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RNS Number : 1223Y Fadel Partners Inc. 05 September 2025
5 September 2025
Fadel Partners, Inc.
('FADEL', the 'Company' or, together with its subsidiaries, the 'Group')
Unaudited interim results for the six months ended 30 June 2025
Fadel Partners, Inc. (AIM: FADL), a brand compliance and rights and royalty
management software provider, is pleased to provide its results for the six
months ended 30 June 2025, based on unaudited management accounts.
Financial Highlights
● Revenue for the first half of 2025 was $4.7 million, compared to
$5.3 million in H1 2024.
● License/Subscription and Support revenue accounted for $3.45
million, representing 74% of total revenue and a slight increase from $3.4
million in the prior‑year period.
● Services revenue declined to $1.2 million (H1 2024: $1.9 million)
), reflecting the unusually strong H1 2024 baseline, which benefited from
several large‑scale implementation projects.
● Total gross margin for the first half of 2025 was 49%, compared to
53% in H1 2024. The reduction in overall margin reflects an increase in
License/Subscription and Support gross margin to 50% (H1 2024: 48%), offset by
a decrease in Services gross margin to 48% (H1 2024: 61%).
Financial Highlights
US Dollars ($M) 1H25 1H24 FY24 Change %( )(4 )
Group revenue 4.7 5.3 13.0 -11%
License/Subscription and Support revenue 3.5 3.4 9.7 4%
Services revenue 1.2 1.9 3.3 -35%
Gross profit 2.3 2.8 8.0 -17%
Gross profit margin (%) 49% 53% 62% -4%
Operating Expenses ( 1 ) 4.8 6.2 12.0 -22%
Adjusted EBITDA ( )(2 ) (2.4) (3.6) (4.0) -33%
Net cash 1.4 2.0 2.4 -30%
ARR ( 3 ) 9.9 9.2 9.9 8%
( )
( 1)( ) Operating expenses comprise research and development costs and
selling, general, and administrative expenses only, and exclude depreciation
and amortization, interest, foreign exchange gains/losses, and other
income/expense.
( 2 ) Earnings after capitalized commission costs and before interest, tax,
depreciation, amortization, exceptional costs and share-based payments.
( )(3 ) ARR is the annual recurring revenue for all active customers at each
period end for all license contracts, and a selection of subscription and
support revenue that is recurring in nature.
( )(4 ) Change % compares 30 June 2024 and 30 June 2025.
OPERATIONAL REVIEW
Highlights
● Full-Year Outlook: The Board reconfirms the guidance provided on
30 July 2025. For FY 2025, revenue is expected to be in the range of $12.0
million to $12.9 million. The Company remains on track to achieve its full
year adjusted EBITDA loss target of $1.0 million to $0.8 million and continues
to expect year-end cash to be between $0.5 million and $0.9 million. The
Company continues to have access to an undrawn $1.0 million credit facility
which has been renewed through May 2026.
● Strengthening Mid-Market IPM Momentum: FADEL's mid-market IPM
segment continued to gain traction in 1H25, supported by a significantly
expanded and more diverse pipeline compared to prior periods. The Company also
entered several longer-cycle enterprise opportunities, with potential closings
anticipated in late 2025 or early 2026, providing a foundation for medium-term
ARR growth.
● Launch of AI Business Insights for IPM Suite: In April 2025, FADEL
released AI Business Insights, a major enhancement to IPM Suite that delivers
predictive analytics, natural-language dashboards, dynamic reporting, and
"what-if" forecasting. Early client feedback has indicated significant
efficiency gains in royalty analysis and improved decision-making for
licensing and finance teams. This capability enhances customer value and
platform stickiness, supporting long-term ARR expansion.
● Upcoming Product Approvals Module: Development of the Product
Approvals module, for Licensors, remains on track, with beta release expected
in September 2025 and general availability by year-end 2025. Early
demonstrations have generated strong client interest, and the feature expands
FADEL's addressable market by combining rights and royalties management with
product approvals workflow automation.
● Operational Efficiency and AI-Driven Productivity Gains: Operating
expenses decreased by 22% to $4.8 million (H1 2024: $6.2 million), with
savings realised across all areas of the business. The integration of AI into
FADEL's development framework has driven greater automation and streamlined
workflows, delivering a 30% productivity improvement in R&D. These
initiatives have maintained delivery velocity while reducing operating
intensity, supporting EBITDA improvement, cash preservation, and long-term
growth capacity.
● Strategic Review Update: The strategic review process, first
referenced in the 2024 Annual Report, remains ongoing. The Company will
provide an update to shareholders at the appropriate time.
These achievements demonstrate FADEL's continued focus on building a durable, high-quality recurring revenue base, driving innovation across our IPM and Brand Vision platforms, and improving operational efficiency. By combining disciplined cost management with strategic product development, we are strengthening our market position and creating a foundation for sustainable ARR growth and long-term shareholder value.
Pipeline
The Group's pipeline continues to diversify, with net ARR growth supported by
both new client acquisitions and the expansion of existing relationships.
FADEL's land‑and‑expand strategy remains effective, particularly among
high‑profile enterprise clients such as L'Oréal and Philip Morris. These
relationships illustrate the broad applicability of FADEL's rights management
solutions across multiple industry verticals.
During the first half of 2025, pipeline conversion was impacted by broad
market uncertainty, particularly surrounding US tariff discussions, which
caused many prospective customers to pause or delay decision‑making. This
impact was most evident in our LicenSee™ and mid‑market IPM target
segments, where we experienced a temporary slowdown in deal closures.
Despite these delays, FADEL's pipeline continued to expand during H1‑25,
reflecting increasing market engagement and interest in our solutions.
Encouragingly, since the start of H2, we have observed decision‑making pace
beginning to recover, which provides optimism for improved conversion rates
and bookings in H2‑25.
Operational Efficiency and Financial Discipline
Operating expenses, defined as research and development (R&D) and selling,
general, and administrative (SG&A) costs excluding depreciation and
amortization, interest, foreign exchange gains/losses, and other
income/expense, decreased by 22% to $4.8 million in H1 2025 (H1 2024: $6.2
million). The reduction reflects savings realised across all areas of the
business, driven in part by the integration of AI into the Company's
development framework, which has streamlined workflows, increased automation,
and improved productivity. Based on these initiatives and organisational
restructuring completed in H1 2025, the Company expects to achieve full-year
operating expense savings of approximately $3.0 million, representing a 25%
decrease year-over-year ($9.0 million in FY 2025 versus $12.0 million in FY
2024), providing sustained benefit to margins and extending the Company's cash
runway.
Revenues for 1H25 were $4.7 million (H1 2024: $5.3 million), within which
License/Subscription and Support revenue increased 4% to $3.5 million (H1
2024: $3.4 million). Professional services revenue declined 35% to $1.2
million (H1 2024: $1.9 million), reflecting a strong prior‑year baseline
that benefited from several large‑scale implementations, including Pearson,
Hachette, and Macmillan.
The combination of a leaner cost base, disciplined investment in innovation,
and an expanding mid‑market presence reinforces FADEL's ability to scale
efficiently while maintaining financial discipline.
New Customer Acquisition and Expansion within Existing Customer Base
FADEL continued to add new customers and expand relationships with existing
clients in the first half of 2025, reflecting the attractive value proposition
of our IPM Suite and Brand Vision platforms.
Mid-market IPM expansion was a key driver in H1-25, highlighted by the
successful sale of IPM Suite to Synaptics Incorporated and a leading North
American manga and anime publisher. These wins demonstrate FADEL's ability to
scale IPM Suite for mid-market customers, offering a cloud-based,
high-functionality solution with a shorter sales cycle and recurring ARR
contribution. In addition, New Zealand Mint Ltd. joined the IPM Suite customer
base, further diversifying our geographic and sector reach.
On the Brand Vision side, a Fortune 50 global media and telecommunications
company became a new client in H1-25, validating continued market demand for
AI-driven content tracking and rights management. Beyond new logo wins,
significant expansion opportunities remain within our existing Brand Vision
customer base, as clients look to increase the number of tracked assets and
sites and pursue regional deployments, supporting long-term ARR growth and
platform stickiness.
Importantly, no logo churn was recorded in H1‑25 across IPM Suite or Brand Vision. However, we experienced a pullback in Extended Support Services (ESS) spend from existing clients, driven by broader macroeconomic conditions and client cost‑reduction initiatives. As FADEL continues to focus on higher‑margin, more durable License ARR, we anticipate that ESS will represent a smaller percentage of the business going forward, aligning our revenue mix with our strategic growth priorities.
Customer numbers as of 30 June 2025 reflect these additions, with IPM Suite
growing to 25 customers (Dec 2024: 22) and Brand Vision to 16 (Dec 2024: 15).
Looking ahead, we expect growth to be driven primarily by adding new
clients-particularly in mid-market IPM and Brand Vision-while also targeting
selective upsell opportunities within our existing accounts. While H1-25 saw
measured progress in new customer acquisition and a pullback in ESS spend, our
expanding pipeline and targeted go-to-market initiatives provide a clear path
to accelerate momentum in H2-25 and into 2026.
Board and Management Changes
In July 2025, FADEL announced a planned CFO transition. Ian Flaherty, who has
served as Chief Financial Officer since February 2024, will step down on 5
September 2025. Ian has been instrumental in driving financial discipline and
operational efficiency and is working closely with the Board and management
team to ensure a smooth handover.
Mark Plotkin, CPA, joined FADEL full‑time on 28 July 2025 and will assume
the role of CFO and Secretary to the Board upon Ian's departure. Mark brings
over 25 years of experience in licensing, publishing, and corporate finance,
including senior roles as VP of Controllership at Marvel Entertainment
(Disney) and Chief Accounting Officer at Marvel Entertainment, along with
experience at Ernst & Young. He offers deep U.S. Generally Accepted
Accounting Principles ("U.S. GAAP"), internal controls, and financial
reporting expertise, and will be instrumental in supporting FADEL's next stage
of disciplined growth and operational scaling. Mark is based in our New York,
NY office.
Current trading and outlook
FADEL remains focused on expanding Annual Recurring Revenue (ARR) through
strong client retention and a growing pipeline. Pipeline expansion continued
during H1‑25, though decision‑making was temporarily delayed by
macroeconomic uncertainty and US tariff discussions. Sales velocity is now
improving, providing confidence for stronger conversion in the second half of
the year.
Looking ahead, the Board expects FY 2025 total revenue to be in the range of
$12.0 million to $12.9 million. The Company remains on track to deliver its
full-year adjusted EBITDA loss target of $1.0 million to $0.8 million,
consistent with market expectations. Year-end cash is anticipated to be
between $0.5 million and $0.9 million. The Company continues to have access to
an undrawn $1.0 million credit facility which has been renewed through May
2026.
FADEL's disciplined cost base, expanding ARR foundation, and growing pipeline
position the Company to deliver sustainable long‑term growth and continued
rapid progress toward profitability.
Tarek Fadel
Chief Executive Officer
5 September 2025
FINANCIAL REVIEW
Revenue
Revenue for the first half of 2025 was $4.7 million, compared to $5.3 million
in H1 2024. We achieved healthy year-over-year growth in our higher-margin
License ARR for H1 2025 versus H1 2024, underscoring the strength and
durability of our recurring revenue base (see ARR section below for further
detail).
License/Subscription and Support revenue accounted for $3.45 million,
representing 74% of total revenue and a slight increase from $3.4 million in
the prior‑year period. Services revenue declined to $1.2 million (H1 2024:
$1.9 million), reflecting the unusually strong H1 2024 baseline, which
benefited from several large‑scale implementation projects, including
Pearson, Hachette, and Macmillan.
Margins
Total gross margin for the first half of 2025 was 49%, compared to 53% in H1
2024. The reduction in overall margin reflects an increase in
License/Subscription and Support gross margin to 50% (H1 2024: 48%), offset by
a decrease in Services gross margin to 48% (H1 2024: 61%), primarily due to
lower team utilisation following the completion of several large,
non-recurring implementation projects in the prior-year period.
Cost of sales decreased to $2.4 million in H1 2025 from $2.5 million in H1
2024, reflecting the benefits of deliberate cost‑management initiatives
while maintaining all client delivery commitments. These savings were achieved
through strategic resource allocation, including shifting certain
higher‑cost consulting roles in India to moderately lower‑cost locations
and leveraging underutilized Support and R&D resources for services
delivery when not engaged in product development. This approach allowed FADEL
to control costs while sustaining product roadmap progress and client
outcomes.
Overall, the margin profile reflects stable and improving efficiency in
recurring revenue streams, offset by the expected variability in
non‑recurring services.
Costs
Research and development (R&D) costs decreased to $1.7 million in H1 2025,
compared to $1.8 million in H1 2024, reflecting a gradual reduction in
headcount and the decision not to replace certain roles as part of our broader
cost‑efficiency program. On a full-year basis, R&D costs are expected to
be approximately $3.1 million in 2025 versus $3.5 million in 2024,
representing an ~11% year-over-year decrease. The majority of these savings
were implemented during H1-25 and will have a more pronounced impact on our
expense run-rate in H2-25 and into 2026. Despite these headcount reductions,
FADEL has expanded its commitment to product innovation, delivering quarterly
updates and new feature releases across IPM Suite and Brand Vision, including
the ongoing integration of AI-driven capabilities to enhance functionality and
customer value. Through these initiatives, we have increased development
activity without increasing cost. The integration of AI into our development
framework has streamlined workflows and delivered approximately 30%
productivity gains in R&D, allowing us to accelerate our product roadmap
with fewer resources. Under U.S. GAAP, FADEL fully expenses all R&D costs,
while many peers reporting under IFRS capitalize and amortize a portion of
their development spend, which can affect comparability of operating results.
Selling, general, and administrative (SG&A) costs decreased to $3.1
million in H1 2025, down from $4.4 million in H1 2024, reflecting the benefits
of organizational restructuring initiated in Q4 2024 and concluded in H1 2025.
On a full-year basis, SG&A costs are expected to be approximately $5.9
million in 2025 versus $8.5 million in 2024, representing an ~31%
year-over-year decrease. As part of this restructuring, several roles in sales
and administrative functions were eliminated or left unfilled, and
prior‑year results included one‑time costs, such as severance and
executive recruitment expenses, that did not recur in the current period.
Combined with operational efficiency measures and AI‑enabled process
improvements, these actions have materially reduced FADEL's cost base,
supported EBITDA improvement and cash preservation, and positioned the Company
to invest selectively in growth initiatives while maintaining financial
discipline.
Key Performance Indicators ("KPIs")
The Directors also consider certain business KPIs when assessing performance
and believe that these, in addition to US GAAP measures, provide an enhanced
understanding of the Company's results and related trends, increasing
transparency and clarity of the core results of the business. The Directors
believe the following metrics are useful in evaluating FADEL's operating
performance.
Adjusted EBITDA
Our adjusted EBITDA Loss (a non-US GAAP measure is defined as earnings after
capitalised commission costs and before interest, tax, depreciation,
amortization, exceptional costs and share-based payments) improved to -$2.4
million in 1H25 from -$3.6 million in 1H24, reflecting both reduced operating
expenses and disciplined cost management, partially offset by
weaker-than-expected sales in the period. This metric is a conservative one,
which, if used for comparison with other companies, needs to consider that, in
accordance with U.S. GAAP, we fully expense our R&D costs as incurred,
which for 1H25 were $1.7 million (1H24: $1.8 million).
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2024
2025 2024
EBITDA $ (2,530,192) $ (3,399,906) $ (3,959,347)
Adjustments to operating expenses
Commissions capitalized during the period $ (184,057) $ (310,366) $ (474,965)
Exceptional items
Restructuring expenses ((1)) $ 92,378 $ - $ 251,398
Corporate Strategic Initiatives $ 75,000 $ - $ -
Share based payments ((2)) $ 132,292 $ 131,158 $ 275,643
Total Adjustments $ 115,613 $ (179,208) $ 52,076
Adjusted EBITDA $ (2,414,579) $ (3,579,114) $ (3,907,271)
(1) Includes costs related to organizational changes undertaken during
the period, such as severance payments
(2) Share based payments for 2023 were recorded on an annual basis as of
31 December 2023. For the first half of 2024, we began recognizing these
expenses on a quarterly basis
Annual recurring revenue
$ As at As at As at
30 June
2024
30 June 31 December
2025 2024
IPM - License and Product Support 4,993,045 4,586,778 4,530,532
IPM - ESS 1,720,535 2,352,268 2,288,610
IPM Suite - Total 6,713,580 6,939,046 6,819,142
BrandVision - License and Product Support 2,274,568 2,070,234 1,527,903
Brand Vision - Total 2,274,568 2,070,234 1,527,903
PictureDesk - License and Product Support 871,688 844,583 868,823
PictureDesk - Total 871,688 844,583 868,823
Total ARR 9,859,836 9,853,863 9,215,868
License and Product Support ARR 8,139,301 7,501,595 6,927,258
ESS ARR 1,720,535 2,352,268 2,288,610
During 1H25, we introduced a more detailed breakdown of Annual Recurring
Revenue (ARR) to improve transparency and provide stakeholders with increased
visibility into the composition of our recurring revenue. ARR is now presented
in two components:
● License and Product Support ARR - representing recurring
contractual revenue from software licenses and standard product support.
● Extended Support Services (ESS) ARR - covering subscription-based
support for minor configurations, technical consulting, and post-go-live
configuration support, associated only with our IPM Suite.
As of 30 June 2025, total ARR stood at $9.9 million, consistent with the $9.9
million recorded at year-end 2024. While overall ARR remained flat, this
reflects two offsetting dynamics. License and Product Support ARR increased to
$8.1 million (from $7.5 million), driven by steady growth in our core IPM
Suite and Brand Vision platforms. Meanwhile, ESS ARR declined to $1.7 million
(from $2.4 million), as clients scaled back recurring support services in
response to internal cost-control efforts and enhanced platform
self-sufficiency.
This shift in ARR composition reflects our deliberate focus on growing the
higher-margin, more durable portion of our recurring revenue base. The
reduction in ESS, although notable, was anticipated and aligns with broader
macroeconomic dynamics affecting client spend. Importantly, the continued
expansion in License ARR-supported by new client wins in both the mid-market
and enterprise segments-reinforces the long-term stickiness of our platform
offerings.
Customer numbers
As at As at
30 June 31 December
2025 2024
IPM Suite 25 22
Brand Vision 16 15
PictureDesk 96 103
Total 137 140
During 1H25, IPM Suite and Brand Vision customer counts increased by three and
one, respectively, with no customer losses.
The net decrease of seven customers in PictureDesk was a result of four new
client additions, eight losses and three customer aggregations/mergers.
Notably, PictureDesk's customer base mainly consists of smaller revenue value
customers compared to our IPM Suite and Brand Vision customers. However, it's
important to highlight that our acquisition of IDS was largely focused on
adopting their intellectual property, particularly their exceptional video
tracking capabilities, which we have successfully integrated into the Brand
Vision product to significantly enhance our content tracking features. Through
1H24, our primary focus was on growing our go-to-market strategy around our
core offerings in IPM and Brand Vision, which meant there wasn't a significant
emphasis on PictureDesk product sales directly. Despite this, we see growth
potential in this business, and during 2H25, we will be increasing investment
in our marketing and sales efforts for PictureDesk .
Cash
Cash and cash equivalents were $1.6 million as of 30 June 2025, compared to
$2.6 million at 31 December 2024. The reduction reflects normal seasonal cash
flow trends, including timing of collections and investment in operating
activities during the first half of the year. Looking ahead, the Company
expects year-end cash to be in the range of $0.5 million to $0.9 million,
consistent with historical seasonal patterns. FADEL remains confident in its
liquidity position, supported by continued cost discipline, expected
collections in the second half, with access to an undrawn $1.0 million credit
facility, renewed through May 2026.
Ian Flaherty
Chief Financial Officer
5 September 2025
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
The unaudited Consolidated Statements of Comprehensive Income of the Group for
the six-month periods ended 30 June 2025 and 2024, and audited Consolidated
Statement of Comprehensive Income of the Group for the year ended 31 December
2024, are set out below:
Continuing Unaudited Unaudited Audited
operations
As at As at As at
30 June 30 June 31 December
2025 2024 2024
$ $ $
License/subscription and support 3,447,981 3,403,523 9,665,773
Professional services 1,207,041 1,853,263 3,356,428
Total revenue 4,655,022 5,256,786 13,022,201
Cost of fees and services 2,364,047 2,482,777 4,973,230
Gross profit 2,290,975 2,774,009 8,048,971
Research and development 1,699,833 1,752,136 3,456,310
Selling, general and administrative expenses 3,121,335 4,421,779 8,552,008
Depreciation and amortization 296,549 381,637 700,851
Interest expense 22,379 60,172 72,583
Foreign exchange (gains)/losses (80,199) 185,887 275,075
Other income - (13,883) -
Total operating expenses 5,059,897 6,787,728 13,056,827
Loss before income taxes (2,768,922) (4,013,719) (5,007,856)
Income tax (gain) / expense 101,139 92,099 818,485
Net loss after taxes (2,870,061) (4,105,818) (5,826,341)
Total foreign currency (losses)/gains 405,583 40,170 134,999
Total comprehensive loss (2,464,478) (4,065,648) (5,691,342)
Net income attributable to non-controlling interest (12) 16 23
Net loss attributable to the Group (2,870,049) (4,105,834) (5,826,364)
Net loss after taxes (2,870,061) (4,105,818) (5,826,341)
Comprehensive income (loss) attributable to non-controlling interest (12) 16 23
Comprehensive loss attributable to the Group (2,464,466) (4,065,664) (5,691,365)
Total comprehensive loss (2,464,478) (4,065,648) (5,691,342)
Basic and diluted loss per Share ($) 6 (0.12) (0.20) (0.28)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
The unaudited Consolidated Statements of Financial Position of the Group as at
30 June 2025 and 2024, together with the audited Consolidated Statement of
Financial Position of the Group as at 31 December 2024, are set out below:
Unaudited Unaudited Audited
As at As at As at
30 June 30 June 31 December
2025 2024 2024
Assets $ $ $
Cash and cash equivalents 1,568,893 2,215,802 2,607,422
Account receivable, net 1,215,681 2,116,256 1,839,305
Unbilled work-in-progress 844,284 1,292,042 1,160,680
Income tax receivable 656,130
- -
Other current assets 249,477 280,866 275,984
Current assets 3,878,335 6,561,097 5,883,391
Intangible assets, net 1,819,106 1,948,415 1,800,613
Goodwill 2,376,613 2,194,442 2,178,198
Furniture, equipment and purchased software 190,253 133,831 206,678
Contract costs 877,409 836,375 835,521
Deferred tax asset 830,778
- -
Right-of-use asset 72,885 169,262 134,777
Non-current assets 5,336,266 6,113,103 5,155,787
TOTAL ASSETS 9,214,601 12,674,200 11,039,178
Liabilities
Accounts payable and accrued expenses 1,929,411 1,701,249 2,542,049
Income tax payable 1,092,962 1,339,470 1,021,905
Deferred revenue 4,117,441 3,506,567 2,849,163
Notes payable - related parties 162,396 162,396 162,396
Current lease liability 57,607 70,765 74,248
Line of Credit - -
-
Current liabilities 7,359,817 6,780,447 6,649,761
Provisions - End of services indemnity 308,824 467,225 308,824
Deferred revenue 293,480 272,556 445,799
Non-current lease liability 15,278 98,497 60,529
Non-current liabilities 617,582 838,279 815,152
Total liabilities 7,977,399 7,618,726 7,464,913
Shareholders' equity
Common shares 20,231 20,231 20,231
Treasury stock, at cost (4,877) - -
Additional paid-in capital 25,724,978 25,448,201 25,592,686
Accumulated deficit (25,407,063) (20,816,484) (22,537,014)
Cumulative translation adjustment 902,862 402,450 497,279
1,236,131 5,054,398 3,573,182
Non-controlling interest 1,071 1,076 1,083
Total Shareholders' equity 1,237,202 5,055,474 3,574,265
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 9,214,601 12,674,200 11,039,178
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
The unaudited Consolidated Statements of Changes in Equity of the Group for
the six-month periods ended 30 June 2025 and 2024 together with the audited
Consolidated Statement of Changes in Equity of the Group as at 31 December
2024, are set out below:
Preferred Shares Preferred Shares Common shares Common shares Treasury Stock Treasury Stock Additional paid in capital Accumulated deficit Cumulative translation adjustment Non-controlling interest Total
# $ # $ # $ $ $ $ $ $
As at 31 December 2023 (audited) - - 20,231,250 20,231 - - 25,317,043 (16,710,650) 362,280 1,060 8,989,964
Non-controlling interest
- - - - - - - 16 16
Stock-based compensation 131,158 131,158
- - - - - - -
Net loss (4,105,834) (4,105,834)
- - - - - - -
Foreign exchange translation income - 40,170 40,170
- - - - - -
As at 30 June 2024 (unaudited) - - 20,231,250 20,231 - - 25,448,201 (20,816,484) 402,450 1,076 5,055,474
Non-controlling interest
- - - - - - - 7 7
Stock-based compensation 144,485 144,485
- - - - - - -
Net loss (1,720,530) (1,720,530)
- - - - - - -
Foreign exchange translation income - 94,829 94,829
- - - - - -
As at 31 December 2024 (audited) - - 20,231,250 20,231 - - 25,592,686 (22,537,014) 497,279 1,083 3,574,265
Non-controlling interest
- (12) (-12)
Common stock repurchased (5,555) (4,877) (4,877)
Stock-based compensation 132,292 132,292
-
Net loss (2,870,049) (1,848,264)
-
Foreign exchange translation income 405,583 (616,202)
-
As at 30 June 2025 (unaudited) - - 20,231,250 20,231 (5,555) (4,877) 25,724,978 (25,407,063) 902,862 1,071 1,237,202
CONSOLIDATED STATEMENTS OF CASH FLOWS
The unaudited Consolidated Statements of Cash Flows of the Group for the
six-month period ended 30 June 2025 and 2024, alongside the audited
Consolidated Statement of Cash Flows of the Group for the year ended 31
December 2024 are set out below:
Unaudited
Six
months Unaudited Audited
ended 30 June
Six
2025
months Year
$
ended 30 June
ended
2024
31 December
$
2024
$
Cash flows from operating activities
Net loss after taxes (2,870,061) (4,105,818) (5,826,341)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization 296,549 381,637 700,851
Non-cash stock compensation 132,292 131,158 275,643
Non-Cash commission shares - - -
Non-cash impact of foreign exchange on intangibles (354,863) 45,366 71,102
Changes in assets and liabilities
Accounts receivable 623,624 192,324 469,275
Unbilled work-in-progress 316,396 2,411,853 2,543,215
Income tax receivable - 4,494 660,624
Other current assets 26,507 17,708 22,590
Deferred tax asset - - 830,778
Capitalization of commissions (184,057) (310,366) (474,965)
Right of use assets 61,892 32,966 67,451
Accounts payable and accrued expenses (612,638) (598,301) 16,647
Income Tax Payable 71,057 76,768 (240,797)
Other Liability (61,892) (32,966) -
Deferred revenue 1,115,959 746,027 261,867
Net cash used in operating activities (1,439,235) (1,007,150) (622,060)
Purchase of furniture, equipment and software - (8,676) (96,975)
Net cash used in investing activities - (8,676) (96,975)
Repurchases of common stock (4,877) - -
Proceeds from line of credit - - 300,000
Repayment of line of credit - - (300,000)
Net cash from financing activities (4,877) - -
Effect of exchange rates on cash 405,583 40,170 134,999
Net (decrease)/increase in cash and cash equivalents (1,038,529) (975,656) (584,036)
Cash and cash equivalents, beginning of year 2,607,422 3,191,458 3,191,458
Cash and cash equivalents, end of year 1,568,893 2,215,802 2,607,422
Supplemental disclosure of cash flow information
Cash paid for interest 20,280 37,738 59,792
Cash received from interest 152 13,883 3,000
Cash paid for income taxes 29,192 8,827 207,782
NOTES TO THE GROUP INTERIM FINANCIAL INFORMATION
1. Organisation and Nature of Business
The interim financial information consolidates the financial information of
the Company and:
● its wholly-owned subsidiaries:
o Fadel Partners UK Limited ("Fadel UK"), and its wholly-owned subsidiary;
▪ Image Data Systems (UK) Limited;
o Fadel Partners France SAS ("Fadel France"); and
● its 99.99%-owned subsidiary, Fadel Partners SAL Lebanon ("Fadel
Lebanon").
The Company is a New York Corporation formed in July 2003 and reincorporated
in Delaware in January 2014. Fadel Lebanon was incorporated in Lebanon in
August 2014. Fadel UK was formed in the United Kingdom ("UK") in January 2015.
Fadel France was formed in France in February 2020. IDS was formed in April
1992 in the UK, by an unrelated party, and acquired by the company on 1
October 2021. Together the entities are collectively referred to herein as the
"Group". The Group is headquartered in New York, with a presence in Los
Angeles, London, Paris, Jordan and Beirut (Lebanon) and is engaged in
providing and servicing its Intellectual Property Rights and Royalty
Management suite of software.
On 6 April 2023, the Company was listed and started trading on AIM, a market
operated by the London Stock Exchange plc ("AIM").
These unaudited interim consolidated financial statements for the six months
ended 30 June 2025 have been prepared in accordance with the accounting
policies set out in the Annual Report and Financial statements of the Company
for the year ended 31 December 2024 using the recognition and measurement
principles in conformity with generally accepted accounting principles in the
United States of America ("US GAAP"). Such consolidated financial statements
reflect all adjustments that are, in management's opinion, necessary to
present fairly, in all material respects, the Company's financial position,
results of operations and cash flows, and are presented in U.S. Dollars. All
material intercompany transactions and balances have been eliminated in
consolidation.
2. Summary 0f Significant Accounting Policies
Principle of consolidation
The interim financial information has been prepared in accordance with US
GAAP. They include the accounts of the Company, and interest owned in
subsidiaries as follows: 99.99% of Fadel Lebanon and 100% of Fadel UK, Fadel
France and IDS. All significant intercompany balances and transactions are
eliminated on consolidation. The non-controlling interest represents the
0.00011% share of Fadel Lebanon owned by outside parties.
Use of Estimates
The preparation of the interim financial information in conformity with US
GAAP requires the Company to make estimates and assumptions that affect the
reported amounts of the Group's assets and liabilities and disclosure of
contingent assets and liabilities, as at the reporting dates, as well as the
reported amounts of revenue and expenses during the reporting periods. Actual
results could differ from these estimates.
Fair Value Measurements
US GAAP requires the disclosure of the fair value of certain financial
instruments, whether or not recognized on the Statement of Financial Position,
for which it is practicable to estimate fair value. The Company estimates fair
values using appropriate valuation methodologies and market information
available as at each reporting date. Considerable judgment is required to
develop estimates of fair value, and the estimates presented are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange. The use of different market assumptions or estimated
methodologies could have a material effect on the estimated fair values.
Additionally, the fair values were estimated at year end, and current
estimates of fair value may differ significantly from the amounts presented.
Fair value is estimated by applying the following hierarchy, which prioritizes
inputs used to measure fair value into three levels and bases categorization
within the hierarchy upon the lowest level of input that is available and
significant to the fair value measurement:
Level 1: Quoted prices in active markets for identical assets or
liabilities;
Level 2: Observable inputs other than quoted prices in active markets
for identical assets and liabilities, quoted prices for identical or similar
assets or liabilities in inactive markets, or other inputs that are observable
or can be corroborated by observable market data for substantially the full
term of the assets or liabilities; and
Level 3: Inputs that are generally unobservable and typically
management's estimate of assumptions that market participants would use in
pricing the asset or liability.
Cash and Cash Equivalents
All highly liquid investments with maturities of three months or less at the
date of purchase are classified as cash equivalents.
Concentrations of Credit Risk
Financial instruments that potentially subject the Group to concentrations of
credit risk consist primarily of cash, accounts receivable and unbilled
work-in-progress. The Company performs on-going evaluations of the Group's
customers' financial condition and, generally, requires no collateral from
customers.
The Group maintains its bank accounts with major financial institutions in the
United States, Lebanon, the UK and France. As at 30 June 2025, the Group had
cash balances in excess of the Federal or National insured limits at financial
institutions in the United States, France and the UK totalling some $0.4
million out of a total of $1.6 million cash deposits. Cash amounts held in
Lebanon are not insured and as such minimal deposits are held in Lebanese
accounts, with payments transferred in the country only on an as needed basis.
The Company believes the risk is limited as the institutions are large
national institutions with strong financial positions.
Accounts receivable, unbilled work-in-progress and allowance for doubtful
accounts
Accounts receivable are recorded at the invoiced amount and do not bear
interest. Credit is extended based on the evaluation of a customer's financial
condition and collateral is not required. Unbilled work-In progress is revenue
which has been earned but not invoiced. An allowance is placed against
accounts receivable or unbilled work-in-progress for management's best
estimate of the amount of probable credit losses. The Company determines the
allowance based on historical write-off experience and information received
during collection efforts.
Credit losses to date have been insignificant and within management's
expectations. The Company provides an allowance for credit losses that is
based upon a review of outstanding receivables, historical collection
information, expected future losses, and existing economic conditions. Account
balances are charged against the allowance after all means of collection have
been exhausted and the potential for recovery is considered remote.
Credit losses
The Company accounts for credit losses under ASU No. 2016-13,"Financial
Instruments-Credit Losses (Topic 326): "Measurement of Credit Losses on
Financial Instruments (ASU 2016-13)". ASU 2016-13 requires that credit losses
be reported as an allowance using an expected losses model, representing the
entity's current estimate of credit losses expected to be incurred. The
accounting guidance currently in effect is based on an incurred loss model.
For available-for-sale debt securities with unrealised losses, this standard
now requires allowances to be recorded instead of reducing the amortized cost
of the investment. The amendments under ASU 2016-13 are effective for interim
and annual fiscal periods beginning after 15 December 2022. The Company
adopted this standard as at 1 January 2023, with no material impact on its
consolidated financial statements.
Revenue Recognition
The Company follows the guidance of ASC 606, "Revenue from Contracts with
Customers," and ASC 340, "Other Assets and Deferred Cost," to account for
revenue.
Sources of Revenue
The Group's revenue is primarily derived from the following sources:
1. License Fees
2. Subscription Fees
3. Customer Support
4. Professional Services
Recognition Criteria
Revenue is recognized when control of the promised goods or services is
transferred to customers in an amount that reflects the consideration the
Company expects to receive in exchange for those goods or services. When a
contract includes variable consideration, such as overage fees, contingent
fees, or service level penalties, the Company estimates the amount to include
in the transaction price only if it is probable that a significant reversal of
cumulative revenue will not occur once the uncertainty associated with the
variable consideration is resolved.
The Company applies the following five steps to determine the amount of
revenue to recognize:
1. Identify the contract(s) with a customer.
2. Identify the performance obligations in the contract.
3. Determine the transaction price.
4. Allocate the transaction price to the performance obligations in the
contract.
5. Recognize revenue when or as the Group satisfies a performance
obligation.
Performance Obligations and Timing of Revenue Recognition
ASC 606 requires the identification of distinct performance obligations within
a contract. The Company's customer agreements primarily fall into the three
distinct contract structures:
1. SaaS Offerings (Brand Vision, Picture Desk, LicenSee)
2. IPM Suite: FADEL Hosted
3. IPM Suite: Client Hosted
Each of these contract structures includes various promised goods and services
that have been assessed to determine if they are distinct or not:
Contract Structures Promised Goods and Services Distinct Performance Obligations Revenue Recognition
1- SaaS Products - SaaS Subscriptions SaaS subscription, support, and software updates are highly interdependent and Over Time
interrelated, forming a single performance obligation.
- Support
- Software Updates
- Services Services can be provided independently of the SaaS product functionality, As Delivered
either by the customer or other third parties.
2- IPM Suite: FADEL Hosted - Software License The software license and hosting are highly interdependent and are treated as Over Time
a single performance obligation.
- Hosting
- Support / ESS Support and ESS provide additional, but not essential, benefits separate from Over Time
the software license and hosting.
- Software Updates Software updates are considered separate, allowing customers to decide on Over Time
implementation independently.
- Services Additional services are not essential to the core functionality of the As Delivered
software license and hosting.
3 - IPM Suite: Client Hosted - Software License The software license is distinct since it does not depend on other As Delivered
FADEL-managed services.
- Support / ESS These remain separate from the software license, enhancing customer experience Over Time
but not critical for core software operation.
- Software Updates Clients can choose whether to implement updates, keeping this service separate Over Time
from the primary software license obligation.
- Services Additional services are not essential to the core functionality of the As Delivered
software license and hosting.
The Company allocates the transaction price first by considering if standalone
sales data is available for each identified performance obligation. Based on a
review of historical subscription agreements, the combined Software License or
SaaS Subscription is sold and renewed on a standalone basis. Consequently, the
Company utilizes these observable inputs to develop the standalone selling
prices of these services.
The Company typically invoices customers annually, with payment terms
requiring settlement within 30 days of invoicing. Amounts invoiced are
recorded as accounts receivable and as either unearned revenue or revenue,
depending on whether control has transferred to the customer.
Costs of obtaining a revenue contract
The Company capitalizes costs of obtaining a revenue contract. These costs
consist of sales commissions related to the acquisition of such contracts that
would not have been incurred if these contracts were not won.
For licenses, the Company estimated the amortization period based on the
remaining expected life of the customer/the term for which it anticipates the
contract will remain effective. It anticipates the term due to the project
size, terms, complexity and cost of implementation and transition, making it
less likely that a client will change vendors for this service.
For service and support contracts, the amortization period is based on the
duration of the contract in consideration that it would be less difficult and
costly for clients to transition to another vendor for continued service.
Amortization periods for customer lives typically vary between 5 and 10 years.
The Company elected not to apply the practical expedient for contracts that
have a duration of less than one year. The Company has also elected to not
include amortisation of the costs of obtaining a revenue contract within gross
profit in order to help the reader see the business through the eyes of
management
Depreciation
Furniture and equipment are stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets, generally
three to seven years. When assets are retired or otherwise disposed of, the
cost and related accumulated depreciation are removed from the accounts and
any resulting gain or loss is reflected in operations for the period. The cost
of maintenance and repairs is charged to operations as incurred. Significant
renewals and betterments are capitalized.
Intangible assets - goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortized.
Instead, goodwill is tested annually for impairment, or more frequently if
events or changes in circumstances indicate that it might be impaired and is
carried at cost less accumulated impairment losses. Impairment losses on
goodwill are taken to profit or loss and are not subsequently reversed.
Intangible assets other than goodwill
The Company has three categories of intangible assets:
Brand assets
The Company purchased IDS in October 2021 and with it acquired a
long-established and respected brand. At the time of purchase, the Company
estimated the useful life of the brand assets acquired for financial reporting
purposes and recognises amortisation on a straight-line basis over the useful
life of the asset, typically 10 years. Purchased brand assets are reviewed for
impairment at each reporting date or when events and circumstances indicate an
impairment. The Company determined that an impairment charge was not necessary
during the period covered by the interim financial information.
Customer relationships
The Company purchased IDS in October 2021 and with it acquired a number of
customer relationships. At the time of purchase, the Company estimated the
useful life of the customer relationships acquired for financial reporting
purposes and recognises amortization on a straight-line basis over the useful
life of the asset, typically 10 years. Purchased customer relationships are
reviewed for impairment at each reporting date or when events and
circumstances indicate an impairment. The Company determined that an
impairment charge was not necessary during the period covered by the interim
financial information.
Software and technology assets
The Company purchased IDS in October 2021 and with it acquired a number of
software and technology assets. At the time of purchase, the Company
estimates the useful life of the software and technology assets acquired for
financial reporting purposes and recognizes amortization on a straight-line
basis over the useful life of the asset, typically 10 years. Purchased
software and technology assets are reviewed for impairment at each reporting
date or when events and circumstances indicate an impairment. The Company
determined that an impairment charge was not necessary during the period
covered by the interim financial information.
Billed accounts receivable and concentrations of credit risk
As at 30 June 2025, there were three significant customers (defined as
contributing at least 10%) that accounted for 64% of accounts receivable.
As at 30 June 2024, there were three significant customers (defined as
contributing at least 10%) that accounted for 64% of accounts receivable
As at 31 December 2024, there were two significant customers (defined as
contributing at least 10%) that accounted for 49% of accounts receivable.
Accounts payable and concentrations of credit risk
As at 30 June 2025, there was two significant vendors (defined as contributing
at least 10%) that accounted for 54% of accounts payable.
As at 30 June 2024, there was one significant vendor (defined as contributing
at least 10%) that accounted for 25% of accounts payable.
As at 31 December 2024, there were two significant vendors (defined as
contributing at least 10%) that accounted for 44% of accounts payable.
Unbilled work-in-progress and concentrations of credit risk
As at 30 June 2025, there were three significant customers (defined as
contributing at least 10%) that accounted for 92% of unbilled
work-in-progress.
As at 30 June 2024, there were three significant customers (defined as
contributing at least 10%) that accounted for 79% of unbilled
work-in-progress.
As at 31 December 2024, there were two significant customers that accounted
for 69% (34% and 35%) of unbilled work-in-progress.
Revenue concentrations
In the six-month period ended 30 June 2025, the five largest customers
accounted for $2,103,198 of revenue, some 45% of revenue from continuing
operations.
In the six-month period ended 30 June 2024, the five largest customers
accounted for $2,457,249 of revenue, some 47% of revenue from continuing
operations.
During 2024, the five largest customers accounted for an aggregate of
$6,379,336 of revenue, some 49% of revenue from continuing operations.
Top 5 Customers' Revenue Concentration
$'000 Revenue Unaudited Revenue Unaudited Revenue Audited
For 6 months ending June 2025 % of Total Revenue For 6 months ending June 2024 % of Total Revenue Year ended
31 December
2024 % of Total Revenue
License/subscription $ 1,228 26% $ 1,056 20% $ 4,004 31%
Support $ - 0% $ 304 6% $ 455 3%
Services $ 875 19% $ 1,098 21% $ 1,920 15%
Total $ 2,103 45% $ 2,457 47% $ 6,379 49%
Advertising and promotion costs
Advertising and promotion costs are expensed as incurred. These costs totalled
approximately $442,926 for the six-month period ended 30 June 2025 (30 June
2024: $502,858) and $1,001,898 for the year ended 31 December 2024.
Segmental reporting
The Company reports its business activities in two areas:
• License/subscription and support revenue; and
• Professional services
which are reported in a manner consistent with the internal reporting to the
CEO, who has been identified as the chief operating decision maker.
Income taxes
The Company records deferred tax assets and liabilities for the estimated
future tax effects of temporary differences between the tax bases of assets
and liabilities and amounts reported in the Group's Consolidated Statements of
Financial Position, as well as operating loss and tax-credit carry-forwards.
The Company also measures the Group's deferred tax assets and liabilities
using enacted tax rates expected to be applied to taxable income in the years
in which those temporary differences are expected to be recovered or settled.
Deferred tax assets are reduced by a valuation allowance if, based on
available evidence, it is more likely than not that these benefits will not be
realized.
Stock-based compensation
The Company records stock-based compensation in accordance with FASB ASC Topic
718 "Compensation-Stock Compensation". The fair value of awards granted is
recognized as an expense over the requisite service period.
Leases
The Group accounts for its leases under ASC 842, Leases, which requires the
recognition of right-of-use ("ROU") assets and lease liabilities on the
Consolidated Statements of Financial Position, including those leases
classified as operating leases. Under the standard, disclosures are required
to meet the objective of enabling users of financial statements to assess the
amount, timing, and uncertainty of cash flows arising from leases.
The Company determines if an arrangement is a lease at inception. If
applicable, operating leases are included in operating lease ROU assets,
current lease liabilities, and non-current lease liabilities on the
accompanying Consolidated Statements of Financial Position. If applicable,
finance leases are included in property and equipment, current lease
liabilities, and non-current lease liabilities on the accompanying
Consolidated Statements of Financial Position.
ROU assets represent the right to use an underlying asset for the lease term
and lease liabilities represent our obligation to make lease payments arising
from the lease. Operating lease ROU assets and liabilities are recognized at
commencement date based on the present value of lease payments over the lease
term.
Foreign currency
The Group's reporting currency is the US Dollar. The functional currency of
foreign operations, excluding the Lebanon entity, is the local currency for
the foreign subsidiaries. Assets and liabilities of those foreign operations
denominated in local currencies are translated at the spot (historical) rate
in effect at the applicable reporting date. The Group's Consolidated
Statements of Comprehensive Income are translated at the weighted average rate
of exchange during the applicable period. Realised and unrealised transaction
gains and losses generated by transactions denominated in a currency different
from the functional currency of the applicable entity are recorded in other
income (expense) in the Consolidated Statements of Comprehensive Income in the
period in which they occur.
The exchange rate used to translate the sterling pound ("£"), ("EURO") and
(CAD) into $ for the purpose of preparing the financial information uses the
average rate for the Consolidated Statements of Comprehensive Income and
Consolidated Statements of Cash Flows and the rate at the end of the reporting
period for the Consolidated Statements of Financial Position.
In accordance with applicable US GAAP, in 2023, our company transitioned Fadel
Lebanon to a USD functional currency entity due to the hyperinflationary
conditions prevalent in the Lebanese currency. As a result, the financial
statements for all periods presented reflect the Lebanon subsidiary's
operations and financial position in USD.
Comprehensive income/(loss)
Comprehensive income/(loss) consists of two components:
• net income/(loss); and
• other comprehensive income/(loss).
Other comprehensive income/(loss) refers to revenue, expenses, gains and
losses that are recorded as an element of shareholder's equity but are
excluded from net income/(loss). Other comprehensive income/(loss) consists of
foreign currency translation adjustments from those subsidiaries not using the
$ as their functional currency.
Statement of cash flows
Cash flows from the Group's operations are calculated based upon the local
currencies. As a result, amounts related to assets and liabilities reported on
the Consolidated Statement of Cash Flows will not necessarily agree with
changes in the corresponding balances on the Consolidated Statements of
Financial Position.
New Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB or
other standard setting bodies and adopted by the Company as at the specified
date. Unless otherwise discussed, the Company believes that the impact of
recently issued standards that are not yet effective will not have a material
impact on the Group's Consolidated Statements of Financial Position,
Consolidated Statements of Comprehensive Income or Consolidated Statements of
Cash Flows.
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU No. 2023-07, "Segment Reporting (Topic
280): Improvements to Reportable Segment Disclosure". This standard requires
disclosure of significant segment expenses that are regularly provided to the
chief operating decision maker ("CODM") and included within each reported
measure of segment profit or loss, an amount and description of its
composition for other segment items to reconcile to segment profit or loss and
the title and position of the entity's CODM. The amendments in this update
also expand the interim segment disclosure requirements. This standard is
effective for fiscal years beginning after 15 December 2023, and interim
periods within fiscal years beginning after 15 December 2024 and early
adoption is permitted. The Company is currently evaluating the potential
impact that this new standard will have on our consolidated financial
statement disclosures.
In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740):
Improvements to Income Tax Disclosures", which is intended to provide
enhancements to annual income tax disclosures. In particular, the standard
will require more detailed information in the income tax rate reconciliation,
as well as the disclosure of income taxes paid disaggregated by jurisdiction,
among other enhancements. The standard is effective for years beginning after
15 December 2024 and early adoption is permitted. The Company is currently
evaluating the impact of the standard on the presentation of its consolidated
financial statements and footnotes.
3. Segmental Reporting
The Group reports its business activities in two areas:
● subscription and support revenue; and
● professional services,
which are reported in a manner consistent with the internal reporting to the
Chief Executive Officer, which has been identified as the chief operating
decision maker.
While the chief operating decision maker considers there to be only two
segments, the Group's revenue is further split between "license subscriptions
and support" and "professional services" and by key product families (IPM
Suite and Brand Vision) and hence to aid the readers understanding of our
results, the split of revenue from these categories is shown below:
Unaudited Unaudited Audited
As at As at As at
30 June 30 June 31 December
2025 2024 2024
$ $ $
Revenue
License/subscription
IPM Suite 1,951,406 1,730,580 6,432,379
Brand Vision 1,496,575 1,195,210 2,559,367
Total license/subscription 3,447,981 2,925,790 8,991,746
Support
IPM Suite - 477,733 674,027
Total support - 477,733 674,027
License/subscription and support 3,447,981 3,403,523 9,665,773
Professional services 1,207,041 1,853,263 3,356,428
Total revenue 4,655,022 5,256,786 13,022,201
Cost of sales
License/subscription and support 1,733,567 1,760,867 3,394,219
Professional services 630,480 721,910 1,579,011
Total cost of sales 2,364,047 2,482,777 4,973,230
Gross profit margins
License/subscription and support 50% 48% 65%
Professional services 48% 61% 53%
Total gross profit margin 49% 53% 62%
4. Accounts Receivable
Accounts receivable consists of the following:
Unaudited Unaudited Audited
As at As at As at
30 June 30 June 31 December
2025 2024 2024
$ $ $
Accounts receivable 1,329,868 2,138,275 1,952,329
Allowance for doubtful accounts (114,187) (22,019) (113,024)
Accounts receivable, net 1,215,681 2,116,256 1,839,305
5. Earnings Per Share
The Company computes earnings / (loss) per share in accordance with ASC 260,
"Earnings per Share", which requires presentation of both basic and diluted
earnings per share on the face of the Consolidated Statements of Comprehensive
Income. Basic earnings (loss) per share is computed by dividing net income /
(loss) available to common shareholders by the weighted average number of
outstanding shares during the period.
Diluted earnings / (loss) per share gives effect to all dilutive potential
common shares outstanding during the period. Due to the Group having losses in
all years presented, the fully diluted loss per share for disclosure purposes,
as shown in the Consolidated Statements of Comprehensive Income, is the same
as for the basic loss per share due to the anti-dilutive nature of the
calculations.
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 June 30 June 31 December
2025 2024 2024
Total comprehensive income attributable to Shareholders (2,464,478) (4,065,648) (5,691,342)
Weighted average number of shares 20,225,695 20,231,250 20,231,250
Basic earnings per share ($) (0.12) (0.20) (0.28)
6. Furniture, Equipment and Purchased Software
Furniture, equipment and purchased software consist of the following:
Unaudited Unaudited Audited
As at As at As at
30 June 30 June 31 December
2025 2024 2024
$ $ $
Furniture, equipment and purchased software 367,007 274,750 363,328
Accumulated depreciation (176,754) (140,919) (156,650)
Furniture and equipment, net 190,253 133,831 206,678
The total depreciation charge for the six-month period ended 30 June 2025 was
$16,811, compared to $9,894 in the six-month period ended 30 June 2024 and
$26,003 for the year ended 31 December 2024.
7. Contract Costs
Contract costs consist of the following:
Unaudited Unaudited Audited
As at As at As at
30 June 30 June 31 December
2025 2024 2024
$ $ $
Opening balance 835,521 763,323 763,323
Commissions capitalized during the period 184,057 310,366 474,965
Amortization charge for the period (142,169) (237,314) (402,767)
Accumulated contract costs 877,409 836,375 835,521
Accumulated amortisation was $2,006,138 as at 30 June 2025, $1,698,517 as at
30 June 2024 and $1,863,969 as at 31 December 2024. Amortisation periods for
customer lives typically vary between 5 and 10 years. The Group elected not to
apply the practical expedient for contracts that have a duration of less than
one year.
8. Common Shares
The Company has authority to issue 150,000,000 shares at $0.001 par value per
Share. As at 31 December 2024 and 30 June 2025, the Company had 20,231,250
common shares of $0.001 each in issue. Shareholders may use this figure as the
denominator by which they are required to notify their interest in, or change
their interest in, the Company under the Disclosure Guidance and Transparency
Rules.
9. Related Parties
Notes Payable
On 2 April 2023, Tarek Fadel and the Company entered into a loan agreement
whereby Mr. Fadel agreed to advance a loan (the "Fadel Loan") of £451,346 to
the Company equivalent to $564,009. The Fadel Loan is unsecured and bears no
interest or fees. The Company made a loan repayment of $401,613 on 28 April
2023 after the issuance of 223,289 new depositary interests ("New Shares")
over common shares at a price of £1.44 per share (the "Placing"). The
remaining balance on the Fadel Loan is repayable only as and when, following
Admission (and excluding the issue of the New Shares in the Placing), the
Company issues new shares at or above the placing price. The loan balance was
$162,396 as at 30 June 2025 and 31 December 2024.
10. Line Of Credit
On 29 June 2022, the Company entered into a new $1 million note agreement for
a line of credit between the Company and Bank of America, N.A.. Advances under
the note bear interest at the bank's Prime Rate plus 0.7%.
On 12 April 2024, the line of credit between the Company and Bank of America,
N.A. was extended until 31 May 2025 and again extended until 31 May 2026 on 4
April 2025. The balance owed to Bank of America, N.A under the terms of the
line of credit was zero at 30 June 2025 and 31 December 2024.
11. Stock Option Plans
In 2014, the Directors approved the "2014 Equity Incentive Plan" with a
maximum of 1,620,366 shares reserved for issuance. As applicable, the exercise
price is as established between the Company and recipient. These options vest
over three or four years from date of grant. Options to acquire 394,140 and
793,830 shares were granted and remain outstanding as at 30 June 2025 and 31
December 2024, respectively. Following Admission to AIM on 6 April 2023, the
Company does not intend to operate the 2014 Equity Incentive Plan to grant
further options, as it was superseded by the 2023 Equity Incentive Plan.
Outside of the above 2014 Equity Incentive Plan, are 576,924 non-plan options
with an exercise price of $1.03. These non-plan options were fully vested at
31 December 2021 and expired in February 2023. On 2 April 2023, the Board
approved the reissuance of these non-plan options in the same amount (with a
ten year term and an exercise price of £1.44 per share). As at 30 June 2025
and 31 December 2024, the 576,924 non-plan options remained outstanding.
On 2 April 2023, the Directors approved the "2023 Equity Incentive Plan" which
supersedes the 2014 Plan. Options may be granted at an exercise price
determined by the Remuneration Committee which will be not less than the fair
market value of a share on the date of grant (i.e. the current market price).
Options may not be exercised later than the tenth anniversary of the date of
the grant (or such earlier date specified when granted). These options vest
over four years from date of grant. As at 30 June 2025, 1,435,238 options
under the 2023 Equity Incentive Plan were granted and remain outstanding.
Determining the appropriate fair value model and the related assumptions
requires judgment. The fair value of each option granted is estimated using a
Black-Scholes option-pricing model on the date of grant as follows:
For the six-month ended 30 June 2025 For the year ended 31 December 2024
Estimated dividend yield 0% 0%
Expected stock price volatility 37% 30%
Risk-free interest rate 4.22% 4.19%
Expected life of option (in years) 7 7
Weighted-average fair value per share $0.42 $0.62
Due to limited historical data, the expected volatility rates are estimated
based on the actual volatility of comparable public companies over the
expected term. The expected term represents the average time that options that
vest are expected to be outstanding. Due to limited historical data, the
Company calculates the expected life based on the midpoint between the vesting
date and the contractual term, which is in accordance with the simplified
method. The risk-free rate is based on the United States Treasury yield curve
during the expected life of the option.
A summary of the status of the Group's option plans for the period as of 30
June 2025 is as follows:
2014 plan Non-plan 2023 plan Total
Options outstanding Number of Weighted Number of Weighted Number of Weighted Number of Weighted
Options
average
Options
average
Options
average
Options
average
(in Shares)
exercise price
(in Shares)
exercise price
(in Shares)
exercise price
(in Shares)
exercise price
As at 31 December 2024 793,830 $1.19 576,924 $1.78 1,723,952 $1.73 3,094,706 $1.60
Granted - $0 - $0 83,400 $1.65 83,400 $1.65
Exercised - $0 - $0 - $0 - $-
Forfeited or (399,690) $1.09 - $0 (372,114) $1.65 (771,804) $1.36
expired
As at 30 June 2025 394,140 $1.09 576,924 $1.78 1,435,238 $1.65 2,406,302 $1.59
Exercisable as at 31 793,830 $1.21 576,924 $1.78 475,542 $1.81 1,846,296 $1.46
December 2024
Exercisable as at 30 June 2025 394,140 $1.20 576,924 $1.78 475,542 $1.71 1,446,606 $1.60
Stock option expense for the period 30 June 2025 was $132,292 and for year
ended 31 December 2024 was $275,643. Unrecognized compensation expense related
to share options which will be recognized through the second half of 2025 was
$127,723 as at 30 June 2025, compared to $272,980 as at 31 December 2024.
12. Retirement Plan
The Company has a 401(k) safe harbor plan that covers all employees at least
21 years of age who have worked for the Company for at least three months.
Employees vest immediately for all employer matching contributions. The
retirement plan expense was $49,724 for the six-month period ended 30 June
2025, $65,033 for the six-month period ended 30 June 2024 and $112,333 for the
year ended 31 December 2024.
The Group also maintains a provision for end-of-service indemnity for
employees of its Lebanese subsidiary, in accordance with local labor
regulations. This liability reflects the estimated obligation for benefits
payable to employees upon separation from service. During 2024, the Company
adopted a refined approach to estimating this provision, representing a change
in accounting estimate. The updated methodology incorporates a forfeiture rate
of 8.11%, derived from historical employee turnover data, and applies a
present value discounting approach using a 10% discount rate, consistent with
prevailing economic conditions in Lebanon. These changes enhance the accuracy
of the estimate by reflecting both expected employee behavior and the time
value of money. As at 31 December, 2024 the liability to end of services
indemnity was $308,824 and remains unchanged at 30 June 2025, as no
alterations have been observed up to the date of the document. It will be
reviewed and validated at the end of 2025.
13. Leases
A lease is defined as a contract that conveys the right to control the use of
identified property, plant or equipment for a period of time in exchange for
consideration. The Company accounts for its leases in accordance with the
guidance in Accounting Standards Codification ("ASC") 842 ("ASC 842").
Substantially all of the leases in which the Company is the lessee are
comprised of real estate property for remote office spaces and corporate
office space. Substantially all of the leases are classified as operating
leases.
As at 30 June 2025, 30 June 2024, and 31 December 2024, the Company had
approximately $72,885, $169,262 and $134,777, respectively, of operating lease
ROU assets and $72,885, $169,262 and $134,777, respectively of operating lease
liabilities on the Group's Consolidated Statements of Financial Position. The
Company has elected not to recognize right-of-use ("ROU") assets and lease
liabilities arising from short-term leases, leases with initial terms of
twelve months or less, or equipment leases (deemed immaterial) on the Group's
Consolidated Statements of Financial Position.
As at 30 June 2025, these leases do not contain material residual value
guarantees or impose restrictions or covenants related to dividends or the
Company's ability to incur additional financial obligations. The discount rate
for operating leases was based on market rates from a bank for obligations
with comparable terms effective at the lease inception date. The following
table presents lease costs, future minimum lease payments and other lease
information as of 30 June 2025:
The lease agreement for the 7th floor has been successfully concluded and
formally terminated as of January 1, 2025.
Operating
2025 $ 57,607
2026 $ 15,278
Total Operating Lease Liabilities $ 72,885
Less amounts representing interest $ 4,125
Present Value of Future Minimum Lease Payments $ 68,760
Less current maturities $ 57,607
Long-term Lease Liability $ 11,153
Lease Cost:
Unaudited As at Unaudited As at Audited
30 June
30 June
As at
2025
2024
31 December
2024
Operating lease - operating cash flows (fixed payments) $ 30,803 $ 71,266 $ 62,438
Weighted average remaining lease term - operating 1.3 years 1.4 years 1.7 years
Weighted average discount rate - operating 10% 10% 10%
14. Income Tax Receivable
On 30 September 2022, a withholding tax liability of 32.5% became payable in
the UK in connection with an intercompany loan of $2,032,690 between Image
Data Systems (UK) Limited ("IDS") and Fadel UK, related to the acquisition of
IDS. This resulted in a withholding tax obligation of $660,624, which became
reclaimable on the condition that the intercompany loan was repaid or
cancelled by 31 December 2023. The tax was paid by IDS to HMRC on 21 June
2023. As the conditions for reclaim were met, the amount was recognized as a
receivable as of 31 December 2023, and the refund of $660,624 was received on
25 October 2024.
15. Subsequent Events
Management has evaluated the subsequent events for disclosure in these
consolidated financial statements through 5 September 2025, the date these
consolidated financial statements were available for issuance, and determined
that no events have occurred that would require adjustment to or disclosure in
these consolidated financial statements.
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