These profits for the Company were the result of the transaction with one of their new subsidiaries, One Championship, Inc. which was incorporated in Delaware back on August 15, 2019. According to their 2020 financial statements “[d]uring the financial year, the Company has sold its intellectual property rights relating to the combat sports and martial arts business in the United States to One Championship, Inc for a consideration of US$400,000,000, of which US$200,000,000 being settled by way of shares in One Championship, inc and US$200,000,000 by way of cash.”
The statement also reported that as of December 31, 2020, the $200,000,000 was still due from the subsidiary. While both the cash and the valuation of the shares was reported as revenue by for the Company, it was not included with revenues for the Group.
To clarify for those who may be confused: sometime last year, ONE (Group) sold the intellectual property rights for their combat sports product to their own ONE subsidiary in Delaware. The price for these IP rights was shares they deemed to be worth $200 million, and another $200 million in cash that remain unpaid.
How they came to determine the fair value of the intellectual property rights or the fair value of their Delaware corporation, especially seeing as how they are being traded between related parties, is not revealed in the filing. Nor does it give any details as to how they will be paying the outstanding cash.
Without this $400 million transaction, the Company would have reported a loss of $59 million.
