period                        (1,441,396)                             (11,276,947) 
===========================================  =====  ==================================  ============================== 
 
 Loss per share 
    Basic and diluted - GBP                                                 (0.01)                              (0.09) 
-------------------------------------------  -----  ----------------------------------  ------------------------------ 
 
 Weighted average number of ordinary 
  shares 
    Basic and diluted                                                      141,854,563                     125,944,428 
===========================================  =====  ==================================  ============================== 
 
 

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

WORLD HIGH LIFE PLC

CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

PERIOD ENDED 31 MARCH 2020

EXPRESSED IN POUNDS STERLING

UNAUDITED

 
 
                          Number                                                 Share 
                     of ordinary              Share             Share    subscriptions                                                      Total 
                          shares            Capital           Premium         received                Reserves          Deficit            equity 
                                                GBP               GBP              GBP                     GBP              GBP               GBP 
----------------  --------------  -----------------  ----------------  ---------------  ----------------------  ---------------  ---------------- 
 Balance, 30 
  June 2019         88,641,354        886,413          291,233              175,493                          -         (79,128)      1,274,011 
   Ordinary 
    shares 
    issued 
    at GBP0.01 
    each              8,100,000              81,000                 -                -                       -                -            81,000 
   Ordinary 
    shares 
    issued 
    at GBP0.06 
    each                 675,000              6,750            33,750                -                       -                -            40,500 
   Ordinary 
    shares 
    issued 
    at GBP0.10 
    each            10,991,737      109,917                 989,257          (175,493)                       -                -       923,681 
   Ordinary 
    shares 
    issued 
    for services      4,000,980             40,010            360,088                -                       -                -     400,098 
   Ordinary 
    shares 
    issued 
    to acquire 
    Love Hemp 
    Ltd.            30,000,000        300,000            2,700,000                   -                       -                -      3,000,000 
   Share-based 
    compensation               -                  -                 -                -        241,963            -                   241,963 
   Net loss for 
    the period                 -                  -                 -                -                       -   (11,276,947)     (11,276,947) 
---------------- 
 Balance, 31 
  March 2020       142,409,071        1,424,090          4,374,328                   -     241,963               (11,356,075)       (5,315,694) 
================  ==============  =================  ================  ===============  ======================  ===============  ================ 
 
 

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

WORLD HIGH LIFE PLC

STATEMENT OF CASH FLOWS

SIX MONTHS ENDED

EXPRESSED IN POUNDS STERLING

UNAUDITED

 
 
                                                                       31 March 
                                                                           2020 
                                                                            GBP 
----------------------------------------------   ------------------------------ 
 
 Operating activities 
 Net loss for the period                                           (11,276,947) 
 Adjusted for: 
   Depreciation                                          22,210 
   Share based payments                              241,963 
   Accretion and interest                             148,346 
   Shares issued for services                                    400,098 
   Accrued interest                                                16,055 
   Impairment - intangible assets                                     7,473,831 
   Derivative fair value adjustment                              618,408 
 
 Changes in non-cash working capital: 
   Receivables and other                                         230,433 
   Inventory                                                     123,927 
   Accounts payable and accrued liabilities                      398,144 
   Due to related party                                                       - 
----------------------------------------------   ------------------------------ 
 Cash flows from operating activities                      (1,603,532) 
 
 Investing activities 
   Acquisition of Love Hemp Limited, net                   (2,915,651) 
   Property and equipment                                       (73,539) 
-----------------------------------------------  ------------------------------ 
 Cash flows from investing activities                      (2,989,190) 
 
 Financing activities 
   Ordinary shares issued for cash                                    1,045,181 
   Convertible debentures                                             2,355,782 
   Convertible debentures - transaction costs           (48,459) 
   Loans received                                  370,416 
   Lease payments                                               (39,340) 
   Loan repayments                                            (295,832) 
-----------------------------------------------  ------------------------------ 
 Cash flows from financing activities                                 3,387,748 
 
 Change in cash                                            (1,204,974) 
 Cash, beginning of period                                   1,307,456 
-----------------------------------------------  ------------------------------ 
 Cash, end of period                                             102,482 
===============================================  ============================== 
 
 

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

   1.            NATURE AND CONTINUANCE OF OPERATIONS 

World High Life Limited w as i ncorp orated by Cert i f ica te of I ncorporati on in England and Wales on 30 January 2019 with registration number 11797850 under the Companies Act 2006. The limited company reregistered as a public company on 6 August 2019, and thus became World High Life Plc (t he " C o m pan y") on the same date. The C o m pan y's head off ice and reg i s tered and records off ice address is 7-9 Swallow Street, 2(nd) Floor, London, United Kingdom, W1B 4DE.

The Company is an investment issuer with a focus on developing business opportunities in the CBD Health and Wellness market, as well as the Regulated Medicinal Cannabis market in the UK and Europe. The Company's focus is on building and facilitating the growth of a diversified portfolio of companies, assets, and opportunities within its focus mandate.

   2.            BASIS OF PRESENTATION 

The Company acquired the entire share capital of Love Hemp Ltd on 18 October 2019 which the Directors have treated as an asset acquisition as explained in Note 9 to the financial statements for the period ended 31 December 2019. The Directors are required to and have prepared consolidated condensed financial statements which include the results of the acquired subsidiary from the date that the acquisition took place.

The interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Statements" as adopted by the European Union and the Disclosure and Transparency Rules of the UK Financial Conduct Authority.

The interim financial information set out above does not constitute statutory accounts within the meaning of the Companies Act 2006. It has been prepared on a going concern basis in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union.

These consolidated interim financial statements have not been audited nor have they been reviewed by the Group's auditors under ISRE 2410 of the Auditing Practices Board .

Going concern

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The consolidated interim financial statements have been prepared on a going concern basis. The Company's assets are generating revenues and based on the Board's budgets, cash flow forecasts, and considered ability to raise further finance, the Directors are of the view that the Company has sufficient funds to undertake its operating activities over the next 12 months from the date these financial statements are approved.

After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. The Company therefore continues to adopt the going concern basis in preparing its financial statements. There is no certainty whether the Company will generate significant revenues or attain profitable operations in the near future and there can be no assurance that it will achieve profitability in the future. The Company incurred a loss of GBP11,276,947 for the period ended 31 March 2020, and has an accumulated deficit GBP11,356,075.

The Company has a need for financing working capital, product development, marketing and sales. Because of continuing operating losses, the Company's continuance as a going concern is dependent upon its ability to obtain adequate financing and to reach profitable levels of operations. It is not possible to accurately predict whether present financing efforts will be successful or if the Company will attain profitable levels of operations. The Company will periodically have to raise funds to continue operations and, although it has been successful in doing so in the past, there is no assurance it will be able to do so in the future. These conditions raise significant doubt as to the Company's ability to continue as a going concern.

On March 11, 2020, the World Health Organization categorized COVID-19 as a pandemic. The potential economic effects within the Company's environment and in the global markets, possible disruption in supply chains, and measures being introduced at various levels of government to curtail the spread of the virus (such as travel restrictions, closures of non-essential municipal and private operations, imposition of quarantines and social distancing) could have a material impact on the Company's operations. As of the date of the audit report the extent of the impact of this outbreak and related containment measures on the Company's operations cannot be reliably estimated. The directors have taken proactive steps to manage costs during this time and expect to be in a position to meet all short-term obligations from cash flow generated from operations.

Risks and uncertainties

The Board continuously assesses and monitors the key risks of the business. The key risks that could affect the Company's medium-term performance are liquidity risk, credit risk, interest rate risk and fair value estimation (Note 15)

Critical accounting estimates

The preparation of condensed interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the end of the reporting period. Significant items subject to such estimates are set out in Note 3.

New and amended standards mandatory for the first time for the financial year beginning 1 July 2019

The following new IFRS standards and/or amendments to IFRS standards are mandatory for the first time for the Company:

 
Standard                                                                       Effective date 
---------------------  ------------------------------------------------------  ---------------- 
 
 IFRS 16                Leases                                                  1 January 2019 
  IAS 28 (Amendments)    Long term interests in associates and joint ventures    1 January 2019 
 IFRS 9 (Amendments)    Prepayment Features with Negative Compensation          1 January 2019 
 Annual Improvements    2015 - 2017 Cycle                                       1 January 2019 
 IAS 19 (Amendments)    Employee Benefits                                       1 January 2019 
 IFRIC 23               Uncertainty over income tax treatments                  1 January 2019 
 

The Directors believe that the adoption of these standards has not had a material impact on the financial statements other than changes to disclosures.

New standards, amendments, and Interpretations in issue but not yet effective or not yet endorsed and not early adopted

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the condensed interim financial statements are listed below. The Company intends to adopt these standards, if applicable when they become effective.

 
Standard                                                                     Effective date 
--------------------  -----------------------------------------------------  --------------- 
 
 IFRS 3 (Amendments)   Business Combinations                                  1 January 2020 
 IAS 1 (Amendments)    Presentation of Financial Statements                   1 January 2020 
 IAS 8 (Amendments)    Accounting policies, Changes in Accounting Estimates   1 January 2020 
 IFRS 7 (Amendments)   Interest Rate Benchmark Reform                         1 January 2020 
 IFRS 9 (Amendments)   Interest Rate Benchmark Reform                         1 January 2020 
 IFRS 17               Insurance Contracts                                    1 January 2021 
 

The Company is evaluating the impact of the new and amended standards above. The Directors believe that these new and amended standards are not expected to have a material impact on the Company's results or shareholders' funds.

   3.            USE OF ESTIMATES, ASSUMPTIONS, AND JUDGEMENTS 

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these judgments, estimates and assumptions could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Impairment of long-lived assets

Long-lived assets, including property and equipment, and intangible assets, are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds its recoverable amount. For the purpose of impairment testing, assets that cannot be tested individually 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 group of assets (CGU). The recoverable amount of an asset or a CGU is the higher of its fair value less costs to sell, and its value in use. If the carrying amount of an asset exceeds its recoverable amount, an impairment charge is recognised immediately in profit or loss by the amount by which the carrying amount of the asset exceeds the recoverable amount. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the lesser of the revised estimate of recoverable amount, and the carrying amount that would have been recorded had no impairment loss been recognised previously.

Business combinations

The consolidated interim financial statements comprise the financial statements of World High Life Plc and its subsidiaries as at 31 March 2020. Subsidiaries are entities controlled by the Group. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has all of the following:

-- Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)

   --      Exposure, or rights, to variable returns from its involvement with the investee 
   --      The ability to use its power over the investee to affect its returns 

Judgement is used in determining whether an acquisition is a business combination or an asset acquisition. Management determines whether assets acquired and liabilities assumed constitute a business. A business consists of inputs and processes applied to those inputs that have the ability to create outputs. Management determines whether assets acquired and liabilities assumed constitute a business. In examining processes and potential outputs, management considers the ability of the acquired and existing processes to adequately be capable of producing the potential outputs; where the processes are insufficient and/or incomplete to produce potential outputs, the company considers the acquisition to be an asset acquisition.

The Company measures all the assets acquired and liabilities assumed at their acquisition-date fair values. Non-controlling interests in the acquiree are measured on the basis of the non-controlling interests' proportionate share of the equity in the acquiree's identifiable net assets. Acquisition-related costs are recognized as expenses in the periods in which the costs are incurred and the services are received (except for the costs to issue debt or equity securities which are recognized according to specific requirements). The excess of the aggregate of (a) the consideration transferred to obtain control, the amount of any non-controlling interest in the acquiree over (b) the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed, is recognised as goodwill as of the acquisition date.

Determination of asset fair values and allocation of purchase consideration

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Significant asset acquisitions and business combinations require judgements and estimates to be made at the date of acquisition in relation to determining the relative fair value of property and equipment, as well as the allocation of the purchase consideration over the fair value of the assets. The information necessary to measure the fair values as at the acquisition date of assets acquired requires management to make certain judgements and estimates about future events, including but not limited to future production potential, and future market prices of products, and the ability to effectively distribute products. In certain circumstances, such as the valuation of property and equipment, intangible assets and goodwill acquired, the Company may rely on independent third-party valuators. Provisional purchase price allocations are subject to review by management upon integration of the acquired businesses and will be adjusted as necessary were circumstances indicate it is appropriate to do so.

Share-based payments

The Company utilizes the Black-Scholes Option Pricing Model ("Black-Scholes") to estimate the fair value of warrants and stock options granted to Directors, Officers, employees, consultants. The use of Black-Scholes requires management to make various estimates and assumptions that impact the value assigned to the stock options including the forecast future volatility of the stock price, the risk-free interest rate, dividend yield and the expected life of the stock options. Any changes in these assumptions could have a material impact on the Share-based compensation calculation value, however the most significant estimate is the volatility. The Company estimated volatility based on historic share prices of companies operating in the regulated cannabis industry. Historical volatility is not necessarily indicative of future volatility. The expected life of stock options or warrants is determined based on the estimate that they would be exercised evenly over their term. There was no recent history of stock option exercises available to consider in the estimate of expected life at the time of grant.

   4.            SIGNIFICANT ACCOUNTING POLICIES 

Foreign currencies

Functional and presentation currency

The functional currency is the currency of the primary economic environment in which the entity operates. The functional currency of the Company and its subsidiaries was determined by conducting an analysis of the consideration factors identified in IAS 21, "The Effects of Changes in Foreign Exchange Rates" ("IAS 21"). The functional currency of the Company is Pounds Sterling which is also the presentation currency of the group.

Translation of foreign transactions and balances into the functional currency

Foreign currency transactions are translated into the functional currency of the Company at rates of exchange prevailing on the dates of the transactions. At each reporting date, all monetary assets and liabilities that are denominated in foreign currencies are translated to the functional currency of the Company at the rates prevailing at the date of the statement of financial position. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transaction

Cash

In the Statement of Cash Flows, cash is comprised of cash at bank and in hand and demand deposits with banks and other financial institutions, that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

Loss per share

The Company presents basic loss per share for its ordinary shares, calculated by dividing the loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted loss per share does not adjust the loss attributable to ordinary shareholders or the weighted average number of ordinary shares outstanding when the effect is anti-dilutive.

Financial instruments

Financial assets

On initial recognition, financial assets are recognised at fair value and are subsequently classified and measured at: (i) amortised cost; (ii) fair value through other comprehensive income ("FVOCI"); or (iii) fair value through profit or loss ("FVTPL"). The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. A financial asset is measured at fair value net of transaction costs that are directly attributable to its acquisition except for financial assets at FVTPL where transaction costs are expensed. All financial assets not classified and measured at amortised cost or FVOCI, are measured at FVTPL. On initial recognition of an equity instrument that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment's fair value in other comprehensive income.

For a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are 'solely payments of principal and interest (SPPI)' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model The classification determines the method by which the financial assets are carried on the statement of financial position subsequent to inception and how changes in value are recorded.

Impairment

An 'expected credit loss' impairment model applies which requires a loss allowance to be recognised based on expected credit losses. The estimated present value of future cash flows associated with the asset is determined and an impairment loss is recognised for the difference between this amount and the carrying amount as follows: the carrying amount of the asset is reduced to estimated present value of the future cash flows associated with the asset, discounted at the financial asset's original effective interest rate, either directly or through the use of an allowance account and the resulting loss is recognised in profit or loss for the period.

In a subsequent period, if the amount of the impairment loss related to financial assets measured at amortised cost decreases, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Financial liabilities

Financial liabilities are designated as either: (i) FVTPL; or (ii) other financial liabilities. All financial liabilities are classified and subsequently measured at amortised cost except for financial liabilities at FVTPL. The classification determines the method by which the financial liabilities are carried on the statement of financial position subsequent to inception and how changes in value are recorded. Accounts payable and accrued liabilities is classified as other financial liabilities and carried on the statement of financial position at amortised cost.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial assets, the estimated future cash flows of the investments have been impacted.

For all financial assets objective evidence of impairment could include:

   -         significant financial difficulty of the issuer or counterparty; or 
   -         default or delinquency in interest or principal payments; or 

- it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For certain categories of financial assets, such as receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. The carrying amount of financial assets is reduced by the impairment loss directly for all financial assets with the exception of receivables, where the carrying amount is reduced through the use of an allowance account. When a receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

Taxation

Income tax on the profit or loss for the periods presented comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax expense is the expected tax payable on the taxable income for the

year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.

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Deferred tax is recorded by providing for temporary differences, between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities which affect neither accounting nor taxable loss as well as differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the statement of financial position date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.

Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and other equity instruments are recognised as a deduction from equity. Ordinary shares issued for consideration other than cash, are valued based on their market value at the date the shares are issued.

The Company has adopted a residual value method with respect to the measurement of warrants attached to private placement units. The residual value method first allocates value to the more easily measurable component based on fair value and then the residual value, if any, to the less easily measurable component. The Company considers the fair value of ordinary shares issued in the private placements to be the more easily measurable component and the ordinary shares are valued at their fair value, as determined by the closing market price on the announcement date. The balance, if any, is allocated to the attached warrants. Any fair value attributed to the warrants is recorded as reserves.

Inventory

Inventories of finished goods and packing materials are valued initially at cost and subsequently at the lower of cost and net realisable value. Inventory consists of infused products, raw materials, accessories, and product packaging. Net realizable value is determined as the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Cost is determined using the weighted average cost basis. Products for resale and supplies and consumables are valued at the lower of cost and net realizable value. The Company reviews inventory for obsolete and slow-moving goods and any such inventory is written-down to net realisable value.

Property and equipment

Property and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated using the following methods and rates:

 
 
 Category                  Method                Rate 
------------------------  -------------------   ----- 
 Leasehold improvements    Declining balance      20% 
 Production equipment      Declining balance      15% 
 Office equipment          Declining balance      15% 
------------------------  --------------------  ----- 
 
 

An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in the profit or loss in the period the asset is derecognized. The assets' residual values, useful lives and methods of depreciation are reviewed at each reporting date, and adjusted prospectively, if appropriate.

Leases

To identify a lease, the Company (1) considers whether an explicit or implicit asset is specified in the contract and (2) determines whether the Company obtains substantially all the economic benefits from the use of the underlying asset by assessing numerous factors, including but not limited to substitution rights and the right to determine how and for what purpose the asset is used.

When assessing the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option or to not exercise a termination option. This judgment is based on factors such as contract rates compared to market rates, economic reasons, significance of leasehold improvements, termination and relocation costs, installation of specialized assets, residual value guarantees, and any sublease term.

The Company has elected not to recognize right-of-use assets and lease liabilities for low-value assets or short-term leases with a term of 12 months or less. These lease payments are recognised in operating expenses over the lease term.

The lease liability is initially measured at the present value of the lease payments that are not paid. The Company elected to not separate non-lease components from lease components and to account for the non-lease and lease components as a single lease component. Lease payments generally include fixed payments less any lease incentives receivable. The lease liability is discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. The Company estimates the incremental borrowing rate based on the lease term, collateral assumptions, and the economic environment in which the lease is denominated. The lease liability is subsequently measured at amortized cost using the effective interest method. The lease liability is remeasured when the expected lease payments change as a result of new assessments of contractual options and residual value guarantees.

The right-of-use asset is recognised at the present value of the liability at the commencement date of the lease less any incentives received from the lessor. Added to the right-of-use asset are initial direct costs, payments made before the commencement date, and estimated restoration costs. The right-of-use asset is subsequently depreciated on a straight-line basis from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

Revenue

The Company's accounting policy for revenue recognition under IFRS 15 is as follows:

To determine the amount and timing of revenue to be recognised, the Company follows a 5-step process:

1. Identifying the contract with a customer

2. Identifying the performance obligations

3. Determining the transaction price

4. Allocating the transaction price to the performance obligations

5. Recognising revenue when/as performance obligation(s) are satisfied.

Revenue from the direct sale of infused products for a fixed price is recognized when the Company transfers control of the good to the customer upon delivery.

Share-based payments

The Company may grant stock options to acquire common shares of the Company to Directors, Officers, employees and consultants. An individual is classified as an employee when the individual is an employee for legal or tax purposes or provides services similar to those performed by an employee.

The fair value of stock options is measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. Consideration paid for the shares on the exercise of stock options is credited to share capital. In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of goods or services received.

   5.            NATURE OF EXPENSES 
 
 
                                                         31 March, 
                                                              2020 
 Selling, general and administrative expense                   GBP 
---------------------------------------------   ------------------ 
 Office and administration                                  84,309 
 Advertising and promotion                                840,038 
 Rent, utilities, operating costs                         182,473 
 Travel and entertainment                                 218,547 
 Insurance                                                  45,019 
 Bank charges and processing costs                          42,483 
----------------------------------------------  ------------------ 
 Total                                                 1,412,869 

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DJ World High Life PLC Interim Results & Intention -6-

----------------------------------------------  ------------------ 
 
 
   6.            TRADE RECEIVABLES AND OTHER CURRENT ASSETS 
 
 
                                            31 March, 
                                                 2020 
                                                  GBP 
-------------------------------   ------------------- 
 Trade receivables                            116,005 
 Prepaid expenses and deposits                 98,600 
--------------------------------  ------------------- 
 Total                                        214,605 
--------------------------------  ------------------- 
 
 
   7.            INVENTORY 
 
 
                    31 March, 
                         2020 
                          GBP 
----------------   ---------- 
 Raw materials        174,577 
 Finished goods       246,402 
-----------------  ---------- 
 Total                420,979 
-----------------  ---------- 
 
 
   8.            PROPERTY AND EQUIPMENT 
 
 
                                    Leasehold                       Right of                     Production 
                                 Improvements                            Use                      Equipment               Office Equipment                          Total 
                                          GBP                            GBP                            GBP                            GBP                            GBP 
--------------  -----------------------------  -----------------------------  -----------------------------  -----------------------------  ----------------------------- 
 Cost 
 Balance 30                                 -                              -                    -                                        -                              - 
 June 2019 
 Additions - 
  Love Hemp 
  acquisition                       40,917                    1,032,297                           58,419                       147,309                  1,278,942 
 Additions                          28,604                                 -                      17,435                    27,500                              73,539 
--------------  -----------------------------  -----------------------------  -----------------------------  -----------------------------  ----------------------------- 
 Balance 31 
  March 2020                        69,521                    1,032,297                           75,854                       174,809                    1,352,481 
--------------  -----------------------------  -----------------------------  -----------------------------  -----------------------------  ----------------------------- 
 
 Accumulated 
 depreciation 
 Balance 30                                 -                              -                              -                              -                              - 
 June 2019 
 Additions - 
  Love Hemp 
  acquisition                        2,243                                 -                      14,432                         36,981                         53,656 
 Depreciation                        4,738                                 -                       5,113                         12,359                         22,210 
--------------  -----------------------------  -----------------------------  -----------------------------  -----------------------------  ----------------------------- 
 Balance 31 
  March 2020                         6,981                                 -                      19,545                         49,340                         75,866 
--------------  -----------------------------  -----------------------------  -----------------------------  -----------------------------  ----------------------------- 
 
 Net book 
 value 
 30 June 2019                               -                              -                              -                              -                              - 
 31 March 2020                      62,540                 1,032,297                              56,309                       125,469                     1,276,615 
--------------  -----------------------------  -----------------------------  -----------------------------  -----------------------------  ----------------------------- 
 
 

A continuity of the lease liability underlying the right of use assets is as follows:

 
 
                                                        31 March, 
                                                             2020 
                                                              GBP 
--------------------------------------------   ------------------ 
 Balance, 30 June 2019                                          - 
 Acquired in Love Hemp transaction (Note 9)           1,032,297 
 Principal reduction                                     (39,340) 
---------------------------------------------  ------------------ 
 Balance, 31 March 2020                              992,957 
 Less: Current portion                                (131,841) 
 Lease liability                                     861,116 
---------------------------------------------  ------------------ 
 
 

The Company recorded interest expense of GBP15,598 in relation to the lease liability during the period.

   9.            ACQUISITION OF LOVE HEMP LIMITED 

On 18 October 2019 the Company acquired 100% of Love Hemp Ltd. ("Love Hemp") for consideration of between GBP9 million and GBP10 million as follows:

   --              GBP3 million of the consideration paid in cash on completion 
   --              GBP3 million satisfied by the issue of 3,000,000 Ordinary Shares on completion 

A further earn out of up to a maximum of GBP4 million to be paid as follows:

-- GBP1,500,000 in cash on the date falling six months and one day from the date of completion, provided that at the Company's election it can alternatively pay to the sellers an amount of GBP2,000,000 to be satisfied by the issue of Ordinary Shares calculated on a 10% discount to the 10 day VWAP preceding the date of the issue of those shares. On 18 April the Company elected to make the payment in Ordinary Shares and is in the process of issuing the shares.

-- GBP1,500,000 in cash on the date falling twelve months and one day from the date of completion provided that at the Company's election it can alternatively pay to the sellers an amount of GBP2,000,000 to be satisfied by the issue of Ordinary Shares calculated on a 10% discount to the 10 day VWAP preceding the date of the issue of those shares.

The acquisition aligns with the Company's mandate to invest in leading companies in the European CBD wellness industry. Love Hemp is an early mover in the UK CBD market with established distribution and long-standing brand recognition.

The acquisition has been accounted for as a business combination, using the acquisition method. The purchase consideration has been provisionally allocated based on the Company's estimated fair value of the identifiable assets acquired and the liabilities assumed at the acquisition date.

The estimated purchase price allocation is as follows:

 
 
Consideration                                                                    GBP 
----------------------------------------------------------------   ----------------- 
3,000,000 Ordinary shares at a fair value of GBP1.00 per share:          3,000,000 
Cash                                                                     3,000,000 
Contingent consideration                                                 4,000,000 
-----------------------------------------------------------------  ----------------- 
                                                                       10,000,000 
Provisional net assets of Love Hemp Ltd. 
Cash                                                                          84,349 
Accounts receivable                                                         378,395 
Inventory                                                                   544,906 
Other current assets                                                          66,357 
Equipment                                                                   192,989 
Right of use asset                                                       1,032,297 
Lease liability                                                        (1,032,297) 
Accounts payable and accrued liabilities                                  (825,300) 
Loan payable                                                              (586,627) 
Deferred tax                                                                (28,900) 
-----------------------------------------------------------------  ----------------- 
Net assets acquired                                                       (173,831) 
Goodwill and intangible assets                                         10,173,831 
-----------------------------------------------------------------  ----------------- 
Total                                                                  10,000,000 
-----------------------------------------------------------------  ----------------- 
 

As of the date of these consolidated interim financial statements, the determination of fair value of assets and liabilities acquired is based on preliminary estimates and has not been finalised. The Company is currently in the process of determining the fair values of the net assets acquired, specifically the final allocation between goodwill and intangible assets. The actual fair values of the assets and liabilities may differ materially from the amounts disclosed in the preliminary fair value above and are subject to change within a period not to exceed twelve months from the acquisition date with retroactive restatement of the impact of adjustment to those provisional fair values effective as at the acquisition date.

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DJ World High Life PLC Interim Results & Intention -7-

Goodwill is expected to arise in the acquisition of Love Hemp because the cost of acquisition included amounts in relation to the benefit of expected revenue growth, existing distribution relationships, and future market development. These benefits are not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.

During the six-month period ended March 31, 2020, in light of the international COVID-19 Virus pandemic, the Company determined it would be prudent to conduct an impairment analysis of the acquired provisional goodwill and intangible assets. Using a probability weighted discounted cash flow ("DCF") analysis the Company determined that an impairment charge of GBP7,473,831 of the provisional goodwill and intangible assets was appropriate given uncertain economic growth prospects. The DCF utilized a 25% discount rate and estimated sales growth rates of between 0% to 20% per month.

The continuity of goodwill is as follows:

 
 
                                    31 March, 
                                         2020 
                                          GBP 
--------------------------   ---------------- 
 Acquisition of Love Hemp         10,173,831 
 Impairment                       (7,473,831) 
---------------------------  ---------------- 
 Total                              2,700,000 
---------------------------  ---------------- 
 
 

From the date of the acquisition on 18 October 2019 to 31 March 2029 Love Hemp Ltd. recognized revenue of GBP1,053,195 and incurred a loss of GBP1,111,617.

   10.          ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 
 
 
                                         31 March, 
                                              2020 
                                               GBP 
-------------------------------   ---------------- 
 Accounts payable                          973,493 
 Accrued liabilities and other             283,682 
--------------------------------  ---------------- 
 Total                                   1,257,175 
--------------------------------  ---------------- 
 
 
   11.          LOANS PAYABLE 

A continuity of the loan balance is as follows:

 
 
                                                             31 March, 
                                                                  2020 
                                                                   GBP 
------------------------------------------------   ------------------- 
 Balance acquired - Love Hemp acquisition (Note 
  9)                                                           586,627 
 Accrued interest                                               16,055 
 Loans issued                                                  370,416 
 Re-payments                                               (295,832) 
-------------------------------------------------  ------------------- 
 Total                                               677,266 
 Current portion                                           (462,072) 
-------------------------------------------------  ------------------- 
 Balance at 31 March 2020                                      215,194 
-------------------------------------------------  ------------------- 
 
 

a) During April 2019, Love Hemp entered a loan agreement for a principal amount of up to GBP 360,343 bearing interest at 9.90%. The loan matures in sixty months and requires monthly repayments of GBP 7,638. Upon maturity, Love Hemp is required to pay a completion fee of GBP 10,495. The loan is secured by the assets of Love Hemp.

b) Love Hemp issued a 12% promissory note of GBP250,000 which was repaid following the close of the acquisition.

c) The Company entered unsecured loan agreements whereby approximately GBP220,394 was advanced to the Company with an interest rate of 5% per annum repayable on November 1, 2020. Subsequent to 31 March 2020 the balance was settled for shares of the Company.

d) The Company entered unsecured loan agreements whereby approximately GBP81,187 was advanced to the Company with an interest rate of 5% per annum repayable on November 1, 2020. The loan was from a Company with a common CFO.

e) The Company entered unsecured loan agreements whereby approximately GBP68,835 was advanced to the Company with an interest rate of 5% per annum repayable on November 1, 2020.

   12.          CONVERTIBLE DEBENTURES 
 
 
                                               October                   November 
                                                  2019                       2019           Total 
                                                   GBP                        GBP                     GBP 
-------------------------------  ---------------------  -------------------------  ---------------------- 
 Balance, 30 June 2019                               -                          -                       - 
 Convertible debentures issued 
  (a,b)                                    2,338,554                    17,228               2,355,782 
 Transaction costs - cash                     (48,459)                          -               (48,459) 
 Conversion feature                         (250,452)                     (1,884)             (252,336) 
 Accretion expense                              49,813                        375          50,188 
 Interest expense                               97,440                        718                  98,158 
 Balance, 31 March 2020                    2,186,896                    16,437               2,203,333 
-------------------------------  ---------------------  -------------------------  ---------------------- 
 
 

In October and November of 2019, the Company issued 2,355,782 GBP0.10 convertible debenture units raising gross proceeds of GBP2,355,782. The convertible debentures units each consist of one debenture convertible into GBP0.01 nominal value Ordinary Shares at a price of GBP0.10 and one share purchase warrant exercisable at a price of GBP0.15 for a period of two years from closing, subject to the Company's right to accelerate the maturity date upon 30 days' notice in the event that the Ordinary Shares trade at GBP0.25 or higher for a 10 day period.

The debentures accrue interest of 10% annually and are subject to the Company's right to force conversion upon 30 days' notice in the event that the Ordinary Shares trade at GBP0.30 or higher for a 10-day period. Interest may be paid in cash or in Ordinary Shares, or a combination thereof at the discretion of the Company. The Debentures will mature in two years plus one day from the closing dates.

In connection with the above the Company paid cash transaction costs of $45,883 and issued a total of 54,970 share purchase warrants exercisable at a price of 0.15 per ordinary share for a period of two years from issue.

As stated in the convertible debenture agreements the conversion price will be adjusted if the Company completes a rights offering for less than 90% of the quoted price. The variability of the conversion price creates a derivative which has been recognized as a financial liability.

A continuity of the derivative liability related to the debenture conversion feature is as follows:

 
 
                                                          October                 November 
                                                             2019                     2019          Total 
                                                              GBP                      GBP                    GBP 
------------------------------------------  ---------------------  -----------------------  --------------------- 
 Balance, 30 June 2019                                          -                        -                      - 
 Conversion feature - initial recognition                 250,452                    1,884                252,336 
 Fair value adjustment                                    614,109                    4,299                618,408 
 Balance, 31 March 2020                             864,561                          6,183                870,744 
------------------------------------------  ---------------------  -----------------------  --------------------- 
 
 

The conversion feature was valued at 31 March 2020 using the Black-Scholes valuation model with the following assumptions: Expected life 1.8 years, volatility 75%, discount rate 2.25%, dividend yield 0%.

   13.          SHARE CAPITAL AND RESERVES 

Auth orised

2,000,000,000 ordinary s hares w i th GBP0.01 nominal (par) val ue. As of 31 March 2020, there were 142,409,071 ordinary shares outstanding.

Escrow Shares

The Company has ordinary shares subject to trading restrictions and escrow which are to be released in tranches through 2021. As at 31 March 2020, a total of 127,415,360 ordinary shares were subject to these escrow restrictions.

Issued and Outstanding - Ordinary Shares

On 20 November 2019 the Company completed a consolidation of its Ordinary shares ("share consolidation") on the basis of one post-consolidation Ordinary share for every ten pre-consolidation Ordinary shares held (10-to-1).

On 14 April 2019 the Company completed a subdivision of its Ordinary shares ("share consolidation") on the basis of ten post-subdivision Ordinary share for every one pre-subdivision Ordinary shares held (10-to-1). All references contained in these financial statements to issued and outstanding Ordinary shares, warrants, per share amounts, and exercise prices, have been retroactively restated to reflect the effect of the share sub-division.

During the period ended 31 March 2020 the Company issued ordinary shares as follows:

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a) In July 2019 the Company issued 3,079,930 units at a price of GBP0.10 per unit for gross proceeds of GBP307,993 with each unit consisting of one ordinary share and one half of a share purchase warrant. The par value of GBP0.01 per share totalling GBP30,799 was recorded to share capital and GBP277,194 was recorded to share premium. GBP175,493 of the proceeds was recorded prior to 30 June 2019 and was previously recorded as shares to be issued. Each full warrant entitles the holder to acquire an additional ordinary share at a price of GBP0.20 per ordinary share for a period of 2 years from the date of issuance. If the price of the ordinary shares of the Company trade above GBP0.50 per share on a stock exchange for 10 consecutive days, the Company has the right to provide notice to accelerate the expiry of the warrants to 30 days after the notice is given.

b) In July 2019 the Company issued 1,990,000 ordinary shares at a fair value of GBP0.10 each for services totalling GBP199,000.

c) In August 2019, the Company issued 7,285,000 Ordinary Shares to raise GBP728,500 at a subscription price of GBP0.10 to which the subscribers also received half a warrant of which a whole warrant can be exercised in return for an Ordinary Share at a price of GBP0.20 per Ordinary Share for a period of two years from the date of issue. The Company maintains an election to accelerate the expiry of such warrants should the Company's shares trade at a price of GBP0.50 or more for a period of 10 days.

d) In August 2019, the Company issued 8,100,000 Ordinary Shares to raise GBP81,000 at a subscription price of GBP0.01.

e) In August 2019, the Company issued 675,000 Ordinary Shares to raise GBP40,500 at a subscription price of GBP0.06 to which the subscribers also received half a warrant of which a whole warrant can be exercised in return for an Ordinary Share at a price of GBP0.12 per Ordinary Share for a period of two years from the date of issue. The Company maintains an election to accelerate the expiry of such warrants should the Company's shares trade at a price of GBP0.30 or more for a period of 10 days.

f) In August 2019, the Company issued 626,810 Ordinary Shares to raise GBP62,681 at a subscription price of GBP0.10 to which the subscribers also received half a warrant of which a whole warrant can be exercised in return for an Ordinary Share at a price of GBP0.20 per Ordinary Share for a period of two years from the date of issue. The Company maintains an election to accelerate the expiry of such warrants should the Company's shares trade at a price of GBP0.50 or more for a period of 10 days.

g) In September 2019 the Company issued 500,000 ordinary shares at a fair value of GBP0.10 each to Peter House Capital Ltd. for services totalling GBP50,000.

h) In December 2019, the Company issued 814,680 Ordinary Shares to raise GBP81,468 at a subscription price of GBP0.10 to which the subscribers also received half a warrant of which a whole warrant can be exercised in return for an Ordinary Share at a price of GBP0.20 per Ordinary Share for a period of two years from the date of issue. The Company maintains an election to accelerate the expiry of such warrants should the Company's shares trade at a price of GBP0.50 or more for a period of 10 days.

i) On 4 February 2020 the Company issued 696,300 Ordinary shares of GBP0.01 each for GBP0.10 per share for a total consideration of GBP69,630 in lieu of consulting fees.

During the period ended 30 June 2019 the Company issued ordinary shares as follows:

a) In January 2019 the Company was incorporated with an issued share capital of GBP10 divided into 1,000 ordinary shares with a nominal value of GBP0.01.

b) In June 2019 the Company issued 82,815,712 ordinary shares at a price of GBP0.01 per share for gross proceeds of GBP828,157.

c) In June 2019 the Company issued 5,824,642 units at a price of GBP0.06 per unit for gross proceeds of GBP349,479 with each unit consisting of one ordinary share and one half of a share purchase warrant. The nominal value of GBP0.01 per share totalling GBP58,246 was recorded to share capital and GBP291,233 was recorded to share premium. Each full warrant entitles the holder to acquire an additional ordinary share at a price of GBP0.12 per ordinary share for a period of 2 years from the date of issuance. If the price of the ordinary shares of the Company trade above GBP0.30 per share on a stock exchange for 10 consecutive days, the Company has the right to provide notice to accelerate the expiry of the warrants to 30 days after the notice is given.

d) In accordance with a GBP1.00 unit offering a total GBP175,493 had been collected by the Company prior to closing.

Options

Ordinary Shares will not exceed 20 percent of the Company's issued Ordinary Shares from time to time without the prior approval of the Shareholders.

A summary of the share option transactions for the period ended 31 March 2020 is summarized as follows:

 
 
                                                                       Weighted 
                                        Number of              Average Exercise 
                                          Options                     Price GBP 
--------------------------  ---------------------  ---------------------------- 
 Balance at 30 June 2019                        -                             - 
 Granted                               25,500,000                         0.128 
                                                   ---------------------------- 
 Balance at 31 March 2020              25,500,000       0.128 
==========================  =====================  ============================ 
 
 

The following table summarizes stock options outstanding and exercisable under the Company's stock option plan as at 31 March 2020

 
 
                                                             Weighted 
                      Number                                  Average 
                          of     Number of                   Exercise 
                               Exercisable 
 Expiry date         Options       Options                  Price GBP 
-------------    -----------  ------------  ------------------------- 
 27 February 
  2025            25,500,000           Nil                      0.128 
---------------  -----------  ------------  ------------------------- 
 
 

The stock options were valued at issuance using the Black-Scholes Option Pricing Model using the following assumptions:

 
 
                                            31 March, 
                                                 2020 
----------------------------------------   ---------- 
 Risk-free interest rate                        1.00% 
 Expected life of options                        4.25 
 Annualized volatility                            75% 
 Dividend rate                                     0% 
 Weighted average fair value per option      GBP 0.05 
-----------------------------------------  ---------- 
 
 

During the period ended 31 March 2020 share-based payment expense was GBP 218,919.

Warrants

A summary of warrant activity is as follows:

 
 
                                                              Weighted 
                                         Number of    Average Exercise 
                                          Warrants           Price GBP 
--------------------------  ----------------------  ------------------ 
 Balance at 30 June 2019                 2,912,328                0.12 
 Granted                               30,509,482                 0.16 
                                                    ------------------ 
 Balance at 31 March 2020              33,421,810                 0.15 
==========================  ======================  ================== 
 
 

The following table summarises warrants outstanding at 31 March 2020:

 
 
                         Number 
                             of                            Weighted Average 
---------------                                                              ----------------------------- 
                                                                                                  Weighted 
                                                                                                   Average 
                                                             Exercise Price                      Remaining 
 Expiry date           Warrants                                         GBP                          Years 
---------------    ------------  ------------------------------------------  ----------------------------- 
 June 28, 2021        2,912,328                                        0.12                           1.24 
 July 19, 2021        1,539,965                                        0.20                           1.30 
 August 16,           3,642,500                                        0.20                           1.38 
  2021 
 August 27,             337,500                                        0.12                           1.41 
  2021 
 August 27,             313,405                                        0.20                           1.41 
  2021 
 September 12,          551,990                                        0.10                           0.45 
  2020 
 October 9,            11,404,8                                        0.15                           1.53 
  2021                       50 
 October 9,             104,000                                        0.15                           1.53 
  2021 
 October 15,          8,666,660                                        0.15                           1.54 
  2021 
 October 28,          3,314,030                                        0.15                           1.58 
  2021 
 October 28,             49,332                                        0.15                           1.58 
  2021 
 November 21,           407,340                                        0.15                           1.64 
  2021 

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DJ World High Life PLC Interim Results & Intention -9-

 November 29,           172,280                                        0.15                           1.67 
  2021 
 November 29,             5,630                                        0.15                           1.67 
  2021 
-----------------    ----------  ------------------------------------------  ----------------------------- 
                     33,421,810                                        0.15                           1.47 
   ============================  ==========================================  ============================= 
 
 

Share-based compensation expense recognized during the period of GBP 23,044 related to 551,990 warrants granted to the Corporate Adviser upon listing on the AQSE Growth Market. The warrants were valued using the Black-Scholes Option Pricing Model using the following weighted average assumptions:

 
 
                                             31 March, 
                                                  2020 
-----------------------------------------   ---------- 
 Risk-free interest rate                         2.25% 
 Expected life                                       2 
 Annualized volatility                             75% 
 Dividend rate                                      0% 
 Weighted average fair value per warrant      GBP 0.04 
------------------------------------------  ---------- 
 
 

Expected annualized volatility was determined using the historic volatility of established comparable publicly traded cannabis companies.

   14.         RELATED PARTY TRANSACTIONS 

K ey m a n ag e ment pers o n nel

Key m a nag e m e nt pers o nnel i ncl u de t h o se pers o ns h a v i ng au t h ori ty a nd res pon si b ili ty for p lann i ng, d irecti ng a nd co n tro lli ng t he act i v iti es of t he C o m p a ny as a w ho le. T he Co m p a ny h as deter m i ned t hat k ey man a g e ment pers on nel co n si st of exec u t i ve and n o n- e xecu t i ve m e m bers of t he C o m pan y's Board of Direct ors and corp orate O ff icers an d / or co m p a n ies co n tro lled by t h o se i n d i v i d uals.

During the period ended 31 March 2020 the Company entered the following transactions with key management personnel:

 
 
                                                                  31 March, 
                                                                       2020 
 Key Management Remuneration:                                           GBP 
-----------------------------------------------------   ------------------- 
 Service fees accrued - David Stadnyk, CEO, 
  Director                                                198,000 
 Service fees accrued - Robert Payment, CFO, 
  Director                                                   17,500 
 Service fees accrued - Charlie Lamb, Director                       10,500 
 Service fees accrued - Kevin Ernst, Director                        10,500 
 Service fees accrued / paid - Andrew Male, 
  Director                                                           35,000 
 Salaries paid - Anthony Calamita, Director 
  of Subsidiary                                                      52,500 
 Salaries paid - Tom Rowland, Director of Subsidiary                 52,500 
------------------------------------------------------  ------------------- 
 Total                                                              376,500 
======================================================  =================== 
 
                                                                  31 March, 
                                                                       2020 
 Other transactions:                                                    GBP 
-----------------------------------------------------   ------------------- 
 Service fees, Heytsbury Corporate LLP, Corporate 
  Secretary                                                          38,545 
======================================================  =================== 
 
 

The following is a summary of the amounts owing to key management:

 
 
                                                              31 March, 
                                                                   2020 
 Due to Key Management:                                             GBP 
--------------------------------------------------   ------------------ 
 Service fees accrued - David Stadnyk, CEO, 
  Director                                                     198,000 
 Service fees accrued - Robert Payment, CFO, 
  Director                                                       17,500 
 Service fees accrued - Charlie Lamb, Director                   10,500 
 Service fees accrued - Kevin Ernst, Director                    10,500 
 Service fees accrued - Andrew Male, Director                    10,500 
 Service fees, Heytsbury Corporate LLP, Corporate 
  Secretary                                                      28,945 
 Total                                                         275,945 
===================================================  ================== 
 
 
   15.          FINANCIAL INSTRUMENTS 

Fa ir va lue

Fi n a n cial i n stru m e n ts mea s ured at fair val ue are cl a ss i f i ed i n to o ne of t hree l e vels in t he fair val ue h ierarchy accord i ng to t he relati ve reliab ili ty of t he i n p u ts u sed to es t i mate t he fair val ues. T he t h ree levels of t he fair val ue h ierarchy are:

-- L e v el 1 - Unad j u sted q u o ted prices in acti ve mar kets f or i den tical as sets or liab iliti e s;

-- L e v el 2 - In p u ts o t her t h an q u o ted prices t hat are ob servab le f or t he a sset or liab il ity eit her d irect ly or i n d irect l y; and

   --     L e v el 3 - In p u ts  t hat are  n ot  based  on  ob servab le  market  data. 

The Company's financial assets and liabilities measured at fair value on a recurring basis were calculated as follows:

 
 
 31 March 2020 - Financial                Balance               Level              Level    Level3 
  assets                                      GBP               1 GBP              2 GBP       GBP 
-----------------------------  ------------------  ------------------  -----------------  -------- 
 Cash                                     102,482             102,482                  -         - 
 Trade receivables and 
  other                                   214,605             214,605                  -         - 
-----------------------------  ------------------  ------------------  -----------------  -------- 
 
 
 30 June 2019 - Financial                 Balance               Level              Level    Level3 
  assets                                      GBP               1 GBP              2 GBP       GBP 
-----------------------------  ------------------  ------------------  -----------------  -------- 
 Cash                                   1,307,456           1,307,456                  -         - 
 Trade receivables and 
  other                                       286                 286                  -         - 
-----------------------------  ------------------  ------------------  -----------------  -------- 
 
 
 31 March 2020 - Financial                Balance               Level              Level    Level3 
  liabilities                                 GBP               1 GBP              2 GBP       GBP 
-----------------------------  ------------------  ------------------  -----------------  -------- 
 Accounts payable and 
  accrued liabilities                   1,257,175           1,257,175                  -         - 
 Loans payable - current                  462,072             462,072                  -         - 
 Loans payable - non-current              215,194             215,194                  -         - 
 Convertible debentures                 2,203,333                   -          2,203,333         - 
 Derivative liability                     870,744                   -            870,744         - 
-----------------------------  ------------------  ------------------  -----------------  -------- 
 
 
 30 June 2019 - Financial                 Balance               Level              Level    Level3 
  liabilities                                 GBP               1 GBP              2 GBP       GBP 
-----------------------------  ------------------  ------------------  -----------------  -------- 
  Accounts payable and 
   accrued liabilities                     33,731              33,731                  -         - 
-----------------------------  ------------------  ------------------  -----------------  -------- 
 

Fin a nci al ri sk m a n ag e m e nt

T h e C o m p a n y's ri sk ex po s ures and t he i m pact on t he C o m pan y's f i n a ncial i n st r u m e n ts are s um marised bel o w.

Cr ed it r i sk

Credit risk is the risk of a potential loss to the Company if customer or third party to a financial instrument fails to meet its contractual obligations. The majority of the Company's credit exposure at 31 March 2020 is the carrying amount of cash. The Company does not have significant credit risk with respect to its customers. All cash and cash equivalents are placed with major UK financial institutions.

The Company provides credit to its customers in the normal course of business and has established credit evaluation and monitoring processes to mitigate credit risk.

In terest r a te r i sk

T h e C o m pany is ex po sed to i n terest rate ri sk to t he ex t e nt t hat t he ca sh mai n tai ned at t he f i nan c ial i n st i t u t i o ns is s u b ject to a f l oati ng rate of i n terest. T he i n terest rate risk on cash is n ot co n s i dered si g n i f i can t.

Liqu i d it y risk

The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at 31 March 2020, the Company's current financial liabilities consist of accounts payable and accrued liabilities.

Fo rei gn cu rrency risk

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DJ World High Life PLC Interim Results & Intention -10-

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign currency rates. As at 31 March 2020 the Company had cash, accounts payable and accrued liabilities, denominated in Canadian dollars ("CAD"). A 10% fluctuation in the foreign exchange rate between the Pound Sterling and Canadian dollar would not have a significant impact on profit or loss for the period. The Company does not undertake currency hedging activities to mitigate its foreign currency risk.

   16.          CAPITAL MANAGEMENT 

The Company defines capital as equity. The Company manages its capital structure and makes adjustments in order to have the funds available to support its operating activities.

The Company's objective when managing capital is to safeguard the Company's ability to continue as a going concern to pursue the development of its business. The Company manages its capital structure and adjusts it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Company may issue new equity instruments, new debt, or acquire and/or dispose of assets. As discussed in Note 1, the Company's ability to continue as a going concern is uncertain and dependent upon the continued financial support of its shareholders, future profitable operations, the lack of adverse political developments in the United Kingdom and Europe with respect to cannabis legislation, and securing additional financing.

Management reviews its capital management approach on an ongoing basis. There were no changes in the Company's approach to capital management during the periods presented. The Company is not subject to externally imposed capital requirement.

   17.          SUBSEQUENT EVENTS 

Subsequent to 31 March 2020 , the Company completed the following transactions:

a) The Company issued 960,000 Ordinary shares of GBP 0.01 in settlement of consulting fees in lieu of cash at a price of GBP 0.10 for total consideration of GBP 96,000.

b) The Company issued 2,231,650 Ordinary Shares of GBP 0.01 in settlement of debt at a price of GBP 0.10 for total consideration of GBP 223,165.

Responsibility Statement

We confirm that to the best of our knowledge:

-- The interim financial statements have been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting, as adopted by the EU.

-- The interim financial statements give a true and fair view of the assets, liabilities, financial position and loss of the Company;

-- The Interim report includes a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first nine months of the financial year and their impact on the set of interim financial statements; and a description of the principal risks and uncertainties for the remaining three months of the year; and

-- The Interim report includes a fair review of the information required by DTR 4.2.8R of the Disclosure and Transparency Rules, being the information required on related party transactions.

The interim report was approved by the Board of Directors and the above responsibility statement was signed on its behalf by:

David Stadnyk

Chairman

12 June 2020

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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