Flexion Mobile Plc

Company description
for listing on Nasdaq First North
FLEXION MOBILE PLC COMPANY DESCRIPTIONPAGE 2

Important information FORWARD-LOOKING STATEMENTS

This company description (”Company Description”) has Any forward-looking statements in the Company De-
been prepared in connection with the listing of shares scription reflects the board of director’s current estimates
(“Listing”) in Flexion Mobile Plc, reg. no. 4306881, on Nasdaq and expectations of future events, as well as financial
First North (“First North”). and operational development which applies at the time
In this Company Description Flexion Mobile refers to for this Company Description. Even if the board of direc-
Flexion Mobile Plc with reg. no. 4306881 and the ”Com- tors believes that the expectations described in such
pany” or ”Flexion” refers to Flexion Mobile Plc and all its forward-looking statements are reasonable, there is no
subsidiaries. ”Euroclear” refers to Euroclear Sweden AB. guarantee that these forward-looking statements will be
”Törngren Magnell” refers to the law firm Advokatfirman materialised or be proven to be correct. Potential inves-
Törngren Magnell KB. tors are encouraged to take part of the information in
this Company Description and to keep in mind that future
EXEMPTION FROM PROSPECTUS REQUIREMENTS earnings and development may differ significantly from
This Company Description does not fulfil the requirements the board of director’s expectations.
of being a prospectus and has not been reviewed or
INFORMATION FROM THIRD PARTIES
approved by the Swedish Financial Supervisory Author-
ity. The reason is that the prospectus rules do not require The Company Description contains information that has
that a prospectus is prepared for the listing of the shares been obtained from third parties. All such information has
to which this Company’s Description refers. The reason been reproduced correctly. Flexion Mobile’s board of
for the exception is that listing does not take place on a directors is responsible for this Company Description and
regulated market and that the Company Description does has taken all reasonable precautions to ensure that the
not include an offer of shares. information provided in the Company Description com-
plies with the actual facts. Although the board of directors
APPLICABLE LAW believes that these sources are reliable, no independent
Swedish law is applicable in relation to this Company verification has been made, so the accuracy or com-
Description. Disputes regarding the Company Description pleteness of the information cannot be guaranteed. As far
and thereby applicable legal circumstances shall be han- as the board of directors knows and can assure by com-
dled under Swedish law exclusively. parison with other information published by third parties
from which the information was collected, no information
THE COMPANY DESCRIPTION’S AVAILABILITY has been omitted in such a way that could make the
information incorrect or misleading.
The Company Description is available on the Company’s
Some figures in this Company Description have been
website www.flexionmobile.com.
subject to rounding. This means that some tables do not
seem to sum up correctly.
RISKS
An investment in shares is associated with certain risks NASDAQ FIRST NORTH
(investors are therefore encouraged to particularly read
First North is an alternative marketplace operated by an
the section ”Risk Factors”). When an investor makes an
exchange within the Nasdaq group. Companies on First
investment decision, he or she must rely on his or her own
North are not subject to the same rules as companies on
analysis of the Company, including present facts and risks.
the regulated main market. Instead they are subject to
Prior to an investment, potential investors ought to consult
a less extensive set of rules and regulations adjusted to
their own professional advisors to diligently evaluate an
small growth companies. The risk in investing in a Compa-
investment consideration. No individual has been author-
ny on First North may therefore be higher than investing
ised to provide any information or make any other state-
in a company on the main market. All Companies with
ments other than those included in the Company Descrip-
shares traded on First North have a Certified Adviser who
tion. If given or made, such information or representation
monitors that the rules are followed. The Exchange ap-
may not be relied upon as having been authorised by the
proves the application for admission to trading.
Company nor should the Company be held responsible
FNCA Sweden AB is the Company’s certified adviser.
for such information or statements.
DEFINITIONS
EUR –Euro
SEK – Swedish krona
USD –US dollars
GBP – British pound sterling
FLEXION MOBILE PLC COMPANY DESCRIPTION Table of contents / PAGE 3

Table of contents

1. Risk factors 4

2. Background to Flexion 9

3. Flexion: History 12

4. Objective: Flexion listing 13

5. CEO’s statement 14

6. Market: Mobile games 16

7. Market: Structure and challenges 18

8. Flexion: Solving an industry problem 21

9. Flexion: Team strengths 26

10. Financial overview 28

11. Comments on the financial development 39

12. Equity, liabilities and other financial information 41

13. Share capital and ownership structure 42

14. Board of directors, senior executives and auditor 44

15. Corporate governance 47

16. Legal considerations and supplementary information 50

17. Constitutional documents and legal comparison 52

18. Tax considerations 57

19. Documents incorporated by reference 60

20. Contact details 61

INFORMATION ABOUT THE SHARE IMPORTANT DATES

Number of outstanding shares: First day of trading on First North: 13 June 2018
41,132,958 ordinary shares Q4 report for 2017/18: 28 June 2018
ISIN code: GB00BZ1MDB19 Q1 report for 2018/19: 29 August 2018
Short name: FLEXM Annual report for 2017/2018: 4 September 2018
Annual general meeting: 26 September 2018
FLEXION MOBILE PLC COMPANY DESCRIPTION 1. Risk factors / PAGE 4

1. Risk factors

An investment in Flexion Mobile’s shares amount and/or at acceptable conditions. This could result
in the Company not being able to make important invest-
is associated with certain risks. There ments or that the necessary liquidity for the expansion of
are several risk factors that can or could the sales and production capacity is not available and
affect the Company’s business, both that as a result the corporate strategy has to be adjusted
or given up completely, putting the Company at a disad-
directly and indirectly. Described below, vantage compared to its competitors that may be less in-
without any order and without claim to debted and subject to less restrictive financial covenants.
be exhaustive, are the risk factors and
DEPENDENCE ON KEY PERSONS AND EMPLOYEES
other factors deemed to be material to the
Within the Company there are key persons and em-
Company’s business and development. ployees who are important for the continuing successful
development of the Company’s business. The Company
The risk factors described below are not the only ones
is dependent on qualified and motivated personnel within
Flexion Mobile and its shareholders may be exposed
all functions. It is essential that the Company manages
to. Additional risks that are not currently known to the
to attract and retain existing key personnel and that the
Company, or that the Company currently considers to
personnel experience the Company as a stimulating em-
be immaterial, could later be proven to have a material
ployer. It is not guaranteed that the Company will manage
adverse effect on the Company’s business, result or finan-
to retain such key personnel or attract and gain new per-
cial position. These risks can negatively affect the value of
sonnel with the required qualifications in a timely manner.
Flexion Mobile’s shares, and investors may risk losing all or
If key personnel and employees leave the Company, this
a part of their investment.
may have a negative impact on the Company’s busi-
In addition to this section, investors should take into
ness, result and financial position. This risk may be further
account the information provided in the Company
increased due to changes made in connection with the
Description as a whole. The Company Description also
United Kingdom’s scheduled withdrawal from the Europe-
includes forward-looking statements that can be affected
an Union on 29 March 2019 (“Brexit”).
by future events, risks and uncertainties. The Company’s
actual results could differ materially from those expressed
COMPETITIVE SERVICES AND PRODUCTS
or implied in the forward-looking statements because of
many factors, such as the risks described below and in The Company is active in a competitive market where
other parts of the Company Description. innovation is fast-paced. Increased competition may
occur in the future. Product development and innovation
by other actors on the market may result in services and
Risks relating to the company products that have better features than the Compa-
ny’s services and products. If the Company is unable to
FINANCING AND FUTURE CAPITAL REQUIREMENTS maintain its competitive advantage on its services and
The Company may, depending on the development of products, this could have a material adverse effect on the
the Company’s business and its ability to generate cash Company’s business, results and financial position.
flow, require additional capital to be able to acquire as-
sets and to develop assets and new products or services, DEPENDENCE ON IT SYSTEMS
on for the Company acceptable commercial terms. The The Company is dependent on IT systems in its business
conditions for future financing will depend on how the for both its day-to-day operation and in relation to its
Company’s business develops, but it will also depend customers and partners. System failures, data breaches,
on other factors outside the Company’s control, such as computer viruses or similar events could have a detri-
macroeconomic developments and capital markets be- mental effect on the Company’s operation, results and
ing prepared to finance companies in the segment where financial position. Such events may also in turn cause
the Company operates. The Company faces the risk that third parties harm and loss and could therefore lead to
it will be unable to achieve financing (debt and equity) the Company being held liable for such harm or loss. Any
on a timely basis or on satisfactory terms. In any case, it is such event could have a material adverse effect on the
not ensured that the Company will receive the necessary Company’s business, results and financial position.
financial resources in all cases in due time, in the required
FLEXION MOBILE PLC COMPANY DESCRIPTION 1. Risk factors / PAGE 5

THE COMPANY DELIVERS AN IT PRODUCT creases the Company’s dependency on compliance with
The software provided by the Company could be faulty applicable laws and regulations. If any of these risks were
or suffer from failure which may result in users of the soft- to materialize this could have a material adverse effect
ware suffering damage to their systems. Further, security on the Company’s business, results and financial position.
gaps in the provided software may lead to business
interruption for customers. Customers and partners could REPUTATION
claim damages for any such business interruption caused Flexion’s business is dependent on the Company’s repu-
by the Company’s software. Any such event may have tation. If the Company were to fail to live up to its agree-
a material adverse effect on the Company’s business, ments, comply with laws, rules and regulations, ensure
results and financial position. good working conditions or similarly this might hurt the
Company’s reputation. If the Company’s reputation were
DEPENDENCY ON KEY CHANNEL PARTNERS to be damaged this could have a material adverse effect
The Company is dependent on several agreements with on the Company’s business, results and financial position.
key channel partners to be able to distribute applications,
games and other digital products. If any of the key chan- RISKS RELATED TO THE COMPANY’S
nel partners were to terminate the agreement with the INTELLECTUAL PROPERTY RIGHTS
Company, this could have a material adverse effect on The value of the Company’s assets is dependent on the
the Company’s business, results and financial position. ability to obtain and defend intellectual property rights. In
countries where the protection of intellectual property is
RISK RELATED TO AGREEMENTS WITH DEVELOPERS limited or missing, a third party could use the Company’s
The Company is dependent on agreements with several intellectual properties and thereby reducing the value
developers which provide the Company with applica- of the Company’s registered or unregistered intellectual
tions, games and other digital products which the Compa- property rights. If the Company fails to maintain or prevent
ny then distribute in its channels. If any of the developers unauthorized usage of its existing intellectual properties,
were to terminate their agreement with the Company, this there is a risk that the Company’s intellectual property
could have a material adverse effect on the Company’s protection and competitive advantages developed by
business, results and financial position. the Company will be adversely affected. Third parties
may also object to, or otherwise challenge, registered and
Following the agreements entered with the developers,
unregistered intellectual properties. As a result, this could
the Company may be liable for indirect or consequen-
adversely affect the Company’s business, results and
tial damages in the event of certain breaches, such as
financial position.
breaches in confidentiality and breaches in the Com-
pany’s warranties on intellectual property rights given to
RISK OF INFRINGEMENT OF INTELLECTUAL
the developers. If the Company would be liable for such
PROPERTY RIGHTS OF THIRD PARTIES
damages, this could have a material adverse effect on
the Company’s business, results and financial position. There is a risk that the Company has infringed or may in-
fringe intellectual property rights, or that third parties claim
RISK RELATED AGREEMENTS WITH IT-PROVIDERS that such infringement (also without justification) has taken
place. Therefore, it cannot be excluded that competitors
The Company is dependent on certain providers which
enforce their own intellectual property rights against the
provide IT-services to the Company, as this provision is
Company and/or defend themselves against the infringe-
material to the operation of the Company’s business. If
ment of intellectual property rights. Legal disputes regard-
any provider of IT-services were to terminate its agree-
ing intellectual property rights can, irrespective of their
ment with the Company, this could have a material
justification, result in a time consuming and cost intensive
adverse effect on the Company’s business, results and
defence and can absorb management capacity and
financial position.
other resources. Payment obligations may arise for the
Company or the Company may have to enter into licence
RISK RELATED TO THIRD PARTIES
agreements, which are not available at economically
If any third party on which the Company is dependent viable conditions, or the Company may not be able to
were to experience down-time or other interruptions apply certain procedures to the offered software. This
relating to their services, this might affect the Company’s could have a material adverse effect on the Company’s
revenue. Any such interruption could have a material business, results and financial position.
adverse effect on the Company’s business, results and
financial position. PROCESSING OF PERSONAL DATA
Flexion registers and processes personal data in connec-
RISK RELATING TO CUSTOMER PAYMENTS
tion with its operation. It is of great importance that the
A key part of the Company’s business is to manage Company’s registration and processing of personal data
payments in distributed games. This makes the Company is conducted in accordance with applicable data pro-
vulnerable to system failures, data breaches, computer tection legislation. For example, high demands are set out
viruses or similar events and increases its dependency on regarding providing information to those who are subject
functioning IT-security. The handling of payments also in- to processing of personal data and that the processing is
FLEXION MOBILE PLC COMPANY DESCRIPTION 1. Risk factors / PAGE 6

conducted in a way that is not inconsistent with the pur- siderable time for Flexion to make a claim from its insurers
pose of registering the personal data. If the Company fails and/or for the insurers to pay out in relation to the relevant
to conduct its processing in accordance with applicable loss. This could have a significant impact on the Compa-
data protection legislation, or if the Company is subject to ny’s business, results and financial position.
hacker attacks or in any other way by mistake violates
the law, the Company may, inter alia, be liable for dam- THE COMPANY MAY BECOME
ages for the injury and the violation that such action may INVOLVED IN LEGAL DISPUTES
entail. This could have a material adverse effect on the The Company may, as part of their ordinary business
Company’s business, results and financial position. activity, become involved in legal disputes. If the Compa-
New EU legislation regarding processing of personal ny fails to settle any legal proceedings it is party to, the
data may result in additional regulations and new trade Company may be required to pay significant amounts
and platform standards. A new data protection legislation, of damages and fees and claims may arise against the
the regulation (2016/679) on protection of natural person Company which may not be covered in full or in part by
with regards to the processing of personal data and on provisions or insurance. In such event, revenues, cash flow
the free movement of such data, and repealing Directive and profitability of the Company could be materially ad-
95/46/EC (General Data Protection Regulation) (“GDPR”), versely affected. Such disputes are also time-consuming
has been adopted by the EU and will enter into force on and detrimental to the day-to-day operation of the Com-
the 25 May 2018. By this date, at the latest, GDPR will be pany’s business. This could have a material adverse effect
directly applicable in all Member States within the EU. on the Company’s business, results and financial position.
In addition, GDPR will be accompanied by a number
of national laws due to utilisation of the so called opening RISK OF NON-COMPLIANCE WITH KEY REGULATION
clauses, which demands or allows for national implemen- Flexion is required to follow a number of local market
tation of GDPR. There is still uncertainty about exactly how regulations. Examples are local regulations in relation to
the authorities in the countries where the Company oper- mobile operator based payments and management
ates will interpret and apply the regulatory framework. of end-user data. Flexion is required to adhere to these
GDPR also imposes stricter penalties for those who do rules and regulations and a breach of any of these may
not comply with the regulation. In this regard, regulatory have a significant impact on Flexion’s business, results and
authorities are entitled, if certain rules are not complied financial position.
with, to impose administrative fines up to the higher of EUR
20 million or 4 per cent of the Company’s annual world- CURRENCY RISK
wide turnover.
Flexion is active on a global market and thus handles a
There is a risk that the measures Flexion takes and
variety of currencies. In addition, a single transaction may
has taken, to ensure and maintain privacy and integ-
involve several currencies as all of end user, channel,
rity regarding personal data, prove to be insufficient or
developer and Flexion’s financial reporting may involve
otherwise not in accordance with applicable law, such as
different currencies paid and reported at different times.
GDPR. There is also a risk that relevant regulatory authori-
Any significant fluctuation may have a significant impact
ties under GDPR will apply or interpret the requirements of
on the Company’s business, results and financial position.
the GDPR in a different manner compared to the Compa-
ny, which may cause difficulties for the Company to for-
TAX RISK
mulate principles regarding the handling of personal data
in a uniform manner that applies to the entire Company, The Company is active on a global market. There is a risk
which in turn can result in higher costs and require more that governments and authorities on the markets where
resources from the company management. If the Com- the Company operates amend the applicable tax laws or
pany does not process the personal data in a manner increases tax rates. Any such change could have a mate-
that complies with applicable requirements regarding the rial adverse effect on the Company’s business, results and
handling of personal data in the jurisdictions in which the financial position.
Company operates, including GDPR, it may have a mate-
rial adverse effect on the Company’s business, financial POLITICAL RISK
position and results and may damage the Company’s The Company operates in many different markets. Chang-
reputation. es in regulations and laws relating to, for example, foreign
ownership, government participation, royalties, duties and
RISKS RELATED TO INSURANCE COVERAGE other political and economic risks and uncertainties such
The Company could be held liable for damages exceed- as war, terrorist attacks and similar events may adversely
ing the Company’s insurance coverage, including, but not affect the Company’s operations, results and financial
limited to, if the Company breaches any agreement in a position. The Company is exposed to heightened political
material way or if any software provided by the Compa- risk due to Brexit and its exposure to the Chinese market
ny causes material damage. In addition, it may take con- which may adversely affect the Company’s business,
results and financial position.
FLEXION MOBILE PLC COMPANY DESCRIPTION 1. Risk factors / PAGE 7

Risks related to the securities influence over the Company. These shareholders’ interest
may differ materially from, or compete with the interests
CAPITAL MARKET RISKS of the Company or other shareholders’ interests and these
Risk and risk taking is an inevitable part of investing in shareholders may exercise influence over the Com-
financial instruments. Since an investment in shares may pany in a manner contrary to the interests of the other
drop in value there is a risk that an investor might not shareholders.
be able to recover the invested capital. An investment in
RESTRICTIONS ON SALES OF SHARES (LOCK-UP)
the Company shall therefore be preceded by a careful
analysis of the Company, its competitors and the market, Directors (which include the two largest shareholders
general information about the industry, the general busi- representing 37.9 per cent of the votes) and senior execu-
ness cycle and other relevant information. tives have accepted to not dispose of any shares owned
at the time of this Company Description, for a period of
MARKETPLACE twelve months after Listing. Such restrictions on share
The Company has applied for listing of Flexion Mobile’s transfers may have an adverse effect on the liquidity of
shares on First North. An investment in a company traded the outstanding shares. Further, at the lapse of the restrict-
on First North is a riskier investment that an investment in a ed period, the shareholders are free to dispose of any
company on a regulated market. First North does not have shares. In case of the major shareholders selling significant
the same legal status as a regulated market and does not amounts of shares, there is a risk of a decrease in Flexion
impose equal demands on the Company regarding for Mobile’s share price.
example disclosure of information or corporate govern-
FUTURE SALES OF SHARES OF EXISTING SHAREHOLDERS
ance as for companies on a regulated market. Compa-
nies on First North are governed by a specific rule book The price of Flexion Mobile’s shares may decrease if there
and not by the legal requirements imposed on companies is a significant sale of Flexion Mobile’s shares, especially
on a regulated market. if the shares are sold by Flexion Mobile’s directors, senior
executives or major shareholders.
RISK FOR FLUCTUATION IN THE SHARE PRICE
NEW ISSUE OF SHARES MAY AFFECT THE PRICE OF
An investment in the Company is associated with risk. The
OUTSTANDING SHARES AND LEAD TO DILUTION
share price may fluctuate over time and the stock market
FOR FLEXION MOBILE’S SHAREHOLDERS
may have a negative trend. The stock market’s general
development and the performance of Flexion Mobile’s Any future share issues may have a material adverse ef-
shares is due in part to a number of factors beyond the fect on the price of the shares and may reduce earnings
control of the Company. Even if the Company’s operations per share and net asset value per share. Although existing
are developing positively, there is a risk that an investor will shareholders according to English law as a rule have
suffer from a loss on the disposal of its holding. pre-emption rights on a share issue, issues may be made
without pre-emption in certain circumstances and also
LIQUIDITY RISK if a special resolution is passed to disapply pre-emption
None of Flexion Mobile’s shares have previously been rights in relation to an issue, which may lead to a dilution
traded on a marketplace. There is a risk that an efficient of the existing shareholders’ rights.
and liquid market for Flexion Mobile’s shares may not
SHARE OPTIONS MAY AFFECT THE PRICE OF
develop and that the spread between bid and sell prices
OUTSTANDING SHARES AND LEAD TO DILUTION
might vary. If an efficient and liquid market does not de-
FOR FLEXION MOBILE’S SHAREHOLDERS
velop there is a risk that shareholders might not be able
to sell shares quickly or at all. The spread between bid As of the date of the Company Description there are
and sell prices may make it unfavourable to buy and sell outstanding share options relating to an incentive pro-
Flexion Mobile’s shares. gramme. If any holder of such share options were to
exercise these this might have a material adverse effect
CURRENCY RISK FOR FOREIGN SHAREHOLDERS on the price of the shares, may reduce earnings per share
The shares will be traded in SEK and any dividend will be and net asset value per share and may lead to a dilution
given in GBP. As a result, foreign shareholders may expe- of the existing shareholders’ rights.
rience adverse effects on the value of their shareholding
FUTURE DIVIDENDS
and any eventual dividend when converted to other
currencies. Any future dividends depend on several factors, such as
future results, financial position, cash flow, working capital
MAJORITY SHAREHOLDERS WITH requirements, future growth and investment strategies and
SIGNIFICANT INFLUENCE the terms of the Company’s outstanding liabilities and
At the date of the Company Description, the four largest other factors. It is therefore not certain that dividends will
shareholders held approximately 54.0 per cent of the be proposed or resolved in a given year or that the size
votes in Flexion Mobile, which gives them a significant of dividends made a certain year will be maintained the
following years.
Background and objectives
FLEXION MOBILE PLC COMPANY DESCRIPTION 2. Background to Flexion / PAGE 9

2. Background to Flexion

Flexion makes it easy for developers developer customers have games in the top 100 revenue
grossing list in Google Play.
to exploit more markets, so they Flexion has built a position as a leader in its segment
can maximize the growth potential and aim to further strengthen its position. The Company
of their mobile games. may in the future choose to increase its target market to
include Google Play and China.
Flexion functions as a distribution platform of Android
games. The Company’s unique technology has solved WHY DOESN’T FLEXION TARGET IOS?
a distribution problem for developers and as a result, 80 per cent of all smartphones are Android and the op-
developers can now reach new channels without having erating system is open. Apple’s iOS is a closed ecosystem
to make any changes to the game code. Flexion’s service – there are no other channels through which developers
makes it profitable for developers to distribute games to can reach end users. This in turn means there is no wider
multiple stores. ecosystem or fragmentation challenge to overcome. As
such, the clearly defined immediate opportunity that ex-
ists for Flexion in the Android space does not exist in iOS.
Market
Overall, mobile gaming is today worth USD 66 billion, ex-
pected to grow to USD 105 billion in 2021. The Company’s Flexion’s offering
addressable market – Android gaming – is today worth Flexion solves technological and commercial fragmenta-
USD 33 billion expected to be worth USD 59 billion in 2021. tion. Unique technology makes games compatible with
The Company’s go to market strategy sees it target a any distribution channel. Integrations and commercial re-
specific segment, “other channels” – Android based stores lationships with channels create an aggregated user base
outside Google Play and China. The Company estimates to which games can be profitably distributed. Flexion’s
the segment to be worth USD 2 billion, growing to USD 5 service management sees Flexion actively working with
billion in 2021. a portfolio of games meaning developers can reach new
Flexion is integrated with global stores such as Amazon channels without additional work. For channels (i.e. stores)
and Samsung and leading regional distribution channels Flexion is a content provider.
in India, South Korea and Japan. The majority of Flexion’s

Market for mobile games

Android – Open operating system

Apple iOS – Closed operating system
80% of devices shipped, 50% of revenues
20% of devices shipped, 50% of revenues
Addressable market $33 bn. ($59 bn.)

Google Play
$18 bn.
($36 bn.)

App Store
Other China $33 bn.
$2 bn. $13 bn. ($46 bn.)
($5 bn.) ($18 bn.)
FLEXION MOBILE PLC COMPANY DESCRIPTION 2. Background to Flexion / PAGE 10

Automated enabling

ENABLING ENHANCEMENT
– Billing SDKs – Monetization features
– File handling and hosting – Retention features
– Channel pricing – Analytics
– Testing – Improved billing support
– In app items and pricing
– Update management

Finished wrapped game builds

Developer’s ready for new channels
existing Android
game file

Patent pending

UNIQUE TECHNOLOGY BUSINESS MODEL

The Company’s enabling technology is unique. It makes Flexion operates with a simple revenue share model,
it possible to add, modify or remove features in games taking a percentage from payments made in distributed
to make them compatible with the requirements of any games.
store.
The technology does not require developers to do any STRONG POSITION AND LIMITED DIRECT COMPETITION
redevelopment work and does not require access to the Flexion’s value proposition is unique. It is full service and
game’s source code. Once processed, games are com- covers everything necessary to make a game successful
patible with the requirements of any supported channel. in a channel. Competition is currently limited in the mar-
The technology can enhance existing applications by ket segment which Flexion is currently targeting. Other
adding features and functionality, primarily to drive rev- companies offer products/services which cover one or
enue and user engagement. For example, gifting features some necessary steps, often with a focus on technology.
can be added which allows distribution channels to cre- Developers need to combine multiple providers and/or
ate unique user acquisition campaigns and offers. build own solutions.
Some developers choose to build own solutions or
combine multiple 3rd parties. Flexion caters to developers
who want a full service offering.

Unique service offering

COMPLIANCE
CHANNEL SETTLEMENT/
ENABLING TESTING UPDATES BILLING DISTRIBUTION CUSTOMER
MGMT REPORTING
SERVICE

Revenue
Flexion’s full service offering

Risks and
unknowns
Developer’s alternative
FLEXION MOBILE PLC COMPANY DESCRIPTION 2. Background to Flexion / PAGE 11

Existing players may extend their value propositions In addition, the business model cultivates network effects.
and new companies may emerge. However, Flexion has Successful developers and channels will attract other de-
a first mover’s advantage with a well-developed and velopers and channels to the platform. Flexion will use its
mature service. The amount of time and effort required first mover’s advantage and strong cash position to focus
for presumptive competitors to duplicate Flexion’s service on building critical mass on its platform to boost network
offering and capabilities would be significant. effects and associated business growth.
Flexion’s position is further solidified thanks to the
comprehensive knowledge base and skill which exists in
the Company. Games distribution to a wider, fragmented Assurance from the board of directors
ecosystem requires specialised skillsets across a number Flexion Mobile’s board of directors is responsible for the
of disciplines, ranging from technology through to service information given in this Company Description. The board
management, user acquisition, business intelligence and of directors declares that, to the best of its knowledge,
payment & settlement. It also requires a deep under- the information provided in the Company Description is
standing of the needs of game developers and distribu- accurate and that, to the best of the board of directors’
tion channels. This understanding can only be achieved knowledge, the Company Description is not subject to
through experience built up over time. any omissions that may serve to distort the picture the
Company Description is to provide, and that all relevant
HIGHLY SCALABLE MODEL information in the minutes of board meetings, auditors’
Flexion’s business model is highly scalable as it involves records and other internal documents is included in the
multi-dimensional growth opportunities originating from: Company Description.

1. general market growth The board of directors of Flexion Mobile Plc

2. increased number of games London, June 8, 2018

3. increased number of channels

4. large growth investment programmes by
integrated channels
5. access to new games released by integrated
developers
6. higher earning games
7. introduction of new/stronger monetisation models
8. using its first mover advantage to undertake
consolidation opportunities

The business model drives network effects

Developers Channels Channels and

attract developers attract developers developers attract users

FLEXION
DISTRIBUTION
USERS
PLATFORM

DEVELOPERS CHANNELS

Developers Channels attract

attract channels channels
FLEXION MOBILE PLC COMPANY DESCRIPTION 3. Flexion: History / PAGE 12

3. Flexion: 
History

Flexion Mobile was founded in 2007. As the market transitioned towards smartphones, Flex-
ion pivoted its activities to focus exclusively on Android
The Company’s focus has always gaming. It did so having predicted the success of Android
been to drive games distribution as well as the challenges the market for Android games
and monetisation forward. would face as it grew. Such was Flexion’s conviction that it
committed to investing in solutions for a market which had
Initially, the Company supported feature phones, supply- yet to fully establish itself.
ing solutions to mobile operators such as Telefonica O2 The Company is headquartered in London, with a
and Orange and device manufacturers such as Sony Er- development studio in Budapest. The Company employs
icsson and Nokia. Using its proprietary wrapping software, 35 fulltime staff and engages the services of 4 long term
Flexion pioneered elements of Freemium gaming long be- contractors. Flexion have sales representation in the larger
fore the term existed. Flexion built a position as a market mobile games markets in the world like for example
leader in what used to be a relatively small market. Japan, Korea and the US and will actively pursue partner-
ships in other key markets as they arise.

10 years of innovation

Flexion is formed and

launches the world’s first
connected subscription- Sony Ericsson preloads Samsung selects Flexion
based live score Java app games using Flexion’s as a partner for
– Premierscores with software for global enabling of their
Hutchison 3G. distribution. freemium games.

Flexion launches a world Flexion starts development Flexion partners with

leading Try& Buy enabling of its freemium wrapper Amazon and is ready for
service for Java games. for Android. global market grab.

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Flexion launches DRM Nokia selects Flexion is awarded a

enabling wrapper Flexion for its global EUR 1.9m grant from the
with Hutchison and Try&Buy game European Commission’s
Orange Group. service. Horizon 2020 programme.
Flexion develops the Flexion machine wraps
world’s first fully the first freemium game
automated Android for open market
wrapper. distribution.
FLEXION MOBILE PLC COMPANY DESCRIPTION 4. Objective: Flexion listing / PAGE 13

4. Objective: 
Flexion listing

Why is Flexion listing? MOBILE GAMES MARKET

Flexion offers an investment exposure to the mobile
Listing the company on First North is being games market. This market has seen massive continuous
done as part of a wider, long-term growth growth since its inception close to two decades ago. The
Android game segment is expected to double in size
strategy. Flexion is well funded and no new
over the next four years. Flexion’s go to market segment is
capital will be raised as part of the listing. estimated to grow even faster during the same period. In
addition, mobile gaming is viewed to be relatively uncor-
Over the last five years, the Company has secured three
related to the general economic climate i.e. mobile gamers
rounds of equity funding and was awarded a European
spend in both good and bad times.
Commission Horizon 2020 grant in 2016. The biggest round
– when SEK 68 million worth of shares were issued with a
DIVERSIFIED GAMES PORTFOLIO
subscription price of SEK 8.30 per share – was closed in
February 2018. With existing capital and a relatively low Flexion manages a diversified catalogue of games. New
burn rate, the Company has a multi-year runway. Flexion games are added continuously and games which per-
is therefore not raising any capital at the Listing. form below expectations are replaced. This means that
Existing capital will be used to drive growth. It will allow the Company’s overall business performance is driven
the Company to extend its portfolio of games and chan- by a portfolio based risk approach. This is in contrast to
nels, and ultimately attain a far more extensive reach and the majority of game developers, whose financial per-
end-user base. formance are often dictated by one or a few individual
There are two key drivers behind the Company’s deci- games. Most successful game developers produce a
sion to list. single blockbuster game but few manage to follow this up
Firstly, a listing will help solidify the Company’s standing with additional hit titles.
and credibility. Flexion is a comparatively small compa-
ny which works with developer and distribution channel SCALABLE BUSINESS MODEL
customers many times its size. Being a public company Flexion has a highly scalable distribution platform, unique
solidifies Flexion’s position as a credible entity and will technology and business model. The Company has also
help the Company when engaging with future customers. successfully raised capital to build critical mass on its
Secondly, the Company wants to gain access to the distribution platform to kick-start network effects which
Swedish and international capital markets. are expected to further increase growth. In addition, with
Both factors are highly beneficial for Flexion’s future access to a very efficient capital market, Flexion will look
growth, operations and ability to undertake potential at consolidation opportunities to speed up its growth.
future market consolidation activities.
STRONG AND WELL ESTABLISHED RELATIONSHIPS
Flexion has strong and established relationships with lead-
Why list in Sweden? ing distribution channels and game developers. Channels
For the Company, a listing in Sweden is a natural choice. range from global players like Amazon and Samsung
Flexion has a clear Swedish connection through its found- through to regional or local stores in emerging markets. The
ers and early stage investors. Equally important, the wider majority of Flexion’s developer customers have games
Swedish investor landscape comprises experienced in the top 100 revenue grossing charts in Google Play. The
investors with an understanding for tech and mobile existing relationships provide a solid foundation for future
gaming companies. Many of these have already seen growth.
success with companies such as King and Supercell. Thus,
the company considers that First North provides the best PROVEN AND MATURE SET UP
environment in which to list. Flexion has a proven and mature set up and is ready to
grow. Over the last decade, the Company has complet-
Why invest in Flexion? ed and proven its core technology, service and business
model. Well-established internal processes and organisa-
Flexion provides a unique opportunity to invest in the mo-
tional structures have been established. Its management
bile games market through a company with a diversified
team alone has over 100-man years of mobile gaming
games portfolio, scalable business model, strong and well
experience and an experienced board of directors has
established relationships with developers and distribution
been in place since 2011.
channels and a proven and mature set up.
FLEXION MOBILE PLC COMPANY DESCRIPTION 5. CEO’s statement / PAGE 14

5. CEO’s statement

I’ve been in mobile gaming for nearly two decades. I’ve

seen the industry grow from a niche market to a global
industry. Mobile is the major segment in video games, and
video gaming is bigger than music and movies combined1.
I don’t think mobile gaming has ever been more exciting than it is today. Android
alone is huge – in user and as well as revenue terms. The structure of the market
is transforming and it has evolved beyond its historical reliance on one
dominant store. A new breed of distribution channels has emerged.
The ecosystem is becoming open and diverse.
I’ve seen this transition once before. During the Dot-com era I
worked with various Internet start-ups. At that time Internet
access was dominated by a handful of players. Portals
and search engines such as Yahoo, Lycos and AltaVista
and Internet service providers like AOL presented a curat-
ed experience. Users had limited choice and an artifi-
cially narrow horizon. Market entry for new players was
difficult. The ecosystem was effectively closed.
Better search combined with consumers’ desire to decide
for themselves what content they consumed or bought
broke down the walled gardens. Today’s Internet is open. I
see the market for Android games transitioning in exactly the
same way. The natural end-point is the open ecosystem which
we’re seeing emerge today. We are perfectly positioned to be a driv-
ing force in this transition.
We founded Flexion in 2007 with the aim of making it a leading player in games
distribution and monetisation. Today game developers need new services to
solve fragmentation issues in order to grow in to the wider Android ecosystem.
Over the last ten years, we have laid the foundation for long term growth. Being
headquartered in London has given us access to world class talent. Our team is
experienced and well connected. We have steadily evolved our business and
matured our technology. The combination of successful equity rounds, growing
revenue and an EC grant means we are well funded.
Taking the Company public will give us the punching power we want in order to be
the driving player in the industry’s next growth phase. We will have access to cap-
ital if needed. We will be well positioned to drive or engage with consolidation. We
will have the credibility that follows from the ongoing intense scrutiny that comes
with being a listed company.
Consequently, it is a pleasure for me to invite you to join us on the next stage of our
exciting journey.
London, June 8, 2018
Jens Lauritzson, CEO

1. https://www.nasdaq.com/article/-cm634585
The market
FLEXION MOBILE PLC COMPANY DESCRIPTION 6. Market: Mobile games / PAGE 16

6. Market: 
Mobile games

Mobile gaming is the single largest DEVELOPERS

segment in what is normally referred Game developers range in size, from multi-billion dol-
lar franchises to small person outfits. The industry is truly
to as video games (mobile, PC, global. To be profitable developers need volume. Volume
console) with an estimated market comes from scaling within a specific distribution channel
value of USD 66 billion in 2017. and/or through scaling across multiple channels.

Mobile gaming is expected to be worth around USD 105

billion in 2021. Video gaming is in turn far bigger than tradi- Impact and dynamics
tional entertainment verticals such as music, films and TV. of the Freemium model
Revenue in mobile gaming is split equally across two Freemium has transformed the way games are devel-
operating systems: Apple’s iOS devices and Android. oped and operated.
However, in terms of user base, Android dominates with When games were sold via payment through a store
around 80 per cent of all smartphone users globally. Flex- before download, the challenge for the industry was to
ion operates in the market for Android games. get users to spend in store. With Freemium games, the
Mobile games are an entertainment product. They challenge for game developers is to retain users and
compete for screen-time with other on-device enter- to get them to spend in games. To drive performance,
tainment, social and productive activities as well as with developers need to add many features beyond pure
non-mobile activities e.g. TV or console/PC gaming. gameplay. As a result, today’s mobile games are complex
products.
MOBILE GAMES HAVE UNIVERSAL APPEAL Aside from the obvious inclusion of payment solu-
Games are played by all walks of life and mobile gaming tions, developers add many ancillary features, either by
penetrates far beyond the conventional “gamer” demo- building such features themselves or by integrating code
graphics found in PC or console gaming. This is in part libraries from 3rd parties. Normal examples are features
driven by accessibility and cost. End-users do not need to analyse user behaviour, display advertising, optimise
to purchase additional hardware (devices are already monetisation performance, social networks and sharing,
owned) and games are immediately available through cloud saving, push notifications, support for additional
multiple stores on the user’s device.. downloads of assets or entire game updates. It is not
The majority of mobile games utilise the so called uncommon for games to contain more raw code relating
“Freemium” monetisation model. Freemium games are free to these integrated features than what relates to actual
to download and to use. Developers generate revenue gameplay.
(monetise) through selling virtual items in games and/or
through displaying advertising within their games. FREEMIUM GAMES ARE LIVING SERVICES
To retain users and optimise monetisation performance
GAMING COMPLEXITY IS INCREASING games need to be run as evolving services. This is done in
Mobile gaming experiences are increasingly rich and im- two ways:
mersive. Multiplayer gaming – long the preserve of PC and 1. Through regular software updates in order to roll out
console gaming – is now commonplace within mobile new tweaks and features.
gaming and many of the biggest titles are multiplayer only.
2. Through regular changes (“liveops”) in already distrib-
While multiplayer and rich gaming features improve the
uted games (ranging from simple pricing or alterations
end-user experience, they also add technical complex-
through to complex specific in-game events).
ity. Rich gaming experiences make games big and more
resource intensive to develop. Multi player features means In support of the continual evolution and optimisation of
developers need to run cloud based infrastructures and game performance, developers employ (often sizeable)
add connected features to their gameplay. analytics teams. The industry has become intensively
data driven, with competitive advantage being available
to the developer with the sharpest analysts.
FLEXION MOBILE PLC COMPANY DESCRIPTION 6. Market: Mobile games / PAGE 17

LIMITATIONS AND WEAKNESSES OF FREEMIUM Emerging trends to move past Freemium

While it is the default model for mobile game monetisation The Company sees some emergent trends beyond the
and clearly capable of creating a strong industry, Freemi- market’s transition towards fragmented distribution.
um is not perfect. The model has some limitations. The industry is looking for ways to move past the
1. Costly to run – as is outlined above, technological Freemium model’s limitations. More specifically, the models
complexity makes ongoing development, testing and inability to convert more users to paying customers and
operations resource intensive. The overall costs of run- its weaknesses in emerging markets. The industry wants
ning Freemium games normally outstrip the initial cost to achieve this without sacrificing the positive aspects
of development. of Freemium, such as its ability to create high spending
2. Low conversion rates – large overall user numbers are whales.
required in order to create a fairly small number of high Already emerging are activities in relation to sub-
spending “whales”. Most users (often 90 per cent or scription based monetisation. The model is proven in the
more) never spend in games. streaming music and video verticals and has historically
been strong in mobile. In relation to gaming, subscription
3. The model does not monetise well in emerging markets,
models could drive monetisation from end-users currently
a segment where smart phone usage is still growing
not spending in games and/or an ability to generate addi-
rapidly. Emerging market economies largely lack wide-
tional revenue from already spending end-users.
spread digital payment infrastructure and per capita
Other developments in this area may include new
income levels are 10s or 100s of times lower than in
forms of payments and over the top services. It’s likely
established Android markets.
that the way the industry solves these challenges will
4. Perhaps most importantly, the large number of create additional cost or complexity and/or market
non-gaming features integrated in games greatly in- fragmentation.
crease cost and complexity for developers distributing
games through multiple channels.
FLEXION MOBILE PLC COMPANY DESCRIPTION 7. Market: Structure and challenges / PAGE 18

7. Market: 
Structure and challenges

Android is the dominant smartphone The open market

platform with 80 per cent of all There are three main types of distribution channels in the
open market.
smartphones being based on Android.
Firstly, a rich landscape of conventional stores exists,
More than 2 billion devices run Android1. ranging from regional players and mobile operator driven
channels to very large over the top services.
The operating system is open source, available through
Secondly, device manufactures also run distribution or
the Android Open Source Project (AOSP)2. Anyone can
game discovery channels which are available through
download the source code and apply it to compatible
their handsets.
hardware3. From a technological perspective, anyone is
Thirdly, thanks to chat services and social networks,
also free to set up and run an app store.
distribution is also being driven by methods which don’t
Key growth regions are emerging markets, where users
necessarily need a store to work at all. Social features
are still transitioning from feature phones to smartphones.
in games drives general game discovery. Chat services
The growth is fuelled by lower priced smartphones.
such as Line and Kakao have integrated explicit games
The Android games market can be broken down in to
features, embedding games discovery as part of their
two main segments:
core offerings.
1. Open market – all markets and stores outside China
2. China – effectively a closed market GOOGLE PLAY
Google Play is the dominant store. In total around 3.5 mil-
Market for Android Games lion games and apps are distributed to end-users4. As a
consequence, the environment within that store is fiercely
Open market competitive. To attract and retain end-users and maintain
chart position developers need to spend heavily on user
acquisition advertising. This advertising happens largely in
channels outside the store itself – such as through other
Google Play games, apps and services (e.g. Facebook).
The fierce competition has created a skewed compet-
$18 bn. itive landscape. The cost of user acquisition has risen to
($36 bn.) levels unattainable for many developers. Weekly ad-
vertising spend of millions of dollars is normal. Because
Google Play is the biggest store – developers currently
build for that store first. The key to continued growth and/
or mitigation of the competitive landscape in Google Play
Other China lies in diversifying distribution in order to reach end-users
through new channels.
$2 bn. $13 bn.
($5 bn.) ($18 bn.)
OTHER STORES
The number – and size – of stores and channels is
growing steadily. As a consequence, the landscape is
becoming increasingly technologically and commercially
fragmented.
This follows as a result of distribution channels mandat-
ing the use of their own technologies, such as proprietary
payment systems. Additionally, some features made
available to developers within Google Play are only avail-
able there – for example features to support additional
asset downloads and game upgrades.

1. https://www.theverge.com/2017/5/17/15654454/android-reaches-2-billion-monthly-active-users
2. https://source.android.com/
3. https://source.android.com/setup/downloading
4. https://www.statista.com/statistics/266210/number-of-available-applications-in-the-google-play-store/
FLEXION MOBILE PLC COMPANY DESCRIPTION 7. Market: Structure and challenges / PAGE 19

Fragmentation makes multi- Developer’s dilemma

channel distribution costly
Distributing to a new channel involves a set of specific
steps, ranging from development through to payment.
When distributing to the wider open market, develop- I want to reach
ers are exposed to additional regulation, specifically in new stores.
relation to payments. For instance, the mobile payment in-
dustry will feature market specific regulations which need
to be followed. Other regulations, such as those governing
the treatment of personal data, are universal, irrespective
of distribution channel. This in itself is a costly and complex
exercise for developers. Cost and complexity rises sharply My main Android
when distributing to multiple channels.
Distributing to multiple stores creates duplication of
store is overcrowded
effort. Store specific game variants need to be developed and costly to
and maintained5. Multiple channels need to be analysed operate in.
and maintained. End-user customer care needs to be
scaled. Revenue settlement and payment needs to be
secured.

Distributing to many channels is costly

Developers end up with a dilemma: a) invest in long term
growth by diversified distribution but risk losing short term
momentum in existing stores OR b) defend position in ex-
1
isting stores by foregoing new channel investment. Neither
scenario is preferable.
Developers struggle to balance the investment case
2
and many end up foregoing investment in diversified
distribution. As a result, many channels are missing out
on content. Open market distribution channels could be
3 growing faster with more quality content. With effective
ways of eliminating the developers’ dilemma, overall mar-
ket growth could be even stronger than it is today.
4

China
China is effectively a closed market. Prior to launch, a
In essence, specific production and distribution lines need developer must get approval from the country’s culture
to be set up for each distribution channel a developer ministry and State Administration of Press, Publication, Ra-
wants to support. dio, Film and Television (SAPPRFT). This creates legally and
commercial challenges which limit the number of non-do-
THE DEVELOPERS’ DILEMMA mestic developers currently targeting China.
For developers, the opportunity cost of investing in new Within China no single store dominates. The market is
distribution and solving fragmentation issues is high. This heavily fragmented. Google does not currently operate
follows as a consequence of: a) new channel support in China. Device manufacturers feature their own stores,
diverting resources from supporting a developer’s position as do mobile operators. In addition, distribution happens
in its existing stores and b) new channel support having through 3rd party stores and social networks and chat.
far longer payback times than user acquisition or feature Each channel needs to create its own set of features
investments in existing distribution6. required by games, such as payments, social features or
Most importantly – to be successful with distribution to push notifications.
many stores, developers need to divert resources from Developers need to build for fragmentation from the
their core business, making games. outset – integrating payments and technology specific to
target channels. Alternatively, they work with publishers
who undertake the conversions on their behalf by re-writ-
ing the game’s source code. Most developers choose to
work with publishers or distribution partners to manage
commercial relationships and distribution.

5. Key features requiring rebuilding are: In-app payments, upgrade management, asset file management (OBB) social features and Google sign-in (the latter
only if distributing to Amazon Fire devices).
6. Developers get paid from Google Play 60 days after month end, meaning that incremental revenue created by new users or features can be realised quickly.
The company
FLEXION MOBILE PLC COMPANY DESCRIPTION 8. Flexion: Solving an industry problem / PAGE 21

8. Flexion: 
Solving an industry problem

Flexion makes it easy for developers TECHNICAL ENABLING

to exploit more markets, so they Flexion’s technology stack and service platform solves
the issue of technical fragmentation. Developers normal-
can maximize the growth potential ly build for Google Play first. Rather than get developers
of their mobile games. to change their code, Flexion works with a developer’s
existing Android game file. Machine-based enabling
Flexion currently operates in the open market. More spe- technology modifies games and makes them compatible
cifically, the company is focussing on distribution channels with requirements of other stores. For example, support for
beyond Google Play. This segment is today worth USD 2 additional payment methods is added. Flexion’s service
billion. The Company expects the segment to grow to be platform provides additional features and ensures games
worth around USD 5 billion in 2021. function as expected once in the hands of end-users.

Three part value proposition TECHNICAL ENHANCEMENT

Flexion’s enabling technology allows it to modify a game
Flexion solves fragmentation through a three-part value
file. This capability is also used to add new features, not
proposition, comprising technical enabling, technical en-
initially present in the game. Such enhancement features
hancement and service management.
can be used to improve a game’s or distribution channel’s
performance. An example of an enhancement feature is
Solution Flexion’s existing “gifting” feature which allows channels
(with a developer’s blessing) to give away an item for free
to new users. This offer can in turn be used as part of pro-
Ahh, through Flexion motional campaigns to attract or retain end-users.
I get one channel
to the whole market. SERVICE MANAGEMENT
Commercial fragmentation is solved by the Company
being a developer’s active distribution partner. Flexion
has built up a network of distribution channel partners
to which games in Flexion’s portfolio are distributed.
The Company manages all operational aspects of the
relationship with the channels on the developers’ behalf,
including revenue reconciliation and out-payment.
Compliance with local market regulation is ensured as
a result of a) Flexion actively monitoring regulatory chang-
CHANNELS
es and – if required – adapting products and services
accordingly and b) regulatory compliance partially being
managed by integrated store or payment partners, who
themselves ensure aspects such as purchase flows com-
ply with relevant rules.
FLEXION
DISTRIBUTION
PLATFORM
FLEXION MOBILE PLC COMPANY DESCRIPTION 8. Flexion: Solving an industry problem / PAGE 22

Example: How Flexion exists on a device The user of this device has Samsung’s Galaxy Apps
store available to it by default (Galaxy Apps is preloaded
End-users become Flexion users as part of finding and
on all distributed Samsung handsets and tablets). This user
using games. Below are screenshots taken from a Sam-
has also chosen to install Amazon’s appstore.
sung device.

One game – multiple channels Business model

on the same device Flexion’s business model is a revenue share from the
payments generated inside the games the Company
distributes.
The revenue share model is made possible as a result
of Flexion’s role in the value chain. The Company and its
platform handle all payment transactions in distributed
games.
The percentages vary considerably dependent on
what role each party has. For illustrative only purposes a
typical flow is presented below. It should also be noted
that the payment flow may differ if Flexion provides the
billing services.

Google Play Samsung Galaxy Apps Amazon Appstore

Distributed Service offerings and current customers

Distributed
through Google Play The company has two sets of partners – game develop-
through Flexion
by GTarcade ers and distribution channels. In addition, its activities also
have a direct – and positive – impact on end-users.
In addition to Google Play, this end-user has two addition- As part of the initial phase of its growth, Flexion has
al routes through which to find a particular game. Flexion is elected to focus on quality – both in content and delivery
the reason the game exists in the other two channels. & service provisioning.

Business model (simplified example)

END USERS

$100

STORE A $70

FLEXION
DISTRIBUTION
PLATFORM $14
Patent pending

$56
FLEXION MOBILE PLC COMPANY DESCRIPTION 8. Flexion: Solving an industry problem / PAGE 23

Automated enabling

ENABLING ENHANCEMENT
– Billing SDKs – Monetization features
– File handling and hosting – Retention features
– Channel pricing – Analytics
– Testing – Improved billing support
– In app items and pricing
– Update management

Finished wrapped game builds

Developer’s ready for new channels
existing Android
game file

Patent pending

DEVELOPER OFFERING Using this portfolio, distribution channels can scale

For developers Flexion is a distribution partner and plat- their revenue and content offerings. Flexion manages the
form. Flexion is integrated with a broad spread of distri- relationships with developers. The channels can focus
bution channels, ranging from global players like Amazon on retailing and ensuring their overall store user numbers
and Samsung through to regional or local stores in emerg- grow.
ing markets. Flexion has arguably the biggest footprint in
Provisioning of enhancement features
the market in terms of distribution to stores beyond Goog-
le Play and China. Flexion also provides a second role to distribution
For developers, Flexion is a full-service partner. The channels.
Company actively manages a developer’s games in These need to create and promote unique or differ-
its channels in order to ensure maximised revenue and entiating services or features which add value to new
performance. or existing users and allow channels to grow. Flexion’s
enhancement capabilities provide channels with features
Activities in detail which address these needs.
More specifically the Company undertakes:
END-USER OFFERING
×× Technical enabling
Flexion becomes part of its distribution channel customers’
×× Technical provisioning and operations
service offering to their end-users. As a result, these chan-
×× Compatibility validation and testing nels can then offer a wider and deeper content offering.
×× Ongoing service configuration Thanks to Flexion, more channels get stronger content
×× Retailing and shop keeping offerings and happier customers.
×× Update management Flexion is always part of the user experience
×× End-user customer care Irrespective of from which store an end-user downloads
×× Securing promotions and user acquisition this game, Flexion will be part of – or power – the end-us-
×× Account management with distribution channels er experience in relation to distribution and monetisation
features. End-users interact with Flexion enabled features
×× Revenue reconciliation and settlement to developers
such as payment or upgrade management.
×× Enhancement of game files Flexion’s active presence in the games also provides
Developers can focus on creating and managing quality benefits to stores and end-users as it allows for the rapid
games. Flexion provides a full service offering which cov- deployment of new features and game updates. Free-
ers everything else. mium games are updated frequently. The upside of this
is the fact that new features can be rolled out swiftly to
DISTRIBUTION CHANNEL OFFERING an entire user base – more or less automatically. Flexion
For distribution channels Flexion is a content partner. Flex- controls the upgrade flow in channels through which it has
ion’s portfolio of games is a consolidated source of quality distributed games and can migrate a user base to a new
games content for the channels. game version within hours.
FLEXION MOBILE PLC COMPANY DESCRIPTION 8. Flexion: Solving an industry problem / PAGE 24

Flexion’s technology DEVELOPERS CAN BUILD FOR THE OPEN MARKET FIRST
Flexion’s service offering is powered by a combination Developers can also choose to build for the open mar-
of unique enabling/conversion technology and a cloud ket from the outset. This is achieved through integrating
based service platform. parts of Flexion’s core technology directly in to a game as
code library (using Flexion’s so called SDK). This means
ENABLING AND ENHANCEMENT TECHNOLOGY games are prepared for open market distribution already
A key strength for Flexion is its ability to take existing game at build time. Additional flexibility and future proofing is
files straight off a developers existing production line and achieved through this second method of enabling.
make these compatible with other distribution channels. Games built with Flexion’s SDK still require post-build
Flexion achieves this without a game developer needing processing in order to add store specific features. This
to undertake any significant development work. workflow means developers do not need to test channel
This is made possible thanks to Flexion’s core enabling specific features or payments – these are managed and
technology. It allows for the addition, removal or replace- tested by Flexion – greatly reducing resource and com-
ment of features in games without requiring access to a plexity when testing such features.
developer’s source code. The technology is automated,
SERVICE PLATFORM
machine based and operates on already compiled game
files. The enabling technology is unique and patent pend- Functionality in distributed games is managed by Flex-
ing in the USA and Europe. The basic conversion process ion’s cloud-based service platform. This manages user
looks as follows. experience, authentication, authorisation, payments and
store independence features. It also manages business
1. A game file is submitted to Flexion as part of a game’s
intelligence and revenue reporting. The service platform is
normal submission or update cycles.
integrated with 3rd party payments and store payment
2. The file is processed by Flexion’s enabling technolo- solutions and other 3rd parties.
gy (often referred to as a wrapper) which creates a
number of new versions – one per distribution channel.
After initial set up, processing and converting a file takes Scaling and future growth
just minutes to complete and encompasses the follow- Flexion has laid a foundation for future growth. The
ing basic steps: infrastructure has been built and critical mass in terms of
a. Flexion’s wrapping engine analyses the game file distribution channel footprint has been achieved. The un-
and identifies required changes based on pre-de- derlying business model is proven. Individual developers
fined settings. and channels are generating worthwhile revenue through
b. Flexion’s wrapping engine undertakes modifications the Company.
to the game, adds required code for new features
and components and also adds Flexion specif- HIGHLY SCALABLE MODEL
ic components to ensure new features function The Company’s growth strategy will see it scale its user
correctly. base and revenue.
c. The process completes with the wrapping engine
saving the completed file (which is now ready for Highly scalable model
distribution without further work).
d. Steps b and c are repeated automatically in order
to produce a variant for each distribution channel to
E

which the game should be delivered.

PL

15 15 30 45 75 105 150 225 375 525 750

I
LT

3. Flexion’s operations team undertakes automated or

U

10 10 20 30 50 70 100 150 250 350 500

Number of channels

manual quality assurance and thereafter delivers con-

E
U

verted files to relevant channels.

EN

7 7 14 21 35 49 70 105 175 245 350

V

The process is largely industrialised and Flexion performs

RE

5 5 10 15 25 35 50 75 125 175 250

E

thousands of wrapping operations monthly as part of its

IV
SS

business operations. 3 3 6 9 15 21 30 45 75 105 150

A
M

2 2 4 6 10 14 20 30 50 70 100

1 1 2 3 5 7 10 15 25 35 50

1 2 3 5 7 10 15 25 35 50

Number of top channels

FLEXION MOBILE PLC COMPANY DESCRIPTION 8. Flexion: Solving an industry problem / PAGE 25

Flexion’s business model includes multiple opportunities to 7. Enhancement features that drive performance – the
grow: company’s ability to enhance existing games with new
1. General market growth – By offering a distribution features allows it to drive or capitalise on new industry
platform in a market with high expected growth, Flexion initiatives and emerging trends. Examples of potential
is likely to also benefit from this market growth. future iterations are features to drive user engagement
and retention, games discovery and new monetisa-
2. Increased number of games – By adding games to its
tion – including subscription based models on a game
platform Flexion can provide a continuously growing
by game or service basis. As a result of these – and/
offer to distribution channels and their end users.
or other – features, Flexion may be able to improve
3. Increased number of channels – by adding new chan- overall monetisation performance for its customer and
nels to its platform, Flexion increases the reach to end user-base.
users who can play and spend in Flexion’s distributed
It is worth noting that user and revenue growth may be
games.
non-linear. The Company will engage with games and
4. Large growth investment programmes by integrated channels which ultimately under-perform, while other
channels – The majority of the channels that Flexion games and channels over-perform. Flexion’s model sets
works with have their own growth strategies to increase the Company up for exponential growth, but that growth
their user bases. This will directly improve the revenue may come in the form of spurts and surges.
potential for the games that Flexion has live on the In addition, the business model creates strong align-
channels. ment between developers’ and channels’ incentives. This
5. Access to new games released by integrated channels fuels network effects in the platform and platform itself
– after Flexion having built a strong relationship with a starts to generate growth.
game developer, Flexion is likely to receive new games Irrespective of which of the above effects is the strongest,
released by the same developer. they can all generate significant growth and momentum –
6. Higher earning games – as the distribution platform in turn driving Flexion’s overall growth.
grows, it will be easier and easier to improve the quality A key objective for Flexion is to use its first mover ad-
of Flexion’s game portfolio. This is likely to have a direct vantage and part of its available cash and quickly build
impact on Flexion’s revenues. critical mass on its platform to fuel network effects and
thus increase its growth potential.

The business model drives network effects

Developers Channels Channels and

attract developers attract developers developers attract users

FLEXION
DISTRIBUTION
USERS
PLATFORM

DEVELOPERS CHANNELS

Developers Channels attract

attract channels channels
FLEXION MOBILE PLC COMPANY DESCRIPTION 9. Flexion: Team strengths / PAGE 26

9. Flexion: 
Team strengths

Ensuring successful distribution to a Operations and delivery

fragmented ecosystem requires a team Flexion’s operations are effectively many-to-many.
Flexion’s operations and delivery team has evolved to
with specialisation across multiple
execute on two dimensions – high throughput volumes
disciplines. Flexion’s strong company combined with intense attention to detail in all aspects of
culture combined with meticulous its activity. Thanks to skilled staff and well established pro-
cesses, a very small team is capable of undertaking 100s
recruitment processes creates low
or even 1000s of delivery actions monthly. This approach
staff turnover – in turn ensuring that also creates a solid foundation for ongoing scaling as
skills and experience built up over time Flexion’s operations grow.
is retained within the Company.
Finance and monetisation
Distribution through the open market poses a set of spe-
Business development cific challenges in relation to finance, monetisation and
Successful business development requires a combination payments. Payment types and channels have varying
of network, experience and intimate market knowledge. payout times. Payout currencies differ, reporting qual-
To meet this challenge, Flexion has built up channel and ity and timeliness fluctuate, and monetary flows from
developer relations teams led by industry veterans. Indi- multiple revenue sources need to be combined. Flexion
vidual team members have previous positions with game has operated in this environment since its inception. As a
developers, distribution channels and mobile operators. result it has built up processes and team knowhow which
Flexion’s core London based biz dev team is augmented are unique in the market. This is evidenced by the fact that
by local representation in the USA and China. Flexion – despite being comparatively small – is fully trust-
ed to reconcile and manage revenue streams by compa-
nies 10s or 100s of times its size.
Technology
Flexion has built development and product teams whose
cores comprise senior, area-specific specialists. Agile de-
velopment methods and proactivity in relation to internal
knowledge transfer ensures true team cross functionality.
This also allows the company to continually recruit and
absorb leading, fresh talent.
The details
FLEXION MOBILE PLC COMPANY DESCRIPTION 10. Financial overview / PAGE 28

10. Financial overview

This financial summary is derived from the Explanations

Company’s audited annual reports for the IAP Revenue (In App Purchase Revenue) represents rev-
enue receivable by the Company in respect of end-user
financial years of 1 April 2015 to 31 March
transactions of sold in-application items in games man-
2016 and 1 April 2016 to 31 March 2017. aged by the Company.
These statements have been prepared in Subscription Revenue is typically revenue from game ap-
accordance with the accounting principles plications distributed through subscription clubs. Subscrip-
tion Revenue is typically derived from end-user subscrip-
of the Companies Act 2006 and IFRS tion fees but the revenue may also include integration fees
as adopted by the European Union. and recurring service charges.

The financial summary has been supplemented with Legacy Revenue is typically old non-strategic revenue
unaudited numbers for the periods 1 April 2016 to 31 including revenue from purchases or subscription fees of
December 2016 and 1 April 2017 to 31 December 2017. game applications in feature phones.
These have been drawn up for the specific purpose of Revenue is reported net of VAT, billing transaction costs, lo-
being included in this Company Description as the Com- cal taxes, bad debt/refunds and distribution channel fees
pany is yet to publish its annual report for the financial deducted at source. Revenue is typically recognized when
year ended March 2018. These unaudited numbers follow transactions are deemed to be successful and recorded
the accounting rules of IAS 34. as accrued income on the balance sheet. The accrued
The financial summary has also been supplemented income is subsequently reversed when payment is re-
with an audited balance sheet for the 17th of May 2018. ceived and / or an invoice is issued for revenue relating to
The balance sheet was created as part of the company’s those successful transactions.
re-registration as a Plc on June 1 2018. The balance sheet The Company’s Cost of Sales is typically a percentage
is available at the end of this chapter and also from the of revenue paid out to game developers and – in some
company’s website. instances – distribution channels as per contractual terms.
Flexion Mobile has two fully owned dormant subsidiar- Costs are recognised in the same period as the related
ies and one 50 per cent owned dormant entity. As these revenue.
are all dormant, there are no material financial differences Staff and Contractors Cost represent associated costs of
between group reporting and parent company reporting. employees and long-term contractors. Costs are reported
The Company’s Revenue is derived from the revenue net of IFRS qualified development costs which the Com-
streams Distribution Revenue and Legacy Revenue. Distri- pany started to capitalise in the financial year ending
bution Revenue further comprises IAP (In App Purchases) March 2017.
Revenue and Subscription Revenue.
Other Overheads represent mainly premises, consultancy
fees and other administrational costs.
Depreciation/Amortization is applied over the economic
life of fixed assets and over five years of Development
cost respectively.
Other Income represents primarily grants recognised to
match related expenditures.
Tax comprises primarily of R&D Tax Credits received from
the UK government to support innovation.
FLEXION MOBILE PLC COMPANY DESCRIPTION 10. Financial overview / PAGE 29

Consolidated Statement of Profit or Loss and other Comprehensive Income

For the period ended 31 December 2017
Dec 2017 Dec 2016 Mar 2017 Mar 2016
9 months 9 months 12 months 12 months
Unaudited Unaudited Audited Audited
Notes GBP GBP GBP GBP
Revenue 3 1,332,256 904,302 1,372,799 863,532
Cost of sales (788,260) (589,844) (886,002) (400,304)
Gross Profit 543,996 314,458 486,797 463,228

General and administrative expenses 5 (1,467,805) (1,305,154) (1,794,435) (1,580,705)

Share-based payments 8 (2,217) (10,896) (11,366) 0

EBITDA (926,026) (1,001,592) (1,319,004) (1,117,477)

Other income 4 511,497 467,378 642,645 0

Depreciation of tangible assets (15,938) (12,106) (17,418) (3,690)

Amortization of intangible assets (18,936) 0 0 0
Operating Profit/Loss (EBIT) (449,403) (546,320) (693,777) (1,121,167)

Finance income/expenses 0 0 0 0
Tax 62,102 39,530 55,661 183,461
Profit/Loss after Tax (387,301) (506,790) (638,116) (937,706)

Attributable to:
Equity holders of the parent (387,301) (506,790) (638,116) (937,706)
Non-controlling interests 0 0 0 0
Profit/Loss for the period (387,301) (506,790) (638,116) (937,706)

Exchange translation differences (6,416) (5,234) (9,290) 83,906

Total comprehensive Profit/Loss for the year (393,717) (512,024) (647,406) (853,800)

Attributable to:
Owners of the parent (393,717) (512,024) (647,406) (853,800)
Non-controlling interests 0 0 0 0
(393,717) (512,024) (647,406) (853,800)

Loss per share:

Loss per share – basic and diluted, attributable
to ordinary equity holders of the parent (pence) 6 (1.23) (1.60) (2.03) (2.87)
FLEXION MOBILE PLC COMPANY DESCRIPTION 10. Financial overview / PAGE 30

Consolidated Statement of Financial Position

As at 31 December 2017
Dec 2017 Dec 2016 Mar 2017 Mar 2016
Unaudited Unaudited Audited Audited
Notes GBP GBP GBP GBP
Assets
Non-Current Assets
Property, plant and equipment 42,503 63,754 58,441 1,966
Intangible assets 157,926 75,697 100,929 0
Investments 0 0 0 0
Total Non-Current Assets 200,429 139,451 159,370 1,966

Current Assets
Trade and other receivables 549,554 856,612 727,926 752,576
Cash and cash equivalents 2,085,936 2,283,733 2,217,767 2,609,734
Total Current Assets 2,635,490 3,140,345 2,945,693 3,362,310
Total Assets 2,835,919 3,279,796 3,105,063 3,364,276

Equity and Liabilities

Equity
Share capital 7 63,856 1,277 1,277 1,277
Share premium 7 3,422,130 3,489,752 3,484,709 3,489,752
Other reserves 13,583 10,896 11,366 0
Retained earnings (1,684,818) (1,155,719) (1,291,101) (643,695)
Total Equity 1,814,751 2,346,206 2,206,251 2,847,334

Non-Current liabilities
Deferred tax liabilities 42,486 30,069 34,147 0
Total Non-Current Liabilities 42,486 30,069 34,147 0

Current Liabilities
Trade and other payables 978,682 903,521 864,665 516,942
Total Current Liabilities 978,682 903,521 864,665 516,942
Total Liabilities 1,021,168 933,590 898,812 516,942
Total Equity and Liabilities 2,835,919 3,279,796 3,105,063 3,364,276
FLEXION MOBILE PLC COMPANY DESCRIPTION 10. Financial overview / PAGE 31

Consolidated Statement of Cash Flows

For the period ended 31 December 2017
Dec 2017 Dec 2016 Mar 2017 Mar 2016
9 months 9 months 12 months 12 months
Unaudited Unaudited Audited Audited
Notes GBP GBP GBP GBP
Cash Flows from Operating Activities
Loss for the year – continuing operations (449,403) (546,320) (693,777) (1,121,167)
Loss for The Year (449,403) (546,320) (693,777) (1,121,167)

Adjustments for:
Finance income 0 0 0 0
Share-based payments 8 2,217 10,896 11,366 0
Depreciation of tangible assets 15,938 12,106 17,418 3,690
Amortization of intangible assets 18,936 0 0 0
Grant income (511,497) (467,378) (642,645) 0

Working capital:
Change in trade and other receivables 236,147 (109,140) 109,091 586,669
Change in trade and other payables (230,769) 344,696 406,727 (164,414)
Operating Cash Flow (918,431) (755,140) (791,820) (695,222)
Grant payment 868,951 583,934 583,935 0
Net Cash Flow from Operating Activities (49,480) (171,206) (207,885) (695,222)

Cash Flow from Investing Activities

Expenditure on property, plant and equipment (0) (73,864) (73,863) 0
Capitalised development costs (75,934) (75,697) (100,929) 0
Bank interest received 0 0 0 0
Net Cash Flow from Investing Activities (75,934) (149,561) (174,792) 0

Cash Flow from Financing Activities

Net proceeds from issue of equity instruments 0 0 0 1,816,883
Net Cash Flow from Financing Activities 0 0 0 1,816,883

Net Change in Cash and Cash Equivalents (125,414) (320,767) (382,677) 1,121,661
Net foreign exchange difference (6,417) (5,234) (9,290) 83,906
Cash and Cash Equivalents At Beginning of Year 2,217,767 2,609,734 2,609,734 1,404,167
Cash and Cash Equivalents At End of Year 2,085,936 2,283,733 2,217,767 2,609,734
FLEXION MOBILE PLC COMPANY DESCRIPTION 10. Financial overview / PAGE 32

Consolidated Statement of Changes in Equity

For the period ended 31 December 2017
Foreign
Share- currency Non-
based trans­ control­
Share Share payment Retained lation ling
capital premium reserve earnings reserve Total interests Total
Notes GBP GBP GBP GBP GBP GBP GBP GBP
Balance at 1 April 2016 1,277 3,489,752 0 (643,695) 0 2,847,334 0 2,847,334
Loss for the year 0 0 0 (512,024) 0 (512,024) 0 (512,024)
Foreign exchange translation reserve 0 0 0 0 0 0 0 0
Total Comprehensive Income 1,277 3,489,752 0 (1,155,719) 0 2,335,310 0 2,335,310

Share-based payments 8 0 0 10,896 0 0 10,896 0 10,896

Issue of share capital 0 0 0 0 0 0 0 0
Balance At 31 December 2016 1,277 3,489,752 10,896 (1,155,719) 0 2,346,206 0 2,346,206

Balance at 1 April 2017 1,277 3,484,709 11,366 (1,291,101) 0 2,206,251 0 2,206,251

Loss for the year 0 0 0 (393,717) 0 (393,717) 0 (393,717)
Foreign exchange translation reserve 0 0 0 0 0 0 0 0
Total Comprehensive Income 1,277 3,484,709 11,366 (1,684,818) 0 1,812,534 0 1,812,534

Share-based payments 8 0 0 2,217 0 0 2,217 0 2,217

Bonus issue 7 62,579 (62,579) 0 0 0 0 0 0
Issue of share capital 0 0 0 0 0 0 0 0
Balance At 31 December 2017 63,856 3,422,130 13,583 (1,684,818) 0 1,814,751 0 1,814,751

Notes to the condensed consolidated The financial information presented herein does not
constitute full statutory accounts under Section 434 of the
financial statements for the period
Companies Act 2006 and was not subject to a formal
ended 31 December 2017 review by the auditors. The financial information in respect
of the year ended 31 March 2017 has been extracted
1. Basis of preparation from the statutory accounts which have been delivered to
the Registrar of Companies. The Company’s Independent
The condensed consolidated financial statements for the
Auditor’s report on those accounts was unqualified, did
9 months ended 31 December 2017 have been prepared
not include references to any matters to which the auditor
in accordance with International Accounting Standard 34
drew attention by way of emphasis without qualifying
Interim Financial Reporting. The annual financial state-
their report and did not contain a statement under section
ments of the Company are prepared in accordance with
498(2) or 498(3) of the Companies Act 2006. The financial
IFRS as adopted by the European Union.
information for the period ended 31 December 2016 and
The Company’s offices are in London and the regis-
31 December 2017 is unaudited. The financial information
tered number of Flexion Mobile is 04306881.
for the twelve months to 31 March 2016 and 31 March
The interim condensed consolidated financial state-
2017 is audited.
ments are presented in GBP and have been prepared
using historical cost accounting.
After making appropriate enquiries, the directors have 2. Significant accounting policies
a reasonable expectation that the Company has ade- The same accounting policies, presentation and methods
quate resources to continue in operational existence for of computation have been followed in these condensed
the foreseeable future. For these reasons, the board of consolidated financial statements as were applied in the
directors continues to adopt the going concern basis in preparation of the Company’s financial statements for the
preparing the interim reports. year ended 31 March 2017.
FLEXION MOBILE PLC COMPANY DESCRIPTION 10. Financial overview / PAGE 33

CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES 5. General and Administrative Expenses

The following accounting policies have changed in the
current year. New amendments to IFRS effective as of 1 Dec 2017 Dec 2016
9 months 9 months
April 2017 have been reviewed by the Company. These
GBP GBP
amendments principally related to clarifications and
Staff and Contractors Cost 1,135,430 1,037,950
presentation and there has been no material impact on
the financial statements as a result. The new amendments Other Overheads 332,375 267,205

include: General and Administrative Expenses 1,467,805 1,305,154

×× Amendments to IAS 12: Recognition of deferred tax

assets for unrealised losses Not included above: The Company has, since March 2017,
started to capitalize the following Staff and Contractors
×× Amendments to IAS 7: Disclosure Initiative
Development Cost as part of the IFRS framework:

ACCOUNTING ESTIMATES Dec 2017 Dec 2016

The preparation of financial statements requires manage- 9 months 9 months
ment to make judgements, estimates and assumptions GBP GBP

that affect the amounts reported for assets and liabilities Capitalized software development cost 75,934 75,697
as at the balance sheet date and amounts reported for
revenues and expenses during the period. However, the The Company is not capitalizing any Staff and Contractors
nature of estimation means that actual outcomes could Cost that is related to the projects that are part funded by
differ from those estimates. The main judgements and the European Union’s Horizon 2020 Research and Innova-
key sources of estimation uncertainty applied in these tion Programme.
interim consolidated financial statements are detailed in
the Company’s annual financial statements for the year
ending 31 March 2017.
6. Loss per share
Basic loss per share is calculated by dividing the loss
attributable to equity shareholders by the weighted aver-
3. Segmental information age number of ordinary shares in issue during the period:
The Company’s revenue reporting format was deter-
Dec 2017 Dec 2016
mined by the traffic segments according to its sales, which
are: Distribution Revenue (comprising IAP and Subscription Loss after tax attributable to
equity holders of the parent (GBP) (393,717) (512,024)
Revenue) and Legacy Revenue.
Weighted average number
Dec 2017 Dec 2016 of ordinary shares in issue 31,927,750 31,927,7501
9 months 9 months Fully diluted weighted average
GBP GBP number of ordinary shares in issue 31,927,750 31,927,7501
Revenue breakdown Basic and diluted loss
IAP Revenue 880,3871 502,855 per share (GBP) (0.0123) (0.0160)

Subscription Revenue 323,704 140,352 1

The number of ordinary shares and share options at December 2016 have been
adjusted by a factor of 250 to take into account the 5 to 1 Share Split and the 50 to 1
Legacy Revenue 128,165 261,095 Bonus Issue that took place on the 14 December 2017.
Total Revenue 1,332,256 904,302
Basic and diluted earnings per share are the same, since
1
Includes a favourable one-off adjustment of GBP 45,642. where a loss is incurred the effect of outstanding share
options and warrants is considered anti-dilutive and is
ignored for the purpose of the loss per share calculation.
4. Other Income The adjusted share options outstanding as at 31 Decem-
ber 2017 totalled 2,404,500 (2016: 2,565,250) and are
Dec 2017 Dec 2016
potentially dilutive.
9 months 9 months
GBP GBP
Grant income 511,497 467,378

On 6 April 2016 the Company was awarded up to GBP

1,619,738 in grant funding from the European Union’s
Horizon 2020 Research and Innovation Programme. In the
9 month period ending December 2017 the Company
recognised GBP 511,497 as grant income. The amount of
cash the Company received from this grant during the 9
month period ending December 2017 was GBP 868,951.
FLEXION MOBILE PLC COMPANY DESCRIPTION 10. Financial overview / PAGE 34

*7. SHARE CAPITAL

Number of Nominal value Total Share Total Share

shares issued per share Capital Premium
Date Details GBP GBP GBP GBP
At 1 Apr. 2016 Opening Balance 127,711 0.01 1,277 3,489,752
At 31 Dec. 2016 127,711 0.01 1,277 3,489,752
Movements in share premium 1,277 (5,043)

At 31 Mar. 2017 127,711 0.01 1,277 3,484,709

14 Dec. 2017 Bonus issue 6,257,839 0.01 62,579 -62,579
14 Dec. 2017 Share split 31,927,750 0.002
At 31 Dec. 2017 31,927,750 0.002 63,856 3,422,130

7. Share capital 9. Events after the reporting period

Details of ordinary shares of GBP 0.002 each issued are in On 23 February 2018 the Company closed a round of
the table above*. funding issuing 8,205,208 shares at a nominal value of
On 14 December 2017 the Company undertook the GBP 0.002 per share. The issue price for these shares was
following two share transactions: i) a bonus issue where SEK 8.30 per share.
every 1 existing ordinary share of par value GBP 0.01 in On 16 May 2018 the Company carried out a Capital
Flexion Mobile at close of business became 50 ordinary Reduction of GBP 4.0m to comply with Companies House
shares of par value GBP 0.01; and ii) a share split where requirements for re-registration as a Plc company. The
every 1 existing ordinary share of par value GBP 0.01 in result of the Capital Reduction was that GBP 4.0m were
Flexion Mobile at close of business became 5 ordinary moved from the Share Premium Account to the Retained
shares of par value GBP 0.002. The rights attaching to Earnings Account on the Balance Sheet.
the new ordinary shares of GBP 0.002 are identical in all On 1 June 2018 the Company re-registered as a public
respects to those of the old ordinary shares of GBP 0.01. company (changed from being Flexion Mobile Ltd to being
Flexion Mobile Plc). To fulfil the re-registration requirements
of the Companies Act 2006, the Company undertook
8. Share-based payments an statutory audit of its 17th of May, 2018 balance sheet
The Company operates a share ownership compensa- to confirm an audited balance sheet and that the Com-
tion scheme for employees of the Company under which pany’s net assets are not less than the aggregate of its
employees may be granted options to purchase ordinary called-up share capital and undisputable reserves. The
shares in Flexion Mobile. Audit Statement submitted as part of this process is pre-
sented in its entirety overleaf.
Dec 2017 Dec 2016 On 5 June 2018 the Company issued 1,000,000 shares
Share options outstanding (adjusted) 2,404,500 1
2,565,2501 at a nominal value of GBP 0.002 per share. The Issue price
Weighted average exercise price (GBP) 0.44231 0.41511 for these shares was SEK 8.30 per share less a discount
Weighted average expiry date 3 August 2025 1 June 2024 of SEK 2.30 per share on the basis that allotments were
limited in sizes of 1,000, 2,000 and 3,000 shares per
1
The numbers for the share options outstanding as well as the weighted average
exercise price at December 2016 and December 2017 have been adjusted by a factor
shareholder. The sole purpose of the share issue was to
of 250 to take into account the 5 to 1 share split and the 50 to 1 bonus issue that took increase the number of shareholders and the post listing
place on the 14 December 2017.
liquidity.
The charge recognised from equity-settled share-based
payments in respect of employee services received dur-
ing that period was GBP 2,217 (2016 GBP 10,896).
FLEXION MOBILE PLC COMPANY DESCRIPTION 10. Financial overview / PAGE 35
FLEXION MOBILE PLC COMPANY DESCRIPTION 10. Financial overview / PAGE 36
FLEXION MOBILE PLC COMPANY DESCRIPTION 10. Financial overview / PAGE 37
FLEXION MOBILE PLC COMPANY DESCRIPTION 10. Financial overview / PAGE 38
FLEXION MOBILE PLC COMPANY DESCRIPTION 11. Comments on the financial development / PAGE 39

11. Comments
on the financial development

The information in this section should Comparsion of 9 months numbers

be read together with the section between Apr–Dec 16 and Apr–Dec 17
“Financial overview” and financial IAP Revenue increased by 75% (or GBP 377,532), from
GBP 502,855 in Apr–Dec 16 to GBP 880,387 in Apr–Dec
statements and accompanying 17. This is an early result of the Company’s efforts to in-
notes which are incorporated in this crease the number of integrated games and channels on
Company Description by reference. its platform.
Subscription Revenues increased by 131% (or GBP
183,352), from GBP 140,352 in Apr–Dec 16 to GBP 323,704
in Apr–Dec 17. This growth was partly driven by contracts
with limited strategic value to the Company.
Old non-strategic Legacy Revenues fell (as expected) by
51% (or GBP 132,920) from GBP 261,095 in Apr–Dec 16 to
GBP 128,165 in Apr–Dec 17.
Total Revenue increased from GBP 904,302 in Apr–Dec 16
to GBP 1,332,256 in Apr–Dec 17. This represents a 47% (or
GBP 427,954) overall growth in revenues for the company.
Gross Profit increased by 73% (or GBP 229,533) from GBP
314,458 in Apr–Dec 16 to GBP 543,996 in Apr–Dec 17.
Operating Loss improved by 18% (or GBP 96,917) from
GBP 546,320 in Apr–Dec 16 to GBP 449,403 in Apr–Dec
17 as the growth in Gross Profit was larger than increases
in General and Administrative Expenses (primarily Staff
and Contractors Costs) during the same period.
Total Comprehensive Loss for the Year improved with
23% (or GBP 118,307) from GBP 512,024 in Apr–Dec 16 to
GBP 393,717 in Apr–Dec 17 driven by improved Operating
Loss and improved contributions of GBP 44,119 from Other
Income (Grant Income) and GBP 22,573 from Tax (R&D
Tax rebate).
The Negative Operating Cash Flow increased by 21%
(or GBP 163,291) from GBP 755,140 in Apr–Dec 16 to GBP
918,431 in Apr–Dec 17 primarily driven by normalisation
of Working Capital flows compared to the previous year.
Net Change in Cash and Cash Equivalents improved
by 61% (or GBP 195,353) from GBP -320,767 in Apr–Dec
16 to GBP -125,414 in Apr–Dec 17 driven by improved
operational performance and support from Other Income
(Grant Income). Cash and Cash Equivalents therefore
remained relatively stable at GBP 2,085,936 in Dec 17
compared to GBP 2,283,733 in Dec 16.
FLEXION MOBILE PLC COMPANY DESCRIPTION 11. Comments on the financial development / PAGE 40

Comparsion of 12 months numbers Key performance indicators

between Apr–Mar 16 and Apr–Mar 17
SUMMARY OF THE COMPANY’S
IAP Revenue increased by 231% (or GBP 552,621) from
KEY PERFORMANCE INDICATORS
GBP 239,753 in Apr–Mar 16 to GBP 792,374 in Apr–Mar 17.
Subscription Revenue increased by 108% (or GBP Dec 2017 Dec 2016 Mar 2017
126,737) from GBP 117,712 in Apr–Mar 16 to GBP 244,449 9 months 9 months 12 months
in Apr–Mar 17. Old non-strategic Legacy Revenue fell (as IAP Revenue Growth1% 75% 197%2 230%
expected) by 51% (or GBP 170,091) from GBP 506,067 in Subscription
Apr–Mar 16 to GBP 335,976 in Apr–Mar 17. Revenue Growth1% 131% 40%2 108%
Total Revenue increased from GBP 863,532 in Apr–Mar16 Total Revenue Growth1% 47% 22%2 59%
to GBP 1,372,799 in Apr–Mar17. This represents a 59% (or Gross Profit Growth % 1
17% -31% 2
-34%
GBP 509,267) growth in Total Revenue for the company. EBITDA Growth1% -37% 6%2 -26%
Gross Profit increased by 5% (or GBP 23,569) from GBP
463,228 in Apr–Mar 16 to GBP 486,797 in Apr–Mar 17. The Gross Profit Margin % 41% 35% 35%
low increase is due to the loss of high margin contribution
EBITDA Margin % -70% -111% -96%
from Legacy Revenue.
Operating Loss improved by 38% (or GBP 427,390) from
Average Monthly
GBP 1,121,167 in Apr–Mar 16 to GBP 693,777 in Apr–Mar Operational
17 mainly due to the contribution of the Grant Income in Cash Burn3GBP 102,048 83,904 65,985
the period Apr–Mar 17. Runway Left Months
4
20 27 34
Total Comprehensive Loss for the Year improved with
32% (or GBP 206,394) from GBP 853,800 in Apr–Mar 16 to
Head Count5 36 28 28
GBP 647,406 in Apr–Mar 17 driven by improved Operat-
ing Loss and improved contributions of GBP 642,645 from 1
Growth rates are measured to the comparable period in the previous financial year.
2
Indicative only: Comparative numbers for the 9 months ended December 2015
Other Income (Grant Income). have been prepared according to FRSSE (Not adjusted for IFRS).
3
Operational Cash flow divided by number of months in the measured period.
The Negative Operating Cash Flow increased by 14% 4
Cash at End of Period to Average Monthly Operational Cash Burn.
(or GBP 96,598) from GBP 695,222 in Apr–Mar 16 to GBP 5
Head Count is defined by the Company as all Staff plus long-term Contractors.

791,820 in Apr–Mar 17 primarily driven by normalisation

of Working Capital flows compared to the previous year.
Net Change in Cash and Cash Equivalents decreased by
34% (or GBP 1,504,388) from GBP 1,121,661 in Apr–Mar 16
to GBP 382,677 in Apr–Mar 17 driven by the fundraise of
GBP 1,816,883 in Apr–Mar 16.
FLEXION MOBILE PLC COMPANY DESCRIPTION 12. Equity, liabilities and other financial information / PAGE 41

12. Equity, liabilities
and other financial information

The table below accounts for the TRENDS AND PROSPECTS

Company’s interest-bearing net In addition to what has been stated in this Company
Description, the Company does not know of any other
indebtedness as at 5 June 2018. trends, uncertainties, potential claims or other claims or
The tables below accounts for the Company’s interest events, that can be expected to materially affect the
bearing net indebtedness as of 5th June 2018. The tables Company’s business prospects.
include full settlement of the 2018 share issues. The table In addition to what has been stated in this Company
should be read together with the sections “Financial Description, the Company does not know of any public,
overview” and “Comments on the financial development” economic, fiscal, monetary or other factors that, directly or
along with the Company’s financial statements and ac- indirectly, can materially affect or could potentially affect
companying notes which are incorporated in this Com- the Company’s business.
pany Description by reference. See section “Share capital
and ownership structure” for further information about the Working capital statement
Company’s share capital and shares.
The board of directors of Flexion Mobile consider that
CONSOLIDATED NET INDEBTEDNESS the working capital is sufficient for the current needs for
at least the next 12 months counting from the date of this
As at 5 June 2018 Company Description.
Unaudited
GBP

A Cash 7,419,856
B Cash equivalents 0
C Trading securities 0
D Liquidity A+B+C 7,419,856
E Current financial receivables 0

F Current bank debt 0

G Current portion of non-current debt 0
H Other current financial debt 0
I Current debt F+G+H 0

J Net current liquidity I-E-D 7,419,856

K Non-current bank loans 0

L Bonds issued 0
M Other non-current debt 0
N Non-current financial indebtedness K+L+M 0

O Net liquidity J+N 7,419,856

FLEXION MOBILE PLC COMPANY DESCRIPTION 13. Share capital and ownership structure / PAGE 42

13. Share capital
and ownership structure

Share capital sue of new shares in Flexion Mobile unless the sharehold-
ers’ meeting, or the board of directors by authorization by
The shares in Flexion Mobile have been issued in accord-
the shareholders’ meeting, resolves to deviate from the
ance with English law and are denominated in GBP and
shareholders’ preferential rights. There are no restrictions
are fully paid. At the date of this Company Description,
on the transferability of the shares. Flexion Mobile’s shares
the share capital amounts to GBP 82,265.92 divided into
are not subject to offers as a result of right of redemption.
41,132,958 shares, each with a nominal value of GBP
0.002. At the general meeting, each share carries one vote.
The shares are currently not subject to public trading, but Share capital development
Flexion Mobile has applied for its shares to be admitted
Flexion Mobile was formed on 18 October 2001 with a
for trading on First North. Each share has equal rights to
trade that was discontinued in 2006, Flexion Mobile was
Flexion Mobile’s assets and profits. At the general meeting
thereafter dormant. From 1 June 2007 Flexion Mobile was
of shareholders, each shareholder is entitled to vote the
reactivated as it commenced with its current trade. The
full number of shares that the shareholder holds in Flexion
table below shows the changes in the share capital from
Mobile, without limitations in the voting rights. All shares
the 18th of October 2001 and onwards.
have equal preferential rights to subscribe for shares on is-

Total
Aggregated Nominal Nominal Aggregated Nominal
Number Number Value Capital Per Nominal Quota
of Issued of Issued Per Share Transaction Capital Value
Date Transaction Shares Shares (GBP) (GBP) (GBP) (GBP)

Ordinary Shares – GBP 1.00 Nominal Value Per Share

18 October 2001 New Share Class 2 2 1.000 2.00 2.00 1.000
29 November 2011 Issue of new shares 998 1,000 1.000 998.00 1,000.00 1.000
29 November 2011 Conversion to GBP 0.01 Ordinary -1,000 0 1.000 -1,000.00 0.00 1.000

Ordinary Shares – GBP 0.01 Nominal Value Per Share

29 November 2011 Share split 1:100 100,000 100,000 0.010 1,000.00 1,000.00 0.010
30 April 20141 Issue of additional shares 15,000 115,000 0.010 150.00 1,150.00 0.010
09 November 2015 2
Issue of additional shares 7,684 122,684 0.010 76.84 1,226.84 0.010
30 November 20152 Issue of additional shares 961 123,645 0.010 9.61 1,236.45 0.010
18 January 2016 2
Issue of additional shares 2,653 126,298 0.010 26.53 1,262.98 0.010
23 February 20162 Issue of additional shares 320 126,618 0.010 3.20 1,266.18 0.010
31 March 2016 2
Issue of additional shares 1,093 127,711 0.010 10.93 1,277.11 0.010
14 December 2017 Bonus issue 1:50 6,257,839 6,385,550 0.010 62,578.39 63,855.50 0.010
14 December 2017 Conversion to GBP 0.002 Ordinary -6,385,550 0 0.010 -63,855.50 0.00 0.010

Ordinary Shares – GBP 0.002 Nominal Value Per Share

14 December 2017 Share split 1:5 31,927,750 31,927,750 0.002 63,855.50 63,855.50 0.002
23 February 20183 Issue of additional shares 8,205,208 40,132,958 0.002 16,410.42 80,265.92 0.002
05 June 2018 4
Issue of additional shares 1,000,000 41,132,958 0.002 2,000.00 82,265.92 0.002

1
Issued at GBP 100 per share (equivalent to GBP 0.40 per share post an assumed share split/bonus issue of 1:250).
2
Issued at an average price of GBP 157.35 per share (equivalent to GBP 0.63 per share post an assumed share split/bonus issue of 1:250).
3
Issued at a price of SEK 8.3 per share (ca GBP 0.733 per share).
4
Issued at a share price of SEK 8.3 per share less a discount of SEK 2.3 per share on the basis that share allocations were limited in size
to 1,000, 2,000 and 3,000 shares per shareholder. The sole purpose was to increase the number of shareholders and liquidity.
FLEXION MOBILE PLC COMPANY DESCRIPTION 13. Share capital and ownership structure / PAGE 43

Dividend policy Lock-up agreement

Flexion Mobile’s articles of association allow Flexion Directors and executive management have agreed not
Mobile by ordinary resolution to declare dividends and to sell any shares in Flexion Mobile until a period of twelve
that the directors may decide to pay interim dividends. A months has elapsed after the date of the Listing of the
dividend may not be declared unless the directors have shares.
made a recommendation as to its amount, such a divi-
dend must not exceed the amount recommended by the SHARES HELD BY DIRECTORS AND
directors. No dividend may be declared or paid unless it is EXECUTIVE MANAGEMENT
in accordance with members’ respective rights.
However, the Company does not currently intend to % Share­
Name, Position Shares Held holding
pay dividends to its Shareholders for the foreseeable
future. Instead, it intends to drive growth by investing any Carl Palmstierna, Chairman (Director) 3,735,000 9.1%

future earnings into the Company’s business. Jens Lauritzson, Director/CEO

Per Lauritzson, Director/COO 11,585,9721 28.1%
Claes Kalborg, Director 134,250 0.3%
Voting rights Christopher Bergstresser, Director 0 0.0%
On a show of hands every member (shareholder) who Niklas Koresaar , CFO
2
48,000 0.2%
is present in person at a general meeting shall have one
Andreas Mac Mahon, CPO 73,750 0.2%
vote unless a poll is duly demanded. Each ordinary share
Total 15,592,972 37.9%
entitles the holder to one vote.
1
Owned by Mobile Sensations Limited.
2
Participation in a Joint Share Ownership Agreement (“JSOP”) with Mobile Sensations
Ownership structure Limited. Further details under “Other information about the board of directors and the
executive officers”.
The table below shows Flexion Mobile’s major sharehold-
ers at the day for this Company Description.

Number
of Shares Aggregated
Owners and Votes % %
Mobile Sensations Ltd 11,585,972 28.1% 28.1%
Palmstierna Invest AB 3,735,000 9.1% 37.2%
Industrial Equity AB 3,582,750 8.7% 45.9%
Zallaz Société Anonyme 3,323,000 8.1% 54.0%
Other shareholders 18,906,236 46.0% 100.0%
Total Number of Shares 41,132,958 100.0%
FLEXION MOBILE PLC COMPANY DESCRIPTION 14. Board of directors, senior executives and auditor / PAGE 44

14. Board of directors,
senior executives and auditor

Board of directors JENS LAURITZSON (BORN 1970)

As set out in Flexion Mobile’s articles of association, the Director since 2001.
number of directors of the board of directors shall consist Other current assignments: Member of the board of
of not less than two and shall not be subject to any maxi- directors of FLAC Limited and Gamesmondo Limited.
mum number. Director, Mobile Sensations. Managing
The board of directors consists of five members, director of Flexion.
including the chairman, and is based in London, England. Previous experience: Sales
The directors are elected annually at the annual general Manager UK at Aspiro and
meeting for the period until the end of the next annual Managing Director at Pop-
general meeting. The current directors have their assign- wire Limited.
ments until the end of the next annual general meeting.
Education: Bachelor degree
The board of directors’ work is governed by the English
in Economics and Finance,
law, the articles of association and the board of directors’
University of Lund.
rules of procedure.
Shareholding in Flexion Mobile:
CARL PALMSTIERNA (BORN 1953) 50% shareholding in 11,585,972
shares through the company Mobile
Chairman of the board of directors since 2011.
Sensations Limited.
Other current assignments: Chairman of the board of
Warrants in Flexion Mobile: 74,000 EMI share options.
directors and member of the board of directors of We-
Mind AB, SPWM Special Clients Services AB, SPWM Special Independent in relation to Flexion Mobile and
Clients AB, Palmstierna Invest AB, Palmstierna Holding AB, Flexion Mobile’s management: No.
Palmeister & Partners AB, Freemelt Independent in relation to major shareholders: No.
AB and ReformTech Heat-
ing Holding AB. Member of PER LAURITZSON (BORN 1974)
the board of directors of Director since 2007.
Chinsay AB, Magine Holding
Other current assignments: Member of the board of
AB, OrganoWood AB, S.P.
directors of Flexion Limited and Gamesmondo Limited.
BECPEL Stockholm AB,
Director, Mobile Sensations.
Viametrics AB, Viametrics
Group AB, Zimpler AB, Sun- Previous experience: Business Developer at Polopoly AB
pocket AB and B8 Sverige AB. and Project Manager at Swedish Trade Council.

Previous experience: Chairman Education: Bachelor of Science,

of the board of directors and mem- Royal Holloway, University
ber of the board of directors of Panopticon Software AB, of London and Master of
myFC Holding AB (publ), Valbay AB, Valbay International Science, London School of
AB. Member of the board of directors of Ankar Sweden Economics.
AB, Bluefish Pharmaceuticals AB (publ), Byredo AB, Natural Shareholding in Flexion
Fragrance of Sweden AB, Now Interact Nordic AB, Oculu- Mobile: 50% shareholding
sai Incentive AB, Peepoople AB, Reforce International AB, in 11,585,972 shares through
Svenska allt för föräldrar AB, Universum Group AB and the company Mobile Sensa-
Valbay Förvaltning AB. tions Limited.
Education: Master of Science in Business and Economics, Warrants in Flexion Mobile: 61,750
Stockholm School of Economics. EMI share options.
Shareholding in Flexion Mobile: 3,750,000 shares through Independent in relation to Flexion Mobile and
Palmstierna Invest AB. Flexion Mobile’s management: No.
Warrants in Flexion Mobile: N/A. Independent in relation to major shareholders: No.
Independent in relation to Flexion Mobile and
Flexion Mobile’s management: Independent in relation
to the management.
Independent in relation to major shareholders: No.
FLEXION MOBILE PLC COMPANY DESCRIPTION 14. Board of directors, senior executives and auditor / PAGE 45

CLAES KALBORG (BORN 1962) Senior executives

Director since 2014.
Other current assignments: Chairman of the board of JENS LAURITZSON (BORN 1970)
directors and member of the board of directors of Barn CEO since 2007.
Storm Media AB and CK TV & Formats AB. Member of For more information see above under Board of directors.
the board of directors of Non-Violence Licensing AB and
Shoalgames LTD. PER LAURITZSON (BORN 1974)
Previous experience: CMO at COO since 2007.
Acute Art, SVP at Rovio Enter- For more information see above under Board of directors.
tainment Ltd and Head of
Global Licensing at King. NIKLAS KORESAAR (BORN 1972)
Education: Various studies CFO since 2014.
at Stockholm University and
Other current assignments: -
IHM Business School.
Previous experience: Vice
Shareholding in Flexion
President – Asset Backed
Mobile: 134,250 shares through
Investments at Tufton Oce-
Barn Storm Media AB.
anic Limited (London/Du-
Warrants in Flexion Mobile: 0. bai), Vice President at DvB
Independent in relation to Flexion Mobile and Bank (London) and Account
Flexion Mobile’s management: Yes. Manager at DnB (London).
Independent in relation to major shareholders: Yes. Education: Bachelor of Science in
Business and Administration, Uppsala
CHRISTOPHER BERGSTRESSER (BORN 1968) University and Master of Science in Shipping, Trade and
Director since 2018. Finance, CASS Business School, London.
Other current assignments: Partner of Shareholding in Flexion Mobile: 48,000 shares and partici-
MTGx and president of the board pation in a JSOP with Mobile Sensations Limited1.
of directors of Ludicious – Zu- Warrants in Flexion Mobile: 437,500 EMI share options.
rich Games Festival.
Previous experience: ANDREAS MAC MAHON (BORN 1978)
President & COO of Sega CPO since 2010 (including building
of Europe. Member of the up the monetization function).
board of directors and EVP Other current assignments: -
of Miniclip SA, co-founder
Previous experience:
& member of the board of
Account/Project manager
directors of Appscotch and
at Popwire AB, independent
member of the advisory board of
consultant AMM Consulting.
Spil Games, Nitro Games and Iconic Future.
Education: Master of Sci-
Education: Bachelor degree in Economics,
ence in Politics and Econom-
San Francisco State University.
ics, Linkoping University, Sweden.
Shareholding in Flexion Mobile: 0.
Shareholding in Flexion Mobile:
Warrants in Flexion Mobile: 0. 73,750 shares.
Independent in relation to Flexion Mobile and Warrants in Flexion Mobile: 361,750 EMI share options.
Flexion Mobile’s management: Yes.
Independent in relation to major shareholders: Yes.
Auditor
Since the March 2015, Jeffreys Henry LLP is Flexion Mobile’s
auditor with Sachin Ramaiya acting as Senior Statutory
Auditor (Statutory Auditor registration number 2379521).
Jeffreys Henry is a London based mid-tier firm with over
20 clients listed on AIM. The firm was awarded mid-size
firm of the year by British Accountancy Awards in 2016.

1. Participation in a Joint Share Ownership Agreement (“JSOP”) with Mobile Sensations Limited.
Further details under “Other information about the board of directors and the executive officers”.
FLEXION MOBILE PLC COMPANY DESCRIPTION 14. Board of directors, senior executives and auditor / PAGE 46

Other information about the board of Remuneration to the CEO

directors and the executive officers Jens Lauritzson receives a salary of GBP 80,000 per
Jens and Per Lauritzson are brothers. None of the oth- annum. In addition, Jens Lauritzson may from time to time
er directors or Flexion Mobile’s senior executives have be eligible for a discretionary management team bonus if
any family ties with any of the other directors or senior such is decided by the board of directors. Flexion Mobile
executives. will make a contribution of 5% of the gross annual salary
The member of the board of directors, Claes Kalborg, towards Jens Lauritzson’s pension. Jens Lauritzson is not
is engaged as a consultant since 1 April 2018. The du- entitled to any severance payment if his employment is
ration of the consultancy agreement is 12 months and terminated.
Claes Kalborg will receive an annual remuneration of GBP
65,000. Claes Karborg will assist and drive brand aware-
Incentive program
ness targeting industry stakeholders such as top tier game
developers, brand and IP owners. The Company has a share option scheme which allows
Niklas Koresaar and Mobile Sensations Limited have its members to be granted options to subscribe for shares.
signed an Joint Share Ownership Agreement (“JSOP”). The program complies with the rules set by HMRC (being
The JSOP entitles Niklas Koresaar to any value above a the UK tax authority) for its Enterprise Management Incen-
pre-agreed share price on the underlying shares. The tive Scheme which then allows share option holders a
underlying shares are 1,250,000 shares in Flexion Mobile. reduced tax rate of 10% when selling the opiton shares if
The JSOP lapses on 15 October 2024 and the effect of the qualifying conditions are met. The options are required
the lapse is that the JSOP is broken up and the shares are to be issued at market value and the options need to be
distributed according to the value owned by each party registered with HMRC. The maximum underlying share
(“Realisation”). Mobile Sensations Limited will hold full voting value at time of issue is GBP 250,000 per option holder.
and dividends right while the JSOP is in place. Flexion Mobile may issue a maximum of 5,000,000
Some of the directors, the CEO and senior executives shares under the scheme. Options may be granted to
have financial interests in Flexion Mobile because of their employees or any other person providing services to the
shareholding in Flexion Mobile as described above. In Company or to a member of the Company. This could
addition to what has been described above, there are lead to maximum increase of GBP 10,000 in the nominal
no conflict of interests or potential conflicts of interests share capital. As of the date of this Company Description
between the directors’ or the senior executives’ obligations a total of 3,645,750 options are outstanding. If exercised,
in relation to Flexion Mobile and such directors’ or senior these outstanding options would result in an increase
executives’ private interests and/or other obligations. None in nominal share capital of GBP 7,291.50. Flexion Mobile
of the directors are entitled to any benefits in conjunction would at the same time receive a cash contribution of
with the termination of an assignment as a director. GBP 1,972,521 in share subscription monies, being the ag-
None of the directors or the executive officers have gregate amount receivable by Flexion Mobile from option
over the last five years (i) been convicted of a fraud-re- holders in payment of the exercise prices for the option
lated case, (ii) represented a company that has been shares.
declared bankrupt or has applied for compulsory The options may be exercised and converted into
liquidation, (iii) been subject of sanctions or accused by shares when Flexion Mobile’s shares are admitted to trad-
authorities or bodies acting for particular professional ing on First North. However, the Company has introduced
groups under public law, or (iv) been subject to injunctions a lock up for all existing option participants where 50% of
against carrying on business. All members of the board of the options can be exercised 6 months after listing date
directors and the members of the executive management and the remaining 50% 12 month after listing date. Execu-
are available at Flexion Mobile’s main office at Unit G5, tive management has agreed to a 12 month lock up on all
Harbour Yard, Chelsea Harbour, Harbour, London, SW10 existing options after listing date. The issue of new options
0XD, UK. includes a 24 month lock up for 50% of shares and a 36
months lock up for the remaining 50%. The options will
be cancelled if the relevant option holder’s employment
Remuneration to the directors with the Company is terminated subject to discretionary
of the board of directors extension by Flexion Mobile’s board of directors.

Remuneration to the directors of the board of directors is

determined by the board of directors. The remuneration to
the board of directors during financial year 1st April 2018
to 31st March 2019 is set at GBP 15,000 to the chairman
and GBP 10,000 to non-executive directors. The remu-
neration may be waived if a non-exectutive director has
other assignments with the Flexion Mobile. Executive direc-
tors will not receive any board remuneration.
FLEXION MOBILE PLC COMPANY DESCRIPTION 15. Corporate governance / PAGE 47

15. Corporate governance

Corporate governance rules and codes member who is present in person or by proxy shall have
one vote for each share on a poll.
Following the Listing on First North, Flexion Mobile will nei-
No business shall be transacted at any general meeting
ther be required to comply with the corporate governance
unless a quorum is present. If a quorum is not present a
rules of the Swedish Companies Act (Swe. Aktiebolagsla-
chairman of the meeting can still be chosen. Two mem-
gen 2005:551) nor the Swedish Corporate Governance
bers present in person or by proxy and entitled to attend
Code (Swe. Svensk kod för bolagsstyrning). This is due to
and to vote on the business to be transacted shall be a
the fact that First North is not considered to be a regulated
quorum.
market. The UK Corporate Governance Code is also not
In accordance with article 58 of Flexion Mobile’s articles
applicable to Flexion Mobile as it applies to companies
of association a general meeting might be held in two or
with a premium listing on the London Stock Exchange’s
more locations to facilitate the organisation and adminis-
Main Market.
tration of any general meeting.
First North is an alternative market, operated by the
different exchanges within Nasdaq. It does not have the
legal status as an EU-regulated market. Companies at Board of directors
First North are subject to the rules of First North and not the
Flexion currently has five directors including the chairman
legal requirements for admission to trading on a regulated
who are appointed for the period until the end of the next
market.
annual shareholders’ meeting.
With the exception of a remuneration committee, the
The companies act 2006 board of directors has not established an audit committee
or any other committees. Instead the board of directors
The corporate law applicable to Flexion Mobile is the
fulfills the tasks of such committees in its entirety.
Companies Act 2006 (the “Companies Act”), applicable
Subject to the Companies Acts, the articles of associ-
UK company law, in addition to Flexion Mobile’s articles of
ation and to any directions given by special resolution
association.
of Flexion Mobile, the business of Flexion Mobile will be
managed by the board of directors, which may exercise
General meetings all the powers of Flexion Mobile, whether relating to the
Subject to the provisions of the Companies Act, annual management of the business or not.
general meetings shall be held at such time and place as Directors of UK companies have a fiduciary duty owed
the directors may determine. Flexion Mobile must hold an to Flexion Mobile. In summary, directors owe a duty to:
annual general meeting within six months of its financial ×× Act within the powers conferred by Flexion Mobile’s
year end. Member resolutions are passed by the appro- constitution,
priate majority at a properly convened meeting. All gener- ×× Promote the success of Flexion Mobile,
al meetings, other than annual general meetings, shall be
×× Exercise independent judgment, reasonable care, skill
called general meetings.
and diligence, avoid conflicts of interest, not accept
The directors may call general meetings. A general
benefits from third parties and declare interests in (pro-
meeting shall be called by at least such minimum notice
posed) transactions or arrangements.
as is required or permitted by the Companies Act. The
These duties are codified in the Companies Act and are
notice shall be given to all members that are entitled to
(save for the duty to exercise reasonable care, skill and
receive such notices from Flexion Mobile. Flexion Mobile
diligence) enforceable as a fiduciary duty. The remedies
may give such notice by any means or combination of
for breach of a fiduciary duty include injunctive relief, set-
means permitted by the Companies Act.
ting aside the transaction restitution and account of profits
The accidental omission to give notice of a meeting to,
and damages.
or the non-receipt of notice of a meeting by, any person
The remedy for a breach of the duty to exercise rea-
entitled to receive notice will not invalidate the proceed-
sonable care, skill and diligence is damages for losses
ings at that meeting.
suffered. Directors also owe a duty of confidentiality to
At any general meeting a resolution put to a vote of
Flexion Mobile, and the terms on which they are engaged
the meeting shall be decided on a show of hands, unless
by Flexion Mobile, especially in the case of executive
a poll is duly demanded. At any general meeting every
directors, may impose or give rise to further duties and
obligations.
FLEXION MOBILE PLC COMPANY DESCRIPTION 15. Corporate governance / PAGE 48

Shares tice. A shareholder owning 15 per cent of Flexion Mobile’s

shares has the right to object by application to the Court
The articles of association of Flexion Mobile provide for
to any variation of the class rights of the shares he holds.
shares to be held in uncertificated form with a central
To pass a special resolution, 75 per cent of sharehold-
securities depository (CSD). The uncertificated shares are
ers who attend the meeting in person or by proxy must
registered in book-entry form in the CSD register operated
vote in favour of it. Therefore, a special resolution cannot
by CREST. CREST is affiliated with Euroclear Sweden, the
be passed if a minority shareholder owning 25 per cent
Swedish CSD. Euroclear Sweden maintains the operator
plus one voting shares in Flexion Mobile votes against the
register of members. Uncertificated shares are registered
resolution. Special resolutions are required to be passed
in book-entry form in a securities account in Euroclear
(amongst other things) to implement the following:
Sweden and are mirrored in CREST. Title to uncertificated
shares is ensured exclusively through registration with ×× alteration of articles of association;
Euroclear Sweden. No share certificates are issued with ×× offer to issue shares in Flexion Mobile to existing share-
respect to the uncertificated shares. holders other than on a pro-rata basis by disapplying
pre-emption rights;
×× reduction of share capital (also subject to confirmation
Transfer of shares
by the court);
After Flexion Mobile’s shares have been listed on First
×× to give, revoke, renew or vary the authority for Flexion
North they will be transferable. Article 32 in Flexion Mobile’s
Mobile to purchase shares in itself;
articles of association stipulates that a transfer of shares
shall be made in accordance with and subject to applica- ×× change of name;
ble rules of the relevant CSD (i.e. Euroclear rules for issuers ×× re-registration of private company to public company;
and agents) and, when such shares are listed on a stock ×× to redeem or purchase own shares out of capital; and
exchange or market place, their rules and regulations.
×× voluntary liquidation.

Changes in share capital

Election and removal of directors
There is currently one class of shares in Flexion Mobile. The
Subject to Flexion Mobile’s articles of association, Flexion
rights attached to any class (unless otherwise provided by
Mobile may by ordinary resolution appoint a person who
the terms of issue of the shares of that class) may be var-
is willing to be a director. Subject to the articles of asso-
ied with the written consent of the holders of three-fourths
ciation, the board of directors also have the power at
in nominal value of the issued shares of that class, or with
any time to appoint any person who is willing to act as a
sanctions of a special resolution passed at a separate
director.
meeting of the holders of the shares of that class.
At each annual general meeting of Flexion Mobile every
The rights attached to any share or class of shares shall
director shall retire from office. A retiring director may offer
not, unless otherwise expressly provided by its terms of
himself for re-appointment by the members and a direc-
issue, be deemed to be varied by the creation of issue
tor that is so re-appointed will be treated as continuing in
of further shares ranking pari passu in all respects with or
office without a break.
subsequent to those already issued with it or the pur-
According to the articles of association, the board of
chase or redemption by Flexion Mobile of its own shares
directors may, but shall not be obliged to, establish before
in accordance with the provisions of Companies Act and
each annual general meeting an election committee con-
the articles of association.
sisting of the three largest shareholders in Flexion Mobile
as at the close of trading on the date falling three months
Minority rights before the annual general meeting concerned who may
A shareholder owning just one share has some basic express in writing their preferences for the re-election
powers including inspecting Flexion Mobile’s statutory or otherwise of directors at the relevant annual general
books, attend and be heard at shareholders’ meetings’ meeting.
and to receive a copy of the annual accounts. A share- In addition to any power of removal conferred by the
holding of 5 per cent of Flexion Mobile’s shares gives a Companies Acts, Flexion Mobile may by special resolution,
shareholder the right to require a resolution to be pro- or by ordinary resolution of which special notice has been
posed at shareholders’ meetings and require a general given in accordance with section 312 of the Companies
meeting to be held. A shareholding of more than 5 per Act, remove a director before the expiry of his period of
cent of Flexion Mobile’s shares has the ability to block the office and may by ordinary resolution appoint another
holding of a general meeting of shareholders’ on short no- person who is willing to act to be a director in his place.
FLEXION MOBILE PLC COMPANY DESCRIPTION 15. Corporate governance / PAGE 49

Dividend between the shareholders or different classes shares. The

liquidator may, with the authority of a special resolution
Under article 119 of its articles of association, Flexion
and any other authority required by the law, transfer all
Mobile may by ordinary resolution declare dividends in
or any part of the assets to trustees on such trusts for the
accordance with the respective rights of the shareholders,
benefit of shareholders as the liquidator decides. Where
but no dividend shall exceed the amount recommended
the liquidator divides or transfers any assets in pursu-
by the board of directors. Subject to the articles of asso-
ance of the powers in this article, no shareholder shall be
ciation, the board of directors may declare and pay such
required to accept any asset in respect of which there is a
interim dividends as appears to the board of directors to
liability.
be justified by the profits of Flexion Mobile available for
distribution.
Annual reports
Rights of redemption The Companies Act requires that the accounts of a public
company be sent to members at least 21 days before its
Shares may be issued which are to be redeemed or
annual general meeting. If copies are sent out later than is
which are liable to be redeemed only at the option of
required they shall, despite that, be deemed to have been
Flexion Mobile on such terms and in such way as may be
duly sent if it is so agreed by all the members entitled to
provided for by the articles of association.
attend and vote at the relevant accounts meeting. It is
possible to provide accounts by electronic means provid-
Rights attached to newly issued share ed certain conditions are respected.
Flexion Mobile’s articles of association stipulate that,
subject to the Companies Act and to any rights attached Pre-emption rights
to existing shares, shares in Flexion Mobile may be issued
Private companies can exclude statutory pre-emption
with such rights or such restrictions, as the Company may
entirely and indefinitely but for public companies, only a
from time to time determine by ordinary resolution of the
more limited disapplication is permitted. Flexion Mobile
shareholders, or, in the absence of such determination, as
can by special resolution authorise directors pursuant to
the board of directors may determine.
section 570 of the Companies Act to allot equity secu-
rities, as if section 561(1) of the Companies Act (right of
Remuneration to the board of directors pre-emption) did not apply to any such allotment pro-
Each of the directors may be paid a fee at such rate as vided such power is limited to the allotment in value and
may from time to time be determined by the board of time. There are also certain statutory exemptions in the
directors. However, the aggregate of all fees payable to Companies Act.
the directors must not exceed GBP 50,000 a year or such
higher amount as may from time to time be decided by CEO and other executive management
ordinary resolution of Flexion Mobile. Any fees accrues
Jens Lauritzson is the CEO and responsible for the ongoing
from day to day. Each director may also be paid his rea-
management of Flexion Mobile’s affairs according to the
sonable expenses properly incurred by him in or about
board of directors’ guidelines and instructions. The board
the performance of his duties as director.
of directors has established a set of instructions for the
If by arrangement with the board of directors any
CEO that clarifies the CEO’s responsibilities and powers.
director shall perform or render any special duties or
The board of directors shall continuously evaluate the
services outside his ordinary duties as a director he may
CEO’s work. According to the instructions, the CEO shall
be paid such reasonable additional remuneration as the
provide the board of directors with the information and
board of directors may determine.
documentation which the directors require in order to
enable the board of directors to continue to perform its
Distribution of assets and liquidation duties and responsibilities, including supervising the man-
If Flexion Mobile is wound up, the liquidator may, with the agement of Flexion Mobile’s affairs and following its activ-
authority of a special resolution and any other authority ities, in each case on a regular and going basis. The board
required by law, divide among the members in specie of directors shall delegate the running of Flexion Mobile
the whole or any part of the assets of Flexion Mobile. This to the CEO, to the maximum extent permitted under the
applies whether the assets shall consist of property of articles of association and the Companies Act, save that
one kind or different kinds. For this purpose, the liquidator the board of directors shall retain direct responsibility for
may set such value as the liquidator considers fair on Flexion Mobile’s business plan, budget and CEO instruction,
any asset or assets and may determine how to divide it and such other matters as the board of directors may
decide from time to time.
FLEXION MOBILE PLC COMPANY DESCRIPTION 16. Legal considerations and supplementary information / PAGE 50

16. Legal considerations
and supplementary information

General corporate information GRANT AGREEMENT

Flexion Mobile was incorporated and registered in England In April 2016 the Company was awarded a grant from
and Wales on 18 October 2001 with registered number Executive Agency for Small and Medium-sized Enterprises
4306881 under the Companies Act as a private company (“EASME”) amounting to a maximum of EUR 1,897,787.50.
limited by shares. On 1 June 2018 Flexion Mobile changed The grant was received to fund a project aiming to build
its legal status to a public limited company and thus an open and fair market for Android games. The project is
became Flexion Mobile Plc. The principal legislation under to run for a duration of 28 months.
which Flexion Mobile operates and the shares have been
created is the UK Companies Act. The registered office and AGREEMENT WITH KEY CHANNEL PARTNERS
the principal place of business in the United Kingdom of The Company has entered into an agreement with Am-
Flexion Mobile is in London. azon Media Group LLC, which governs the Company’s
access to the use of Advertise Your App, a program that
allows the Company to advertise applications through
Group structure Amazon. The agreement can be terminated at any time
The Company consists of Flexion Mobile as a parent, a by either of the parties.
Hungarian branch, the wholly-owned dormant subsidiar- The Company has entered into an app distribution and
ies Flexion Limited (formed in 2012) and Gamesmondo Ltd services agreement with Amazon Digital Services LLC, Am-
(formed in 2013), and the dormant Flac Ltd (incorporated azon Media EU S.a.r.l., Amazon Services International, Inc.,
in 2011) of which Flexion Mobile currently owns 50 per Amazon Servicos de Varejo do Brasil Ltda., Amazon.com
cent. However, Flexion Mobile intends to acquire the re- Int’l Sales Inc., and Amazon Australia Services, Inc. Following
maining 50 per cent so that Flac Ltd can be closed down. the agreement Amazon provides, amongst others, a pro-
gram that allows end users to purchase, download and
access mobile and non-mobile software applications,
Significant agreements games and other digital products. The agreement can be
terminated at any time by Amazon and the Company
LEASE AGREEMENT
can terminate the agreement at any time by giving Ama-
The Company has entered into a lease agreement with zon a 10 days advance notice.
Chelsea Harbour Limited regarding a premise located The Company has entered into a mobile ad network
in London, Chelsea Harbour. The lease term is 1 June publisher agreement with Amazon Services International,
2016 – 31 December 2019 and expires at the end of the Inc., Amazon Digital Services, Inc. and Amazon Europe Core
lease term without prior written notice. The annual base S.à.r.l. The agreement permits the Company to incorporate
rent amounts to GBP 75,750 per annum for the period 1 advertising made available through Amazon’s mobile
November 2016 – 31 May 2017 and GBP 90,750 per an- ad network on the Company’s mobile properties. The
num for the period 1 June 2017 – 31 December 2019. The agreement can be terminated at any time by either of the
Company has waived its security of tenure. parties.
Further, the Company has entered into a sublease The Company has entered into an agreement with
agreement with New Silk Road Limited regarding sublease Samsung Electronics Co., Ltd. pursuant to the use of Sam-
of a part of the premises located in London, Chelsea Har- sung Galaxy Apps and other services provided by Sam-
bour. The lease term is 16 December 2016 – 28 December sung Electronics. The services allow the Company to make
2019 and expires at the end of the lease term without applications available to customers. The agreement can
prior written notice. The sublease agreement contains a be terminated at any time by either of the parties.
mutual break clause giving both parties a right to ter- The Company has accepted terms and conditions in
minate the sublease agreement on 16 December 2018 connections to its use of ONE store Developer Center and
with six months’ prior written notice. The annual base rent e-commerce service respectively provided by ONE Store
amounts to GBP 35,625 per year. New Silk Road Limited Co., Ltd, LG Uplus Corp. and KT Corp. Services provided un-
has waived its security of tenure and provided deposition der ONE store Developer Center covers, amongst others,
in the amount of GBP 10,687.50 as security for the rightful the use of its SDK and API.
fulfilment of its obligations under the sublease agreement.
FLEXION MOBILE PLC COMPANY DESCRIPTION 16. Legal considerations and supplementary information / PAGE 51

AGREEMENTS WITH KEY DEVELOPERS Disputes and legal procedures

The Company has entered into billing, distribution and The Company is not, nor has it been a party to any legal
software license agreements with the mobile application proceedings or arbitration proceedings, including not yet
producers Scopely, Inc. and Outfit7 Limited respectively. settled cases or cases that the Company is aware of or
Following the agreements, the Company has agreed to that may arise, during the past twelve months that recent-
deliver a billing and digital rights management solution on ly has had or will have significant effect on the Company’s
a non-exclusive basis that each of the parties may utilise financial position or profitability.
in content and applications they produce and provide to
the Company. The agreement with Scopely is an ongo-
ing agreement which is renewed for 30 days and unless Agreements and transactions
terminated by either of the parties. The agreement with with related parties
Outfit7 is an indefinite agreement, which may be terminat- Aside from what has been described elsewhere in this
ed by giving a two months prior written notice to the other company description, there are no agreements or trans-
party. actions with closely-related parties.
The Company has entered into billing, distribution and
software license agreements with the mobile application
producers Wargaming Group Limited and Disruptor Beam Intellectual property rights
respectively. Following the agreements, the Company has The Company has registered the figurative trademark
agreed to deliver a billing and digital rights management for the logo of Gamesmondo through an EU trade mark
solution on a non-exclusive basis that each of the parties (012435541). Further, the Company has registered the
may utilise in content and applications they produce domain names flexionmobile.com, flxn.se, gamesmondo.
and provide to the Company. Further, the Company has com, gamesmondo.eu. The Company has to the date no
agreed to distribute Wargaming Group’s and Disruptor approved patents and has submitted a PCT application
Beam’s mobile applications through distribution channels (PCT/IB2015/051403) regarding a system and method to
which the Company has commercial relationships. The modify run-time behaviour of an application by modifica-
agreement with Wargaming Group is an ongoing agree- tion of machine-readable instructions.
ment which may be terminated at any time by either of
the parties upon one month’s prior written notice. The
agreement with Disruptor Beam is valid until November Certified adviser and advisers
2018 and will automatically continue in force until either of The Company has entered into an agreement with FNCA
the parties terminates the agreement upon two months Sweden AB, who will be the Company’s certified advis-
prior written notice. er. FNCA Sweden AB does not own, and does not intend
The Company has entered into an agreement with to own any shares in Flexion Mobile. In connection with
YouZu HongKong Co., Ltd., regarding the distribution of mo- the Listing that is described in this Company Description,
bile games developed by YouZu HongKong or its related Törngren Magnell has acted as a legal adviser to Flex-
parties. The agreement may be terminated by either of ion Mobile’s board of directors. Törngren Magnell and
the parties with one month’s prior written notice provided FNCA Sweden AB receive ongoing compensation for the
that the agreement becomes considered as improper to services rendered in conjunction with the Listing. Törngren
continue based on the situation of the operation of the Magnell does not own, and does not intend to own any
game product and gross revenues. shares in Flexion Mobile.

IT-AGREEMENT
The Company has accepted terms and conditions set Liquidity Provider
out by Amazon in connection to The Company’s use of The Company has entered into an agreement with Pareto
Amazon Web Services, which provides the Company with Securities under which Pareto Securities acts as a Liquid-
cloud computing. ity Provider in Flexion Mobile Plc:s share. According to
An agreement has been entered between the Com- the agreement, the Liquidity Provider must quote prices
pany and Hosting Services Inc., following which Hosting corresponding to a defined minimum value, on both buy
Services provides web and server hosting to the Compa- and sell sides so that the prices do not deviate more than
ny. The agreement continues until terminated by either of 4 per cent from each other. The prices must be quoted at
the parties. least 85 per cent of the time during continuous trading.

Employees Insurances
The Company employs 35 fulltime staff and engages the The Company has one for the industry customary insur-
services of 4 long term contractors. ance coverage and Flexion Mobile’s board of directors
considers that the Company’s current insurance coverage
is satisfactory in terms of the nature and the extent of the
business.
FLEXION MOBILE PLC COMPANY DESCRIPTION 17. Constitutional documents and legal comparison / PAGE 52

17. Constitutional documents
and legal comparison

The following is a brief summary of the Shares

rights of shareholders of Flexion Mobile England
based upon the corporate law applicable At the date of this document, Flexion Mobile’s issued share
to Flexion Mobile, the Companies Act. It capital only consists of ordinary shares, all of which rank
equally with full voting, dividend and capital distribu-
also sets out certain differences between
tion rights. Subject to passing appropriate shareholder
the English and Swedish corporate law. resolutions, Flexion Mobile would be able to issue other
The summary is of a general nature only. classes of shares (including without limitation preferred or
deferred shares).
It does not claim to give an exhaustive
account of the aforementioned corporate Sweden
documents, nor of all potentially relevant Under the Swedish Companies Act, a company may issue
different classes of shares provided that such classes of
differences between English and Swedish
shares are specified in a company’s articles of associ-
law or corporate governance requirements. ation and that the maximum numbers of shares in the
articles of association are not exceeded.

Objective
Rights, benefits and limitations
England attached to the shares
Flexion Mobile was incorporated with a Memorandum of
Association allowing it to trade as a general commercial VOTING RIGHTS
company with wide powers.
England
Sweden A shareholder may vote for the full number of shares hold,
Under the Swedish Companies Act, the objectives of a unless otherwise prescribed in the articles of association.
company must be set out in the articles of association. Different classes of shares may have different voting rights,
These objectives set out the limits which the company can if so prescribed in the articles of association.
operate within.
Sweden
A shareholder may vote for the full number of shares
hold, unless other prescribed in the articles of association.
According the Swedish Companies Act, different classes of
shares may have different voting rights. However, no share
may however have a voting right which exceeds the vot-
ing rights of any other share by more than ten times.
FLEXION MOBILE PLC COMPANY DESCRIPTION 17. Constitutional documents and legal comparison / PAGE 53

SHAREHOLDER MEETINGS Sweden

Under the Swedish Companies Ac, the shareholders shall
England
be given notice to attend a general meeting in the manner
A public company must hold an annual general meeting prescribed in the articles of association. The notice shall
within the period of six months following its accounting e.g. contain a draft agenda for the meeting where the
reference date (financial year end). The main business of matters to be considered shall be stated. Notice can be
an annual general meeting is the laying of and approval given by, for example by email. However, notice must also
of the yearly accounts and appointments of auditors and be sent by post to the shareholders in some cases, for
directors, and the declaration and approval of final divi- example if an annual general meeting is to be at a time
dends. Often companies give renewed authorities to allot other than as prescribed in the articles of association or if
new shares in the forthcoming year or to purchase shares the general meeting shall address a matter regarding the
in the company on the market. The meeting can be held alteration of the articles of association.
where and at what time the directors decide. However, public limited companies are legally bound to
announce all types of general meetings in the national ga-
Sweden
zette, (Swe. Post-och inrikes tidningar). The company must
The shareholders’ meeting is the highest decision-mak- also either publish the full notice in a daily newspaper with
ing body of a Swedish limited company. Each year the nationwide circulation or a short form message contain-
company must hold an annual general meeting within ing information regarding the notice and where it can be
six months from the end of the financial year. The meet- found. The articles of association may also prescribe that
ing must be held within the city, town or village where the the notice must be published on the company’s website.
registered office of the company is situated. The articles of
association may, however prescribe that the meeting shall RECORD DATE
or may be held at another designated locality in Sweden.
Extraordinary general meeting may, according to the England
Swedish Companies Act, be convened at any time by Flexion Mobile or the board of directors may by resolution
the board of directors. In addition, in accordance with the specify any date (record date) as the date at the close of
Swedish Companies Act, the company’s auditor or share- business (or such other time as the board of directors may
holders holding 10 per cent or more of all the shares in the determine) on which persons registered as the holders
company may request the board of directors to convene of shares or other securities shall be entitled to receipt of
an extraordinary meeting. any dividend, distribution, interest, allotment, issue, notice,
information, document or circular. Such record date may
NOTICES be before, on or after the date on which the dividend,
distribution, interest, allotment, issue, notice, information,
England document or circular is declared, made, paid, given, or
A notice of meeting must be sent to all shareholders who served.
are entitled to receive notice which shall include the time,
date and place of the meeting, the general nature of the Sweden
business to be dealt with at the meeting and the full text of Under the Swedish Companies Act, in order for a share-
any special resolution (one that is required to be passed holder in a central securities depositary company, to
by a 75% vote). It is normal practice to set out the full text participate in a general meeting the holder must have his
of any ordinary resolutions (that is ones that require just shares registered in his own name in such a printout or
simple majority support) too. 21 clear days notice is re- other presentation of the share register kept by the central
quired for an annual general meeting and 14 for any other securities depositary on the fifth business day prior to the
general meetings. general meeting. Shareholders must also, if provided for in
the articles of association, give notice of their intention to
attend the general meeting.
FLEXION MOBILE PLC COMPANY DESCRIPTION 17. Constitutional documents and legal comparison / PAGE 54

VOTING AT GENERAL MEETINGS PRE-EMPTIVE RIGHTS

England England
Shareholders may cast their votes at a meeting on a show English public companies are required under the Compa-
of hands or on a poll. The articles and the Companies Act nies Act to offer new shares to their existing shareholders
contain provisions allowing shareholders to vote by proxy. on a proportionate pre-emptive basis. There are ex-
Unless a poll is demanded a resolution will be decided on emptions for certain issues- for non-cash consideration
by a show of hands. On a poll every shareholder being (say on a takeover by way of a share for share offer),
present in person or by proxy shall have one vote for bonus issues and employee share scheme issues. Also,
every share held by him, her or it. the shareholders may waive their pre-emption rights in
Shareholders who hold the requisite number of shares relation to a proposed issue by a special resolution that is
have rights to request that the board of directors puts supported by shareholders carrying at least 75% of the
additional resolutions on the agenda of an annual general votes at a general meeting.
meeting. Public companies operate pre-emptive issues typical-
The chairman of the meeting does not usually have a ly by using one of two routes. Either a rights issue which
second or casting vote. involves giving shareholders nil paid rights that they can
either take up and pay the subscription price on or po-
Sweden tentially sell or through an open offer where shareholders
Under the Swedish Companies Act, shareholders as of respond to the offer by filling in a subscription application
the record date are entitled to vote at a general meeting. letter saying whether they wish to take up their propor-
Shareholders who have their shares registered through a tionate entitlement or whether they would if possibly take
nominee and wish to exercise their voting rights at a gen- up more than their entitlement if others decline.
eral meeting must request to be temporary registered as a
shareholder in the record at the record date. Sweden
A shareholder who is not personally present at the gen- The share issue can either be with or without pre-emption
eral meeting may exercise his or her rights at the meeting right. Normally the issue is a rights issue which means that
through a proxy or proxies. A shareholder or a proxy may the existing shareholders have a pre-emption right to
be accompanied by one or two advisors. However, a the newly issued shares where the existing shareholders
share that is held by the company itself or a subsidiary receive subscription rights in proportion to their respective
may not be represented at a general meeting. holding.
However, the share issue can divert from the existing
ISSUE OF SHARES shareholder’s pre-emption rights if the shares are to be
paid for with non-cash consideration or if the pre-emption
England rights is to be governed in another manner as a conse-
The articles of association provide that the board of quence of provisions in the company’s articles of asso-
directors may with the authority of the shareholders in a ciation or according to terms and conditions in the actual
general meeting offer, allot or grant options over shares share issue or an earlier issue. However, the pre-emption
at such times and on such terms as the board of directors right to subscribe for new shares may be set aside by
may decide. Normally Flexion Mobile will by resolution the terms and conditions of the share issue, only if it is
authorise the board of directors to do so up to a stated approved by two thirds of the votes cast and shares rep-
number of shares for the forthcoming year at an annual resented at the general meeting resolving upon the issue.
general meeting.

Sweden
A rights issue is initiated by the board of directors or
somebody else, for example a shareholder, who writes
a proposal for the new share issue. Thereafter, the resolu-
tion has to be adopted by the shareholders’ meeting, the
board of directors after authorisation in advance of the
shareholders’ meeting, provided that the authorisation is
within the limits of the number of shares and share capital
set out in the company’s articles of association, or by the
board of directors with the approval of the shareholders’
meeting afterwards.
FLEXION MOBILE PLC COMPANY DESCRIPTION 17. Constitutional documents and legal comparison / PAGE 55

DIVIDENDS REDEMPTION PROVISION

England England
Public companies typically declare a final dividend for Flexion Mobile’s ordinary shares at the date of this docu-
each of their financial years at their annual general meet- ment are not redeemable but Flexion Mobile does have
ing. Companies may declare interim dividends throughout the power subject to any necessary shareholder consents
the year as well. being obtained to issue shares that are redeemable by it.
The directors recommend the amount of the final divi-
dend at the annual general meeting and the shareholders Sweden
approve by a majority vote. The shareholders may not As a general rule, the general meeting resolves upon a
declare a final dividend that is more than that recom- redemption of the company’s shares as well as authorise
mended by the directors. the board of directors to adopt such resolution. A quali-
Interim dividends are normally declared by the board fied majority of the votes cast representing shares at the
of directors alone. meeting is required. The general meeting can delegate to
Dividends may only be paid out of profits that are the board of directors to determine certain terms of such
available for distribution. Certain reserves such as the redemption.
share premium account are not distributable.
Public companies declare dividends by reference to AMENDMENTS TO THE ARTICLES OF ASSOCIATION
their year end financial reports and, in the case of interim
England
dividends, specifically prepared interim accounts.
The directors are not required to recommend the distri- A special resolution (ie 75% of the votes cast) of the
bution of all the company’s distributable profits and can shareholders at a general meeting is required to amend
balance the ongoing financial needs of the business with the articles of association of Flexion Mobile.
the desire to distribute.
Sweden
The directors will normally select a record date for
payment of any dividend. Each person who is listed as Alterations of the articles of association shall be resolved
a shareholder in the share register as of the record date upon by the general meeting. An amendment of the
for the dividend will be entitled to receive the dividend articles of association generally requires approval by a
distribution. majority of not less than two-thirds of both the votes cast
and the shares represented at the general meeting. A res-
Sweden olution regarding alterations of the articles of association
A resolution regarding a company’s profit distribution is shall be reported immediately for registration in the Swed-
usually taken at an annual general meeting where the ish Companies Register and may not, other than in certain
annual accounts are adopted. However, a profit distri- exceptional cases, be effected prior to registration.
bution may also be resolved at an extraordinary general
meeting. A resolution to pay dividends may, with some
exceptions, not exceed the amount recommended by the
Directors and the board of directors
board of directors.
NUMBER OF DIRECTORS
However, a dividend may only be made if, after the
dividend is distributed, there is sufficient coverage for the England
company’s restricted equity. To the proposal, a reasoned
The minimum number of directors is 2 and there is no
statement from the board of directors shall be added,
maximum set.
that describes how the proposed profit distribution is in
accordance with the so-called prudence rule (Swe. försik- Sweden
tighetsregeln). The prudence rule means that a dividend Under the Swedish Companies Act, a public company
distribution only can be made if it is considered to be jus- shall have a board of directors consisting of at least three
tified taking into consideration; the demands with respect directors. More than half of the directors shall be resident
to size of shareholders’ equity which are imposed by the within the European Economic Area (unless otherwise
nature, scope and risks associated with the operations approved by the Swedish Companies Registration Office).
and the company’s need to strengthen its balance sheet, The actual number of directors shall be determined by a
liquidity and financial position in general. general meeting, within the limits set out in the company’s
Each person who is listed as a shareholder in the share articles of association.
register as of the record date for the dividend will be enti-
tled to receive the dividend distribution. However, a com-
pany may include a provision in the articles of association
that different classes of shares should have different rights
to receive dividend. A common difference is that dividend
is paid out to preferred stock holders before holders of
common stock.
FLEXION MOBILE PLC COMPANY DESCRIPTION 17. Constitutional documents and legal comparison / PAGE 56

NOMINATION, APPOINTMENT AND normally have a different focus to a COO or a CFO but in
REMOVAL OF DIRECTORS general the board of directors have a collective responsi-
bility to work together.
England The articles of association permit the board of direc-
The directors will normally be appointed by ordinary tors to delegate to and confer on any director holding
resolution of the shareholders at each annual general executive office (i.e. a full board director, as opposed to
meeting. The board of directors has the right to co-opt a non-executive director) such of its powers, authorities
new directors in the intervening period. and discretions (with power to sub-delegate) for such
The Companies Act contains a procedure pursuant to time, on such terms and subject to such conditions as it
which the shareholders may by ordinary resolution re- thinks fit. The articles of association also permit the board
move a director before the expiration of his term of office. of directors to revoke, withdraw, alter or vary all or any of
such powers.
Sweden Although the articles of association contain the delega-
The board of directors shall be appointed by a general tion powers which are summarised above, in practice, UK
meeting. The articles of association may prescribe that public companies only tend to delegate limited matters
one or more members of the board of directors shall (e.g. audit matters or remuneration matters) to a smaller
be appointed in another manner. The right to appoint committee of directors which has been set up to handle
members of the board of directors may not be delegated such matters, rather than seeking to delegate to a com-
to the board of directors or to a member of the board of mittee of directors or a particular director responsibility for
directors. However, in a public limited liability company, the general running of the company.
more than one-half of the members of the board of di- Subject to the articles of association and the Compa-
rectors shall be appointed by the general meeting. nies Act, the directors are responsible for the management
The members of the board of directors are usually of Flexion Mobile’s business, for which purpose they may
elected for the period until the end of the next annual gen- exercise all the powers of Flexion Mobile.
eral meeting, unless a longer term of up to four financial
is set out in the articles of association. It is possible for the Sweden
director to be re-elected for a new term of office. Under the Swedish Companies Act, the board of directors
is responsible for the organisation of the company and
POWERS OF THE BOARD OF DIRECTORS AND the management of the company’s affairs. The board of
DELEGATION OF THE BOARD OF DIRECTORS directors shall regularly assess the company’s financial
position and, where the company is the parent compa-
England
ny in a group, the group’s financial position. The board of
The board of directors has the power and authority to directors shall ensure that the company’s organisation is
manage the affairs and trading of Flexion Mobile. The structured in such a manner that accounting, manage-
board of directors acts by majority decision with each ment of funds, and the company’s finances in general are
director having one vote. The chairman at meetings of monitored in a satisfactory manner.
the board of directors has a casting vote under Flexion The board of directors in a public company shall ap-
Mobile’s articles of association. point a CEO, whom may not also be the chairman of the
The board of directors can constitute committees of board of directors, and may also appoint one or more
directors to deal with certain matter as it requires. The deputy managing directors. The CEO is responsible for the
articles of association permit the board of directors to del- day-to-day management of the company in accord-
egate any of its powers, authorities and discretions (with ance with law, which normally includes appointing the
power to sub-delegate) for such time on such terms and other senior executives.
subject to such conditions as it thinks fit to any committee The CEO shall be resident within the European Eco-
of directors. nomic Area (unless otherwise approved by the Swedish
The board of directors may allocate responsibilities Companies Registration Office).
between the respective directors. For instance, a CEO will
FLEXION MOBILE PLC COMPANY DESCRIPTION 18. Tax considerations / PAGE 57

18. Tax considerations

General TAXATION OF DIVIDENDS

This chapter (17 Tax Considerations) is a short summa- Under current United Kingdom legislation, no tax is re-
ry of certain tax aspects that may arises as a result of quired to be withheld from dividend payments by Flexion
holding shares in Flexion Mobile and is not intended to be Mobile.
a complete analysis of all potential tax consequences of
acquiring, holding or dispose of shares in Flexion Mobile. UK COMPANIES
This chapter should therefore not be considered a legal UK Corporate shareholders would generally not be liable
advice. Any prospective holder of shares or holder of to UK Corporation tax on dividends from Flexion Mobile
shares who is in any doubt about their tax position provided the dividends fall within an exempt class and
should consult their own professional tax advisors. certain conditions are met. Subject to anti avoidance
rules, almost all dividends received should fall within an
exempt dividend class.
United Kingdom In the event that dividends are not exempt, they will
become subject to corporation tax. The current rate of
GENERAL
corporation tax in the UK is 19%, which will reduce to 17%
The following is intended to be used as a summary of from 1 April 2020.
certain tax issues that may arise as a result of holding
shares in Flexion Mobile and are not intended to be a UK RESIDENT INDIVIDUAL SHAREHOLDERS
complete analysis of all potential UK tax consequences UK resident individual shareholders will be subject to
of acquiring, holding or dispose of shares. The following income tax on dividends received. The individuals will
statements are based on current UK tax law and HMRC not pay income tax on the first GBP 5,000 of dividends
published practice both of which may change, possibly received per tax year, i.e. 6 April to 5 April. Thereafter, the
with retrospective effect. It is intended only as general tax rate for individual shareholders who receive divi-
information for shareholders, who are resident and in the dends over GBP 5,000 will be 7.5%, 32.5% and 38.1% for
case of individuals domiciled in the UK for tax purposes, if basic, higher and additional rate tax payers respectively
not otherwise stated. (rates effective for dividends received after 6 April 2016).
The statements apply only to persons who hold their In calculating into which tax band any dividend income
shares directly and who are the absolute beneficial own- over the GBP 5,000 allowance falls, savings and dividend
er of the shares (and who do not hold their shares through income are treated as the highest part of an individual’s
a Self-Invested Personal Pension or and Individual Savings income. Where an individual has both savings and divi-
Account). The summary does not cover situations where dend income, the dividend income is treated as the top
shares are held as current assets in business operations slice.
or by a partnership. The tax position of certain categories Dividends payable to trustees of interest in possession
of shareholders who are subject to special rules (such as trusts or personal representatives will be subject to income
persons acquiring their shares in connection with em- tax at 7.5%. Trustees do not qualify for the GBP 5,000
ployment, dealers in securities, insurance companies and dividend allowance available to individuals.
collective investment schemes) is also not considered. Where a dividend is paid to a discretionary trust, the
Any prospective subscriber for shares who is in any individuals will not be able to benefit from the GBP 5,000
doubt about their tax position or who is subject to tax tax free dividend allowance and will be taxed at 38.1%.
in any jurisdiction other than the United Kingdom should
consult their own professional tax advisors. NON-UK RESIDENT SHAREHOLDERS
Non-UK resident shareholders may be subject to non-
UK income tax on dividends received. Therefore non-UK
resident shareholders should seek professional advice
to confirm their liability in respect of dividends received.
There is no withholding tax or tax credit available on divi-
dends paid by UK companies under domestic law.
FLEXION MOBILE PLC COMPANY DESCRIPTION 18. Tax considerations / PAGE 58

TAXATION OF CHARGEABLE GAINS STAMP DUTY AND STAMP DUTY RESERVE TAX (“SDRT”)
The acquisition of shares on a placing by either a corpo- No stamp duty or SDRT will be payable on the issue of
rate or individual shareholder will be deemed an acquisi- shares.
tion in a new holding of share capital for Flexion Mobile. To An Exemption from stamp duty and SDRT came into
the extent that a shareholder acquires shares allotted to effect on 28 April 2014 in respect of securities admitted to
them, the shares so acquired will, for the purpose of tax on trading on a Recognised Growth Market and which are
chargeable gains, be treated as acquired on the date of not listed on a Recognised Stock Exchange (“Exemption”).
the purchase becoming unconditional. First North Stockholm has been classified as a Recog-
A disposal of the shareholding may give rise to a liabil- nised Growth Market since 8 August 2017 and therefore
ity to UK taxation on chargeable gains, depending on the Exemption should apply in dealings in the shares of Flex-
circumstances and any available reliefs or exemptions. ion Mobile. No liability to stamp duty or SDRT should arise
Invariably shareholders will be subject to taxation on from admission in respect of any transfers on sale of the
chargeable gains unless they are not UK tax resident. shares.

UK RESIDENT CORPORATE SHAREHOLDERS

Swedish tax considerations
UK resident Corporate shareholders who are subject
to UK corporation tax may be liable to corporation tax
GENERAL
arising on the disposal of shares depending on individual
circumstances and subject to any available exemption or The following is a summary of certain tax issues that may
relief. arise as a result of holding shares in Flexion Mobile. The
Corporation tax will be liable at the prevailing rate on summary is based on Swedish tax legislation currently
any chargeable gain, which currently is 19%, reducing to in force and is intended only as general information for
17% from 1 April 2020. shareholders, who are resident or domiciled in Sweden
It is important to note that legislation was introduced in for tax purposes, if not otherwise stated.
Finance No. 2 Bill 2017-19 to amend the indexation allow- The summary does not cover situations where shares
ance rules in the Taxation and Chargeable Gains Act 1992. are held as current assets in business operations or by
This amendment, effective for disposals from 1 January a partnership. Furthermore, the summary does not cover
2018, means that the indexation allowance that historical- special regulations governing tax exempt capital gains,
ly was applied to determine the amount of a chargeable shareholding in companies that are, or have previously
gain will only be calculated up to December 2017, instead been, closely held companies (Swe. fåmansföretag) or
of being calculated up to the month in which the disposal on shares acquired based on such holdings, shares held
event takes place (assuming Finance (No.2) Bill 2017-19 through a life insurance (Swe. kapitalförsäkring) or an
receives Royal Assent). investment savings account (Swe. investeringssparkonto)
or other specific situations and rules. The summary also
UK RESIDENT INDIVIDUAL SHAREHOLDERS does not cover tax issues related to holdings in unlisted
shares. Shares are considered listed for tax purposes if the
In the event an individual shareholder disposes of shares
shares are subject to continuous publicly available listing
resulting in a chargeable gain, the individual will be subject
on the basis of marketable trade in the share.
to capital gains tax to the extent the capital gain exceeds
The summary is not applicable to shareholders that
the annual exemption limit (GBP 11,300 for 2017/18 for
have ever been resident in the UK for tax purposes,
individuals and GBP 5,560 for 2017/18 for other trustees).
carried on business or maintained a permanent estab-
After taking the offset of chargeable losses and other
lishment in the UK, as defined in the Sweden-UK Double
exemptions into account, basic rate taxpayers are sub-
Taxation Convention (2015).
ject to capital gains tax at 10% whereas individuals who
Special tax consequences that are not described
are higher and additional rate tax payers are subject to
below may also apply for certain categories of taxpayers,
capital gains tax at 20%. Note: no indexation allowance is
including investment companies, mutual funds, insur-
available to individual shareholders.
ance companies and persons who are not resident or
domiciled in Sweden. Each shareholder is recommended
NON-UK RESIDENT SHAREHOLDERS
to consult a tax adviser for information on the specific
Non-UK resident shareholders may not be liable to UK tax consequences that may arise as a result of holding
taxation on chargeable gains, arising from a sale or dis- shares in Flexion Mobile, including the applicability and
posal of shares unless they carry on a trade or profession effect of foreign or other rules, tax treaties or from foreign
or vocation in the UK through a branch or agency or, in exchange rate fluctuations between currencies which
the case of a company, a permanent establishment with may be applicable.
which their shares are connected and professional advice
should be sought to confirm an individual position.
FLEXION MOBILE PLC COMPANY DESCRIPTION 18. Tax considerations / PAGE 59

TAXATION OF CAPITAL GAINS TAXATION OF DIVIDENDS

General Individuals
The main rule under the tax treaty between UK and Swe- For Individuals dividends on shares are taxed as income
den is that capital gains are taxed in Sweden only as far from capital at a rate of 30 per cent.
as Swedish residents are concerned.
Limited Liability Companies
Individuals In general, dividends, if any, on shares to limited liability
Individuals who sell their shares, are subject to capital companies are taxed in Sweden at a rate of 22 per cent
gains tax. The current tax rate is 30 per cent of the gain. as ordinary income from business activities.
The capital gain is calculated to equal the difference
between the sales proceeds, after deduction for sales CERTAIN TAX CONSIDERATION FOR SHAREHOLDERS
expenses, and the shares’ acquisition cost for tax purpos- WHO ARE NOT TAX RESIDENT IN SWEDEN
es. The acquisition cost is determined according to the Individual shareholders who are not resident or domiciled
“average cost method”. This means that the costs for all in Sweden for Swedish tax purposes are generally not
shares of the same type and class are added together subject to tax in Sweden for dividends and capital gains
and determined collectively, with respect to changes to upon a sale or other disposal of shares. Shareholders
the holding. Alternatively, “the standard rule” according to may, however, be subject to taxation in their country of
which the acquisition cost is deemed to be equal to 20 domicile and elsewhere.
per cent of the net sales price may be applied on the Under a domestic Swedish tax provision, non-Swedish
disposal of listed shares. tax resident individuals may be subject to Swedish capital
Capital losses on listed shares are fully deductible gains taxation upon a sale or other disposal of shares in
against taxable capital gains on shares during the same non-Swedish corporate entities if the shares were ac-
fiscal year. The losses are also deductible against gains on quired during their tax residency in Sweden if they have
other listed securities that are taxed in the same manner been resident or lived permanently in Sweden at any
as shares (except for shares in mutual funds containing time during the calendar year of such disposal or during
only Swedish receivables (Swe. räntefonder)). A loss ex- the previous ten calendar years preceding the year of
ceeding the above-mentioned gains is deductible with 70 disposal. The applicability of this provision may however
per cent against any other taxable capital income. be limited by an applicable tax treaty between Sweden
If a deficit arises in the income from capital category, and other countries.
a reduction of the tax on income from employment and Foreign legal entities are not liable to Swedish tax on
from business, as well as the tax on real estate, is allowed. dividends or capital gains upon a sale or other disposal
The tax reduction allowed amounts to 30 per cent of any of shares, provided that the shares are not pertaining to a
deficit not exceeding SEK 100,000 and 21 per cent of any permanent establishment in Sweden.
deficit exceeding SEK 100,000. Deficits may not be carried
forward to a later fiscal year.

Limited Liability Companies

Swedish limited liability companies (Swe. aktiebolag)
are taxed on all income as income from business activ-
ities at a flat rate of 22 per cent currently. Regarding the
calculation of capital gains or losses and the acquisition
cost, see above under section “Taxation of capital gains
– Individuals”.
A capital loss on shares incurred by a corporate
shareholder may be offset only against gains on shares
or other securities that are taxed in the same manner as
shares. Such capital losses may, under certain circum-
stances, also be deductible against capital gains on such
securities within the same group of companies, provided
the requirements for exchanging group contributions are
met. Capital losses on shares or other such securities,
which have not been deducted from capital gains within
a certain year, may be carried forward and be offset
against similar capital gains in future years without any
limitation in time.
FLEXION MOBILE PLC COMPANY DESCRIPTION 19. Documents incorporated by reference / PAGE 60

19. Documents
incorporated by reference

The information below is incorporated into

the Company Description by reference:
×× Flexion Mobile Limited’s annual report, including the audit report, for 2015/16
×× Flexion Mobile Limited’s annual report, including the audit report, for 2016/17
×× Flexion Mobile Limited’s balance sheet 17 May 2018, including audit letter
The information, to which the reference is made should be seen as a part of this
Company Description. The information and Flexion Mobile’s articles of association
are available at the Company’s website www.flexionmobile.com. The memoran-
dum of association can be obtained from the Companies house.
FLEXION MOBILE PLC COMPANY DESCRIPTION 20. Contact details / PAGE 61

20. Contact details

Company Legal advisers

FLEXION MOBILE PLC TÖRNGREN MAGNELL KB
Unit G5, Harbour Yard Västra Trädgårdsgatan 8
Chelsea Harbour 111 53 Stockholm
London, SW10 0XD Sweden
United Kingdom +46 8 400 283 00
+44 207 351 5944 www.torngrenmagnell.com
www.flexionmobile.com
MOORCROFTS LLP
Thames House, Mere Park
Certified adviser
Dedmere Road
Marlow, SL7 1PB
FNCA SWEDEN AB
United Kingdom
Humlegårdsgatan 5
+44 1628 470 000
102 48 Stockholm
Sweden www.moorcrofts.com
+46 8 528 00 399
www.fnca.se Auditor
JEFFREYS HENRY LLP
Liquidity provider
5–7 Cranwood Street
London, EC1V 9EE
PARETO SECURITIES AB
United Kingdom
Berzelii Park 9
+44 207 309 2222
P.O. Box 7415
103 91 Stockholm, Sweden www.jeffreyshenry.com
+46 8 402 50 00
www.paretosec.com