MelodyVR : Full year results 2019

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

For Immediate Release

30 June 2020

MelodyVR Group PLC

('MVR', the 'Group' or the 'Company')

Full Year Results

MelodyVR Group PLC (AIM: MVR), the leading creator of virtual reality music ('VR') content and operator of the MelodyVR platform, is pleased to announce its results for the year ended 31 December 2019.

Highlights

• • MelodyVR featured by Apple as "App of the Day" and by Google as a winner of "Best Apps in 2019"

• • The official launch of an exclusive 5G partnership with Telefonica's, O2 mobile network operator;

• • MelodyVR launched on the Oculus Quest

• • Partnered with Good Morning America for the first ever live simultaneous TV and VR broadcast featuring Kane Brown and Marshmello;

• • Launch of the MelodyVR platform service in 4 new additional markets together with the first live festival broadcast of Wireless festival in combination with Live Nation;

• • The launch of our iOS and Android mobile application, broadening the reach of MelodyVR to billions of smart phones;

• • A strategic partnership with John Gore Organisation for the capture of theatrical content and a subscription of £5m by way of equity investment.

For further information please contact:

MelodyVR Group PLC

Anthony Matchett, Executive Chairman & CEO

www.melodyvr.groupArden Partners plc: Nominated Adviser, Financial Adviser and Corporate BrokerTel: [phone]

Corporate Finance: Ciaran Walsh, Ruari McGirr,

Corporate Broking: Simon Johnson

Chairman's Statement

It has now been more than 12 months since the broadcast of our inaugural live stream event featuring Liam Payne formerly of One Direction to 36 countries on both the MelodyVR platform and Facebook 360. The viewing metrics achieved for that event, particularly via Facebooks 360 social platform illustrated not only significant consumer appetite for our platform content but also mass engagement via a 2D screen. In July 2019, with a view to harnessing engagement and extending the reach of our music content library to the 1 billion plus smartphone devices around the world, we launched our own mobile application allowing users access to our platform content and the ability to experience truly immersive content from their own mobile device. Our launch coincided with our first partnership with Live Nation and the live stream to audiences across 45 countries of Wireless Festival, a ground-breaking VR first, which generated more than 250,000 individual views reaching more than 1,000,000 fans via Facebook live and 13,000,000 impressions over the company's digital media channels. Over the festival weekend, our newly launched app featured as one of the top 20 apps on the iOS App store as well as trending as the number 1 app on Google play marking a new phase in amplified awareness of our musicservice.

Our objective has been to build awareness and foster engagement at a pace far exceeding the adoption of dedicated VR devices. Our partnership with Good Morning America ("GMA") and the first ever live simultaneous TV and VR broadcastfeaturing Marshmello and Kane Brown from Central Park in New York reached viewing audiences in all 50 US states and stimulated tens of thousands of installs of our mobile app in the days leading up to the event.

Live coverage of the Good Morning America Nashville concerts reinforced our partnership with GMA and provided an opportunity to extend the reach of our content to new genres and extending reach and extend consumer awareness of VR and our MelodyVR platform content as a pre-curser to monetisation.

In October 2019, we announced our partnership with Telefonica's O2 mobile network, in a move to showcase both the capabilities of 5G technology and the full extent of immersive content using a next generation network. Our on-going flagship partnership with O2 signalled the first step in our core objective of scaling our business via a subscription model and we continue to work on both replicating these alliances with new strategic partners and extending our existing relationships in new geographic territories.

Recognition by Apple in November as an "App of the day" and our nomination by Google as one of its "Best of 2019" celebrates the consumer appeal of our offering and provides a testament to our technological capabilities in delivering content direct to consumer.

The release of content from internationally celebrated artists including Panic! At the Disco, Luke Combs, Tyga, Lewis Capaldi and Kelly Clarkson during 2019, have ensured that our platform content reflects the necessary diversity to attract a board and rich user base, and our exclusive sessions with L Devine, Hamzaa, Ashnikko and J C Stewart have truly showcased the depth of unique engagement that can be experienced via our platform as we push the boundaries of intimate and personal artist- fan engagement.

Operationally we recognise that our key strategic partners reside in the US and our new facility in Los Angeles will provide us with the necessary operational hub from which to extend our US presence. New warehouse and distribution facilities in the UK provide us with the necessary platform from which to further open the eyes of new users to the immersive world of MelodyVR via our own VR viewer which we intend to offer both as part of stand-alone initiatives and as part of a programme of support to our strategic partners.

As we continue to build awareness, we have been careful to contain our operational cost base. Overall staff numbers, including third party contractors, have reduced in number since the last year end, despite bolstering our management team with a number of seasoned industry professional who will oversee the next phase of our businesses development.

Our relationship with John Gore Organisation and the opportunity to extend our offering to a new theatre vertical remains a priority and during 2019 we were able to capture our first Broadway production in VR. We intend to further our exposure to theatre capture once we have progressed our navigation of the rights and distribution framework of this new and exciting opportunity. The partial exercise of the option by John Gore Organisation, and the extension of that option for a further two years demonstrates the valued and continuing support that we have from one of our key strategic partners. This in combination with the successful conclusion of a further equity raise in early 2020 provides us not only with the necessary validation of our strategic objectives but also the funding with which to deliver on our strategic ambitions.

Significant events in 2019

• • In November and December 2019, MelodyVR is featured by Apple as "App of the Day" and by Google as a winner of "Best Apps in 2019"

• • In October 2019, we launched our exclusive 5G partnership with Telefonica's, O2 mobile network operator;

• • In August 2019, we launched on the Oculus Quest and partnered with Good Morning America for the first ever live simultaneous TV and VR broadcast featuring Kane Brown and Marshmello;

• • In July 2019, we launched our MelodyVR platform service in 4 new additional markets together with our first live festival broadcast of Wireless festival in combination with Live Nation;

• • In June 2019, we announced the launch of our iOS and Android mobile application together with a strategic partnership with John Gore Organisation for the capture of theatrical content and a subscription of £5m by way of equity investment.

Review of business and 2019 financial results

Since the launch of our mobile app in July 2019 our principle focus has been to extend awareness of the MelodyVR platform and consequent engagement with its platform content. Since that time, we have generated more than 150,000 new installs of our app and seen average engagement time grow to more than 28 minutes in a single session.

The success of these initiatives provided a firm foundation for the strategic partnership with O2, which in combination with a global telecommunications provider for the first time saw MelodyVR monetise its platform content via subscription and this flagship partnership with O2 signals our intentions with regards to subscription monetisation of our platform content. O2's 5G subscribers now have access to our content beyond the confines of their own homes and we anticipate that as the availability of 5G handsets increase, those embracing MelodyVR as part of their bundled offering will expand. The availability of unique live events and paid ticketed offerings will further broaden awareness and, as part of a bundled subscription, offer the music fan the ultimate in artist - fan connection.

The Group reported revenues for the year totalling £0.2m (2018: £1.2m) resulting from content sales, partnership licencing deals and subscriber revenues from its partnership with O2 which launched in October 2019. The gross loss of £1.6m (2018 : £0.2m) has been calculated after the deduction of content creation costs as well as amounts due to all rights holders. These amounts include commissions and revenue share arrangements due to app stores, record labels, artists, publishers, songwriters and exclusive event / venue partners.

The operating loss before non-recurring and non-cash items for the year amounted to £13.8m (2018: loss £10.1m) and excludes £1.2m (2018: £0.1m) of Research and Development tax credits associated with the development and launch of our mobile app and the subsequent step up in content capture and broadcast activity associated with events such as Wireless and the Good Morning America Series.

After non-recurring and non-cash items, net financing charges and taxation, the Group reported a loss of £15.0m (2018: loss £11.3m) resulting in a loss per share of 1.1p (2018: loss 0.9p).

The Group continues to capitalise the capture and production of music content on its balance sheet as intangible assets in addition to the capitalisation of specific development activities such as that of its mobile application. During the course of 2019, the Group capitalised £1.72m (2018 : £1.82m) of intangible assets on its balance sheet, consisting of £1.28m (2018: £0.67m) of R&D development spend and £0.44m (2018 : £1.15m) of content assets. These amounts will be amortised over their useful lives and amortisation charges of £0.41m (2018 : £0.15m) and £0.59m (2018 £0.18m) respectively were reflected during the year.

As at 31 December 2019 the Group had cash reserves of £6.8m (2019: £19.3m), subsequently bolstered by the equity raise of $12m (before costs) and $1m of option exercise subscription proceeds received after the year end.

In March 2020, we raised a further $12 million (£10.3m) before costs via the issuance of new shares to new US based investors. This raise will ensure that we have sufficient resources to continue to scale our business responsibly and positions us well in this time of global uncertainty caused as a result of the COVID-19 pandemic.

The outbreak of the COVID-19 pandemic has provided us with an unexpected circumstance to further showcase our VR capabilities and the heightened experiences we can offer to music fans around the world. In the absence of mass attended events, our purpose-built studio in LA provides us with a unique forum for artists to engage with their fans at a time bereft of traditional mass attended music performances. We recognise the opportunity to spotlight our offering and further extend our brand awareness with a rich new stream of live performances from a broad spectrum of artists and intend to use this time to build upon our library of content and ensure a constant and exciting series of new platform releases throughout the remainder of this year.

With support from all of the major labels, publishers and many high profile artists who have recognised this as one of the few credible opportunities that exist to engage with their fan base at this time of restriction, our intention is to replicate the concept not only in other key geographies but at new previously unexplored and unconventional venues which, in the absence of audience attendance would add further interest and depth to the experience.

These initiatives have not only provided us with the opportunity to extend reach and showcase our content platform at a time of restricted choice but have also pivoted the manner in which we capture content resulting in a streamlining of our operational capture costs. The transition to an operating model of performance capture and broadcast at a single location greatly reduces the logistical challenges and cost of multi venue capture and we expect to be able to report the impact of this with our half year results.

Whilst there have been many positives associated with the decision to pursue these new initiatives, the application of resource required to stage these events has inevitably delayed the trajectory for launching our consumer subscription service. Our commitment to growing awareness as a platform for subsequent monetisation of that engagement remains a priority, and in the near term, our Live Series will provide new openings for branding and partner advertising and the stage upon which to offer our first live ticketing "paid for" event. The content created over the course of the next few months of our Live Series will allow us to further extend the breadth and depth of our content library and allow for greater engagement at the time our subscription service is launched.

The launch of our live series in 2020, initially in Los Angeles will provide the first live performance hub to both enrich our platform content and provide potentially weekly live content broadcast to music fans around the world. The opportunity to deliver exclusive performances in real time to audiences around the world will afford new opportunities for product placement, session branding and other ad supported initiatives.

Technology and development

The Group will continue to build awareness and engagement with its content platform as a pre-cursor to launching its subscription service. Our efforts to enrich our content library to extend consumer appeal in addition to more frequent broadcasting of live events from both our own purpose-built studios and established event venues will provide the platform for monetisation of our user base and the opportunity to forge new partnerships and extend our reach to new user groups. In addition, we continue to pursue the opportunity that live theatre affords, and the development of our platform will incorporate access to this new creative vertical.

Product development expenses primarily comprise of costs incurred for development of equipment related to the capture and production of content together with resources expended on the Group's existing platform and service offerings.

Again, I would like to take this opportunity to extend my gratitude to our shareholders, customers and business partners for their support, effort and insights over the course of this last year - our continued progress would not have been attained without the efforts of the management team and the unwavering commitment of our staff.

Going forward, we will continue to pursue opportunities to keep us at the forefront of providing ever more immersive experiences and pursue our ambitions of creating long-term value for stakeholders, and I look forward to reporting on our progress over the course of the coming year.

Anthony Matchett

Executive Chairman

PRIMARY FINANCIAL STATEMENTS

Consolidated Statement of Comprehensive Income For the year ended 31 December 2019

2019 £

2018 £

Continuing operations:
Revenue	194,971	1,180,623
Cost of sales	(1,832,042)	(1,427,674)
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GROSS LOSS	(1,637,071)	(247,051)
------------------	------------------
Administrative expenses	(14,227,561)	(11,260,086)
------------------	------------------
OPERATING LOSS	(15,864,632)	(11,507,137)
Operating loss before non-recurring and non-cash items	(13,794,485)	(10,142,438)
Depreciation	(624,862)	(388,833)
Amortisation	(1,001,809)	(329,073)
Share based payments	(443,476)	(646,793)
------------------	------------------
OPERATING LOSS	(15,864,632)	(11,507,137)
Finance income	106,891	42,929
Finance costs	(14,229)	-
Foreign exchange gain/(loss)	(381,101)	73,253
------------------	------------------
LOSS FOR THE YEAR BEFORE TAXATION	(16,153,071)	(11,390,955)
Taxation	1,184,287	121,016
------------------	------------------
NET LOSS AND TOTAL COMPREHENSIVE INCOME
FOR THE YEAR	(14,968,784)	(11,269,939)
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Attributable to:
Owners of the parent company	(14,968,784)	(11,270,952)
Non - controlling interest	-	1,013
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LOSS PER SHARE - from continuing operations - basic	(1.1)p	(0.9)p
and diluted and diluted	=========	=========