("MySQUAR" or the "Company")
Investigation Update and Delisting
MySQUAR announces that in order to preserve cash the Company has temporarily shut down one division and part of another to further conserve cash. The Mobile Money division and MyMingalarbar, a social app, have ceased operations within the past week. Some staff from both these divisions have been made redundant. Furthermore, the Directors and senior staff have not been paid for between two and three months.
The Mobile Games division and Mingalarbar Morning, a lifestyle and entertainment portal, remain active and continues to operate.
MySQUAR announces that following the announcements of 5th November 2018 and 9th November 2018, the non-executive directors of the Company are able to provide further details on a related party transaction following a review of the segregated account into which the proceeds were paid from the bond issues announced on 7th March 2018 and 20th June 2018.
Related Party Transaction
On 5th February 2018 it appears that a Loan of £200,000 was provided to the Company by a company that may have been a substantial shareholder of the Company at the time under the terms of a promissory note dated 2nd February 2018 issued by the Company to that shareholder (the “Loan”). The terms of the promissory note are that the Loan was repayable in 45 days with the Company to bear the USD 500 of administrative and transaction fees of the lender. The Loan was repaid on 13th March 2018 out of the proceeds of the convertible bonds issued by the Company and announced on 7th March 2018.
The preliminary view of the non-executive directors is that:
(a) this Loan may have constituted a related party transaction under Rule 13 of the AIM Rules for Companies (“AIM Rules”) and, as such, should have been notified at the time together with a statement that the directors of the Company, having consulted with its nominated adviser, considered the Loan to be fair and reasonable insofar as the Company’s shareholders are concerned;
(b) In breach of Rule 13 the Company did not consult with its nominated adviser at the time in relation to the Loan.
(c) regardless of whether the Loan did or did not require disclosure as a related party transaction it may have otherwise required disclosure in accordance with the AIM Rules; and
(d) the Loan should have been considered and approved by the Board of the Company in compliance with the Board Memorandum on the Financial Position and Prospects Procedures (“FPPP”) adopted by the Company on 29th June 2015.
The related party transaction referred to above is included in payments amounting to approximately £900,000 referred to in the Company’s RNS of 9th November 2018. In addition to these payments two further series of payments have come to light which ought to have received Board approval:
a payment made on 22nd February 2018 in the sum of USD 13,800 to Rising Dragon Singapore Pte Limited. The Board considers Rising Dragon Singapore Pte Limited to be a related party but that this sum falls below the class tests for the purposes of AIM Rule 13; and
various payments made to a company believed to be related to a director of MyPay Limited made between 8th February 2018 to 4th April 2018 in the sum of USD 188,742.
The Board is currently considering its options in relation to the above matters.
The Company’s cash position remains critically low. The creditor of the Company who had previously indicated it was prepared to provide a working capital facility has completed its due diligence and the Company awaits an offer of funding. There can be no certainty an offer of funding will be forthcoming so there remains a material uncertainty regarding the Company's working capital position.
The Company is in discussions with a NEX quoted company regarding the sale of the Company’s subsidiary companies. It is proposed that the consideration on such a sale include shares in the NEX quoted company and that, in due course, such shares be distributed to the Company’s shareholders. However, there can be no certainty that this sale will complete or in what timeframe.
The Company’s shares will cease to be traded on AIM with effect from 7am on 10th December 2018 as the Company has been unable to appoint a new nominated adviser pursuant to AIM Rule 1.
Further announcements will be made on the Company’s website https://investors.mysquar.com/ following 10th December 2018.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.
For further information:
Stephen Chong (Interim Chief Executive)
Tel: +65 6725 6388