Exhibit 15.1

GLAAM CO., LTD

AND SUBSIDIARIES

 

 

CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 and December 31, 2022

GLAAM Co., Ltd and Subsidiaries

Consolidated Financial Statements

June 30, 2023 and December 31, 2022

 

CONTENTS		Page No.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			3
FINANCIAL STATEMENTS
Consolidated Statements of Financial Position			4
Consolidated Statements of Profit and Loss and Comprehensive Income (Loss)			6
Consolidated Statements of Changes in Equity			7
Consolidated Statements of Cash Flows			9
Notes to Consolidated Financial Statements			10

 

		RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM US LLP. Visit rsmus.com/aboutus for more information regarding RSM US LLP and RSM International. The RSM™ logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.

		OFFICES IN:   LOS ANGELES, CA SAN DIEGO, CA SAN FRANCISCO, CA IRVINE, CA MONTGOMERY, AL AUBURN, AL FORT LEE, NJ ATLANTA, GA

Report of Independent Registered Public Accounting Firm

Board of Directors

GLAAM Co., Ltd and Subsidiaries

Pyeong-taek, Gyounggi, Republic of Korea

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated Statements of financial position of GLAAM Co., and Subsidiaries (the “Company”) as of June 30, 2023, and the related consolidated statements of profit and loss and comprehensive income (loss), changes in equity, and cash flows, for the six-month period then ended June 30, 2023 and 2022, and the related notes (collectively referred to as the interim financial information).

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Basis for Review Results

This interim financial information is the responsibility of the Company’s management. We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

 

		RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM US LLP. Visit rsmus.com/aboutus for more information regarding RSM US LLP and RSM International. The RSM™ logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.

GLAAM Co., Ltd and Subsidiaries

Consolidated Statements of Financial Position

As of June 30, 2023 and December 31, 2022

 

 

 

														(Unit: USD)
Accounts		Notes				As of June 30, 2023 (Unaudited)								As of December 31, 2022
Assets
I. Current Assets											18,836,252								9,166,574
Cash and cash equivalents			5, 6				73,625								196,627
Trade receivables, net			6, 7				8,834,914								697,999
Other current financial assets			8				854,305								1,035,930
Prepayments and other short-term assets			9				2,679,040								1,520,917
Inventories, net			10				6,394,329								5,714,352
Prepaid income tax							39								749
II. Non-current Assets											26,749,829								27,457,524
Long-term trade receivables			7				1,763,457								—
Non-current financial assets			6, 11				103,435								107,890
Investments accounted for using the equity method			12				2,527,774								2,777,515
Property, plant and equipment, net			13,16				10,499,881								11,055,170
Intangible assets, net			14				5,063,137								6,039,521
Deposits			6, 15				3,975,373								4,515,581
Deferred income tax assets			28				2,816,772								2,961,847
Total Assets											45,586,081								36,624,098
Liabilities
I. Current Liabilities											32,457,472								27,698,141
Trade payables			6				6,937,392								7,184,181
Other payables			18				7,816,560								5,690,765
Current portion of lease liabilities			6,16				99,248								108,488
Other current liabilities			18				916,966								799,571
Short-term borrowings			6, 21				13,537,122								11,863,506
Convertible bond			6,21				1,868,507								—
Product warranty provision			20				34,942								36,099
Current portion of long-term liabilities			6, 21				1,234,765								2,001,142
Current tax liabilities							11,970								14,389
II. Non-current Liabilities											6,100,836								6,209,572
Other non-current payables			19				4,165								31,826
Pension and other employee obligations			22				1,344,898								1,341,858
Long-term borrowings			6, 21				4,728,047								4,741,358
Non-current lease liabilities			6,16				23,726								24,694
Other non-current liabilities			6, 19				—								69,836
Total Liabilities											38,558,308								33,907,713

 

4

GLAAM Co., Ltd and Subsidiaries

Consolidated Statements of Financial Position

As of June 30, 2023 and December 31, 2022

 

 

 

														(Unit: USD)
Accounts		Notes				As of June 30, 2023 (Unaudited)								As of December 31, 2022
Equity
I. Share capital											8,736,267								8,326,057
Share capital			23				8,736,267								8,326,057
II. Additional paid-in and other capital											57,070,548								53,382,904
Additional paid-in and other capital			23				57,070,548								53,382,904
III. Other components of equity											1,750,242								1,482,658
Changes in equity from equity method			24				2,754,052								2,897,852
(negative) Changes in equity from equity method			24				(3,251,395	)							(3,251,395	)
Stock options			24				2,709,081								2,297,697
Loss on sale of treasury stock			24				(410,453	)							(410,453	)
Other capital surplus			24				(51,043	)							(51,043	)
IV. Accumulated other comprehensive income											1,471,596								1,933,924
Foreign currency translation differences for foreign operations			24				1,471,596								1,933,924
V. Retained earnings (deficit)											(61,429,967	)							(62,348,576	)
Unappropriated retained earnings (deficit)							(61,429,967	)							(62,348,576	)
VI. Non-controlling interest											(570,913	)							(60,582	)
Non-controlling interest							(570,913	)							(60,582	)
Total equity											7,027,773								2,716,385
Total liabilities and equity											45,586,081								36,624,098

 

5

GLAAM Co., Ltd and Subsidiaries

Consolidated Statements of Profit and Loss and Comprehensive Income (Loss)(Unaudited)

Six Months Ended June 30, 2023 and 2022

 

 

 

										(Unit: USD)
Accounts		Notes				For the six months ended June 30, 2023				For the six months ended June 30, 2022
Revenue							12,562,180				13,406,333
Cost of sales							6,327,732				6,878,593
Gross Profit							6,234,448				6,527,740
Selling and administrative expenses			25				4,981,094				4,250,957
Operating profit							1,253,354				2,276,783
Finance income			26				193,076				432,315
Finance costs			26				885,210				229,374
Other income			27				18,851				147,464
Other expenses			27				107,739				847,413
Profit before tax							472,332				1,779,775
Corporate income tax expense (benefit)			28				20,081				(254,522	)
Net profit for the period							452,251				2,034,297
Owners of the parent							920,543				2,091,513
Non-controlling interests							(468,292	)			(57,216	)
Other comprehensive income							(462,328	)			(34,802	)
Item that may be subsequently reclassified to profit or loss							(462,328	)			(34,802	)
Exchange difference on translating foreign operations							(462,328	)			(34,802	)
Total comprehensive (loss) income							(10,077	)			1,999,495
Owners of the parent							458,215				2,056,711
Non-controlling interests							(468,292	)			(57,216	)
Earnings per share
Basic Earnings Per Share (Unit: USD)			32				0.02				0.12

 

6

GLAAM Co., Ltd and Subsidiaries

Consolidated Statements of Changes in Equity (Unaudited)

Six Months Ended June 30, 2023 and 2022

 

 

 

																														(Unit: USD)
		Attributable to owners of the Controlling Company																								Non-controlling interests				Total equity
		Share capital				Additional paid-in capital				Other component of equity				Accumulated other comprehensive income				Retained earnings (deficits)				Total attributable to owners of parent
Balances as of January 1, 2023			8,326,057				53,382,904				1,482,658				1,933,924				(62,348,576	)			2,776,967				(60,582	)			2,716,385
Net income (loss)			—				—				—				—				920,543				920,543				(468,292	)			452,251
Issuance of share capital on private placement			81,056				729,501				—				—				—				810,557				—				810,557
Issuance of shares for payment of debt			329,154				2,958,143				—				—				—				3,287,297				—				3,287,297
Changes in equity from equity method investments			—				—				(143,800	)			—				—				(143,800	)			—				(143,800	)
Stock options			—				—				411,384				—				—				411,384				—				411,384
Actuarial gain due to changes in financial assumptions			—				—				—				—				(1,934	)			(1,934	)			—				(1,934	)
Exchange difference on translating foreign operations			—				—				—				(462,328	)			—				(462,328	)			(42,039	)			(504,367	)
Balances as of June 30, 2023			8,736,267				57,070,548				1,750,242				1,471,596				(61,429,967	)			7,598,686				(570,913	)			7,027,773

 

7

GLAAM Co., Ltd and Subsidiaries

Consolidated Statements of Changes in Equity (Unaudited)

Six Months Ended June 30, 2023 and 2022

 

 

 

																														(Unit: USD)
		Attributable to owners of the Controlling Company																								Non-controlling interests				Total equity
		Share capital				Additional paid-in capital				Other component of equity				Accumulated other comprehensive income				Retained earnings (deficits)				Total attributable to owners of parent
Balances as of January 1, 2022			6,207,730				34,317,961				2,395,732				1,304,641				(56,494,217	)			(12,268,153	)			3,610				(12,264,543	)
Net income (loss)			—				—				—				—				2,091,513				2,091,513				(57,216	)			2,034,297
Issuance of share capital on private placement			100,355				903,199				—				—				—				1,003,554				—				1,003,554
Issuance of shares for payment of debt			763,918				6,857,580				—				—				—				7,621,498				—				7,621,498
Changes in equity from equity method investments			—				—				(1,107,287	)			—				—				(1,107,287	)			—				(1,107,287	)
Conversion of convertible Bonds			611,797				5,506,166				—				—				—				6,117,963				—				6,117,963
Stock options			—				—				312,052				—				—				312,052				—				312,052
Acquisition of treasury stock			—				—				(228,530	)			—				—				(228,530	)			—				(228,530	)
Exchange difference on translating foreign operations			—				—				—				(34,802	)			—				(34,802	)			(27,144	)			(61,946	)
Others			—				—				—				—				400,329				400,329				—				400,329
Balances as of June 30, 2022			7,683,800				47,584,906				1,371,967				1,269,839				(54,002,375	)			3,908,137				(80,750	)			3,827,387

 

8

GLAAM Co., Ltd and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

Six Months Ended June 30, 2023 and 2022

 

 

 

																		(Unit : USD)
Accounts		Note				For the six months ended June 30, 2023								For the six months ended June 30, 2022
I. Cash flows from operating activities			31								(6,350,979	)							1,715,676
1. Cash generated from (used in) operating activities			31				(5,584,883	)							1,923,715
2. Interest received							186								94
3. Interest paid							(765,118	)							(462,655	)
4. Income taxes benefit							(1,164	)							254,522
II. Cash flows from investing activities											(424,183	)							(1,751,064	)
1. Proceeds from investing activities							1,542,711								34,257
a. Proceeds from short term loans							1,159,356								18,777
b. Decrease in deposits							383,355								15,480
2. Cash outflows from investing activities							(1,966,894	)							(1,785,321	)
a. Increase in short-term loan							(1,782,646	)							(361,620	)
b. Acquisition of investments in affiliates							—								(1,423,701	)
c. Acquisition of property plant and equipment							(161,774	)							—
d. Increase in deposit							(22,474	)							—
III. Cash flows from financing activities											6,701,451								5,978
1. Proceeds from financing activities							17,895,865								7,235,019
a. Proceeds from short-term borrowings							15,032,478								6,015,395
b. Proceeds from long-term borrowings							185,372								216,070
c. Proceeds from issuance of stocks							810,557								1,003,554
d. Proceeds from issuance of CB							1,867,458								—
2. Cash outflows from financing activities							(11,194,414	)							(7,229,041	)
a. Repayments of short-term borrowings							(10,315,394	)							(6,570,442	)
b. Decrease in deposits for rent							—								(81,072	)
c. Repayments of liquid long-term borrowings							(694,511	)							—
d. Repayments of lease							(116,502	)							(215,369	)
e. Increase in other deposits							(68,007	)							(133,628	)
f. Acquisition of treasury stock							—								(228,530	)
IV. Effects of changes in foreign exchange rates											(49,291	)							(39,207	)
V. Decrease in cash and cash equivalents (I+II+III+IV)											(123,002	)							(68,617	)
VI. Beginning balance of cash and cash equivalent											196,627								239,342
VII. Ending balance of cash and cash equivalent											73,625								170,725

 

9

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

1.	Nature of operations

The principal activities of GLAAM Co, Ltd (GLAAM) and subsidiaries (the Company) include manufacturing, installing, and selling LED display G-Glass. G-Glass is an integrated ICT product that has the basic characteristics of transparent glass but can display media images at the same time. It implements media images through the glass surface while preserving the features of a clear and transparent glass. G-Glass is the world’s first IT building material that can be applied to various places where glass is used.

 

2.	General information, statement of compliance with IFRS and going concern assumption

GLAAM, the Company’s ultimate parent company, is a corporation incorporated and domiciled in the Republic of Korea. Its’ registered office and factory are located at 298-42 Chung-buk Chungang-ro Chung-buk, Pyeong-taek, Gyounggi, Republic of Korea.

The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). They have been prepared under the assumption the Company operates on a going concern basis.

Consolidated subsidiaries as of June 30, 2023

 

Name of the subsidiary		Major business activities		Shareholding ratio
G-Frame Co., Ltd. (G-Frame)		Manufacture G-Glass related products			100.00	%
G-SMATT Europe Media Limited and its subsidiary (G-SMATT Europe) (*)		Distribute G-Glass			76.55	%
G-SMATT Tech		Distribute G-Glass			100.00	%
G-SMATT America (**)		Distribute G-Glass			54.63	%

 

(*)

On November 30, 2022, G-SMATT Europe acquired 100% ownership of Inflectix Limited (“Inflectix”) as a wholly owned subsidiary for USD 301,654. Inflectix was incorporated on July 11, 2018, by Orhan Ertughrul, G-SMATT Europe’s chief executive officer. It is located in Gloucestershire, United Kingdom and provides high level technical expertise service in biotechnology investment consulting field.

(**)

In 2022, certain minority shareholders of G-SMATT America Co., Ltd (an equity method associate located in CA, USA) sold all their shares, a total of 1,470,116 shares, to the Company. As a result, the Company’s ownership in G-SMATT America Co., Ltd. increased by 12.00% from 42.63% to 54.63% and became the major shareholder. G-SMATT America Co., Ltd. is subject to consolidation from the date of the majority ownership change in July 1, 2022.

The consolidated financial statements were authorized for issuance by the Company’s management on September xx, 2023.

Information of subsidiaries as of and for the six months ended June 30, 2023 (before elimination of intercompany transactions):

 

																		(Unit: USD)
Name of the subsidiary		Assets				Liabilities				Sales				Net income (loss)				Comprehensive income (loss)
G-Frame			5,781,882				7,093,201				571,632				(390,109	)			(390,109	)
G-SMATT Europe			1,676,293				6,592,241				72,701				(465,040	)			(653,707	)
G-SMATT Tech			90,054				6,115,732				793				(128,028	)			(111,189	)
G-SMATT America			2,747,598				3,127,976				365,117				(791,754	)			(788,365	)

 

10

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

Consolidated Subsidiaries as of December 31, 2022

 

Name of the subsidiary		Major business activities		Shareholding ratio
G-Frame Co., Ltd. (G-Frame)		Manufacture G-Glass related products			100.00	%
G-SMATT Europe Media Limited and its subsidiary (G-SMATT Europe) (*)		Distribute G-Glass			76.55	%
G-SMATT Tech		Distribute G-Glass			100.00	%
G-SMATT America (**)		Distribute G-Glass			54.63	%

Information of subsidiaries as of December 31, 2022 and for the six months ended June 30, 2022 (before elimination of intercompany transactions):

 

																		(Unit: USD)
		As of December 31, 2022								For the six months ended June 30, 2022
Name of the subsidiary		Assets				Liabilities				Sales				Net income (loss)				Comprehensive income (loss)
G-Frame			7,558,305				6,826,664				1,356,476				(298,198	)			(298,198	)
G-SMATT Europe			1,451,597				5,908,020				79,324				(468,677	)			(608,448	)
G-SMATT Tech			74,730				6,245,793				—				(123,972	)			(40,280	)
G-SMATT America(*)			3,413,876				3,001,074				—				—				—

(*) In 2022, certain minority shareholders of G-SMATT America Co., Ltd (an equity method associate located in CA, USA) sold all their shares, a total of 1,470,116 shares, to the Company. As a result, the Company’s ownership in G-SMATT America Co., Ltd. increased by 12.00% from 42.63% to 54.63% and became the major shareholder. G-SMATT America Co., Ltd. is subject to consolidation from the date of the majority ownership change in July 1, 2022.

Going Concern

The Company has an outstanding deficit of USD 61,429,967 and USD 62,348,576 as of June 30, 2023 and at the end of 2022, respectively, and the current liabilities also exceed current assets by USD 13,621,220 and USD 18,531,567 as of June 30 2023 and at the end of 2022, respectively.

Despite the accumulated losses, the Company has established the following mitigation plans to achieve stable operating profit and continue as a going concern.

 

Classification		Mitigation plan
Improvement in business		Achieve positive operating profit by increasing sales and reducing operating expenses. Pro-active sales plans for 2023 are in place and contract with new customers is being prepared as of the reporting date.
Subsequent debt to equity conversion (*)		Mitigate capital impairment by the debt-to-equity conversion.
Merger with Jaguar		On March 2, 2023, the Company and Jaguar Global Growth Corporation I (“JGGC”) have entered into a definitive business combination agreement that would result in the Company becoming a publicly traded company. On May 5, it was announced that a registration statement on Form F-4 had been publicly filed with the US Securities and Exchange Commission. The closing of the business combination between the Company and JGGC is scheduled to be completed on September 29, 2023.

 

11

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

(*) Subsequent to June 30, 2023, the Company initiated two equity conversion agreements on August 1, 2023. Under these agreements, the Company committed to converting a total of KRW 3,290,288,000 of outstanding debt and trade payables into the Company’s Common Shares (the “Debt to Equity Conversion”). Following the conversion, the number of the Company’s Common Shares increased by 357,640 shares.

The Company’s consolidated financial statements were prepared on the assumption that the Company will continue as a going concern and are accounted for under the assumption that the Company’s assets and liabilities could be recovered or repaid through normal business activities.

In a situation where the validity of the going concern assumption, which is the premise of preparing the Company’s financial statements, is questioned, there may be certain uncertainty relating to the feasibility of financing plans for debt repayment, new business, and financial improvement plans. However, considering the above management’s mitigation plans, the Company has strong feasibility to continue as a going concern and achieve positive operating profits in the near future.

 

3.	Basis of Presenting Financial Statements

Basis of Measurement

The consolidated financial statements have been prepared on the historical cost basis except for the following material items in the consolidated statement of financial position:

 

•

Certain financial assets and liabilities – measured at fair value

Functional and Reporting Currency

Functional and reporting currency

Each subsidiary’s financial statements of the Company are reported in the subsidiary’s functional currency, which is the currency of the primary economic environment in which each subsidiary operates. The consolidated financial statements are presented in US dollar, which is the Company’s reporting currency, whilst the functional currency is in Korean won.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at period end exchange rates are generally recognized in profit or loss. They are deferred in other comprehensive income if they relate to qualifying cash flows hedges and qualifying effective portion of net investment hedges or are attributable to monetary part of the net investment in a foreign operation. Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit or loss, within finance costs.

 

12

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognized in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equities classified as available-for-sale financial assets are recognized in other comprehensive income.

Fair Value Hierarchy

To provide an indication about the reliability of the inputs used in determining fair value, the Company classifies its financial instruments into the three levels prescribed under the accounting standards. Financial instruments that are measured at fair value are categorized by the fair value hierarchy, and the defined levels are as follows:

Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in level 1.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

 

4.	Summary of Significant Accounting Policies

The significant accounting policies followed by the Company in the preparation of its consolidated financial statements are as follows:

Significant Accounting Estimates and Assumptions

The preparation of financial statements in conformity with IFRS requires management to make significant estimates and assumptions that affect the assets, liabilities, revenues and expenses, and other related amounts during the periods covered by the financial statements. Management routinely makes judgments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the future resolution of the uncertainties increases, these judgments become more subjective and complex. The Company has identified the following accounting policies as the most important to the presentation and disclosure of the financial condition and results of operations.

Subsidiaries

The Company has prepared the consolidated financial statements in accordance with IFRS 10 Consolidated Financial Statements.

Subsidiaries

Subsidiaries are all entities over which the Company has control. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are deconsolidated from the date that control ceases.

 

13

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

The acquisition method of accounting is used to account for business combinations by the Company. The consideration transferred is measured at the fair values of the assets transferred, and identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Company recognizes any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. All other non-controlling interests are measured at fair values, unless otherwise required by other standards. Acquisition-related costs are expensed as incurred.

The excess of consideration transferred, amount of any non-controlling interest in the acquired entity and acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recoded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognized directly in the profit or loss as a bargain purchase.

Intercompany transactions, balances and unrealized gains on intercompany transactions are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. The accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Company.

Changes in ownership interests in subsidiaries without change of control

Any differences between the amount of the adjustment to non-controlling interest that do not result in a loss of control and any consideration paid or received is recognized in a separate reserve within equity attributable to owners of the Controlling Company.

Disposal of subsidiaries

When the Company ceases to consolidate for a subsidiary because of a loss of control, any retained interest in the subsidiary is remeasured to its fair value with the change in carrying amount recognized in profit or loss.

Associates

Associates are entities over which the Company has significant influence but does not possess control or joint control. Investments in associates are accounted for using the equity method of accounting, after initially being recognized at cost. Unrealized gains on transactions between the Company and its associates are eliminated to the extent of the Company’s interest in the associates. If the Company’s share of losses of an associate equal or exceeds its interest in the associate (including long-term interests that, in substance, form part of the Company’s net investment in the associate), the Company discontinues recognizing its share of further losses. After the Company’s interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate. If there is objective evidence of impairment for the investment in the associate, the Company recognizes the difference between the recoverable amount of the associate and its book amount as impairment loss. If an associate uses accounting policies other than those of the Company for transactions and events in similar circumstances, if necessary, adjustments shall be made to make the associate’s accounting policies conform to those of the Company when the associate’s financial statements are used by the Company in applying the equity method.

 

14

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

Cash and cash equivalents

Cash and cash equivalents include all cash balances and short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amounts of cash.

Non-derivative financial assets

Recognition and initial measurement

Trade receivables and debt instruments issued are initially recognized when they are originated. All other financial assets are recognized in statement of financial position when, and only when, the Company becomes a party to the contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) is initially measured at fair value plus, for an item not at Fair Value Through Profit or Loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

Classification and subsequent measurement

On initial recognition, a financial asset is classified as measured at: amortized cost; Fair Value through Other Comprehensive Income (FVOCI) – debt investment; FVOCI – equity investments; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the subsequent reporting period following the change in the business model.

A financial asset is measured as at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

 

•

it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

 

•

Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

 

•

it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

 

•

the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.

All financial assets not classified as measured at amortized cost or FVOCI as described above are measured as at FVTPL. This includes all derivative financial assets. At initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

 

15

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

Derecognition

The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, it transfers the rights to receive the contractual cash flows of the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred, or it transfers or does not retain substantially all the risks and rewards of ownership of a transferred asset, and does not retain control of the transferred asset.

If the Company has retained substantially all the risks and rewards of ownership of the transferred asset, the Company continues to recognize the transferred asset.

Offset

Financial assets and liabilities are offset, and the net amount is presented in the consolidated statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

Trade Receivables

Trade receivables are recognized initially at the amount of consideration that is unconditional, unless they contain significant financing components when they are recognized at fair value. Trade receivables are subsequently measured at amortized cost using the effective interest method, less loss allowance.

Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the moving average method, except for inventories in-transit.

Property, Plant and Equipment

Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes an expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labor, any costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located and borrowing costs on qualifying assets.

The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, and recognized in other income or other expenses.

Subsequent costs

Subsequent expenditure on an item of property, plant and equipment is recognized as part of its cost only if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognized in profit or loss as incurred.

Depreciation

Land is not depreciated, and depreciation of other items of property, plant and equipment is recognized in profit or loss on a straight-line basis, reflecting the pattern in which the asset’s future economic benefits are expected to be consumed by the Company. The residual value of property, plant and equipment is zero.

 

16

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

Estimated useful lives of the assets are as follows:

 

Items		Estimated useful lives (years)
Buildings and structures			40
Machinery			10
Others			5

Depreciation methods, useful lives and residual values are reviewed at each financial period-end and adjusted if appropriate and any changes are accounted for as changes in accounting estimates.

Intangible Assets

Intangible assets are initially measured at cost. Subsequently, intangible assets are measured at cost less accumulated amortization and accumulated impairment losses. Intangible assets are amortized in a straight-line method for five years with the residual value of zero from the time they are available.

Subsequent costs

Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in the specific intangible asset to which they relate. All other expenditures, including expenditures on internally generated brands, are recognized in profit or loss as incurred.

Impairment for Non-financial assets

The carrying amounts of the Company’s non-financial assets, other than assets arising from employee benefits, inventories, and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For intangible assets that have indefinite useful lives or that are not yet available for use, irrespective of whether there is any indication of impairment, the recoverable amount is estimated each year.

An impairment loss is recognized if the carrying amount of an asset exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss.

In respect of assets other than goodwill, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of accumulated depreciation or amortization, if no impairment loss had been recognized from the acquisition cost. An impairment loss in respect of goodwill is not reversed.

Deferred Income Tax

The Company’s taxable income generated from these operations are subject to income taxes based on tax laws and interpretations of tax authorities in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination is uncertain.

If certain portion of the taxable income is not used for investments or increase in wages or dividends in accordance with the Tax System for Recirculation of Corporate Income, the Company is liable to pay additional income tax calculated based on the tax laws. Accordingly, the measurement of current and deferred income tax is affected by the tax effects from the new tax system. As the Company’s income tax is dependent on the investments, as well as wage and dividends increase, there is an uncertainty measuring the final tax effects.

 

17

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

Fair Value of Financial Instruments

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Company uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period.

Impairment of Financial Assets

The provision for impairment for financial assets is based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation based on the Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

Net Defined Benefit Liability

The present value of net defined benefit liability depends on several factors that are determined on an actuarial basis using a number of assumptions including the discount rate.

Non-derivative financial liabilities

The Company classifies financial liabilities as financial liabilities at profit or loss and other financial liabilities according to the substance of the contract and the definition of financial liabilities and recognizes them in its statement of financial position when it becomes a party to the contract.

Financial liabilities at profit or loss

Financial liability at profit or loss includes a short-term trading financial liability or a financial liability designated as financial liability at profit or loss at initial recognition. A financial liability at profit or loss is measured at fair value after initial recognition and changes in fair value are recognized in profit or loss. On the other hand, transaction costs incurred in connection with the issuance at initial recognition are recognized in profit or loss immediately upon occurrence.

Other financial liabilities

Non-derivative financial liabilities that are not classified as financial liabilities at profit or loss are classified as other financial liabilities. Other financial liabilities are measured at fair value minus transaction costs directly related to issuance at initial recognition. Subsequently, other financial liabilities are measured at amortized cost using the effective interest method and interest expenses are recognized using the effective interest method.

Financial liabilities are removed from the statement of financial position only when they are extinguished, i.e., contractual obligations are fulfilled, cancelled, or expired.

Trade and other Payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of reporting period which are unpaid. Trade and other payables are presented as current liabilities, unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.

 

18

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

Employee benefits

Short-term employee benefits

Short-term employee benefits that are due to be settled within twelve months after the end of the period in which the employees render the related service are recognized in profit or loss on an undiscounted basis.

Defined contribution plan

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the period during which services are rendered by employees.

Defined benefit plan

A defined benefit plan is a post-employment benefit plan other than defined contribution plans. The Company’s net obligation in respect of its defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of any plan assets is deducted.

The calculation is performed annually by an independent actuary using the projected unit credit method. The discount rate is the yield at the reporting date on high quality corporate bonds that have maturity dates approximating the terms of the Company’s obligations and that are denominated in the same currency in which the benefits are expected to be paid. The Company recognizes all actuarial gains and losses arising from defined benefit plans in retained earnings immediately.

The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), considering any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Consequently, the net interest on the net defined benefit liability (asset) now comprises interest cost on the defined benefit obligation, interest income on plan assets, and interest on the effect on the asset ceiling.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Termination benefits

The Company recognizes expense for termination benefits at the earlier of the date when the entity can no longer withdraw the offer of those benefits and when the entity recognizes costs for a restructuring involving the payment of termination benefits. If the termination benefits are not expected to be settled wholly before twelve months after the end of the annual reporting period, the Company measures the termination benefit with the present value of future cash payments.

Share-based payments

Equity-settled share-based payment is recognized at fair value of equity instruments granted, and employee benefit expense is recognized over the vesting period. At the end of each period, the Company revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognizes the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

 

19

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

Provisions

Provisions for product warranties, litigations and claims, and others are recognized when the Company presently hold legal or constructive obligation as a result of past events, and when it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period, and the increase in the provision due to the passage of time is recognized as interest expense.

Leases

The Company leases various repeater server racks, offices, communication line facilities, machinery, and cars. Contracts may contain both lease and non-lease components. The Company allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices. However, for leases of real estate for which the Company is lessee, the Company applies the practical expedient which has elected not to separate lease and non-lease components and instead accounts them as a single lease component.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

 

•

Fixed payments (including in-substance fixed payments), less any lease incentives receivable

 

•

Variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date

 

•

Amounts expected to be payable by the Company (the lessee) under residual value guarantees

 

•

The exercise price of a purchase option if the Company (the lessee) is reasonably certain to exercise that option, and

 

•

Payments of penalties for terminating the lease, if the lease term reflects the Company (the lessee) exercising that option

Measurement of lease liability also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease.

The Company determines the lease term as the non-cancellable period of a lease, together with both (a) periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and (b) periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option. When the lessee and the lessor each has the right to terminate the lease without permission from the other party, the Company should consider a termination penalty in determining the period for which the contract is enforceable.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, which is the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

The Company is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.

 

20

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period in order to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

 

•

amount of the initial measurement of lease liability

 

•

any lease payments made at or before the commencement date less any lease incentives received

 

•

any initial direct costs (leasehold deposits)

 

•

restoration costs

The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.

Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less, such as mechanical devices and cars. Low-value assets are comprised of tools, equipment, and others.

Paid-in Capital

Common shares are classified as capital, and incremental costs incurred directly related to capital transactions are deducted from capital as a net amount reflecting tax effects. If the Company reacquires its own equity instruments, these equity instruments are deducted directly from equity as subjects of equity. Profit or loss in the case of purchasing, selling, issuing, or incinerating a self-interest product is not recognized in profit or loss.

Revenue from contracts with customers

The Company generates revenue primarily from sale and installation of LED display glasses. Product revenue is recognized when a customer obtains control over the Company’s products, which typically occurs upon delivery or completion of installation depending on the terms of the contracts with the customer.

Finance Income

Finance income comprises interest income on funds invested (including debt instruments measured at FVOCI), gains on disposal of debt instruments measured at FVOCI, and changes in fair value of financial assets at FVTPL. Interest income is recognized as it accrues in profit or loss, using the effective interest method.

Income Tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.

Current tax

Current tax comprises the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively enacted at the reporting date and any adjustment to tax payable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any.

 

21

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

The taxable profit is different from the accounting profit for the period since the taxable profit is calculated excluding the temporary differences, which will be taxable or deductible in determining taxable profit (tax loss) of future periods, and non-taxable or non-deductible items from the accounting profit.

Deferred tax

Deferred tax is recognized, using the asset and liability method, in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses and unrecognized tax credit carryforwards can be utilized. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

The Company recognizes a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries, associates, and interests in joint ventures, except to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. A deferred tax asset is recognized for all deductible temporary differences to the extent that it is probable that the differences relating to investments in subsidiaries, associates and joint ventures will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

The Company offsets deferred tax assets and deferred tax liabilities if, and only if the Company has a legally enforceable right to set off current tax assets against current tax liabilities and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously.

Earnings (Loss) Per Share

GLAAM, the Controlling Company presents basic and diluted earnings (loss) per share (“EPS”) data for its common stocks. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Controlling Company by the weighted average number of common stocks outstanding during the period.

Dividend

Dividend distribution to the Company’s shareholders is recognized as a liability in the financial statements in the period in which the dividends are approved by the Company’s shareholders.

 

22

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

Information by revenue categories

Revenue: The Company consists of a single operating segment.

 

Classification		For the six months ended June 30, 2023				For the six months ended June 30, 2022
Product			11,239,035				12,213,452
Service (*)			1,323,145				1,192,881
Total			12,562,180				13,406,333

 

(*)	On March 27, 2023, GLAAM and GLAAM Malaysia Sdn. Bhd made an exclusive distribution and license agreement. Per the agreement, in consideration for the exclusive territorial distribution rights and license granted to, GLAAM Malaysia Sdn. Bhd paid a royalty payment of total USD 760,000.

Information about key customers

Two key customers, Inspire Casino Resort and GLAAM Malaysia, during the six months ended June 30, 2023, account for more than 50% of the Company’s sales.

Critical Accounting Estimates and Assumptions

The Company makes estimates and assumptions concerning the future. The estimates and assumptions are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the current circumstances. Actual results may differ from these estimates.

 

5.	Cash and cash equivalents

Cash and cash equivalents as of June 30, 2023 and December 31, 2022, are as follows:

 

						(Unit: USD)
Cash and cash equivalent breakdown		As of June 30, 2023				As of December 31, 2022
Cash in bank			73,625				196,627

There are no restricted financial instruments as of June 30, 2023 and December 31, 2022.

 

6.	Financial Instruments by categories

Financial Instruments as of June 30, 2023, by categories are as follows:

 

(Unit: USD)

Assets in Financial Position

As of June 30, 2023

Financial assets at amortized cost

Financial assets at fair value through profit or loss

Financial assets at fair value through other comprehensive income

Total

Cash and cash equivalents

73,625

—

—

73,625

Trade receivables

8,834,914

—

—

8,834,914

Long-term trade receivables

1,763,457

—

—

1,763,457

Non-current financial assets

—

103,435

—

103,435

Lease deposits

176,847

—

—

176,847

Other deposits

3,798,526

—

—

3,798,526

Total

14,647,369

103,435

—

14,750,804

 

23

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

(Unit: USD)

Liabilities in Financial Position

As of June 30, 2023

Financial liabilities at amortized cost

Financial assets at fair value through profit or loss

Others

Total

Trade payables

6,937,392

—

—

6,937,392

Short-term borrowings

13,537,122

—

—

13,537,122

Convertible bond (*)

1,868,507

1,868,507

Current portion of long-term liabilities

1,234,765

—

—

1,234,765

Current portion of lease liabilities

99,248

—

—

99,248

Long-term borrowings

4,728,047

—

—

4,728,047

Long-term lease liabilities

23,726

—

—

23,726

Total

28,428,807

—

—

28,428,807

 

(*)	On March 23, 2023, the Company issued a convertible bond (“CB”) to Charm Savings Bank in an aggregate principal amount of KRW 2,500,000,000. The CB accrues interest at an annual rate of 10% and is set to mature on March 23, 2024.

Financial Instruments as of December 31, 2022, by categories are as follows:

 

(Unit: USD)

Assets in Financial Position

As of December 31, 2022

Financial assets at amortized cost

Financial assets at fair value through profit or loss

Financial assets at fair value through other comprehensive income

Total

Cash and cash equivalents

196,627

—

—

196,627

Trade receivables

697,999

—

—

697,999

Non-current financial assets

—

107,890

—

107,890

Security deposits

207,825

—

—

207,825

Other deposits

4,307,756

—

—

4,307,756

Total

5,410,207

107,890

—

5,518,097

 

24

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

(Unit: USD)

Liabilities in Financial Position

As of December 31, 2022

Financial liabilities at amortized cost

Financial assets at fair value through profit or loss

Others

Total

Trade payables

7,184,181

—

—

7,184,181

Short-term borrowings

11,863,506

—

—

11,863,506

Current portion of long-term liabilities

2,001,142

—

—

2,001,142

Current portion of lease liabilities

108,488

—

—

108,488

Long-term borrowings

4,741,358

—

—

4,741,358

Security deposit received

69,836

—

—

69,836

Long-term lease liabilities

24,694

—

—

24,694

Total

25,993,205

—

—

25,993,205

 

7.	Trade receivables

Trade receivables as of June 30, 2023 and December 31, 2022, are as follows:

 

(Unit: USD)

Classification

As of June 30, 2023

As of December 31, 2022

Current

Non-current

Current

Non-current

Trade receivables (*)

8,834,914

1,763,457

697,999

—

Allowance for bad debts

—

—

—

—

Net Trade receivables

8,834,914

1,763,457

697,999

—

 

(*)

As of June 30, 2023, the balance of trade receivables primarily consists of USD 3,259,135 and USD 1,763,457, which are receivable from Inspire Casino Resort for the Incheon Yeongjongdo Inspire Project. Furthermore, there is a trade receivable of USD 1,130,007 included, which is associated with the distribution rights sold to GLAAM Malaysia.

 

25

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

8.	Other current financial assets

Other current financial assets as of June 30, 2023 and December 31, 2022 are as follows:

 

						(Unit: USD)
Classification		As of June 30, 2023				As of December 31, 2022
Short-term loan			770,878				639,491
Accrued income			83,240				76,649
Other			187				319,790
Total			854,305				1,035,930

 

9.	Prepayments and other short-term assets

Prepayments and other short-term assets as of June 30, 2023 and December 31, 2022 are as follows:

 

						(Unit: USD)
Classification		As of June 30, 2023				As of December 31, 2022
Advanced payments (*)			2,647,317				1,503,365
Prepaid expenses			20,893				17,552
Value added tax (VAT) receivable			10,830				—
Total			2,679,040				1,520,917

 

(*)	Advanced payments as of June 30, 2023, is mainly composed of USD 862,300 for the professional fee related to the business combination and USD 151,941 for the convertible bond related advance payments.

 

10.	Inventories

Inventories as of June 30, 2023, are as follows:

 

		(Unit: USD)
Classification		As of June 30, 2023
		Acquisition cost				Provision for valuation of inventory				Book value
Products			4,980,257				—				4,980,257
Raw material			1,595,090				(181,018	)			1,414,072
Total			6,575,347				(181,018	)			6,394,329

Inventories as of December 31, 2022, are as follows:

 

		(Unit: USD)
Classification		As of December 31, 2022
		Acquisition cost				Provision for valuation of inventory				Book value
Products			4,671,074				—				4,671,074
Raw material			1,246,042				(202,764	)			1,043,278
Total			5,917,116				(202,764	)			5,714,352

The spread of COVID-19 posed material impact on the global economy in 2022. Therefore, the Company experienced a devasting impact on its financial position and performance including, but not limited to, decrease of productivity, inventory obsolescence, delayed or cancelled contracts, and collection of existing receivables. Consequently, the Company decided to reassess the significant accounting estimates and assumptions applied in the preparation of the consolidated financial statements.

 

26

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

Due to contract cancellation, GLAAM’s product inventory of USD 3,705,865 and USD 1,439,096 were returned from the customer on September 29 and December 30, 2022, respectively.

The Company wrote off USD 1,273,916 of GLAAM’s returned inventory as impaired.

Additionally, in 2022, the Company wrote off USD 4,922,600 of G-SMATT America’s inventory which were held for more than two years and considered as obsolete. The remaining balance of G-SMATT America inventory as of June 30, 2023 and December 31, 2022, was USD 0 and USD 170,603, respectively.

 

11.	Non-current financial assets

Non-current financial assets as of June 30, 2023 and December 31, 2022 are as follows:

 

						(Unit: USD)
Classification		As of June 30, 2023				As of December 31, 2022
Fair value of membership in Construction Association of Republic of Korea			103,435				107,890
Total			103,435				107,890

 

						(Unit: USD)
		As of June 30, 2023				As of December 31, 2022
Beginning balance			107,890				114,520
Foreign currency translation differences for foreign operations			(4,455	)			(6,630	)
Ending balance			103,435				107,890

 

12.	Investments accounted for using the equity method

Investment accounted for using the equity method as of June 30, 2023 and December 31, 2022, are as follows:

 

		As of June 30, 2023
Classification		Company		GLAAM stake holding ratio				G-FRAME stake holding ratio				Location		Financial statement date				Business type
Associates		Chenjin Chungjeolneung Ltd.			33.00	%			—			China			2023.06.30			Manufacturing
		G-SMATT JAPAN			28.73	%			11.43	%		Japan			2023.06.30			Retail
		G-SMATT HONGKONG			20.00	%			7.40	%		Hongkong			2023.06.30			Retail

 

27

GLAAM Co., Ltd and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

		As of December 31, 2022
Classification		Company		GLAAM stake holding ratio				G-FRAME stake holding ratio				Location		Financial statement date				Business type
Associates		Chenjin Chungjeolneung Ltd.			33.00	%			—			China			2022.12.31			Manufacturing
		G-SMATT JAPAN			28.73	%			11.43	%		Japan			2022.12.31			Retail
		G-SMATT HONGKONG			20.00	%			7.40	%		Hongkong			2022.12.31			Retail

Summary financial statements for associates are follows:

 

																				(Unit: USD)
		As of June 30, 2023
Classification		Company		Assets				Liabilities				Sales				Net income (loss)				Comprehensive income (loss)
Associates		Chenjin Chungjeolneung Ltd.			27,312,378				32,925,353				—				(290,098	)			(290,098	)
		G-SMATT JAPAN			8,691,354				4,408,582				3,303,183				16,520				16,520
		G-SMATT HONGKONG			330,860				4,291,674				—				(268,417	)			(268,417	)

 

																				(Unit: USD)
		As of December 31, 2022										For the six months ended June 30, 2022
Classification		Company		Assets				Liabilities				Sales				Net income (loss)				Comprehensive income(loss)
Associates		Chenjin Chungjeolneung Ltd.			27,376,845				32,703,114				25,508				(494,854	)			(494,854	)
		G-SMATT JAPAN			10,649,564				5,831,552				946,160				(347,847	)			(347,847	)
		G-SMATT HONGKONG			377,895				3,832,029				—				(252,310	)			(252,310	)
		G-SMATT America			2,747,598				3,127,976				84,914				(1,067,826	)			(1,067,826	)
		Korea Networks (*)			—				—				—				(799,333	)			(799,333	)

 

(*)	Korea Networks, in which the Company was holding 32.98% ownership, ceased its operation on October 19, 2022.

The details of adjusting the financial information amount of the associates to the carrying amount of the stake in the associates held by GLAAM are as follows:

 

																		(Unit: USD)
		As of June 30, 2023
Company		Net asset (a)				Stake holding ratio (b)				Net asset applied to stake holding ratio (a*b)				Goodwill				Book value
Chenjin Chungjeolneung Ltd.			(5,612,975	)			33.00	%			—				—				—
G-SMATT JAPAN			4,282,773				28.73	%			1,230,441				575,384				1,805,825
G-SMATT HONGKONG			(3,960,814	)			20.00	%			—				—				—
Total																			1,805,825

 

 

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