REG - Electric Guitar PLC - Annual Report and Financial Statements
30/09/2024 08:30
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RNS Number : 2062G Electric Guitar PLC 30 September 2024
30 September 2024
Electric Guitar PLC
("Electric Guitar" or the "Company")
Annual Report and Financial Statements of Electric Guitar for the year ended
31 March 2024
and
Financial Statements of 3radical Limited for the year ended 31 March 2024
Electric Guitar PLC (LSE: ELEG), the digital marketing and advertising company
providing first-party data solutions, today publishes its financial results
for the year ended 31 March 2024, a period during which it was still a
Special Purpose Acquisition Company.
Post-period end, the Company completed the acquisition of 3radical Limited
("3radical") in May 2024, which corresponded with the cancelling of its
listing on the Standard Segment of the Official List and trading on the Main
Market of the London Stock Exchange, and subsequent admission to trading on
AIM. Accordingly, the Company also today publishes the annual results of
3radical for the year ended 31 March 2024, the financial statements for which
are set out at the end of this announcement.
Since the year-end, the Company has made significant progress in advancing its
strategy and building commercial opportunities.
Post-Period End Strategic and Operational Highlights:
· Completed the £1.3 million all-share acquisition of 3radical, a
leader in gamification solutions that help brands gain deeper engagement with
their audiences and better marketing ROI, as the Company's first acquisition
in its buy-and-build strategy.
· Transferred to the AIM market of the London Stock Exchange,
successfully raising £2.2 million in new equity and agreeing a new £600k
loan facility.
· Enhanced 3radical's management, adding additional sales and marketing
resources, winning new clients and prospects, and launching a new
rapid-deployment solution for customer engagement, the Voco Solutions Portal
("VSP").
· Launched an AI joint venture to create AI-based products for
businesses to increase their marketing ROI by targeting audiences more
effectively, drawing initially from 3radical's unique store of over 1 billion
data points of how consumers engage with digital advertising.
· Acquired Mymyne Limited ("Mymyne"), a software and sales &
marketing services business in an all-share transaction valuing the business
at up to a maximum of £154k, achieving synergies that alone more than offset
the value of the consideration.
· Entered into collaborations with Sophus3, Digital Alchemy and Little
Birdie: businesses with access to new markets, technologies and products.
John Regan, CEO of Electric Guitar PLC, commented: "The past year has been one of transformation for Electric Guitar. The acquisition of 3radical and admission to AIM were pivotal moments for the Company, allowing us to revitalise operations and accelerate innovation at 3radical.
"The subsequent launch of VSP, recent strategic collaborations and a further acquisition, paired with the strength of 3radical's unique data set, position us at the forefront of the evolving digital marketing landscape.
"We are now confident in our outlook as we continue to integrate new technologies, deepen customer engagement and pursue growth opportunities as part of our wider buy-and-build strategy."
The Company's annual report and accounts for the year ended 31 March 2024 will
be sent to shareholders today. A copy of the annual report will shortly be
made available on the Company's website at: www.electricguitarplc.com
(http://www.electricguitarplc.com) .
For further information:
Electric Guitar PLC
John Regan (CEO) +44 (0)7721 348826
Allenby Capital (Nominated Adviser and Joint Broker) 020 3328 5656
Jeremy Porter
Piers Shimwell
Dan Dearden-Williams
Axis Capital Markets (Joint Broker) 020 3026 0320
Richard Hutchison
Global Investment Strategy UK (Joint Broker) 020 7048 9400
James Sheehan
Yellow Jersey (Financial PR)
Charles Goodwin 020 3004 9512
Annabelle Wills electric@yellowjerseypr.com
(https://appriver3651008983.sharepoint.com/sites/CompanyData/Shared%20Documents/Corporate%20Finance/Mandated%20Transactions/Electric%20Guitar/Announcements/electric@yellowjerseypr.com)
Bessie Elliot
Notes to Editors
Electric Guitar PLC (AIM: ELEG) is the provider of first-party data solutions
for the marketing and advertising industry, empowering businesses to realise
the value of their first-party data. In an era of changing consumer attitudes
towards the use of their data, tighter privacy legislation, and the demise of
third-party cookies, first-party data is now the key to success in digital
marketing. Electric Guitar's strategy is to acquire and scale businesses that
help marketers maximise the value of first-party data by curating, managing,
and deploying it, and in doing so making Electric Guitar the industry standard
for first-party data solutions.
As the first part of this strategy, Electric Guitar acquired 3radical Limited,
a company that utilises its Software as a Service platform, 3radical Voco, to
enable organisations to engage individuals and request their data directly
using interactive digital experiences. It has since entered into
collaborations with several other businesses operating in the field, as well
as a joint venture with Exelia Technologies Limited called Marcomms.ai for
producing AI-driven products and services for the digital marketing and
advertising industry.
For further information please visit www.electricguitarplc.com
(http://www.electricguitarplc.com) .
Chair's Statement
Since it was listed on the Standard List and the Main Market of the London
Stock Exchange in January 2022 as a Special Purpose Acquisition Company, the
Company has investigated many potential acquisitions of trading companies,
initially to reverse into one of them as its first acquisition which
culminated in the acquisition of 3radical, and with a view to creating a
pipeline for further acquisitions and collaborations.
I am grateful to our supportive shareholders who have joined and stayed with
us on this journey, despite some very difficult stock market conditions. I
would also like to thank the executive team led by John Regan and Richard
Horwood who have applied themselves with skill, vigour and imagination to
achieve the Company's goals, as well as the non-executive directors who have
served the Company during this period and since the year-end - Sarfraz Munshi,
Grahame Cook, Caroline Worboys and David Eldridge - whose wise counsel has
proved invaluable.
First acquisition and admission to AIM
Led by industry expert John Regan as Chief Executive Officer and following the
appointment in April 2023 of experienced M&A professional Richard Horwood
as an executive director - subsequently appointed Chief Operating Officer -
the Company focused on a shortlist of acquisition targets. This quickly led to
the announcement of non-binding heads of terms on 6 July 2023 to acquire,
through a reverse takeover subject to regulatory and shareholder approval and
due diligence, all the outstanding shares in 3radical in an all-share
transaction (the "Transaction").
The Transaction was subsequently completed on 3 May 2024, despite difficult
stock market conditions. At the same time, the Company cancelled its listing
on the Main Market of the London Stock Exchange and had its Ordinary share
capital, as enlarged following the completion of the Transaction at the
negotiated value of £1.3 million satisfied in shares and of a successful
£2.2 million equity fundraising ("Fundraising"), admitted to trading on AIM,
a market operated by the London Stock Exchange ("Admission"). It was one of a
very small number of successful new admissions on AIM in the last year.
Market environment
As outlined in last year's annual report, the online marketing industry is
fundamentally shifting from targeting consumers en masse through third-party
data cookies intrusively planted on their devices and indiscriminately
monitoring their online activities, to understanding and engaging consumers
better using first-party information they have willingly provided.
At the same time, the market is being disrupted by the competing drivers of
consumer privacy and data protection on the one hand, and AI-driven demands
for more personalised marketing on the other. As a result, consented
first-party data has become increasingly critical for marketing and providing
a compelling customer experience, optimising communications, designing
products and services and, ultimately, driving revenues.
The initial excitement over general purpose generative AI, such as ChatGPT,
has led to heightened awareness of the capabilities of AI and its use in
marketing, with major brands such as Coca Cola and BMW beginning to deploy
advertising created by AI. As the industry gets to grips with this rapidly
advancing technology, there is increasing awareness that accessing the right
data is fundamental to this process. This has further bolstered interest in
first-party data, and businesses with access to their own proprietary data
which can be deployed to create AI for specific use cases, such as consumer
engagement, have a significant advantage as the market for AI develops.
The emergence of Web 3.0 technologies is beginning to influence this evolving
landscape. By leveraging decentralised platforms and blockchain technology,
Web 3.0 empowers consumers with greater control over their personal data and
online interactions, supporting the shift towards transparency and user
consent. Recognising these trends, marketers are beginning to explore Web 3.0
solutions to stay ahead of the curve.
These industry shifts are coupled with continuing relatively high interest
rates and less readily available private equity for SMEs, leaving many
growth-oriented technology-based companies with less access to the capital
they need. This is resulting in increasingly realistic valuations by target
company founders and their private investors, creating more opportunities for
the Company to acquire complementary businesses at attractive valuations, both
by using its now AIM-quoted equity as an acquisition currency that can grow in
value as the acquired businesses deliver on their potential and as a way to
access growth capital.
..............................
John Hutchinson
Chairman
30 September 2024
Chief Executive Officer's Report
After acquiring 3radical in May 2024, we immediately enhanced its sales and
marketing activities, following an extended period of retrenchment that
inevitably impacted revenues and sales opportunities. We also brought in new
and experienced senior management and bore down on non-revenue-generating
overheads; generated significant synergies by in-housing the services
previously provided by Mymyne; and established several new collaborations for
additional products, technologies and access to new markets.
Product development was refocused on client-related activities and the
development of the Voco Solutions Portal. VSP is an evolution of 3radical's
established Voco platform, designed specifically to provide businesses with a
streamlined and rapid deployment solution for customer engagement, with much
shorter sales and implementation lead times, and clearer marketing ROI.
3radical's business in the context of Electric Guitar's strategy
Voco is a robust and sophisticated Software as a Service (SaaS) platform,
which enables organisations to engage individuals and request their
first-party data directly, using progressive and interactive digital
experiences, at scale. A trailblazer in digital consumer engagement solutions
and based in the UK, 3radical also has an operation in Singapore, and
customers across the UK, US and Asia-Pacific.
With Voco offering marketers a tried and tested way to earn valuable
first-party data and with 3radical's existing global reach, it fits Electric
Guitar's buy-and-build strategy of capitalising on the structural disruption
in the marketing industry.
In addition, having provided its online engagement solutions to marketers for
some years, 3radical has built up a unique global dataset of anonymised data
with over 1 billion data points, including detailed information on how
consumers engage with digital advertising ("Global Data Store"). This unique
data asset is exactly the kind of proprietary data that AI needs.
Marcomms.ai joint venture
Post-period end, on 31 July 2024, the Company announced the launch of
Marcomms.ai as a UK joint venture with Exelia Technologies Limited ("Exelia"),
with the aim of positioning the joint venture, and by extension Exelia and
Electric Guitar, as a leading authority in AI-enhanced marketing and
advertising solutions.
Exelia is a Cyprus-based software development business with a specialised team
of developers proficient in blockchain, machine learning, data processing and
AI. The joint venture combines these capabilities with Electric Guitar's
administration, sales and general commercialisation expertise, and access to
3radical's Global Data Store. It will also benefit from access to 3radical's
established clients in the marketing communications and advertising industry,
providing both valuable data and a ready market for the joint venture's
offerings in the marketing communications and advertising sectors.
Marcomms.ai's first product, Engagement Intelligence (EI), will use the more
than 1 billion data points in the Global Data Store to provide detailed
understanding of how consumers engage with digital advertising, enabling
marketers to increase ROI by providing information to help optimise their
marketing campaigns to increase engagement. This strategic integration marks a
crucial step in the development of AI-based products designed to enable
businesses to connect with their audiences more effectively.
Exelia is funding the joint venture's initial working capital in relation to
data engineering and transformation, data analysis and dashboard creation
based on 3radical's Global Data Store. Electric Guitar is funding the initial
costs relating to incorporation and administration of the joint venture
company, access to the Global Data Store, and the introduction of a minimum
viable product to customers and prospects.
Other collaborations
On 15 July 2024, 3radical agreed a mutual reseller arrangement with Sophus3, a
well-established business working with some of the world's largest automotive
brands such as Ford, Hyundai and Volkswagen. Sophus3 analyses behavioural data
collected from multiple websites to understand the habits, influences and
behaviours of online car buyers. Sophus3 has developed 'Engage' as its own
SaaS platform that allows clients to respond to consumer behaviour in
real-time and serve them the right content at the right moment to maximise
sales. Under the agreement, 3radical can offer Engage to assist its clients,
and Sophus3 can offer Voco to some of the world's largest car brands at a time
when first-party data is becoming increasingly important in the automotive
industry, as manufacturers seek to engage and retain their car buyers directly
rather than through distributors.
On 25 September 2024 in Singapore, 3radical launched its strategic
collaboration with Digital Alchemy, a global marketing automation consultancy
based in Asia-Pacific and North America, to deliver comprehensive and
personalised engaging marketing solutions. This further strengthens 3radical's
existing presence in Asia-Pacific, enhancing relationships with its existing
client base, as well as attracting and retaining new clients by leveraging
Digital Alchemy's expertise in marketing automation and its robust
technological partnerships with Salesforce, Adobe, SAS, Braze and HCL. The
event enabled 3radical to extend its network and establish relationships with
leading enterprises looking to enhance their digital marketing strategies
through cutting-edge technologies.
Also on 25 September 2024, the Company announced a collaboration with Little
Birdie, a subscription and recurring payments management platform, to create a
loyalty app that integrates first-party 'Open Banking' data with 3radical's
Global Data Store, enabling clients to enhance consumer engagement by
providing personalised financial insights into customer spending habits,
preferences and financial behaviours.
Mymyne
As stated in the Company's AIM Admission document and in anticipation of the
Transaction, 3radical had engaged Mymyne, a business related to the Company
due to shareholdings in it by two of the Company's directors (John Hutchinson
and myself), to start to provide 3radical's needed sales and marketing
expertise and capabilities, payment for which was conditional on completion of
the Transaction.
On 28 August 2024, the Company completed an all-share acquisition of Mymyne,
valuing it at up to a maximum of approximately £154k based on the closing
mid-market price of the Company's shares immediately prior to announcing the
proposed acquisition on 9 August 2024. This acquisition was conducted solely
by Electric Guitar's independent directors, and was approved by shareholders
at a General Meeting on 27 August 2024. This brought Mymyne's capabilities
in-house, and achieved substantial cost-savings that will more than offset the
value of the consideration.
3radical's trading
As anticipated in the Company's AIM Admission document, and as reflected in
3radical's interim results to 30 September 2023 contained therein, 3radical's
trading in the year to 31 March 2024 was adversely affected by an extended
period of retrenchment from late 2022 up to completion of the Transaction, due
to lack of resources especially in its sales, marketing and account management
functions.
This resulted in 3radical's revenues for the financial year ended 31 March
2024 falling to £0.4 million from £0.7 million in the previous year,
exacerbated by the transition from direct sales to indirect sales net of
reseller commissions of typically 50 per cent, as well as to some attrition in
the customer base, in line with the Board's expectations.
Despite the substantial cost reductions mainly in sales and marketing, the
lower turnover - coupled with larger than expected exceptional costs incurred
for the Transaction and an adverse effect of foreign exchange losses -
increased operating losses for the financial year ended 31 March 2024 to £1.5
million from £1.1 million in the previous financial year.
The Transaction in May 2024 not only brought in additional resources from the
Fundraising but has also enabled 3radical to start to benefit from the
Company's expertise in productisation, sales and marketing. For example, in
just the first few months we have nearly doubled 3radical's inbound website
traffic and increased dwell time by 400%; and have more than doubled UK direct
sales lead generation, resulting in 36 new live conversations with significant
brands in the last 3 months, almost halving the historic average sales cycle.
On 19 September 2024, 3radical launched VSP at the Digital Marketing
Exposition & Conference ("DMEXCO") in Cologne, Germany; and on 25
September 2024 at the joint event with Digital Alchemy in Singapore. While the
Voco platform has long been a comprehensive tool for creating interactive and
personalised digital experiences, VSP focuses on enabling organisations to
quickly and efficiently deploy engagement strategies without the need for
extensive technical expertise, reducing the time needed for clients to
implement Voco from months to hours.
The recent event in Singapore was attended by senior members of the digital
advertising community from across the Asia-Pacific region, and our recent
roll-out of activity with MediaCorp, Singapore's largest content creator and
national media network, demonstrates that momentum is returning to this
region.
I thank all our staff who have worked tirelessly to reinvigorate the business
after an extended period of constrained resources, and the inevitable
distraction of a lengthy takeover period since the proposed acquisition of
3radical was announced in July 2023, before we were able to bring in new
resources and skills. It takes time to turn a business around in such
circumstances, but I am hugely encouraged by the progress we have made and
look forward to our future success.
..............................
John Regan
Chief Executive Officer
30 September 2024
MANAGEMENT REPORT
For the year ended 31 March 2024
Principal activities
The Company was established in March 2021 as a Special Purpose Acquisition
Company to seek acquisition targets in the digital media sector. In January
2022 its Ordinary shares were admitted to the Standard Segment of the Official
List and to trading on the Main Market of the London Stock Exchange, following
a successful placing of 40,000,000 Ordinary shares at £0.03 per share raising
gross proceeds of £1,200,000 before expenses.
The principal activity of the Company during the period to 31 March 2024 was
that of identifying potential companies, businesses, or assets for
acquisition.
Financial review
As a Special Purpose Acquisition Company for the period, the Company had no
revenue and incurred a net loss of £1,367,797 in the year ended 31 March 2024
(2023: £537,690). At 31 March 2024, the Company held cash at bank totalling
£137 (2023: £491,635), and £650,000 of available loan facilities.
Post balance sheet events
In May 2024, the Company cancelled the listing of its Ordinary shares on the
Standard Segment of the Official List and had its Ordinary shares admitted to
trading on AIM, a market operated by the London Stock Exchange.
At the same time, it acquired 3radical through an all-share reverse takeover
by issuing 61,184,843 ordinary shares at £0.021 per share valuing 3radical at
£1,284,882; and issued a further 104,785,670 ordinary shares at £0.021 per
share raising £2,200,499 before expenses, through a combination of
subscription, placing, and the conversion of certain liabilities to new
Ordinary shares.
As a result, the Company's principal activity changed to the provision of
first-party data solutions for the digital marketing and advertising industry
as well as identifying potential companies, businesses, or assets for
acquisition.
In August 2024, the Company acquired Mymyne through an all-share acquisition
by issuing 9,834,521 Ordinary shares at £0.0073 per share on completion, plus
deferred consideration of up to a maximum of 11,191,665 Ordinary shares after
a year subject to conditions, valuing Mymyne at a maximum of £153,491 at the
closing mid-market price of the Company's Ordinary shares on 8 August 2024. At
the same time, the Company issued a further 9,589,042 Ordinary shares at
£0.0073 per share in satisfaction of £70,000 in fees to professional
advisers.
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2024
Year ended Year ended
31 March 31 March 2023
2024
Note
£ £
Administration expenses
- Acquisition costs 5 (927,605) -
- Other costs 4 (447,547) (544,420)
Operating loss (1,375,152) (544,420)
Finance income- interest received 7,355 6,730
Loss before income tax 7 (1,367,797) (537,690)
Income tax 8 - -
Loss and other comprehensive income for the year (1,367,797) (537,690)
Loss per share
Basic (pence) 6 (2.36) (0.93)
Diluted (pence) 6 (2.36) (0.93)
There was no other comprehensive income for the year(2023: £nil).
The notes on pages 46 to 61 form part of these financial statements.
STATEMENT OF FINANCIAL POSITION
for the year ended 31 March 2024
2024 2023
Note £ £
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 5,529 -
CURRENT ASSETS
Other receivables 9 75,745 29,533
Cash and cash equivalents 10 137 491,635
75,882 521,168
TOTAL ASSETS 81,411 521,168
EQUITY
SHAREHOLDERS' EQUITY
Share capital 11 289,314 289,314
Share premium 13 948,629 948,629
Accumulated losses 13 (2,150,874) (783,077)
TOTAL EQUITY- (deficiency) (912,931) 454,866
LIABILITIES
CURRENT LIABILITIES
Financial liabilities
Borrowings 14 251,928 -
Trade and other payables 15 742,414 66,302
TOTAL LIABILITIES 994,342 66,302
TOTAL EQUITY AND LIABILITIES 81,411 521,168
TOTAL ASSETS
81,411
521,168
EQUITY
SHAREHOLDERS' EQUITY
Share capital
11
289,314
289,314
Share premium
13
948,629
948,629
Accumulated losses
13
(2,150,874)
(783,077)
TOTAL EQUITY- (deficiency)
(912,931)
454,866
LIABILITIES
CURRENT LIABILITIES
Financial liabilities
Borrowings
14
251,928
-
Trade and other payables
15
742,414
66,302
TOTAL LIABILITIES
994,342
66,302
TOTAL EQUITY AND LIABILITIES
81,411
521,168
The financial statements were approved by the Board of Directors and
authorised for issue on 30 September 2024 and were signed on its behalf by:
........................................................................
John Hutchinson
Director
The notes on pages 46 to 61 form part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2024
Share capital Share premium Retained earnings
Total
£ £ £ £
At 1 April 2022 289,314 948,629 (245,387) 992,556
Change in equity
Loss for the year - - (537,690) (537,690)
At 31 March 2023 289,314 948,629 (783,077) 454,866
Change in equity
Loss for the year - - (1,367,797) (1,367,797)
At 31 March 2024 289,314 948,629 (2,150,874) (912,931)
The notes on pages 46 to 61 form part of these financial statements.
STATEMENT OF CASH FLOWS
for the year ended 31 March 2024
Year ended Year
31 March 2024 ended
31 March 2023
£ £
Cash flow from operating activities
Loss for the year (1,367,797) (537,690)
Adjustments for:
Finance income (7,355) (6,730)
Depreciation charges 257 -
(Increase)/decrease in other receivables (46,212) 2,254
Increase in trade and other payables 676,112 30,740
Net cash used in operating activities (744,095) (511,426)
Cash flow from investing activities
Finance income 7,355 6,730
-
Purchase of tangible fixed assets (5,786)
Net cash from / (used in) investing activities 1,569 6,730
Cash flow from financing activities
Borrowings during the year 251,928
Net cash from financing activities 251,928 -
Net increase/(decrease) in cash and cash equivalents (491,498) (504,696)
Cash and cash equivalents at the beginning of the year
491,635 996,331
Cash and cash equivalents at the end of the year 137 491,635
The notes on pages 46 to 61 form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
1. General information
Electric Guitar Plc is a public limited company, registered in England and
Wales. The Company's registered office is One Bartholomew Close, London, EC1A
7BL. The Company's principal activities and the nature of its operations are
disclosed in the director's report.
The functional and presentational currency is Great British Pounds Sterling
("£") and the financial statements have been rounded off to nearest £.
2. Accounting policies
2.1 Basis of preparation
The financial statements have been prepared under historical cost convention,
in accordance with UK adopted International Financial Reporting Standards (UK
adopted IFRS) and the Companies Act 2006.
The following accounting principles have been applied:
2.2 Going concern
The financial statements have been prepared on a going concern basis. The
board has assessed the Company's financial position as at 31 March 2024 and 30
September 2024 and the factors which may impact the Company's ability to
continue as a going concern for a period of at least 12 months from the date
of approval of these financial statements. Subsequent to the year-end, the
Company has acquired control of the businesses for 3radical Limited and Mymyne
Limited (see note 18). Management and the directors have also considered what
the Group (Electric Guitar Ltd and its subsidiaries) is expected to look like
following the completion of these business combination transactions, which
includes the Group's working capital requirements over the period to 30
September 2025.
At as 31 March 2024, the Company had a deficiency in total equity of £913k.
The Company also generated a loss for the year ended 31 March 2024 of £1,368k
and a net cash outflow from operating activities of £745k. The Group has also
incurred a loss for the current period and a net cash outflow from operating
activities of approximately £1.2m for the period to 30 September 2024.
In assessing the ability of the Company to continue as a going concern and pay
its debts as and when they fall due, the directors have taken into
consideration the following matters:
· On 26 March 2024, the Group secured an additional loan facility with
Sanderson Capital Partners of £600k. As at 31 March 2024, the Group had
unutilised loan facilities of £650k.
· Management has prepared detailed cash flow forecasts and sales
forecasts for the Group for the period September 2024 to September 2025. The
Group is forecast to generate a significant increase in sales and cash
receipts from customers and continue to operate within its agreed loan
facilities for all periods from September 2024 to the end of September 2025.
The directors have reviewed and approved these forecasts.
· As part of its assessment of the forecasts, certain sensitivity
analyses were run on the forecast models. In the event the Group's actual
sales for the period ended 30 September 2025 were lower than forecast by 20%
and certain controllable costs were to be deferred, the Group would still have
the ability to operate within its agreed loan facilities and pay its debts as
and when they fall due for the same periods as above.
· The Group has a strong sales pipeline which continues to grow in size
both in terms of potential total contract values and the number of
opportunities with high profile international blue-chip businesses.
Based on the above matters, the directors have assessed that the ability of
the Company to continue as a going concern is dependent on the Group achieving
its sales forecasts for the periods to 30 September 2025. There is no
guarantee that potential sales opportunities in the sales forecasts will be
converted into actual sales contracts, orders, sales and cash receipts. In
addition, lead times for conversion of sales opportunities into sales
contracts, orders, sales and cash receipts could be longer than the periods
assumed in its forecasts. Due to these factors, the Group may require more
financing than the current facilities available to it. There is no guarantee
the directors would be successful in raising additional financing required for
its future growth and working capital. This matter indicates that a material
uncertainty exists that may cast significant doubt on the ability of the
Company to continue as a going concern at the time of approval of the
financial statements. The financial statements do not include adjustments
should the going concern basis be inappropriate. Nonetheless, in view of the
successful track record of raising financing in recent years from both equity
and debt sources and other available funding options, the directors are
confident they would be successful in raising any necessary financing within
the next 12 months from the date of approval of the financial statements.
For these reasons, the directors continue to adopt the going concern basis in
preparing the financial statements.
2.3 Foreign currency translation
Transactions in currencies other than the functional and presentation currency
of the Company, pound sterling, are recorded at the rates of exchange
prevailing on the dates of the transactions. At each reporting date, monetary
assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the reporting date. Non-monetary
assets and liabilities that are determined in foreign currencies are
translated at the rates prevailing at the date when the fair value was
determined.
Gains or losses arising from on retranslation of the monetary assets and
liabilities are included in profit or loss for the period.
2.4 Taxation
The income tax expense represents the sum of tax currently payable and
deferred tax.
Current tax
The tax currently payable is based on the taxable profit for the period.
Taxable profit differs from net profit as reported in profit or loss because
it excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Company's liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounting for using the liability method.
Deferred tax assets are recognised on tax losses when there is convincing
evidence that the Company will generate sufficient future taxable profits in
the foreseeable future against which the tax losses can be utilised to reduce
the Company's liabilities to corporation tax.
2.5 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank.
2.6 Share capital and share premium
Share capital represents the nominal value of shares that have been issued.
Share premium includes any premiums received on issue of share capital. Any
transactions costs associated with the issuing of shares are deducted from
share premium.
2.7 Provisions for liabilities
Provisions are made where an event has taken place that gives the Company a
legal or constructive obligation that requires settlement by a transfer of
economic benefit, and a reliable estimate can be made of the amount of the
obligation.
Provisions are charged as an expense to the statement of comprehensive income
in the year that the Company becomes aware of the obligation and are measured
at the best estimate at the balance sheet date of the expenditure required to
settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried
in the balance sheet.
2.8 Other receivables
Other receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less loss
allowance.
2.9 Trade and other payables
Trade and other payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from suppliers. Accruals
and accounts payable are classified as current liabilities if payment is due
within one year or less. Trade payables are initially recognised at fair
value, and subsequently measured at amortised cost using the effective
interest method.
2.10 Financial liabilities
All financial liabilities are recognised in the statement of financial
position when the Company becomes party to the contractual provision of the
instrument.
Financial liabilities measured at amortised cost
The Company's financial liabilities held at amortised cost comprise trade
payables and other payables and borrowings.
These financial liabilities are initially measured at fair value net of any
transaction costs directly attributable to the issue of the instrument. Such
interest-bearing liabilities are subsequently measured at amortised cost using
the effective interest rate method, which ensures that any interest expense
over the period to repayment is at a market rate on the balance of the
liability carried in the statement of financial position.
Subsequent measurement
The amortised cost of a financial liability is the amount at which the
financial liability is measure on initial recognition, minus the principal
repayments, plus or minus the cumulative amortisation using effective interest
method of any difference between the initial amount recognised and the
maturity amount. Such amortisation amounts are recognised in the statement of
comprehensive income. Due to the short-term nature of trade and other
payables, they are stated at their nominal value, which approximates their
fair value.
2.11 Share warrants
The Company has granted A-series warrants to directors and B-series warrants
to service providers for services received at the time of listing in a prior
period.
The A-series warrants and B-series warrants are issued to directors and
service providers in respect of the service provided. The grant of the share
warrants is recognised as equity settled share-based payments under IFRS 2.
The warrants can be exercised by the holder of the warrants prior to the
exercise date for a fixed number of equity shares at fixed price. The value of
the share-based warrants is determined at the date of grant and expensed on a
straight-line basis over the vesting period with a corresponding increase in
equity based on the Company's estimate of the shares that will eventually vest
at the time of the grant. At each balance sheet date, the Company revises its
estimates of the number of warrants that are expected to vest based on service
and non-market performance conditions.
The Company takes into account the market condition (i.e. target share price
being in excess of the exercise price) at the time of estimating the fair
value of the warrants. The amount expensed is adjusted over the vesting period
for changes in the estimate of the number of shares that will eventually vest,
except for changes resulting from any market-related performance conditions.
2.12 Capital management
Capital consists of ordinary shares, share premium and retained losses. The
Board monitors the return on capital. The Company is not subject to any
externally imposed capital requirements.
2.13 Employee benefits
The costs of short-term employee benefits are recognised as a liability and an
expense. The cost of any unused holiday entitlement is recognised in the
period in which the employee's services are received.
2.14 Adoption of new and revised standards and changes in accounting policies
A number of new standards and amendments to standards and interpretations are
effective for annual periods beginning on or after 1 April 2023 and have not
been applied in preparing these financial statements. None of these is
expected to have a significant effect on the financial statements of the
Company.
There are no other IFRSs or IFRIC interpretations that are not yet effective
that would be expected to have a material impact on the Company.
3. Critical accounting judgements and estimates
The preparation of the financial statements in accordance with IFRS requires
the use of certain critical accounting estimates. It also requires management
to exercise their judgment in applying the Company's accounting policies.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including future conditions that are assessed to
be reasonable under the circumstances.
Classification of share warrants (note 11)
Management considers that the share warrants issued to directors and service
providers are considered as equity settled share-based payments ("SBP") as
these warrants are issued for the services received and can be exchanged only
for a fixed number of equity shares at fixed price.
The measurement of the SBP expense recognised through profit or loss requires
estimation of future fair values of instruments of instruments expected to
vest.
4. Employees and directors remuneration
31 March 2024 31 March 2023
£ £
Wages and salaries 220,255 74,700
Social security costs 14,413 3,908
Other pension costs 6,469 -
241,137 78,608
The average number of employees and directors during the year was as follows:
31 March 2024 31 March 2023
Administration 5 3
The remuneration paid to directors is provided in the director's report
accompanying the financial statements.
5. Acquisition costs
During the year, the Company incurred one-off expenses towards the planned
acquisition of 3Radical Limited as part of the reverse takeover.
31 March 2024 31 March 2023
£ £
Legal fees 393,276 -
Corporate Finance & Brokerage 115,197 -
Accountancy Advice 235,090 -
Consultancy & Professional Advice 124,500 -
Financing fees 41,928 -
Listing fees 17,614 -
927,605 -
6. Loss per share
Basic earnings per share is calculated by dividing the loss attributable in
the period to equity holders of the Company by the weighted average number of
ordinary shares in issue during the period, excluding any ordinary shares
purchased by the Company and held as treasury shares.
31 March 2024 31 March 2023
£ £
Loss for the year/period attributable to equity holders of the Company
(1,367,797) (537,690)
Weighted average number of ordinary shares 57,862,776 57,862,776
Loss per share (pence) (2.36) (0.93)
Share warrants issued by the Company have an anti-dilutive effect on loss per
share. Hence, under IAS requirements diluted loss per share is shown as being
the same as basic loss per share.
7. Loss before income tax
The loss before income tax is stated after charging:
31 March 2024 31 March 2023
£ £
Auditor's remuneration
- For audit services 29,500 20,000
- For non-audit services 16,000 -
45,500 20,000
Income tax
No liability to UK corporation tax arose for the year ended 31 March 2024 nor
for the year ended 31 March 2023 as the Company generated tax losses for both
years.
Prima facie tax reconciliation
The loss for the year was £1,368k (2023: £538k). For the year ended 31 March
2024, the standard rate of corporation tax in the UK is 25% (2022: 19%). The
rate of corporation tax applicable in UK for profits up to £50k is 19%.
The expected tax credit on the loss for the year is £88k (2023: £73k).
Actual tax credit recognised for the year was £NIL (2023: £Nil). The main
reasons for the differences for both periods are tax losses not recognised due
to uncertainty of taxable profits being generated in the foreseeable future.
Unrecognised tax losses
The Company has tax losses available for offset against taxable profits in
future periods of £846k as at 31 March 2024 (2023: £383k).
8. Other receivables and prepayments
31 March 2024 31 March 2023
£ £
Other receivables - 53
VAT receivable 63,703 19,781
Prepayments and accrued income 12,042 9,699
75,745 29,533
The directors consider that the carrying amount of other receivables and VAT
receivable approximates to their fair value.
9. Cash and cash equivalents
31 March 2024 31 March 2023
£ £
Cash at bank and in hand 137 491,635
10. Share capital
31 March 2024 31 March 2023
£ £
Authorised share capital
57,862,776 Ordinary shares of 0.5p each 289,314 289,314
Issued and fully paid
57,862,776 Ordinary shares of 0.5p each 289,314 289,314
289,314 289,314
The ordinary shares carry voting and dividend rights.
11. Share warrants
The company issued A-series warrants and B-series warrants to directors and
service providers respectively. These warrants are exercisable at a price of
4.5p. The vesting period of the various warrant instruments are as provided
below:
- Allocated A-series warrants vests over a period of 5 years, and
should the options remain unexercised they lapse after the seventh anniversary
of admission.
- Unallocated A-series (discretionary) warrants which are granted in
the current year are vested on the date of grant and should the options remain
unexercised they lapse after the seventh anniversary of admission.
- B-series warrants are vested on the date of grant, and should the
options remain unexercised they lapse after the third anniversary of
admission.
Warrants are valued using the Black Scholes option pricing model. The
following table summarise the warrants outstanding at the end of the year and
movements during the year.
A-series warrants B-series warrants
Outstanding at 31 March 2022 3,599,064 1,157,256
Granted during the period 719,812 -
Forfeited during the period - -
Expired during the period - -
Exercised during the period - -
Outstanding at 31 March 2023 4,318,876 1,157,256
Granted during the year 205,991 -
Forfeited during the year - -
Expired during the year - -
Exercised during the year - -
Outstanding at 31 March 2024 4,524,867 1,157,256
Options vested and not exercised as at 31 March 2024
2,365,429 1,157,256
Options vested and not exercised as at 31 March 2023
1,439,625 1,157,256
12. Share warrants (continued)
The assumptions considered in the valuation of the warrants using the
black-sholes model is as given below:
31 March 2024
Exercise price 4.5 pence
Share price at date of grant 3 pence
Risk free interest rate 1.25%
Volatility 16%
Dividend yield 0%
Contractual life of A-series warrants 7 years
Contractual life of B-series warrants 3 years
The fair value of both A-series warrants, and B-series warrants as of 31 March
2024 is £nil (2023: £nil).
See note 18 for changes to share warrants subsequent to the year-end.
13. Reserves
Share premium account
The share premium account includes any premiums received on issue of share
capital. Any transaction costs associated with the issuing of shares are
deducted from share premium.
Accumulated losses
This reserve records retained earnings and accumulated losses.
14. Financial Liabilities - Borrowings
31 March 2024 31 March 2023
£ £
Current:
Borrowings 251,928 -
Less than 1 year
Term and debt repayment schedule £
251,928
Borrowings
On 27 October 2023, an unsecured loan facility of £250k was agreed with
Sanderson Capital Partners Limited, a related party (the "£250k Facility"). A
facility fee of £25k was incurred in addition to a drawdown fee of 10 percent
per tranche to be paid on repayment date. No interest accrued. Of this
facility, £50k was drawn down on 13 November 2023 and a further £150k on 6
December 2023, leaving £50k still available as at the year-end, and which has
since been drawn down.
On 26 March 2024, a further unsecured loan facility of £600k was agreed with
Sanderson Capital Partners Limited (the "£600k Facility"). A facility fee (to
be satisfied in shares on the Company's AIM Admission) of £100k was incurred
in lieu of any further costs of the £600k Facility, with a repayment date of
12 months from the Company's AIM Admission, and an option to extend for a
further 8 months for an additional facility fee of £15,000 payable at the end
of that extended period.
On 3 May 2024, the £250k Facility and all associated fees, and all fees
associated with the £600k Facility, were settled in full by the issue of
20,238,095 shares in the Company at a price of 2.1p per share.
Of the £600k Facility, £50k was drawn down on 19 September 2024.
As at year-end, the borrowings balance included associated facility fees
(£42k) and legal fees (£10k).
15. Trade and other payables
31 March 2024 31 March 2023
£ £
Trade creditors 376,824 16,001
Social security and other taxes 11,705 3,702
Other creditors 3,720 -
Pension payable to directors' personal SIPPs 4,578 -
Accrued expenses 345,587 46,599
742,414 66,302
Trade payables and accruals primarily comprise amounts payable for services
received from third parties. The Company has financial risk management
policies in place to ensure that all payables are paid within the pre-agreed
credit terms. The directors considers that the fair value approximates the
carrying value.
16. Financial risk management
The Company's activities expose it to liquidity risk, credit risk and foreign
exchange risk. The Company's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise potential adverse
effects on the Company's financial performance.
Capital risk management
The Company manages its capital to ensure that it will be able to continue as
a going concern while maximising the return to stakeholders through the
optimisation of debt and equity instruments.
The capital structure of the Company consists of debt, cash and cash
equivalents and equity comprising share capital and reserves. The Company
reviews the capital structure annually and as part of this review considers
the cost of capital and risks associated with each class of capital and debt.
Liquidity risk
Responsibility for management of liquidity risk rests with the board of
directors, which has established an appropriate liquidity risk framework for
the management of the Company's funding and liquidity requirements. The
Company manages liquidity risk by maintaining adequate reserves, debt
facilities and reserve borrowing facilities by continuously monitoring
forecasts and actual cash flows, and by matching the maturity profiles of
financial assets and liabilities.
Foreign exchange risk
The Company makes some purchases in foreign currencies. The payments in
foreign currency are made using the exchange rates on the date of payment. As
of year-end, the Company did not have any payables in foreign currency.
17. Related party transactions
During the year, the Company entered into the following transactions with
related parties, all of which were conducted on an arm's length basis:
· The Company purchased services of £206,750 (2023: £10,112) from BDB
Pitmans LLP. The amount payable as at year-end is £240,900 (2023: Nil).
John Hutchinson serves as chairman of the Company and is managing partner of
BDB Pitmans LLP.
· The Company purchased services of £36,000 (2023: £21,000) from
Belmont Partners. The amount payable as at year-end is £7,200 (2023: Nil).
Sarfraz Munshi was a director of the Company as at the end of financial year
2024 and also director of Belmont Partners.
· The Company purchased services of £95,000 (2023: Nil) from Mymyne
Ltd. The amount payable as at year-end was Nil (2023: Nil). John Regan is a
director of the Company and also director of Mymyne Ltd.
· See note 14 in relation to borrowings entered into with Sanderson
Capital Partners Limited.
18. Post balance sheet events
On 3 May 2024, the Company acquired the entire issued share capital of
3radical Limited. At the same time, the Company cancelled its listing on the
London Stock Exchange's Standard List, and had its ordinary share capital, as
enlarged following completion of the Transaction at the negotiated value of
£1.3 million paid in shares and of a successful £2.2 million equity
fundraising, admitted to trading on the AIM Market of the London Stock
Exchange.
On 3 May 2024, 3,494,910 A warrants were surrendered. These were replaced by
an LTIP including options over 34,046,353 shares to the Directors. 205,991
warrants were issued to a former director. 2,238,833 warrants were issued to
each of the brokers: namely Axis Capital Markets Limited, Global Investment
Strategy Limited and Allenby Capital Limited. All options and warrants have an
exercise price of 2.1p and the exercise period is 10 years from AIM Admission
for the options issued under the LTIP and 3 years for the warrants.
On 9 August 2024, 9,589,042 shares were issued to certain professional
advisors and consultants to settle their fees. Included in this amount was
5,479,452 shares issued to Tanvier Malik in relation to his role as Capital
Markets Consultant. Since Mr Malik controls Sanderson Capital Partners
Limited, this transaction constitutes a related party transaction.
On 28 August 2024, the independent directors of the Company, following careful
review and consultation with its nominated adviser Allenby Capital Limited and
approval of the transaction by shareholders in General Meeting on 27 August
2024 as a related party transaction, completed an all-share acquisition of
Mymyne Limited, valuing it at up to a maximum of approximately £154,000 based
on the closing mid-market price of the Company's shares immediately prior to
announcing the proposed acquisition on 9 August 2024. The transaction was
settled by the issue of 9,834,521 ordinary shares in the Company. This has
brought Mymyne's capabilities in-house and has achieved substantial
cost-savings that will more than offset the value of the consideration, and
added additional software to enhance 3radical's product offering.
19. Controlling party
The Company considers that there is no ultimate controlling party.
Financial Statements of 3radical Limited for the year ended 31 March 2024
3radical Limited
Consolidated Income Statement
For the year ended 31 March 2024
Year ended 31 March 2024 Year ended 31 March 2023
£'000
£'000
Notes
Continuing operations
Revenue 4 411 710
Cost of sales (155) (212)
Gross Profit 256 498
Other operating income - 7
Administrative expenses 6 (1,741) (1,550)
Operating loss (1,485) (1,045)
Finance expense 8 (218) (5)
Loss before tax (1,703) (1,050)
Taxation 9 (4) 190
Loss for the year (1,707) (860)
Attributable to:
Equity holders of the parent (1,707) (860)
Loss per share
Basic and diluted (pence) 10 (25) (30)
3radical Limited
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2024
Year ended 31 Year ended 31
March 2024 March 2023
£'000 £'000
Loss for the year (1,707) (860)
Other comprehensive income/expense):
Exchange differences on translation of 185 (248)
foreign operations
Total comprehensive loss for the year (1,522) (1,108)
Attributable to:
Equity holders of the parent (1,522) (1,108)
The notes on pages 10-32 form an integral part of these financial statements
3radical Limited
Consolidated Statement of Financial Position
As at 31 March 2024
Year ended 31 March 2024 Year ended 31 March 2023
£'000
£'000
Notes
ASSETS
Non-current assets
Property, plant & equipment - 2
Total non-current assets - 2
Current assets
Trade and other receivables 12 24 327
Cash at bank 70 38
Total current assets 94 365
TOTAL ASSETS 94 367
EQUITY
Share capital 15 1,370 1,338
Share premium account 11,611 10,941
15
Share based payments reserves 16, 17 50 35
Foreign currency translation reserve 16 4 (181)
Accumulated losses (13,785) (12,101)
Total equity (750) 32
LIABILITIES
Current liabilities
Financial liabilities - borrowings
Interest bearing loans and borrowings 14 269 -
Trade and other payables 13 575 335
Total liabilities 844 335
TOTAL EQUITY AND LIABILITIES 94 367
The financial statements are approved by Board of Directors on 30 September
2024 and signed on their behalf by:
John Patrick Regan
Director
The notes on pages 10-32 form an integral part of these financial statements
3radical Limited
Consolidated Statement of Cashflows
For the year ended 31 March 2024
Share premium Share based payments Foreign currency
Share Capital account reserve translation Accumulated Total Equity
Losses
Notes £'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 2022 1,300 9,957 74 67 (11,241) 157
Comprehensive income
Loss for the year - - - - (860) (860)
Currency translation differences
- - - (248) - (248)
Total comprehensive loss for the year
- - - (248) (860) (1,108)
Transactions with owners
Issue of shares 15 38 984 - - - 1,022
Share based payments - - (39) - - (39)
Total transactions with owners 38 984 (39) - - 983
As at 31 March 2023 1,338 10,941 35 (181) (12,101) 32
Comprehensive income
Loss for the year - - - - (1,707) (1,707)
Currency translation difference
- - - 185 185
-
Total comprehensive loss for the year
- - - 185 (1,707) (1,522)
Transactions with owners
Issue of shares 15 32 670 - - - 702
Movement in reserve - - (23) - 23 -
Share based payments - - 38 - - 38
Total transactions with owners 32 670 15 - 23 740
As at 31 March 2024 1,370 11,611 50 4 (13,785) (750)
The notes on pages 10-32 form an integral part of these financial statements
3radical Limited
Consolidated Statement of Cashflows
For the year ended 31 March 2024
Year Year
ended 31 ended 31
March 2024 March 2023
Note £'000 £'000
Operating loss (1,703) (1,050)
Adjustments for:
Share based payment 38 12
Depreciation 2 6
Finance cost 218 5
8
Foreign exchange differences 218 (298)
Operating cash flows before movements in the working capital (1,227) (1,325)
(Increase)/decrease in receivables 113 203
Increase/(decrease) in payables 235 (78)
Cash used in operations (879) (1,200)
Interest paid - (5)
Tax refunds 9 190 136
Net cash used in operating activities (689) (1,069)
Investing activities
Acquisition of property, plant and equipment - (3)
Net cash used in investing activities - (3)
Financing activities
Proceeds on issue of shares 502 1,022
New loan received during the year 219
Net cash from financing activities 721 1,022
Net Increase/(decrease) in cash and cash equivalents 32 (50)
Cash and cash equivalents at beginning of year 38 88
Cash and cash equivalents at end of year 70 38
The notes form an integral part of these financial statements
3radical Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022, 31 March 2023, 31 March 2024
1. General information
3radical Limited ("3radical") is a private company limited by shares
incorporated in England and Wales under the Companies Act 2006. The registered
office address is Desklodge House, Redcliffe Way, Bristol, England, BS1 6NL.
The functional currency of 3radical is pounds sterling (£). Foreign
operations use alternative currencies as their functional currency and are
included in accordance with the accounting policies set out in note 3.
The financial statements are presented in pounds sterling (£) which is the
presentational currency of the consolidated group comprising 3radical and each
of its foreign subsidiaries (hereafter "the 3radical Group").
2. Adoption of new and revised Standards
Basis of accounting
The consolidated annual financial statements have been prepared in accordance
with UK-adopted international accounting standards. The consolidated annual
financial statements have been prepared on the historical cost basis. The
principal accounting policies are set out below.
New standards and interpretations not yet adopted
Unless material the 3radical Group does not adopt new accounting standards and
interpretations which have been published and that are not mandatory for
reporting periods after 31 March 2024.
No new standards or interpretations issued by the International Accounting
Standards Board ('IASB') or the IFRS Interpretations Committee ('IFRIC') have
led to any material changes in the 3radical's accounting policies or
disclosures during each reporting period.
The most significant new standards and interpretations to be adopted in the
future are as follows:
Ref Title Summary Application date of standards
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 - Changes requirements from disclosing Annual periods beginning on or after 1 January 2024.
Disclosure of Accounting Policies
'significant' to 'material' accounting policies and provides explanations and
guidance on how to
identify material accounting policies.
IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current Clarifies that only those covenants with which an entity must comply on or Annual periods beginning on or after 1 January 2024.
or Non-Current and Non-Current Liabilities with Covenants Date before the end of the reporting period affect the classification of a
liability as current or non-current.
There are no other IFRSs or IFRIC interpretations that are not yet effective
that would be expected to have a material impact on 3radical.
The directors are evaluating the impact that these standards will have on the
financial statements of the 3radical Group.
2. Significant accounting policies
Basis of consolidation
The consolidated financial statements comprise the financial statements of the
3radical and entities controlled by the 3radical (its subsidiaries) (together
the "3radical Group). These consolidated financial statements comprise results
and cashflow for the year ended 31 March 2024, and statement of the financial
position as at 31 March 2024.
Subsidiaries are all entities (including structured entities) over which the
3radical has control. Subsidiaries are fully consolidated from the date on
which control is transferred to the 3radical Group. They are deconsolidated
from the date that control ceases.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used
by the 3radical Group. All intra-group transactions, balances, income and
expenses are eliminated on consolidation.
Business combinations
The 3radical Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of a
subsidiary is the fair values of the assets transferred, less the liabilities
incurred and the equity interests issued by the 3radical Group. The
consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable assets,
liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date.
Going concern
The financial statements have been prepared on a going concern basis. The
director has assessed the Group's (3radical Ltd and its subsidiaries, "3R
Group") financial position as at 31 March 2024 and 30 September 2024 and the
factors which may impact the Company's and Group's ability to continue as
going concerns for a period of at least 12 months from the date of approval of
these financial statements. Management and the director have considered the
Group's working capital and financing requirements over the period to 30
September 2025. Subsequent to the year-end, the Company was acquired by
Electric Guitar plc (see note 22) and is now wholly owned by Electric Guitar
plc ("the Parent").
At as 31 March 2024, the Company had a deficiency in equity of £750k. The
Company also generated a loss for the year ended 31 March 2024 of £1,707k and
a net cash outflow from operating activities of £689k. The Group has also
incurred a loss for the current period and a net cash outflow from operating
activities for the period to 30 September 2024.
In assessing the ability of the Company to continue as a going concern and pay
its debts as and when they fall due, the directors have taken into
consideration the following matters:
· Subsequent to year-end, the Company's borrowings owed to third
parties were settled through the issue of shares by the Parent.
· Management has prepared detailed cash flow forecasts and sales
forecasts for the Group for the period September 2024 to September 2025. The
Group is forecast to generate a significant increase in sales and cash
receipts from customers and continue to operate within its facilities for all
periods from September 2024 to the end of September 2025. The directors have
reviewed and approved these forecasts.
· As part of its assessment of the forecasts, certain sensitivity
analyses were run on the forecast models. In the event the Group's actual
sales for the period ended 30 September 2025 were lower than forecast by 20%
and certain controllable costs were to be deferred, the Group would still have
the ability to operate within its facilities and pay its debts as when they
fall due for the same periods as above.
· The Group has a strong sales pipeline which continues to grow in size
both in terms of potential total contract values and the number of
opportunities with high profile international blue-chip businesses.
· The Parent has agreed in writing that it will provide sufficient
financial support to 3R Group as is required by 3R Group to enable it to pay
its debts as and when they fall due for a period of at least twelve months
from the date of signing of its non-statutory financial statements for the
year-ended 31 March 2024. The Parent's board has also confirmed that they have
reviewed the financial position of the Parent as at 27 September 2024 and the
cash flows and financing requirements of the Parent and its subsidiaries for a
period of at least twelve months from 27 September 2024 ("the cash flow
period"). Upon completing this assessment, the Parent's board is confident
that the Parent Company will be able to provide any necessary financial
support to 3Radical Group over the cash flow period.
· The latest statutory financial statements for the Parent indicates
that the Parent may require more financing than the current facilities
available to it. In addition, there is no guarantee the Parent's directors
would be successful in raising additional financing required for its future
growth and working capital. This matter indicates that a material uncertainty
exists that may cast significant doubt on the ability of the Parent to
continue as a going concern over the cash flow period. There is also material
uncertainty in relation to the Parent's ability to provide financial support
to the 3R Group. Nonetheless, in view of the Parent's successful track record
of raising financing in recent years from both equity and debt sources and
other available funding options, the directors of 3R Group are confident that
the Parent would be successful in raising any necessary financing within the
next 12 months from the date of approval of its financial statements.
Based on the above matters, the director has assessed that the ability of 3R
Group to continue as a going concern is dependent on 3R Group achieving its
sales forecasts for the periods to 30 September 2025. There is no guarantee
that potential sales opportunities in the sales forecasts will be converted
into actual sales contracts, orders, sales and cash receipts. In addition,
lead times for conversion of sales opportunities into sales contracts, orders,
sales and cash receipts could be longer than the periods assumed in its
forecasts. Due to these factors, the group may require more financing than the
current facilities available to it. There is no guarantee the director would
be successful in raising additional financing required for its future growth
and working capital from its Parent or other finance providers. This matter
indicates that a material uncertainty exists that may cast significant doubt
on the ability of the Company to continue as a going concern at the time of
approval of the financial statements. The financial statements do not include
adjustments should the going concern basis be inappropriate.
Foreign currencies
The individual financial statements of each company in the 3radical Group is
maintained in the currency of the primary economic environment in which it
operates (its functional currency). For the purpose of the consolidated
financial statements, the results and financial position of each company in
the 3radical Group are expressed in Pound Sterling, which is the functional
currency of the 3radical Group, and the presentational currency for the
consolidated financial statements.
In preparing the financial statements of the individual companies,
transactions in currencies other than the entity's functional currency
(foreign currencies) are recorded at the average rates of exchange for the
period. At each balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the spot rates
prevailing on the balance sheet date. Non-monetary items carried at fair value
that are denominated in foreign currencies are translated at the rates
prevailing at the date when the fair value was determined. Non-monetary items
that are measured in terms of historical cost in a foreign currency continue
to be held at historic rates and are not retranslated.
Foreign currency differences arising on translation from a transaction
currency into an entity's functional currency are recognised in profit and
loss.
For the purpose of presenting consolidated financial statements, the assets
and liabilities of the 3radical Group's foreign operations are translated at
exchange rates prevailing on the balance sheet date. Income and expense items
are translated at the average exchange rates for the period, unless exchange
rates fluctuate significantly during that period, in which case the exchange
rates at the date of transactions are used. Exchange differences arising, if
any, are recognised in other comprehensive income and accumulated in equity.
Taxation
The tax expense comprises current and deferred tax.
Current tax
The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the end of the reporting period in the
countries where 3radical's subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to interpretation.
Where uncertainty exists, it establishes provisions representing additional
tax due under a reasonable worst-case scenario.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounting for using the liability method.
Deferred tax assets are recognised on tax losses when there is convincing
evidence that the Company will generate sufficient future taxable profits in
the foreseeable future against which the tax losses can be utilised to reduce
the Company's liabilities to corporation tax.
Research and development
Research expenditure is incurred primarily in the form of software development
costs, and these are all written off to the Income Statement during the
period. Development expenditure is written off in the same way unless the
Director is satisfied with all of the following conditions,
- an individual project is technically, commercially and
financially viable,
- a project gives rise to a separately identifiable asset and
arises from contractual or other legal rights,
- it is probable that future economic benefits that are
attributable to the project will flow to 3radical,
- the cost or value of the asset can be measured reliably
If the above criteria are met, the development expenditure is capitalised as
an intangible asset and is initially measured at cost. After initial
recognition, development costs are amortised evenly over their estimated
useful lives.
Financial assets
Classification
The 3radical Group classifies its financial assets as either: those measured
at amortised cost (including trade and other receivables).
Trade receivables
Trade receivables are amounts due from customers for goods sold or services
performed in the ordinary course of business. They are generally due for
settlement within 30 days and are therefore all classified as current. Trade
receivables are recognised initially at the amount of consideration that is
unconditional, unless they contain significant financing components, in which
case they are recognised at fair value. The 3radical Group holds the trade
receivables with the objective of collecting the contractual cash flows, and
so it measures them subsequently at amortised cost using the effective
interest method.
Fair value of trade and other receivables
Due to the short-term nature of the current receivables, their carrying amount
is considered to be the same as their fair value.
Cash and Cash Equivalents
Cash and cash equivalents in the statement of financial position comprise cash
at bank.
Financial liabilities
Trade and other payables
Trade payables are initially measured at fair value, and are subsequently
measured at amortised cost, using the effective interest rate method.
Share-based payments
Goods or services received or acquired in a share-based payment transaction
are recognised when the goods or services are received. A corresponding
increase in equity is recognised if the goods or services were received in an
equity- settled share-based payment transaction or a liability if the goods or
services were acquired in a cash-settled share based payment transaction.
When the goods or services received or acquired in a share-based payment, do
not qualify for recognition as assets, they are recognised as expenses.
For equity-settled share-based payment transactions the goods or services
received and the corresponding increase in equity are measured, directly, at
the fair value of the goods or services received provided that the fair value
can be estimated reliably.
If the fair value of the goods or services received cannot be estimated
reliably, or if the services received are employee services, their value and
the corresponding increase in equity, are measured, indirectly, by reference
to the fair value of the equity instruments granted.
Vesting conditions, which are not market, related (i.e. service conditions and
non-market related performance conditions) are not taken into consideration
when determining the fair value of the equity instruments granted. Instead,
vesting conditions which are not market related shall be taken into account by
adjusting the number of equity instruments included in the measurement of the
transaction amount so that, ultimately, the amount recognised for goods or
services received as consideration for the equity instruments granted shall be
based on the number of equity instruments that eventually vest. Market
conditions, such as a target share price, are taken into account when
estimating the fair value of the equity instruments granted. The number of
equity instruments is not adjusted to reflect equity instruments which are not
expected to vest or do not vest because the market condition is not achieved.
If the share-based payments granted do not vest until the counterparty
completes a specified period of service, the Group accounts for those services
as they are rendered by the counterparty during the vesting period, (or on a
straight- line basis over the vesting period).
If the share-based payments vest immediately the services received are
recognised in full.
Employee benefits
Short-term employee benefits
The cost of short-term employee benefits, (those payable within 12 months
after the service is rendered, such as paid vacation leave and sick leave,
bonuses, and non-monetary benefits such as medical care), are recognised in
the period in which the service is rendered and are not discounted.
The expected cost of compensated absences is recognised as an expense as the
employees render services that increase their entitlement or, in the case of
non- accumulating absences, when the absence occurs.
The expected cost of profit sharing and bonus payments is recognised as an
expense when there is a legal or constructive obligation to make such payments
as a result of past performance.
Share capital and equity
An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Incremental costs
directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
Share Capital
Share capital represents the amount subscribed for shares at nominal value.
Share Premium
The share premium account represents premiums received on the initial issuing
of the share capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income tax
benefits.
Share-Based Payment Reserve
The share-based payment reserve represents the cumulative amount which has
been expensed in the statement of comprehensive income in connection with
share-based payments, less any amounts transferred to retained earnings on the
exercise of share options.
Revenue recognition
The 3radicalGroup provides software licensing, consulting and support
services.
The weighting of these and pricing of these services (which drives the revenue
recognition) depends on the service level required by the client, and on the
commercial imperatives and pricing sensitivities of the client. The
contractual performance obligations will typically be embedded in an agreement
with the client. Where that agreement is detailed, the revenue recognition
will follow the allocation of fees and revenues against the completion of the
agreed performance milestones in the accounting period.
Revenue from Software licensing contracts, ongoing support and consulting
contracts is recognised over the contractual term when the customer
simultaneously receives and consumes the benefits provided by the
3radicalGroup's performance, as the 3radicalGroup performs. Contract
liabilities for goods and services paid for but not yet provided are
recognised as of the period end.
The 3radical Group starts recognising revenue when all the following
conditions are met:
- the parties have approved the contract and are committed to
perform their respective obligations,
- the Group can identify each party's rights including payment
terms for the goods or services to be transferred,
- the contract has commercial substance (i.e. the risk, timing or
amount of the 3radical Group's future cash flows is expected to change as a
result of the contract),
- it is probable that the 3radicalGroup will collect the
consideration to which it will be entitled in exchange for the services that
will be transferred to the customer,
- when specific criteria have been met for each of the 3radical
Group's contracts with customers.
The 3radicalGroup bases its estimates on historical results, taking into
consideration the type of customer, the type of transaction and the specifics
of each arrangement. When evaluating whether an amount of consideration is
likely to be collected, the 3radicalGroup considers only the customer's
ability and intention to pay that amount of consideration when it is due.
Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the Executive Chairman who is responsible for allocating
resources and assessing performance of the operating segments.
3. Critical accounting judgements and key sources of estimation uncertainty
When applying the 3radical Group's accounting policies described in note 3,
the Director is required to make judgements, estimates and assumptions about
the carrying amounts of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions are based on
historical experience and other relevant factors. The actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The following are the critical judgements that the Directors have made in the
process of applying the 3radical Group's accounting policies and that have the
most significant effect on the amounts recognised in the financial statements.
Research and development
It is the 3radical Group's policy to capitalise development expenditure only
if the Director is satisfied as to the technical, commercial and financial
viability of individual projects and if the asset recognition criteria under
IAS 38 are met as disclosed in Note 2. The assessment of directly attributable
costs to projects, future economic benefits generated by these intangible
assets and the determination of their amortisation profile involve a
significant degree of judgement based on estimation of future potential
revenue and profit and the useful life of the assets. The nature of the staff
roles and responsibilities in the period have meant that it is not possible to
accurately measure the costs to be capitalised and therefore, no costs are
capitalised in the financial statements.
Share-based payments
The estimation of share-based payment costs requires the selection of an
appropriate valuation model and consideration as to the inputs necessary for
the valuation model chosen. The 3radical Group has made estimates as to the
volatility of its own shares, the probable life of options granted and the
time of exercise of those options. The model used by the 3radical Group is the
Black-Scholes model.
4. Revenue
The 3radical Group derives its revenue from the sale of SaaS licences, and
associated configuration and delivery services. It's core Voco product enables
the creation of sophisticated interactive digital experiences including
quizzes, games and surveys.
Revenue relates to services transferred over time. Analysis of revenue by
country of destination:
Year Year
ended 31 ended 31
March March
2024 2023
£'000 £'000
Sales UK 174 307
Sales USA 216 186
Sales Rest of the world 21 217
411 710
Contract liabilities can arise on revenue which is being recognised over time
and are included within "trade and other payables" on the face of the
statement of financial position.
Contract liabilities are short term in nature with balances typically settled
in the subsequent period.
Year ended 31 Year ended 31
March March
2024 2023
Notes £'000 £'000
Contract liabilities as at 1 April 195 268
Cash received in advance of 95 195
performance and not recognised as
revenue during the period
Revenue recognised during the period (195) (268)
Contract liabilities as at 31 March 13 95 195
Remaining performance obligations
In respect of the above contract balances delivery of services will occur
within 12 months of the statement of financial position date, or has already
occurred. Therefore, the practical expedient in paragraph 121(a) of IFRS 15
has been applied.
5. Segmental Analysis
The 3radical Group's management has determined the operating segments based on
the reports reviewed by the executive director that are used to make strategic
decisions. He considers the business from a geographical perspective and the
3radical Group has four reportable segments, the UK, USA, Singapore, and
Australia.
Segment results
Year ended 31 March 2024
UK USA Singapore Australia Total
£'000 £'000 £'000 £'000 £'000
Revenue 254 216 21 - 491
Intersegment eliminations (80) - - - (80)
Revenue from external customers 174 216 21 - 411
Cost of sales, intersegment eliminations (122) (33) - - (155)
Other income - - - - -
Administrative expenses (1,454) (34) (247) (4) (1,739)
Depreciation (1) - (1) - (2)
Operating (Loss) / profit (1,403) 149 (227) (4) (1,485)
Finance costs (218) - - - (218)
Taxation - (4) - - (4)
(Loss) / profit for the year (1,621) 145 227) (4) (1,707)
Segment assets and liabilities
Gross assets 3,903 24 12 1 3,941
Intersegmental eliminations (3,846) - - (1) (3,847)
Consolidated total assets 57 24 12 - 94
Segmental liabilities 796 1,714 665 527 3,702
Intersegmental eliminations - (1,689) (643) (526) (2,858)
Consolidated total liabilities 796 25 22 1 844
5. Segmental Analysis (continued)
Segment results
Year ended 31 March 2023
UK USA Singapore Australia Total
£'000 £'000 £'000 £'000 £'000
Revenue 409 257 273 57 996
Intersegment eliminations (102) (71) (113) - (286)
Revenue from external customers 307 186 160 57 710
Cost of sales, intersegment eliminations (155) (49) (7) (1) (212)
Other income 4 3 - - 7
Administrative expenses (736) (553) (252) (3) (1,544)
Depreciation (3) (1) (2) - (6)
Operating (loss) / profit (583) (414) (101) 53 (1,045)
Finance costs (5) - - - (5)
Taxation 190 - - - 190
(Loss) / profit for the year (398) (414) (101) 53 (860)
Segment assets and liabilities
Gross assets 4,204 80 64 - 4,348
Intersegmental eliminations (3,927) (3) (51) - (3,981)
Consolidated total assets 277 77 13 - 367
Segmental liabilities 220 1,917 606 579 3,322
Intersegmental eliminations - (1,834) (574) (579) (2,987)
Consolidated total liabilities 220 83 32 - 335
6. Expenses by nature
Loss for the year has been arrived at after charging the following under
administrative expenses:
Year Year
ended 31 ended 31
March March
2024 2023
£'000 £'000
Depreciation of property, plant and equipment 2 6
Legal and professional 265 18
Audit & accountancy fees 76 19
Directors remuneration 145 271
Employee Salaries 710 1,136
IT 29 32
Marketing 77 104
FX losses / (gains) 186 (290)
Other expenses 251 254
1,741 1,550
7. Staff costs
Year ended Year ended
31 March 31 March
2024 2023
£'000 £'000
Directors
145 271
Employees cost
Admin expenses 710 1,136
Cost of sales 18 58
873 1,465
The average number of employees (including directors) was:
Year ended 31 Year ended
March 31 March
2024 2023
No. No.
Directors 4 4
Employees 11 20
Total 15 24
8. Finance costs
Year ended Year ended
31 March 31 March
2024 2023
£'000 £'000
Finance
cost
218 5
Finance cost 218 5
The finance cost is settled in the year through issue of shares (non-cash
consideration). The finance costs include £160k expense recognised towards
the fair value of bonus shares issued to lenders. The bonus shares are fair
valued at a price of 14p being the value determined for reverse takeover (RTO)
by Electric Guitar Plc.
9. Tax
Year ended 31 March Year ended 31 March 2023
2024 £'000
£'000
Current year tax credit/(expense) (4) 190
Deferred tax credit - -
Taxation (4) 190
UK corporation tax is calculated at 19.00% (2023:19.00%), of the estimated
assessable loss for the year. Taxation for other jurisdictions is calculated
at the rates prevailing in the respective jurisdictions.
Year ended Year ended 31 March
31 March 2023
2024
£'000 £'000
Loss before tax from continuing operations (1,703) (1,050)
Tax at the UK rate of 19.0% (324) (200)
(2023: 19.0%)
Effects Of:
Expenses not deductible for tax purposes 108 11
R&D tax credits - (190)
Other tax differences 3 15
Deferred tax not recognised 217 174
Tax charge/(credit) for the year 4 (190)
Tax losses have not been recognised in deferred tax due to uncertainty over
their future recoverability. Gross tax losses available for offset against
future taxable profits but not recognised in deferred tax amount to £10.97m
at the Balance Sheet date (2023: £9.9m).
10. Loss per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Year ended Year ended
31 March 31 March
2024 2023
Loss for the year attributable to equity holders of the company (£) 1,706,591 859,204
Weighted average number of ordinary shares 6,710,840 2,867,544
Loss per share (pence) 25 30
The share options and warrants issued by the company have an anti-dilutive
effect on the loss per share. Hence, under IAS requirements diluted loss per
share is shown as being the same as basic loss per share.
11. Investments
Investments in subsidiaries
Details of 3radical's subsidiaries at each year end are as follows:
Proportion of ownership & voting power held
Name Place of incorporation and operation Date controlling interest acquired Group % Parent % Principal activity
3radical Pty Limited Australia 27/06/2014 100 100 Operating Company
3radical Pte Limited Singapore 16/02/2016 100 100 Operating Company
3radical Inc United States 27/03/2020 100 100 Operating Company
Registered address:
3radical Pte. Ltd. registered address: 51 Goldhill Plaza, #07-10/11, Singapore
(308900).
3radical Pty Limited registered address: C/- Mas Partners, Level 5, 2 Defries
Avenue, Zetland NSW 2017. 3radical Inc registered address: 564 W Randolph St
FI2, Chicago, IL 60661.
12. Trade and other receivables
As at As at 31 March
31 March
2024 2023
£'000 £'000
Trade debtors 22 126
Prepayments 2 11
R&D tax credit - 190
receivable
24 327
The receivables are considered to be held within a held-to-collect business
model consistent with the 3radical Group's continuing recognition of the
receivables.
Credit and market risks, and impairment losses
The 3radical Group did not impair any of its trade receivables as at the year
end, as all trade receivables generated during the financial year were settled
in full, prior to the year-end or close to their due dates.
The Director considers that the carrying amount of trade and other receivables
approximates their fair value.
13. Trade and other payables - Current
As at 31 March 2024 As at 31 March
£'000 2023
£'000
Trade creditors 179 49
Accruals 294 84
Contract liabilities 95 195
Social security and other taxes 7 7
575 335
14. Financial Liabilities - Borrowings
As at 31 March 2024 As at 31 March
£'000 2023
£'000
Current:
Short term borrowings 269 -
269 -
On 16 November 2023, a loan of £50,000 was received from Anglia Securities
Ltd. On 19 March 2024, a further £75,000 was advanced. Each tranche of the
loan was subject to a 5% facility fee and interest accrued at a rate of 21%
per annum. On 3 May 2025, £25,000 of the outstanding loan amount was part
settled with the issue of 1,190,480 shares in Electric Guitar Plc with a fair
value of 2.1p per share. On 24 May 2024, the remaining balance of £184,406.85
was settled in cash by Electric Guitar Plc.
Richard Horwood (a director of Electric Guitar Plc) and Ben Lister (an
employee of Electric Guitar Plc) each advanced the company an amount of
£12,500 on 21 December 2023 and 22 December 2023 respectively. These loans
were subject to a fixed facility fee of £2,500 (20%) each as well as 155,841
A ordinary shares in 3radical Ltd issued to each of them. On 3 May 2024,
Richard Horwood's outstanding loan amount and facility fee was settled with
the issue of 714,286 shares in Electric Guitar Plc with a fair value of 2.1p
per share. On 22 May 2024, Ben Lister's outstanding loan amount and facility
fee was settled in cash by Electric Guitar Plc.
On 29 January 2024, a loan of £30,000 was received from Sanderson Capital
Partners Ltd. On 20 February 2024, a further £25,000 was advanced and on 26
February 2024, a further £20,000 was advanced. These loans were subject to a
fixed facility fee of £15,000 (20%) in total as well as 935,049 A ordinary
shares in 3radical Ltd. On 3 May 2024, the outstanding loan amount and
facility fee was settled with the issue of 4,285,714 shares with a fair value
of 2.1p per share.
15. Share capital
2024 2023
Ordinary shares of £1 Number of Number of
each shares £'000 shares £'000
At 1 April 1,299,835 1,300 1,299,835 1,300
Issued during the period of £1 each - - - -
At 31 March 1,299,835 1,300 1,299,835 1,300
2024 2023
Ordinary A shares of Number of Number of
£0.01 each shares £'000 shares £'000
At 1 April 3,803,133 38 - -
Issued during the period of £0.01p each 3,208,568 32 3,803,133 38
At 31 March 7,011,701 70 3,803,133 38
Total Ordinary and Ordinary A shares 8,311,536 1,370 1,338
5,102,968
The following Ordinary Shares of £0.01 were issued during the year ended 31
March 2023:
a. Issued 20 September 2022: 2,250,395 at £0.27 per share
b. Issued 27 September 2022: 156,291 at £0.27 per share
c. Issued 19 December 2022: 650,155 at £0.27 per share
d. Issued 23 December 2022: 92,592 at £0.27 per share
e. Issued 10 February 2023: 653,700 at £0.27 per share
The following Ordinary Shares of £0.01 were issued during the year ended 31
March 2024:
f. Issued 4 April 2023: 533,324 at £0.27 per share
g. Issued 5 April 2023: 274,073 at £0.27 per share
h. Issued 28 July 2023: 777,774 at £0.27 per share
i. Issued 1 August 2023: 6,296 at £0.27 per
share
j. Issued 20 September 2023: 370,370 at £0.27 per share
k. Issued 28 February 2024:F 1,246,731 at £0.01 per share with
a fair value ascertained to be 14p
Of the shares issued during the year, 1,352,280 were issued for consideration
other than cash.
16. Reserves
Share-based payments reserve
The share-based payments reserve is used to recognise the costs relating to
share-based payments issued to employees and officers of the 3radical Group.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange
differences arising from the translation of the financial statements of
foreign subsidiaries.
17. Share-based payments
3radical has issued share options to certain employees of the 3radical Group,
and select external third parties. It has also issued warrants to 3radical's
brokers for costs directly associated with share issuance. All share options
and warrants vest immediately or within three years of the issue date. If the
share options or warrants remain unexercised after the relevant time period
from the date of grant, then they expire.
Details of 3radical's share options and warrants outstanding during the year
are as follows:
FY 2024 FY 2023
Number of Weighted Number of Weighted
share share average
options options exercise
and warrants and warrants price
£
average
exercise
price
£
Outstanding at 1 April 739,461 0.37 45,612 6.84
Granted during the year 425,000 0.01 720,000 0.07
Exercised during the year - - - -
Expired during the year (15,169) 2.60 (26,151) 3.33
Outstanding at 31 March 1,149,292 0.21 739,461 0.37
Exercisable at 31 March 1,149,292 0.21 739,461 0.37
On 21 August 2024, 3radical issued 425,000 options of which 300,000 have been
awarded to Directors and a further 125,000 options have been awarded to UK
employees of 3radical. The options vest over a 36 month period commencing on 1
September 2023, with an exercise price of 1p. Where an exit event occurs prior
to all of the options vesting, the remaining options are treated as vested at
the transaction date.
During the year ended 31 March 2024, 15,169 options were surrendered by
directors and employees of 3radical.
All of the above share options and warrants are recognised as an expense in
the income statement over their vesting period.
New options granted are valued using the Black Scholes model, a commonly used
option-pricing model. The calculation of volatility used in the model is based
upon the share price and equity instrument movements during the financial
period. The following factors are all taken into consideration when the
options are valued:
· Weighted average share price
· Expected volatility
· Expected dividends
· Stock price
· Exercise price
· Option life
· Risk free interest rate
Year ended 31 Year ended 31
March 2024 March 2023
Average spot at grant date (pence) 0.27 0.27
Expected volatility 50% 50%
Expected option life 10 10
Expected dividends - -
The risk free interest rate 5.25% 4.00%
Expected volatility was determined by calculating the historical volatility of
the 3radical Group's share price over the previous year.
The expected life used in the model has been adjusted; based on management's
best estimate, for the effects of non- transferability, exercise restrictions,
and behavioral considerations.
18. Non-cash transactions
The Company entered into the following material non-cash transactions during
the year:
• Under the terms of loans entered into with Mr Richard Horwood (a
director of Electric Guitar plc) and a former executive of Electric Guitar
plc, the Company issued a total of 1,246,731 shares at 1 pence per share to
these parties (nominal value of shares £12k). As the substance of the
transaction was to issue equity shares to settle finance costs on the loans,
finance costs of £172k, representing the fair value of the shares issued were
recognized through the income statement. The corresponding entries in the
financial statements were recognized through equity- share capital £12k and
share premium £160k. (see note 14 for further details)
19. Financial instruments
Finance Risk Management
3radical has exposure to the following risks arising from financial
instruments:
a. Capital
b. Market
c. Foreign currency
d. Credit
e. Liquidity
Management determines, as required, the degree to which it is appropriate to use financial instruments to mitigate risk. Currently the 3radical Group's principal financial instruments comprise cash, borrowings, trade receivables, trade payable and equity capital. The 3radical Group does not enter into complex derivatives to manage risk ass the cost would outweigh the benefit. There is no material difference between the book value and fair value of the 3radical Group's cash and cash equivalents balances, trade and other receivables balances or trade payables balances.
Significant accounting policies
Details of the significant accounting policies and methods adopted (including
the criteria for recognition, the basis of measurement and the basis for
recognition of income and expenses) for each class of financial asset,
financial liability and equity instrument are disclosed in note 3.
Categories of financial instruments
The 3radical Group calculates the fair value of assets and liabilities by
reference to amounts considered to be receivable or payable at the balance
sheet date.
The book value of the 3radical Group's financial assets and liabilities
approximates their fair value.
Trade payables are non-interest bearing and are normally settled within 30
days. All other payables are to be settled within the next 12 months, as and
when they become due.
Capital risk management
3radical Group manages its capital to ensure that entities in the 3radical
Group will be able to continue as going concerns. The 3radical Group is not
subject to externally imposed capital requirements. The capital structure of
the 3radical Group consists of cash and borrowing and equity attributable to
equity holders of the parent, comprising issued capital, reserves and retained
earnings.
The Director anticipates a net operating cash outflow for the 3radical Group
for the next twelve months from the date of signing the financial statements.
Management have confirmed that they expect to source additional funding from
the new parent company, Electric Guitar Plc in order to support the 3radical
Group's capital requirements for the foreseeable future.
Market risk management
The 3radical Group's activities expose it primarily to the financial risks of
foreign currency exchange rates. The 3radical Group applies a continuous
review process to manage its exposure to foreign currency and equity price
risk:
a. The respective exchange rates of the currencies for which the 3radical
Group holds significant balances are monitored on a daily basis;
b. known cash requirements in the respective currencies in which the
3radical Group transacts are matched against cash reserves and any shortfalls
are addressed through transfers across the longest practical timeframes to
minimise foreign currency risk as best as possible; and
c. strategies are updated on a regular basis to reflect actual market
data and the changing needs of the business.
Foreign currency risk management
The 3radical Group undertakes transactions denominated in foreign currencies
and consequently is exposed to year end and average exchange rate
fluctuations.
The primary currency that the 3radical Group is exposed to is the US Dollar
(USD).
Credit risk management
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the 3radical Group. The
3radical Group's principal financial assets are cash deposits and the credit
risk on these liquid funds is limited because the counterparties are banks.
An allowance for impairment is made where there is an identified loss event,
which is evidence of a reduction in the recoverable cash flows.
The carrying amount of financial assets represents the maximum credit
exposure. The maximum exposure to credit risk at the reporting date was as
follows:
31 March 31 March
2024 2023
Financial assets at amortised £'000
cost
£'000
Trade and other 327
receivables
24
Cash and cash 38
equivalents
70
94 365
Liquidity risk management
Liquidity risk is the risk is the possibility that 3radical will encounter
difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset.
3radical's approach to managing liquidity is to ensure, as far as possible
that it will always have sufficient liquidity to meet its liabilities when
due, without incurring unacceptable losses. The following are contractual
maturities of financial liabilities at the balance sheet date:
31 March 31 March
Financial liabilities at amortised 2024 2023
cost
£'000 £'000
Trade and other 568 328
payables
568 328
20. Related party transactions
Balances and transactions between 3radical and its subsidiaries, which are
related parties, have been eliminated on consolidation.
Remuneration of key management personnel
The remuneration of the Directors and other staff members, who are the key
management personnel of the 3radical Group, is set out below in aggregate for
each of the categories specified in IAS 24 Related Party Disclosures.
Year ended Year ended
31 March 31 March
2024 2023
£'000 £'000
Salaries and other short-term employee benefits 145 271
Other staff benefits (8) (9)
Shared based payment 37 12
174 274
21. Ultimate controlling party
The Director believes there was no ultimate controlling party as at 31 March
2024. As from 3 May 2024, the ultimate parent undertaking of the Company is
Electric Guitar Plc, a company registered in England and Wales which owns 100%
of the issued share capital.
22. Events after balance sheet date
On 3 May 2024, the entire share capital of the Company was purchased by
Electric Guitar Plc at the negotiated value of £1.3m. See Note 14 for further
details of settlement of borrowings subsequent to year end.
23. Nature of the Consolidated Financial Statements
3radical Group's consolidated financial statements presented above does not
constitute statutory accounts for the period under review.
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