Brera Holdings PLC — Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2022. The filing is an annual Form 20-F, not a standalone fourth-quarter report. Financial statements are audited and prepared under IFRS in euros. Brera Holdings is an Irish holding company focused on social-impact football, football-club acquisitions and management, sponsorships, football schools, player-transfer opportunities and consulting services.
Business context
- Brera Holdings was incorporated in Ireland on June 30, 2022, and acquired 100% of Brera Milano S.r.l. on July 29, 2022. The transaction was accounted for as a reverse recapitalization, with no goodwill recorded.
- Brera FC, an amateur Italian club, was the primary football asset during 2022. The company planned to expand into Eastern Europe, Africa and South America.
- At December 31, 2022, the company had 7,700,000 Class A shares and 2,205,000 Class B shares outstanding. Class A shares carry 10 votes per share; Class B shares carry one vote per share.
2022 financial performance
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Revenue | €162,407 | €420,167 | Down 61.3% |
| Cost of revenue | €90,270 | €110,588 | Down 18.4% |
| Gross profit | €72,137 | €309,579 | Down 76.7% |
| Gross margin | 44.4% | 73.7% | Down 29.3 percentage points |
| General and administrative expense | €1,298,873 | €316,669 | Up 310.2% |
| Operating loss | €1,226,736 | €7,090 | Materially higher loss |
| Net loss | €1,226,855 | €87,056 | Up 1,309.3% |
| Basic and diluted loss per share | €0.21 | €0.03 | Higher loss per share |
Revenue consisted entirely of consultancy revenue, primarily from the legacy KAP business. The filing does not provide a clear 2022 revenue contribution from football operations. Management attributed the revenue decline to lower consulting contract volumes. The increase in general and administrative expense primarily reflected professional and consultancy fees associated with the Nasdaq IPO, sponsorship costs and other administrative expenses.
Cash flow, liquidity and debt
| Metric | 2022 | 2021 |
|---|---|---|
| Cash flow from operating activities | $(917,436) | €26,849 |
| Cash flow from investing activities | $(26,209) | $(16,353) |
| Cash flow from financing activities | €1,237,144 | $(36,911) |
| Cash and cash equivalents at year-end | €347,229 | €26,957 |
| Total assets | €1,125,099 | €598,165 |
| Total shareholders’ deficit | $(131,213) | $(253,821) |
- Operating cash burn was funded primarily by share issuances. Net proceeds from 2022 share issuances were approximately €1.35 million.
- Cash included €292,658 held with Wise Europe SA, which was not insured by a local government deposit-guarantee scheme.
- Debt consisted primarily of a €21,916 outstanding small-business guarantee-fund loan at December 31, 2022. The €20,000 shareholder loan outstanding in 2021 was repaid in 2022.
- Lease liabilities totaled €307,410 at year-end, with undiscounted lease commitments of €312,228.
- The company reported net current liabilities of approximately €188,481 and a net loss of €1.23 million, creating going-concern pressure at year-end.
Material changes versus the prior comparable period
- Revenue declined substantially as consulting activity decreased, while the business incurred significant IPO-related and expansion-related expenses.
- General and administrative expenses increased by approximately €982,204, driving the transition from a modest 2021 operating loss to a €1.23 million 2022 operating loss.
- Operating cash flow changed from a €26,849 inflow to a €917,436 outflow.
- Cash increased because financing inflows more than offset operating and investing cash outflows.
- The company’s reported deficit improved from €253,821 to €131,213, primarily due to equity issuances and other reserves, despite the 2022 net loss.
- Revenue concentration increased: one customer represented 74% of 2022 revenue, compared with three customers representing 75% in 2021.
- Supplier concentration also increased: four suppliers represented 88% of 2022 cost of revenue, compared with three suppliers representing 56% in 2021.
Outlook, subsequent events and unusual items
- On January 31, 2023, Brera completed an IPO of 1.5 million Class B shares at $5.00 per share and received approximately $6.9 million of net proceeds after underwriting discounts and expenses. The shares began trading on Nasdaq under “BREA” on January 27, 2023.
- Management stated that IPO proceeds would support football-club acquisitions or management rights, social-impact football, sales and marketing, working capital and general corporate purposes.
- Management reported approximately €6.0 million of cash and cash equivalents at March 31, 2023 and concluded that the IPO provided sufficient liquidity for at least the next 12 months. The filing text contains two slightly different March 31 cash figures, approximately €5.99 million and €6.06 million.
- In April 2023, the company acquired 90% of Fudbalski Klub Akademija Pandev in North Macedonia for €600,000, with potential future Class B share issuances tied to 15% of specified transfer-fee and UEFA qualifying-prize income for ten years.
- In March 2023, the company entered into a Mozambique partnership to rebrand Tchumene FC as Brera Tchumene FC. The initial payment obligation was €25,000, with no company responsibility for the club’s sporting management.
- No specific revenue, earnings or margin guidance was provided. Management’s strategy depends on acquiring clubs, achieving competitive success, securing sponsorships, developing players and generating transfer-market and tournament income.
- Key risks include uncertain sporting performance, seasonality, customer and supplier concentration, dependence on sponsorships, acquisition and integration risk, COVID-19 or other disruptions, foreign-exchange exposure, Nasdaq listing compliance, dilution and concentrated voting control.
- The company does not currently intend to pay dividends.
Most important facts for investors to verify
- Whether the IPO proceeds are sufficient to fund planned acquisitions and operating losses, given the company’s historical negative operating cash flow.
- The timing and financial contribution of football-club acquisitions, including Akademija Pandev and the Tchumene FC partnership.
- Whether revenue can diversify beyond legacy consulting services and the single customer that represented 74% of 2022 revenue.
- The company’s ability to convert sponsorships, football schools, transfer fees and tournament participation into recurring revenue.
- The effect of the 2022 Equity Incentive Plan, placement-agent warrants, IPO warrants and contingent share issuances on future dilution.
- The going-concern assessment, including the reported year-end deficit, net current liabilities and reliance on external financing.
- The uninsured €292,658 Wise Europe SA deposit and the company’s broader cash-counterparty exposure.
- The implications of the dual-class structure: Class A holders controlled approximately 95.4% of voting power as of the filing date.
- The discrepancy in reported March 31, 2023 cash balances and the company’s post-IPO cash usage.