Exhibit 99.1
METALPHA TECHNOLOGY HOLDING LIMITED
(FORMERLY DRAGON VICTORY INTERNATIONAL LIMITED)
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF SEPTEMBER 30, 2022 AND MARCH 31, 2022
(Amounts in U.S. dollars)
Notes | As of September 30, 2022 | As of March 31, 2022 | |||||||||
(Unaudited) | (Audited) | ||||||||||
Assets | |||||||||||
Non-current assets | |||||||||||
Property and equipment | 4 | ||||||||||
Right of use assets | 5 | ||||||||||
Other assets | |||||||||||
Total non-current assets | |||||||||||
Current assets | |||||||||||
Other receivables and prepayments | 6 | ||||||||||
Loans receivables | 7 | ||||||||||
Digital assets | 8 | ||||||||||
Cash and cash equivalents | 9 | ||||||||||
Total current assets | |||||||||||
Total assets | |||||||||||
Equity | |||||||||||
Share capital | 10 | ||||||||||
Additional paid-in capital | |||||||||||
Warrants reserves | 10 | ||||||||||
Statutory reserves | |||||||||||
Accumulated deficit | ( | ) | ( | ) | |||||||
Accumulated other comprehensive (loss) income | ( | ) | |||||||||
Equity attributable to owners of the Company | |||||||||||
Non-controlling interests | 10 | ||||||||||
Total equity | |||||||||||
Liabilities | |||||||||||
Non-current liabilities | |||||||||||
Lease liabilities | 5 | ||||||||||
Total non-current liabilities | |||||||||||
Current liabilities | |||||||||||
Accounts and other payables | 11 | ||||||||||
Digital assets payables | 12 | ||||||||||
Taxes payable | |||||||||||
Lease liabilities | 5 | ||||||||||
Total current liabilities | |||||||||||
Total liabilities | |||||||||||
Total equity and liabilities |
The accompanying notes form an integral part of these condensed consolidated financial statements.
F-1
METALPHA TECHNOLOGY HOLDING LIMITED
(FORMERLY DRAGON VICTORY INTERNATIONAL LIMITED)
CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND COMPREHENSIVE (LOSS) INCOME
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(Amounts in U.S. dollars)
For the six months ended September 30, | |||||||||||
Notes | 2022 | 2021 | |||||||||
(Unaudited) | (Unaudited) | ||||||||||
(Restated) | |||||||||||
Revenue | |||||||||||
- Supply chain management platform service fee | 13 | ||||||||||
- Fair value change of proprietary trading digital assets | 13 | ||||||||||
Total revenue | |||||||||||
Cost of revenue | 14 | ||||||||||
Selling and promotion expenses | 15 | ||||||||||
Consultation service expenses | 16 | ||||||||||
General and administrative expenses | 17 | ||||||||||
Total operating expenses | |||||||||||
Results from operating activities | ( | ) | ( | ) | |||||||
Other income | |||||||||||
Other expenses | ( | ) | ( | ) | |||||||
Share purchase warrants expenses | 10 | ( | ) | ||||||||
Finance income | |||||||||||
Finance costs | ( | ) | ( | ) | |||||||
Net finance costs | 18 | ( | ) | ( | ) | ||||||
Loss before income tax | ( | ) | ( | ) | |||||||
Income tax expense | 19 | ( | ) | ||||||||
Loss for the period | ( | ) | ( | ) | |||||||
Income (loss) attributable to: | |||||||||||
Owners of the Company | ( | ) | ( | ) | |||||||
Non-controlling interests | ( | ) | |||||||||
( | ) | ( | ) | ||||||||
Other comprehensive (loss) income | |||||||||||
Foreign operation – foreign currency translation differences | ( | ) | |||||||||
Total comprehensive loss for the period | ( | ) | ( | ) | |||||||
Total comprehensive loss attributable to: | |||||||||||
Owners of the Company | ( | ) | ( | ) | |||||||
Non-controlling interests | |||||||||||
( | ) | ( | ) | ||||||||
Loss per share attributable to owners of the Company | |||||||||||
22 | ( | ) | ( | ) |
The accompanying notes form an integral part of these condensed consolidated financial statements.
F-2
METALPHA TECHNOLOGY HOLDING LIMITED
(FORMERLY DRAGON VICTORY INTERNATIONAL LIMITED)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(Amounts in U.S. dollars)
Available to owners of the Company | ||||||||||||||||||||||||||||||||||||||||||||||
Ordinary Shares | Additional | Accumulated
other | Non- | |||||||||||||||||||||||||||||||||||||||||||
Note | Shares | Amount | paid-in capital | Shares to be issued | Warrants reserves | Statutory reserves | Accumulated deficit | comprehensive loss (income) | Subtotal | controlling interests | Totals | |||||||||||||||||||||||||||||||||||
US$ | US$ | US$ | US$ | US$ | US$ | US$ | US$ | US$ | ||||||||||||||||||||||||||||||||||||||
Balances at April 1, 2021 (Unaudited) (Restated) | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
Net loss for the period | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
Conversion of convertible debenture into ordinary shares | (a) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
Ordinary shares issued under employee plans | ||||||||||||||||||||||||||||||||||||||||||||||
Changes in non- controlling interest due to changes in ownership of partially owned subsidiary | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
Foreign operation – foreign currency translation differences | - | |||||||||||||||||||||||||||||||||||||||||||||
Balances at September 30, 2021 (Unaudited) (Restated) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
Balances at April 1, 2022 (Unaudited) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
Net loss for the period | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
Issuance of share purchase warrants | - | |||||||||||||||||||||||||||||||||||||||||||||
Shares issued on private placement (Note 10) | ||||||||||||||||||||||||||||||||||||||||||||||
Foreign operation – foreign currency translation differences | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
Balances at September 30, 2022 (Unaudited) | ( | ) | ( | ) |
Note:
(a) |
The accompanying notes form an integral part of these condensed consolidated financial statements.
F-3
METALPHA TECHNOLOGY HOLDING LIMITED
(FORMERLY DRAGON VICTORY INTERNATIONAL LIMITED)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(Amounts in U.S. dollars)
For the six months ended September 30, | |||||||
2022 | 2021 | ||||||
(Unaudited) | (Unaudited) | ||||||
(Restated) | |||||||
Cash flows from operating activities | |||||||
Loss before income tax | ( | ) | ( | ) | |||
Adjustments for | |||||||
Finance income | ( | ) | ( | ) | |||
Finance costs | |||||||
Fair value change of proprietary trading digital assets | ( | ) | |||||
Depreciation of property and equipment | |||||||
Depreciation of right of use assets | |||||||
Loss on disposal of property and equipment | |||||||
Share-based compensation | |||||||
Share purchase warrants expenses | |||||||
Changes in assets and liabilities | |||||||
Decrease/(increase) in other receivables and prepayments | ( | ) | |||||
Increase in advance to suppliers | ( | ) | |||||
Increase in accounts and other payables | |||||||
Net cash used in operating activities | ( | ) | ( | ) | |||
Cash flows from investing activities | |||||||
Interest received | |||||||
(Increase)/decrease in loans receivables | ( | ) | |||||
Purchase of property and equipment | ( | ) | ( | ) | |||
Decrease/(increase) in related party receivables | ( | ) | |||||
Net cash provided by investing activities | |||||||
Cash flows from financing activities | |||||||
Proceeds from shares issued on private placement | |||||||
Proceeds from issuance of convertible notes, net | |||||||
Increase in related parties payable | |||||||
Payment of principal portion of lease liabilities | ( | ) | ( | ) | |||
Interest paid | ( | ) | ( | ) | |||
Net cash provided by financing activities | |||||||
Net Increase of Cash and Cash Equivalents | |||||||
Effect of foreign currency translation on cash and cash equivalents | ( | ) | |||||
Cash and cash equivalents–beginning of the period | |||||||
Cash and cash equivalents–end of the period |
F-4
Reconciliation of movement of liabilities to cash flows arising from financing activities | ||||
Lease liabilities | ||||
US$ | ||||
Balance as of April 1, 2021 | ||||
Changes from financing cash flow | ||||
Lease payment | ( | ) | ||
Interest paid | ||||
Total changes from financing cash flow | ( | ) | ||
Other changes | ||||
New leases | ||||
Exchange realignments | ||||
Total other changes | ||||
Balance as of September 30, 2021 | ||||
Balance as of April 1, 2022 | ||||
Changes from financing cash flow | ||||
Lease payment | ( | ) | ||
Interest paid | ||||
Total changes from financing cash flow | ( | ) | ||
Other changes | ||||
New leases | ||||
Exchange realignments | ( | ) | ||
Total other changes | ||||
Balance as of September 30, 2022 |
Significant non-cash transactions
Non-cash investing and financing activities
Non-cash investing and financing activities for the periods ended September 30, 2022 and 2021, as disclosed in the note, are:
(i) | Capitalized US$79,533 (2021: US$425,922) in right of use assets and US$79,533 (2021: US$425,922) in lease liabilities. |
The accompanying notes form an integral part of these condensed consolidated financial statements.
F-5
METALPHA TECHNOLOGY HOLDING LIMITED
(FORMERLY DRAGON VICTORY INTERNATIONAL LIMITED)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
1. | BUSINESS AND ORGANIZATION |
Metalpha Technology Holding Limited (“the Company”), formerly Dragon Victory International Limited, was formed in the Cayman Islands on July 19, 2015. The Company operates through its PRC operating entities and Metalpha Limited, a company incorporated in the British Virgin Islands. The PRC operating entities currently have one line of business, namely, supply chain management platform services. Metalpha Limited operates cryptocurrency derivative product services in Hong Kong.
On September 21, 2022, the Company
transferred
On November 15, 2022, the shareholders of the Company approved the change of the name of the Company from “Dragon Victory International Limited” to “Metalpha Technology Holding Limited”.
Particulars of subsidiaries of the Company are as below:
Place of incorporation | Issued share | Principal | Percentage of shareholding% | |||||||||||||
Company | and operation | capital | activities | Direct | Indirect | |||||||||||
Sweet Lollipop Co., Ltd. (“Sweet Lollipop”) | % | |||||||||||||||
Metalpha Holding (HK) Limited (formerly known as “Long Yun International Holdings Limited”) | % | |||||||||||||||
HangZhou Longyun Network Technology Co., Ltd (“HangZhou Longyun”) (1) | ||||||||||||||||
Hangzhou Dacheng Investment Management Co., Ltd. (“Hangzhou Dacheng”) | % | |||||||||||||||
Dacheng Liantong Zhejiang Information Technology Co., Ltd (“Dacheng Liantong”)(1) | ||||||||||||||||
Hangzhou Xuzhihang Supply Chain Management Co., Ltd. (“Hangzhou Xuzhihang”) (1) | ||||||||||||||||
Meta Rich Limited | % | |||||||||||||||
LSQ Capital Limited | % | |||||||||||||||
Metalpha Limited | % | |||||||||||||||
LSQ Investment Limited | % | |||||||||||||||
Hangzhou Taikexi Dacheng Automobile Technology Service Co. Ltd. | % |
Notes:
(1) |
(2) |
F-6
2. | BASIS OF PRESENTATION AND CONSOLIDATION |
2.1) | Principles of Presentation |
The condensed consolidated financial statements of the Company have been prepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”). This basis of accounting involves the application of accrual accounting and consequently, revenue and gains are recognized when earned, and expenses and losses are recognized when incurred. The Company’s condensed consolidated financial statements are expressed in U.S. dollars (“US$”).
These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements included in the Company’s annual report on Form 20-F for the year ended March 31, 2022, filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 16, 2023. Certain disclosures included in the annual financial statements have been condensed or omitted from these condensed consolidated financial statements as they are not required for interim financial statements under IAS and the rules of the SEC.
These condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These adjustments are of a normal, recurring nature. Interim period operating results may not be indicative of the operating results for a full year.
The Company has disclosed its condensed consolidated financial statements under International Financial Reporting Standards (“IFRS”) for the six months ended September 30, 2022 and 2021. The latest consolidated financial statements under generally accepted accounting principles (U.S. GAAP) were prepared for the year ended March 31, 2021, and the date of transition to IFRS is April 1, 2020. The comparative amounts for the six months ended September 30, 2021 has been restated.
2.2) | Recent Accounting Pronouncements |
There were no recent accounting pronouncements adopted by the Company.
3. | SIGNIFICANT ACCOUNTING POLICIES |
The accounting policies applied in these condensed consolidated financial statements are the same as those applied in the most recent annual audited consolidated financial statements issued on August 16, 2022.
4. | PROPERTY AND EQUIPMENT |
Computer and equipment | Automobiles | Total | ||||||||||
US$ | US$ | US$ | ||||||||||
Cost | ||||||||||||
As of April 1, 2021 | ||||||||||||
Additions | ||||||||||||
Acquisition of a subsidiary | ||||||||||||
Exchange realignment | ||||||||||||
As of March 31, 2022 | ||||||||||||
Additions | ||||||||||||
Disposals | ( | ) | ( | ) | ||||||||
Exchange realignment | ( | ) | ( | ) | ( | ) | ||||||
As of September 30, 2022 | ||||||||||||
Accumulated depreciation | ||||||||||||
As of April 1, 2021 | ||||||||||||
Depreciation for the year | ||||||||||||
Exchange realignment | ( | ) | ( | ) | ( | ) | ||||||
As of March 31, 2022 | ||||||||||||
Depreciation for the period | ||||||||||||
Disposals | ( | ) | ( | ) | ||||||||
Exchange realignment | ( | ) | ( | ) | ( | ) | ||||||
As of September 30, 2022 | ||||||||||||
Carrying amounts | ||||||||||||
As of September 30, 2022 | ||||||||||||
As of March 31, 2022 |
F-7
5. | RIGHT-OF-USE ASSETS AND LEASE LIABILITIES |
(a) Right-of-use assets
The
Company has entered into leases of buildings, which are used for the Company’s operations. Leases of buildings have lease terms
of between over
September 30, 2022 | March 31, 2022 | |||||||
US$ | US$ | |||||||
Cost: | ||||||||
At beginning of period/year | ||||||||
Addition during the period/year | ||||||||
Exchange realignment | ( | ) | ||||||
At end of period/year | ||||||||
Accumulated depreciation: | ||||||||
At beginning of period/year | ||||||||
Depreciation for the period/year | ||||||||
Exchange realignment | ( | ) | ||||||
At end of period/year | ||||||||
Net carrying amount: |
(b) Lease liabilities
Set out below are the carrying amounts of lease liabilities and the movements during the period/year:
September 30, 2022 | March 31, 2022 | |||||||
US$ | US$ | |||||||
At beginning of period/year | ||||||||
Additions to lease liabilities | ||||||||
Interest charged | ||||||||
Payment | ( | ) | ( | ) | ||||
Exchange realignment | ( | ) | ||||||
At end of period/year |
Presentation on:
Condensed Consolidated Statements of Financial Position:
As of September 30, 2022 US$ | As of March 31, 2021 US$ | |||||||
Current | ||||||||
Non-current | ||||||||
Total |
F-8
The following are the contractual undiscounted cash outflows of lease liabilities for the maturity analysis:
Within 1 year | Over 1 year | Total | ||||||||||
US$ | US$ | US$ | ||||||||||
September 30, 2022 | ||||||||||||
March 31, 2022 |
The
effective interest rate applied to the lease liabilities recognized in the condensed consolidated statements of financial position range
from
6. | OTHER RECEIVABLES AND PREPAYMENTS |
Other receivables and prepayments consisted of the following:
As
of 2022 US$ | As
of 2022 US$ | |||||||
Advance to service providers | ||||||||
Prepaid tax | ||||||||
Prepaid insurance | ||||||||
Others | ||||||||
Allowance for doubtful accounts | ( | ) | ( | ) | ||||
Movements of allowance for doubtful accounts as followings:
September 30, 2022 | March 31, 2022 | |||||||
US$ | US$ | |||||||
At beginning of period/year | ||||||||
Exchange realignments | ( | ) | ||||||
At end of period/year |
7. | LOANS RECEIVABLES |
As
of 2022 | As of 2022 | |||||||
US$ | US$ | |||||||
Loans to third parties (Note (a)) | ||||||||
Loans to a related party (Note (b)) | ||||||||
Notes:
(a) |
(b) |
An impairment analysis is performed on loan receivables at each reporting date and expected credit losses are estimated by applying a loss rate approach with reference to the historical credit records of the Company’s borrowers. The loss rate is adjusted to reflect the current conditions and forecasts of future economic conditions, as appropriate. According to historical experience, all of the proceeds have been received within their due date, and therefore, management considers the probability of default is minimal as of September 30, 2022.
F-9
8. | DIGITAL ASSETS |
As
of 2022 | As
of 2022 | |||||||
US$ | US$ | |||||||
Digital assets held on exchange institutions |
The digital assets held on third party exchange institutions are measured at fair value. They represented balance of digital assets attributable to the Company held in shared wallets of the third party exchanges.
The balance is measured at fair value through profit or loss.
Fair
value loss of approximately US$
9. | CASH AND CASH EQUIVALENTS |
As
of 2022 US$ | As
of 2022 US$ | |||||||
Bank balances |
The Company had the cash and cash equivalents in the following currencies:
As
of 2022 US$ | As
of 2022 US$ | |||||||
US$ | ||||||||
HKD | ||||||||
RMB | ||||||||
The cash and cash equivalents of US$
F-10
10. | CAPITAL, RESERVES AND NON-CONTROLLING INTERESTS |
(i) Share capital and additional paid-in capital
The addition of share capital and additional
paid-in capital represented the issue of
(ii) Share purchase warrants
A continuity schedule of outstanding share purchase warrants and fair value charged to profit or loss are as follows:
Number | Weighted Average Exercise Price | Fair value charged to profit or loss | ||||||||||
US$ | US$ | |||||||||||
Balance - April 1, 2021 | ||||||||||||
Issued | ||||||||||||
Balance - March 31, 2022 | ||||||||||||
Issued | ||||||||||||
Balance – September 30, 2022 |
On
October 27, 2021, the Company issued
On
October 29, 2021,
(iii) | 3,500,000 share purchase warrants exercisable at $1.50 per share, and |
(iv) | 7,000,000 share purchase warrants exercisable at $2.50 per share. |
On
November 30, 2021, the Company issued
On May 10, 2022, the Company issued
On May 26, 2022, the Company issued
On July 2022, the Company issued
F-11
The Company used the following assumptions in calculating the fair value of the warrants for the period ended:
September 30, 2022 | ||
Risk-free interest rate | ||
Expected life of warrants | ||
Volatility | ||
Weighted average fair value per warrant (US$) |
At September 30, 2022, the Company had share purchase warrants outstanding as follows:
Warrants outstanding | Fair value at issue date | Fair value charged for current period | Exercise price | Weighted average remaining life | ||||||||||||||||
Expiry Date | US$ | US$ | US$ | (years) | ||||||||||||||||
October 29, 2031 | ||||||||||||||||||||
October 29, 2031 | ||||||||||||||||||||
October 29, 2031 | ||||||||||||||||||||
October 27, 2026 | ||||||||||||||||||||
October 30, 2026 | ||||||||||||||||||||
May 10, 2027 | ||||||||||||||||||||
May 26, 2027 | ||||||||||||||||||||
July 22, 2027 | ||||||||||||||||||||
July 25, 2027 | ||||||||||||||||||||
July 26, 2027 | ||||||||||||||||||||
July 27, 2027 | ||||||||||||||||||||
July 28, 2027 | ||||||||||||||||||||
Total |
F-12
(iii) Non-controlling interests
Taikexi | Shenzhen Guanpeng | Dacheng Liantong | Hangzhou Xu Zhihang | Metalpha | Total | |||||||||||||||||||
US$ | US$ | US$ | US$ | US$ | US$ | |||||||||||||||||||
As of April 1, 2021 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
Net loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Changes in non-controlling interest due to changes in ownership of partially owned subsidiary | ||||||||||||||||||||||||
As of September 30, 2021 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
As of April 1, 2022 | ( | ) | ( | ) | ||||||||||||||||||||
Net (loss) profit | ( | ) | ||||||||||||||||||||||
As of September 30, 2022 | ( | ) | ( | ) |
11. | ACCOUNTS AND OTHER PAYABLES |
As of September 30, 2022 | As of March 31, 2022 | |||||||
US$ | US$ | |||||||
Accounts payables | ||||||||
Other payables and accrued charges (Note (a)) | ||||||||
Amount due to related parties | ||||||||
Total |
Note:
(a) |
The amount due to related parties are unsecured, interest-free and repayable on demand.
12. | DIGITAL ASSETS PAYABLES |
As of September 30, 2022 | As of March 31, 2022 | |||||||
US$ | US$ | |||||||
Digital assets payables to a non-controlling shareholder | ||||||||
Digital assets payables to third parties | ||||||||
Total |
These payables were unsecured, interest-free, and repayable by an agreed amount of digital assets as stipulated in the Digital Asset Trading Agreements.
The digital assets payables are measured at fair value through profit or loss and refer to Note 20(a) to the condensed consolidated financial statement for the details of fair value analysis.
F-13
13. | REVENUE |
For the six months ended September 30, | ||||||||
2022 | 2021 | |||||||
US$ | US$ | |||||||
Supply chain management platform service fee | ||||||||
Fair value change of proprietary trading digital assets | ||||||||
Total revenue |
14. | COST OF REVENUE |
For the six months ended September 30, | ||||||||
2022 | 2021 | |||||||
US$ | US$ | |||||||
Cost of supply chain management platform service |
15. | SELLING AND PROMOTION EXPENSES |
For the six months ended September 30, | ||||||||
2022 | 2021 | |||||||
US$ | US$ | |||||||
Marketing and promotional expenditures |
16. | CONSULTATION SERVICE EXPENSES |
The consultation services expenses represented consultation fees to external consultants who provided consultation services on cryptocurrencies trading to the Company.
17. | GENERAL AND ADMINISTRATIVE EXPENSES |
The following items have been included in arriving at general and administrative expenses:
For the six months ended September 30, | ||||||||
2022 | 2021 | |||||||
US$ | US$ | |||||||
(Restated) | ||||||||
Professional fees | ||||||||
Wages and benefits | ||||||||
Travelling expenses | ||||||||
Depreciation of property and equipment | ||||||||
Depreciation of right of use assets | ||||||||
Meals and entertainment | ||||||||
Share-based compensation | ||||||||
Office expenses | ||||||||
Insurance costs | ||||||||
Other | ||||||||
F-14
18. | NET FINANCE COSTS |
For the six months ended September 30, | ||||||||
2022 | 2021 | |||||||
US$ | US$ | |||||||
(Restated) | ||||||||
Interest income | ||||||||
Finance income | ||||||||
Interest expense | ( | ) | ||||||
Interest on lease arrangements | ( | ) | ( | ) | ||||
Finance cost | ( | ) | ( | ) | ||||
Net finance cost | ( | ) | ( | ) |
19. | INCOME TAX EXPENSE |
The Company is formed in Cayman Islands and is not subject to tax on its income or capital gains. In addition, upon payments of dividends by the Company to its shareholders, no Cayman Islands withholding tax is imposed.
The Company’s subsidiary formed in British Virgin Island is not subject to tax on its income or capital gains. In addition, upon payments of dividends by the Company to its shareholders, no British Virgin Island withholding tax is imposed.
The Company’s subsidiary formed
in Hong Kong is subject to the profits tax on the taxable income derived from its activities conducted in Hong Kong. The applicable tax
rate is
The Company’s subsidiaries incorporated
in the PRC are subject to profits tax rate at
For the six months ended September 30, | ||||||||
2022 | 2021 | |||||||
US$ | US$ | |||||||
Tax recognised in profit or loss | ||||||||
Current tax expense | ||||||||
Current period | ||||||||
Reconciliation of effective tax rate | ||||||||
Loss before income tax | ( | ) | ( | ) | ||||
Tax calculated at domestic tax rates applicable to profits in PRC (2022 and 2021: | ( | ) | ( | ) | ||||
Effect of tax rates in foreign jurisdiction | ||||||||
Tax effect of tax loss not recognized | ||||||||
Income tax expense |
The full realization of the tax benefit associated with the carry forward depends predominantly upon the Company’s ability to generate taxable income during the carry forward period.
The Company’s subsidiaries incorporated in the PRC has unused net operating losses available for carry forward to future years for PRC income tax reporting purposes up to five years. No deferred tax asset has been recognized in respect of these tax losses due to the unpredictability of future profit streams.
F-15
20. | FINANCIAL RISK MANAGEMENT |
(a) | Fair value |
The Company’s maximum exposure to credit risk in the event that counterparties fail to perform their obligations in relation to each class of recognized financial assets is the carrying amounts of those assets as stated in the consolidated statement of financial position. The Company’s credit risk is primarily attributable to its loan receivables, deposits and other receivables, and cash and cash equivalents. In order to minimize credit risk, the directors of the Company have delegated a team to be responsible for the determination of credit limits, credit approvals and other monitoring procedures. In addition, the directors of the Company review the recoverable amount of each individual debt regularly to ensure that adequate impairment losses are recognized for irrecoverable debts. The credit risk on cash and cash equivalents are limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. In this regard, the directors of the Company consider that the Company’s credit risk is significantly reduced.
The Company has no significant concentration of credit risk, with exposure spread over a number of counterparties.
(b) | Foreign currency risk |
The Company has minimal exposure to foreign currency risk as most of its business transactions, assets and liabilities are principally denominated in the functional currencies of the Company entities.
As Hong Kong dollar is pegged to United States dollar, the Company considers the risk of movements in exchange rates between Hong Kong dollars and United States dollars to be insignificant.
The Company currently does not have a foreign currency hedging policy in respect of foreign currency transactions, assets and liabilities. The Company will monitor its foreign currency exposure closely and will consider hedging significant foreign currency exposure should the need arise.
(c) | Price risk |
Digital assets that the Company deals with in its trading activities are digital assets such as Bitcoin (“BTC”) and Ethereum (“ETH”) which can be traded in a number of public exchanges.
Company’s exposure to price risk arises from digital assets and digital assets payables, which are both measured on fair value basis. In particular, the Company’s operating result may depend upon the market price of BTC and ETH, as well as other digital assets. Digital asset prices have fluctuated significantly from time to time. There is no assurance that digital asset prices will reflect historical trends.
The price risk of digital assets arising from trading of digital assets business is partially offset by remeasurement of digital assets payables representing the obligations to deliver digital assets held by the Company in the customers’ accounts to the customers under the respective trading and lending arrangements with the Company.
(d) | Fair value |
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability which market participants would take into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such basis.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3, based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
F-16
Level 3 inputs are unobservable inputs for the asset or liability.
The Company’s policy is to recognize transfers into and transfers out of any of the three levels as of the date of the event or change in circumstances that caused the transfer.
(i) | Disclosures of level in fair value hierarchy: |
Fair value measurements using | ||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
US$ | US$ | US$ | US$ | |||||||||||||
As of March 31, 2022 | ||||||||||||||||
Recurring fair value measurements: | ||||||||||||||||
Digital assets | ||||||||||||||||
Digital assets payables | ||||||||||||||||
As of September 30, 2022 | ||||||||||||||||
Recurring fair value measurements: | ||||||||||||||||
Digital assets | - | |||||||||||||||
Digital assets payables | - | - |
(ii) | Reconciliation of liabilities measured at fair value based on level 3: |
Digital assets payables | ||||
US$ | ||||
As of April 1, 2021 | ||||
Acquired during the period | ||||
Settlement by digital assets, for the period | ( | ) | ||
Fair value gains recognized in profit or loss (recognized in “revenue - fair value change of proprietary trading digital assets”) | ( | ) | ||
As of March 31, 2022 | ||||
Acquired during the period | ||||
Settlement by digital assets, for the period | ( | ) | ||
Fair value gains recognized in profit or loss (recognized in “revenue - fair value change of proprietary trading digital assets”) | ||||
As of September 30, 2022 |
(iii) | Disclosures of valuation process used by the Company and valuation techniques and inputs used in fair value measurements at September 30, 2022 and March 31, 2022: |
The directors of the Company are responsible for the fair value measurements of assets and liabilities required for financial reporting purposes, including level 3 fair value measurements.
For level 3 fair value measurements, the Company will normally engage external valuation experts with the recognized professional qualifications and recent experience to perform the valuations.
The Company’s digital assets payables are revalued as at September 30, 2022 by independent professional qualified valuer, who has the recent experience in the categories of digital assets payables being valued.
F-17
Level 2 fair value measurements
Significant observable input | Effect on fair | |||||||
As of September 30, |
As of March 31, |
value for increase of | ||||||
Description | Valuation techniques and key inputs | 2022 | 2022 | inputs | ||||
Digital assets |
Key unobservable inputs used in level 3 fair value measurements are mainly:
Significant | Range | Effect on fair value | ||||||
Valuation | unobservable | As of March 31, | for increase of | |||||
Description | techniques | inputs | 2022 | inputs | ||||
Binomial Option Pricing Model | - |
|||||||
Black-Scholes Pricing Model | |
Significant | Range | Effect on fair value | ||||||
Valuation | unobservable | As of September 30, | for increase of | |||||
Description | techniques | inputs | 2022 | inputs | ||||
Black-Scholes Pricing Model |
Binomial Option Pricing Model is used to valuate certain types of digital asset payables as of March 31, 2022. No such types of digital asset payables occurred as of September 30, 2023.
There were no transfers between levels 2 and 3 for recurring fair value measurements during the period ended September 30, 2022 (March 31, 2022: Nil).
The directors of the Company consider that the carrying amounts of Company’s financial assets, including other receivables and prepayments, loan receivables and cash and cash equivalents, and financial liabilities, including accounts and other payables, approximate their respective fair values due to the relatively short-term maturity of these financial instruments.
The fair values of the Company’s lease liabilities are determined by using the discounted cash flows method using discount rate that reflects the issuer’s borrowing rate as at the end of the reporting period. The own non-performance risk as at September 30, 2022 and March 31, 2022 was assessed to be insignificant.
(b) | Capital management |
The Company’s primary objective when managing capital is to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain or adjust the capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders and issue new shares. The Company’s overall strategy remains unchanged from prior year.
F-18
Consistent with others in the industry,
the Company monitors capital on the basis of the gearing ratio. This ratio is calculated as total liabilities divided by total assets.
The gearing ratio as at September 30, 2022 was
The business plans of the Company mainly depend on maintaining sufficient funding to meet its expenditure requirements. The Company currently relies on funding from a variety of sources including equity financing.
In response to the above, the Company regularly reviews its major funding positions to ensure that it has adequate financial resources in meeting its financial obligations and relevant regulatory requirements of the Company entities and seek to diversify its funding sources as appropriate.
21. | OPERATING SEGMENTS |
Operating segments are identified on the basis of internal reports about components of the Company that are regularly reviewed by the CODM (“Chief Operating Decision Maker”) for the purpose of resource allocation and performance assessment.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
The following provides the results of operations for the six months ended September 30, 2022 and the financial position of the Company’s operating segments as of September 30, 2022. The Metalpha operating segment reflects the Company’s business of proprietary trading of digital assets. The Longyun operating segment reflects the Company’s crowdfunding and incubation business. The Dacheng Liantong operating segment reflects the Company’s business of platform services.
Results of Operations
For the six months ended September 30, 2022
Metalpha | Longyun | Dacheng Liantong | Other | Total | ||||||||||||||||
US$ | US$ | US$ | US$ | US$ | ||||||||||||||||
Revenue | ||||||||||||||||||||
Operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
Other income (expenses) | ( | ) | ( | ) | ( | ) | ||||||||||||||
Profit (loss) before tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Taxes | ( | ) | ( | ) | ( | ) | ||||||||||||||
Net profit (loss) | ( | ) | ( | ) | ( | ) | ( | ) |
F-19
Financial position
As of September 30, 2022
Metalpha | Longyun | Dacheng Liantong | Other | Total | ||||||||||||||||
US$ | US$ | US$ | US$ | US$ | ||||||||||||||||
Current assets | ||||||||||||||||||||
Non-current assets | ||||||||||||||||||||
Total assets | ||||||||||||||||||||
Current liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
Non-current liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Total liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
Net assets |
The following provides the results of operations for the six months ended September 30, 2021 and the financial position of the Company’s operating segments as of March 31, 2021.
Results of operations
For the six months ended September 30, 2021
Longyun | Dacheng Liantong | Other | Total | |||||||||||||
US$ | US$ | US$ | US$ | |||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | |||||||||||||
Revenue | ||||||||||||||||
Operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Other income (expenses) | ( | ) | ( | ) | ( | ) | ||||||||||
Profit (loss) before tax | ( | ) | ( | ) | ( | ) | ||||||||||
Taxes | ||||||||||||||||
Net loss | ( | ) | ( | ) | ( | ) |
F-20
Financial position
As of March 31, 2022
Metalpha | Longyun | Dacheng Liantong | Other | Total | ||||||||||||||||
US$ | US$ | US$ | US$ | US$ | ||||||||||||||||
Current assets | ||||||||||||||||||||
Non-current assets | ||||||||||||||||||||
Total assets | ||||||||||||||||||||
Current liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
Non-current liabilities | ( | ) | ( | ) | ||||||||||||||||
Total liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
Net assets |
Geographical information
Revenue
For the six months ended September 30, | ||||||||
2022 | 2021 | |||||||
US$ | US$ | |||||||
Hong Kong | ||||||||
PRC | ||||||||
The revenue information above is based on the location of the customers’ country of incorporation.
Non-current assets
As of September 30, 2022 | As of March 31, 2022 | |||||||
US$ | US$ | |||||||
Hong Kong | ||||||||
PRC | ||||||||
Major customers
As of September 30, 2022 and March 31, 2022, there was no concentration in the Company’s gross accounts receivables. For the period ended September 30, 2022 and 2021, there was no concentration in the Company’s revenues.
F-21
22. | LOSS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY |
The basic loss per share is calculated as the loss for the year attributable to equity holders of the Company divided by the weighted average number of ordinary shares of the Company in issue during the period.
The diluted loss per share is calculated
as the loss for the year attributable to equity holders of the Company divided by the weighted average number of ordinary shares used
in the calculation which is the weighted average number of ordinary shares in issue plus the number of shares held under the share purchase
warrants (2021:
The Company had no potentially dilutive ordinary shares in issue during the period.
For the six months ended September 30 |
||||||||
2022 | 2021 | |||||||
(Restated) | ||||||||
Basic Loss Per Share Numerator | ||||||||
Loss for the period attributable to owners of the Company | $ | ( |
) | $ | ( |
) | ||
Diluted Loss Per Share Numerator | ||||||||
Loss for the period attributable to owners of the Company | $ | ( |
) | $ | ( |
) | ||
Basic Loss Per Share Denominator | ||||||||
Original shares: | ||||||||
Additions from actual events: | ||||||||
- Issuance of common stock, weighted | ||||||||
Basic weighted average shares outstanding | ||||||||
Diluted Loss Per Share Denominator | ||||||||
Diluted Weighted Average Shares Outstanding: | ||||||||
Loss Per Share | ||||||||
$ | ( |
) | $ | ( |
) | |||
Weighted Average Shares Outstanding | ||||||||
23. | RELATED PARTY BALANCES AND TRANSACTIONS |
Related parties’ relationships as follows:
Name | Relationship | |
HangZhou TianQi Network Technology Co. Ltd. | ||
Hangzhou Yuao Venture Capital Co., Ltd | ||
Zhejiang Getai Curtain Wall Decoration Engineering Co., Ltd. | ||
Mangyue Sun | ||
Fang Qin | ||
Antalpha Technologies Limited (“Antalpha”) |
F-22
Loans receivables – related parties consisted of the following:
As of September 30, 2022 | As of March 31, 2022 | |||||||
US$ | US$ | |||||||
Hangzhou Yuao Venture Capital Co., Ltd | ||||||||
Total |
Other related parties’ payables consisted of the following:
As
of | As
of | |||||||
US$ | US$ | |||||||
HangZhou TianQi Network Technology Co. Ltd. (i) | ||||||||
Zhejiang Getai Curtain Wall Decoration Engineering Co., Ltd. (ii) | ||||||||
Mangyue Sun (ii) | ||||||||
Fang Qin (ii) | ||||||||
Antalpha (iii) | ||||||||
Total |
(i) |
(ii) |
(iii) |
(iv) |
Digital asset payables consisted of the following:
As
of 2022 | As of March 31, 2022 | |||||||
US$ | US$ | |||||||
Antalpha | ||||||||
Total |
Related parties’ transactions are consisted of the following:
For the six months ended September 30, | ||||||||
2022 | 2021 | |||||||
US$ | US$ | |||||||
Interest income derived from Hangzhou Yuao Venture Capital Co., Ltd | ||||||||
Derivative products entered with Antalpha | ||||||||
Derivative products expired to Antalpha | ( | ) | ||||||
Consultation service fees to Antalpha | ( | ) |
24. | DISCONTINUED OPERATION |
On January 20, 2023, the board of directors (the “Board”) of the Company, unanimously approved the Company’s plan to discontinue and cease all business operations in mainland China (collectively, the “Mainland China Business”), which are conducted by the Company through its subsidiaries and variable interest entities, and to dispose of the Mainland China Business by selling it to one or more third parties.
The Company determined that the disposal group should be classified as assets held for sale, and they fulfilled the requirements established in IFRS 5 to classify them as a discontinued operation, since they represent a major line of business and geographical area of operations.
F-23
The information related to the condensed consolidated statement of financial position of the disposal group as of September 30, 2022 is presented below:
As of September 30, 2022 | ||||
US$ | ||||
(Unaudited) | ||||
Assets | ||||
Property, plant and equipment | ||||
Right of use assets | ||||
Non-current assets | ||||
Other receivables and prepayments | ||||
Loans receivables | ||||
Cash and cash equivalents | ||||
Current assets | ||||
Total assets | ||||
Equity | ||||
Share capital | ||||
Statutory reserves | ||||
Accumulated deficit | ( | ) | ||
Accumulated other comprehensive (loss) income | ( | ) | ||
Equity attributable to owners of the Company | ||||
Non-controlling interests | ( | ) | ||
Total equity | ||||
Liabilities | ||||
Lease liabilities | ||||
Non-current liabilities | ||||
Accounts and other payables | ||||
Taxes payable | ||||
Lease liabilities | ||||
Current liabilities | ||||
Total liabilities | ||||
Total equity and liabilities |
The information related to the condensed consolidated statements of profit or loss of the disposal group for the six months ended September 30, 2022 is presented below:
For the six months ended September 30, 2022 | ||||
US$ | ||||
(Unaudited) | ||||
Revenue | ||||
Cost of revenue | ||||
Selling and promotion expenses | ||||
General and administrative expenses | ||||
Total operating expenses | ||||
Result from operating activities | ( | ) | ||
Other income | ||||
Other expense | ( | ) | ||
Finance income | ||||
Finance costs | ( | ) | ||
Loss before income tax | ( | ) | ||
Income tax expense | ( | ) | ||
Loss from discontinued operations | ( | ) |
F-24
The net cash flows incurred by the disposal group are as follows:
For the six months ended September 30, 2022 | ||||
US$ | ||||
(Unaudited) | ||||
Operating activities | ( | ) | ||
Investing activities | ||||
Financing activities | ( | ) | ||
Net cash outflows |
25. | SUBSEQUENT EVENTS |
On November 15, 2022, the shareholders of the Company approved change of the name of the Company from Dragon Victory International Limited to Metalpha Technology Holding Limited.
On November 28, 2022, the Company entered
into a Sale and Purchase Agreement with Antalpha to purchase
On November 28, 2022,
On January 20, 2023, the Board of the Company, unanimously approved the Company’s plan to discontinue and cease the Mainland China Business, which was conducted by the Company through its subsidiaries, Hangzhou Dacheng and Hangzhou Longyun.
On February 20, 2023, Metalpha Holding
(HK) Limited (“Metalpha HK”), an indirect wholly-owned subsidiary of the Company, Liu Limin and Wang Wei (as the registered
nominee shareholders of Hangzhou Longyun) entered into a sale and purchase agreement (“SPA”) with two individual third parties,
Xu Yang and Zheng Liqing (collectively, the “Purchasers”). Pursuant to the SPA, the Purchasers will purchase from Metalpha
HK the entire equity interest of Hangzhou Dacheng, and from Liu Limin and Wang Wei the entire equity interest of Hangzhou Longyun (the
“Transaction”). The Transaction was proposed to implement the Company’s decision to discontinue the Mainland China Business.
The aggregate consideration for the Transaction is US$
F-25