REG - IQ-AI Limited - Half-year Report
16/08/2022 09:30
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RNS Number : 1650W IQ-AI Limited 16 August 2022
16 August 2022
IQ-AI Limited (the "Company" or the "Group")
Half Yearly Report for the Period Ended 30 June 2022
Chief Executive's Statement
I am pleased to announce IQ-AI Limited's unaudited financial results for the
six months ended 30 June 2022.
For further information, please contact:
IQ-AI Limited
Trevor Brown/Vinod Kaushal/Brett Skelly 0207 469 0930
Peterhouse Capital Limited
Lucy Williams/Heena Karani 0207 220 9797
Financial Highlights
Revenues of £256,000 were sustained by renewal subscriptions of IB Clinic, as
we successfully continued to manage the after-effects of Covid 19. Major
cancer centres continue to trial IB platforms and remain viable prospects.
Grant funding from the National Institutes of Health (NIH) continue to provide
support for our continuing development of new disruptive technologies.
Major Developments
IB Zero G™
As reported on May 31, we submitted an FDA 510(k) application to the USFDA. IB
Zero G™ is an automated processing pipeline that leverages patented
technology (US Patent No. 11,100,621) to output enhanced post-contrast images
using routinely acquired non-contrast images as input. This technology is
targeted at the multibillion-dollar global MRI contrast media market offering
cost, convenience, and alleviating safety and environmental concerns. The
initial 510(k) application followed the Traditional 510(k) pathway. Under this
pathway, the sponsoring company identifies a previously FDA cleared
"predicate" device and uses the attributes of that predicate device to
demonstrate "substantial equivalence" for the new device. The FDA has now
determined that the patented artificial intelligence (AI) technology contained
in IB Zero G is a novel, a "first in kind", such that no currently cleared
device exists that can serve as a predicate to establish substantial
equivalence.
In the response, the FDA provided several alternatives including a "de novo"
application. The de novo pathway is specifically designed for novel medical
devices intended as Class I and Class II (a risk-based classification) and
allows the FDA to review new technologies more expeditiously such that
patients can have access to safe and effective medical devices sooner. Prior
to the establishment of the de novo pathway, novel technologies were
automatically considered Class III (highest risk) and underwent a much more
rigorous and longer market clearance pathway, called a Premarket Approval
(PMA). We do not believe IB Zero G is appropriately considered a Class III
device, so IB intends to take advantage of the de novo pathway and will be
communicating with the FDA for further clarification and guidance in advance
of the de novo submission.
The de novo pathway is simpler and is becoming more frequently used, driven in
part by the rapid pace of technology, computing power, and AI algorithmic
development.
We continue to advance this technology and have entered into a second data use
agreement with Phoenix Children's Hospital ("PCH"). PCH has begun providing
anonymized datasets which will be used to evaluate IB Zero G's capability in
infants and neonates.
IB Rad Tech Automation
One of the derivative technologies that resulted from the development of the
IB Zero G AI is auto-segmentation. This AI capability enables multiple
opportunities that can streamline workflows and automate processing of
sophisticated parametric maps that currently require manual intervention. One
workflow is the for the generation of IB's "fractional tumour burden" or "FTB"
maps. These perfusion-derived class maps quantify regions of blood volume; a
measurement that has been correlated with tumour grade. A beta-release of this
functionality will be deployed in Q4 2022 to our luminary sites including the
Mayo Clinic in Arizona, Froedtert and the Medical College of Wisconsin,
Stanford Medical Centre, and Keck Medical Centre at USC.
IB Trax™
IB Trax remains a high priority as it includes an elegant reporting feature
that quantifies disease progression over time, a major medical need. To
compress time to market, a phased release approach is being implemented. The
first release, which will serve as a foundation for subsequent releases,
displays volumetric changes for IB's Delta T1 (patent-pending) and
quantitative perfusion class maps (also known as "fractional tumour burden" or
"FTB" maps). Feedback sessions were held with three experienced clinicians who
offered valuable insights into the design and content of the reporting
feature. Subsequent releases of IB Trax will include automated identification
and tracking of metastatic lesions to systematically organize the data and
improve clinical workflows which are currently time-consuming and prone to
high error rates.
The quantitative reporting feature of the initial release capitalises upon the
exclusive quantitative mapping capability of IB's core technologies. It is
conceivable that the report could be shared directly with patients and provide
them with a graphical depiction of their treatment response. It is also
planned to be incorporated into the NIMBLE app outlined later in this update.
Phase I Clinical Trial - Oral Gallium Maltolate (IB 003)
Our sponsorship of the Phase I clinical trial at the Medical College of
Wisconsin Cancer Centre ("MCWCC") continues. Under phase I trials, new agents
are studied for safe dosing levels to be used in phase II trials. Screening
activity is ongoing and those patients who meet the study's inclusion criteria
are invited to participate. Thus far, the enrolled subjects are tolerating the
agent well and are remaining on the treatment. The IB Clinic suite of software
continues to be used to monitor response to the agent for follow-up imaging
exams and we expect more patients to be screened and enrolled.
To help broaden awareness about the trial, we have actively engaged with
various patient advocacy groups and brain tumour associations both local to
the MCWCC and internationally. For example, the American Brain Tumour
Association (ABTA) participated in a day-long information exchange at our
Milwaukee, WI offices. Opportunities for continued collaboration and research
funding were discussed and being pursued. The 2022 ABTA Annual Conference is
being held virtually which we will attend.
In addition, the principal investigator of the study will be traveling to
other cancer centres starting in September to generate further interest and
promote participation.
NIMBLE - Network for the Integrated Management of Brain Metastases
Through our interactions with the MCWCC and collaborations with Professor
Schmainda's laboratory, we became aware of a novel smartphone "app" that is
being used by Froedtert and the Medical College of Wisconsin (Froedtert &
MCW) to treat brain metastases.
Developed by Dr. Joseph Bovi, MD, an experienced radiation oncologist at MCW,
the "NIMBLE" (Network for the Integrated Management of Brain Metastases) app,
engages the entire treatment team swiftly and virtually to help navigate
multi-disciplinary and complex medical decisions, obviating the need for
face-to-face meetings which are often difficult to coordinate. Dr. Bovi's
institution, Froedtert & MCW, began using NIMBLE in March of 2020 during
the onset of COVID 19 lockdowns and restrictions. Since then, it has been used
routinely to create timely, evidenced-based treatment plans via remote live
inputs from the clinician teams.
NIMBLE provides a tool for both inpatient and outpatient providers to
implement a data-driven, comprehensive algorithm for managing brain
metastases, via a secure mechanism by which providers can submit a patient for
consideration to a virtual tumour board for real-time guidance of the best
possible management for the patient.
The 'virtual tumour board' app has proven itself in a real-world clinical
setting such that we believe it may have much wider utility. Therefore, we
have entered into an exclusive world-wide licensing agreement with MCW for the
commercial rights to NIMBLE, enlisting Dr. Bovi to continue its commercial
adoption by third party users. The architecture of NIMBLE is also potentially
applicable to other disease groups, such as immunotherapy and cardiology and
these other uses will be explored.
IB Clinic - Processing as a Service
Over the past several months, we have contemplated new ways for clinicians to
access our quantitative mapping solutions. One promising idea is the provision
of a post-processing service whereby we offer clinicians an "a la carte"
service by remotely processing exams for them. This is a solution for
institutions for whom the significant investment a full installation of IB
Clinic is not economic on a patient throughput basis, while also minimizing IT
security reviews and approvals, and the burden of the already constrained
hospital resources with further training and specialized support. Currently,
two sites are reviewing service agreements which would constitute a new
revenue stream. One advantage for a service income model is that we could
potentially directly address a global market directly from our Milwaukee site.
Outlook
The development of both NIMBLE and the service model offer the prospect of new
income streams in the months ahead which could complement our ongoing
development projects discussed above.
Trevor Brown
Chief Executive
Results for the 2022 interim financial period
A summary of the key financial results is set out in the table below:
30 June 2022
£
Revenue 255,609
Gross Profit 258,066
Operating expenses (583,339)
Finance costs (5,311)
Loss for the period from discontinued operations -
Loss for the period (330,584)
Interest
The net interest cost for the Group for the period was £5,311 (2021:
£5,311).
Loss before tax
Loss before tax for the period was £330,584 (2021: £207,135).
Taxation
Taxation charge was £nil for the period (2021: £nil).
Earnings per share
Basic and diluted earnings per share for the period were 0.18p loss (2021:
0.12p loss).
Financial position
The Group's balance sheet as at 30 June 2022 can be summarised as set out in
the table below:
Net assets
£'m
£
Non-current assets 815,800
Net current assets 5,798
Net assets and total equity 821,598
Cash flow
Net cash outflow for the period was £373,854 (2021: £241,072 outflow).
Consolidated Income Statement
For the six months ended 30 June 2022
Half year ended (Audited) Full year ended Half year
ended
30 Jun 2022 31 Dec 2021 30 Jun 2021
£ £ £
Continuing operations
Revenue 255,609 521,069 238,488
Cost of sales 2,457 (17,047) (4,070)
Gross profit 258,066 504,022 234,418
Administrative expenses (583,346) (994,388) (436,247)
Other income 7 18 5
Operating loss (325,273) (490,348) (201,824)
Finance costs (5,311) (10,710) (5,311)
Loss before income tax (330,584) (501,058) (207,135)
Income tax - - -
Loss for the year from continuing operations (330,584) (501,058) (207,135)
Discontinued operations
Loss for the period from discontinued operations - - -
Loss for the year attributable to owners of the Company (330,584) (717,534) (207,135)
Earnings per share attributable to owners of the Company
From continuing operations:
Basic & diluted (pence per share) (0.18) (0.29) (0.12)
From discontinued operations:
Basic & diluted (pence per share) (0.00) (0.00) (0.00)
Total earnings per share (pence per share) (0.18) (0.29) (0.12)
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2022
Half year (Audited) Full year ended Half year
ended ended
30 Jun 2022 31 Dec 2021 30 Jun 2021
£ £ £
Loss for the period (330,584) (501,058) (207,135)
Other comprehensive income
Items that may be subsequently reclassified as profit or loss
Exchange differences on translation of foreign operations (16,956) 737 (67)
Total comprehensive loss for the year attributable to the owners of the (347,540) (500,321) (207,202)
Company
Total comprehensive loss for year arises from:
Continuing operations (347,540) (500,321) (207,202)
Discontinuing operations - - -
(347,540) (500,321) (207,202)
Consolidated Balance Sheet
As at 30 June 2022
(Audited) 30 Jun 2021
30 Jun 2022 31 Dec 2021 £
£ £
Non-current assets
Property, plant and equipment 5,426 4,440 3,090
Goodwill 219,263 205,203 202,800
Intangible assets 591,111 567,060 599,663
Total non-current assets 815,800 776,703 805,553
Current assets
Trade and other receivables 166,025 78,189 175,836
Cash 354,732 728,586 237,838
Assets classified as held for sale - - -
Total current assets 520,757 806,775 413,674
Current liabilities
Trade and other payables 514,959 392,787 356,064
Liabilities directly associated with assets classified as held for sale - - -
Total current liabilities 514,959 392,787 356,064
Net current assets 5,798 413,988 57,610
NET ASSETS 821,598 1,190,691 863,163
Equity
Share capital 1,826,214 1,825,076 1,701,076
Share premium 20,553,499 20,547,343 20,076,343
Capital redemption reserve 23,616 23,616 23,616
Merger reserve 160,000 160,000 160,000
Convertible loan note reserve 212,385 207,074 201,675
Share based payment reserve 71,808 71,808 76,140
Foreign currency reserve (30,141) 20,973 (4,411)
Retained losses (21,995,783) (21,665,199) (21,371,276)
Equity attributable to owners of the Company 821,598 1,190,691 863,163
TOTAL EQUITY 821,598 1,190,691 863,163
Consolidated statement of changes in equity
For the six months ended 30 June 2022
Share Share Capital redemption reserve Merger Convertible loan note reserve Share based payment reserve Foreign currency reserve Retained TOTAL EQUITY
Capital premium reserve losses
£ £ £ £ £ £ £ £ £
Balance at 1 January 2021 1,701,076 20,076,343 23,616 160,000 196,364 63,087 15,009 (21,164,141) 1,071,354
Loss for the year - - - - - - - (501,058) (501,058)
Exchange differences on translation of foreign operations - - - - - - 737 - 737
Total comprehensive loss for the year - - - - - - 737 (501,058) (500,321)
Shares issued 124,000 496,000 - - - - - - 620,000
Cost of shares issued - (25,000) - - - - - - (25,000)
Share based payments - - - - - 8,721 - - 8,721
Movement in the year - - - - 10,710 - 5,227 - 15,937
Balance at 31 December 2021 1,825,076 20,547,343 23,616 160,000 207,074 71,808 20,973 (21,665,199) 1,190,691
Loss for the period - - - - - - - (330,584) (330,584)
Exchange differences on translation of foreign operations - - - - - - (16,956) - (16,956)
Total comprehensive loss for the period - - - - - - (16,956) (330,584) (347,540)
Shares issued 1,138 6,156 - - - - - - 7,294
Share based payments - - - - - - - - -
Movement in the period - - - - 5,311 - (34,158) - (28,847)
Balance at 30 June 2022 1,826,214 20,553,499 23,616 160,000 212,385 71,808 (30,141) (21,995,783) 821,598
Consolidated Cash Flow Statement
For the six months ended 30 June 2022
Half year ended (Audited) Full year ended Half year ended
30 Jun 2022 31 Dec 2021 30 Jun 2021
£ £ £
Cash flows from operating activities:
Operating loss (330,584) (501,058) (207,135)
Adjustment for:
Depreciation and amortisation 69,704 133,474 61,848
Impairment of intangible assets - 42,303 -
Fees in exchange for shares 7,293 - -
Share based payment expense - 8,721 13,053
Foreign exchange loss (125,842) 509 14,261
Finance costs 5,311 10,710 -
Increase in receivables (87,836) (14,616) (112,263)
Increase/(Decrease) in payables 122,172 31,198 (5,525)
Net cash used in operating activities (339,782) (288,759) (235,761)
Cash flows from investing activities
Purchase of equipment (2,129) (5,874) -
Purchase of intangible assets (31,943) (50,691) -
Net cash used in investing activities (34,072) (56,565) -
Cash flows from financing activities
Shares issued - 595,000 -
Cost of shares issued - - -
Less shares issued arising from convertible loan notes - - -
Convertible loan notes - - -
Unclaimed dividends - - -
Interest cost - - (5,311)
Net cash from financing activities - 595,000 (5,311)
Net decrease in cash and cash equivalents (373,854) 249,676 (241,072)
Cash and cash equivalents brought forward 728,586 478,910 478,910
Effects of exchange rate changes on cash and cash equivalents - - -
Cash and cash equivalents carried forward 354,732 728,586 237,838
Summary of significant accounting policies
IQ-AI Limited (the "Company") is a limited liability company incorporated and
domiciled in Jersey.
The financial statements are presented in pounds sterling (£) since that is
the currency of the primary environment in which the Group and Company
operates.
The principal accounting policies applied in the preparation of these
financial statements are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
Basis of preparation
These financial statements have been prepared and approved by the Directors in
accordance with International Financial Reporting Standards (IFRS) and IFRIC
interpretations (IFRS IC) as adopted by the European Union.
The financial statements have been prepared under the historical cost
convention, as modified for the assets held for sale measured at fair value
less costs to sell.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the accounting policies.
The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the financial statements,
are disclosed under the heading 'Critical accounting estimates and judgements'
below.
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Chief
Executive Officer's Statement.
The current economic conditions continue to create uncertainty, particularly
over (a) the level of demand for the group's products; and (b) the
availability of finance for the foreseeable future. The group's forecasts
and projections, taking account of reasonably possible changes in trading
performance, show that additional funding will be required either via an issue
of equity or through the issuance of convertible loan notes. The Directors are
reasonably confident that funds will be forthcoming if and when they are
required. The Chief Executive Officer has provided a letter of financial
support to the Group to make sufficient funds available, if required, to
ensure the Group can meet its obligations over the going concern period.
Taking in to account the comments above, the Directors have, at the time of
approving the financial statements, a reasonable expectation that the Company
and the Group have adequate resources to continue in operational existence for
the foreseeable future. Therefore, they continue to adopt the going concern
basis of accounting in preparing the financial statements
New standards, amendments and interpretations adopted by the Group and Company
The following IFRS or IFRIC interpretations were effective for the first time
for the financial year beginning 1 January 2021. Their adoption has not had
any material impact on the disclosures or on the amounts reported in these
financial statements:
Standards /interpretations Application
IAS 1 & IAS 8 amendments Definition of Material
IFRS 3 amendments Business Combinations
IFRS 16 Amendments to provide lessees with an exemption from assessing whether a
COVID-19 related rent concession is a lease modification
New standards, amendments and interpretations not yet adopted
Standards /interpretations Application
IAS 1 amendments Presentation of Financial Statements: Classification of Liabilities as Current
or Non-Current.
Effective: Annual periods beginning on or after 1 January 2023
IFRS 3 amendments Business Combinations - Reference to the Conceptual Framework.
Effective: Annual periods beginning on or after 1 January 2022
IFRS 7, IFRS 9, IFRS 16 Amendments regarding replacement issues in the contract of IBOR reform.
Effective: Annual periods beginning on or after 1 January 2021
IFRS 16 Amended by Covid-19 Related Rent Concessions beyond 30 June 2021 (amendment to
IFRS 16)
Effective: Annual periods beginning on or after 1 April 2021
IAS 1 amendments Presentation of Financial Statements: Classification of Liabilities as Current
or Non-Current.
Effective: Annual periods beginning on or after 1 January 2023
There are no IFRS's or IFRIC interpretations that are not yet effective that
would be expected to have a material impact on the Company or Group.
Basis of consolidation
The Group financial statements consolidate the financial statements of the
Company and all its subsidiaries ("the Group"). Subsidiaries include all
entities over which the Group is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to affect those
returns through its power over the investee. The existence and effect of
potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity.
Subsidiaries are consolidated from the date on which control commences until
the date that control ceases. Intra-group balances and any unrealised gains
and losses on income or expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
The acquisition method of accounting is used to account for business
combinations. The cost of an acquisition is measured as the fair value of the
assets given, equity instruments issued, and liabilities incurred or assumed
at the date of exchange, and the equity interests issued. Identifiable assets
acquired, and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair value at the acquisition
date. Acquisition related costs are expensed as incurred. Where necessary,
amounts reported by subsidiaries have been adjusted to conform with the
Group's accounting policies.
Investments in subsidiaries
Investments in subsidiaries are held at cost less any impairment.
Goodwill
Goodwill on acquisition of subsidiaries represents the excess of the cost of
acquisition over the fair value of the Group's share of the identifiable net
assets and contingent liabilities acquired. Identifiable assets are those
which can be sold separately, or which arise from legal rights regardless of
whether those rights are separable. Goodwill on acquisition of subsidiaries is
included in intangible assets. Goodwill is not amortised but is tested
annually, or when trigger events occur, for impairment and is carried at cost
less accumulated impairment losses.
Segment reporting
An operating segment is a component of the Group that engages in business
activity from which it may earn revenues and incur expenses, including
revenues and expenses that relate to transactions with and of the Group's
other components. All operating segments' operating results, for which
discrete financial information is available, are reviewed regularly by the
Group's Board to make decisions about resources to be allocated to the segment
and assess its performance. As a result of the acquisition during the year,
the Group reports on a two-segment basis - holding company expenses and
medical software.
Foreign Currency Translation
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the income
statement. Foreign exchange gains and losses are presented in the income
statement within 'finance income or costs.'
The results and financial position of Group entities that have a functional
currency different from the presentation currency are translated into the
presentation currency as follows:
· assets and liabilities for each Statement of Financial Position
presented are translated at the closing rate at the date of that Statement of
Financial Position;
· income and expenses for each Income Statement presented are
translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the
rate on the dates of the transactions); and
· all resulting exchange differences are recognised in other
comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate. Exchange differences arising are recognised in
other comprehensive income.
Intangible Assets - Intellectual property and internally generated software
Separately acquired intellectual property is shown at historic cost.
Intellectual property acquired in a business combination is recognised at fair
value at the acquisition date. Amortisation is calculated using the
straight-line method over the estimated useful life of up to 5 years.
Development costs that are directly attributable to the design and testing of
identifiable and unique software products controlled by the Group are
recognised as intangible assets when the following criteria are met:
· it is technically feasible to complete the software product so that
it will be available for use;
· management intends to complete the software product and use or sell
it;
· there is an ability to use or sell the software product;
· it can be demonstrated how the software product will generate
probable future economic benefits;
· adequate technical, financial and other resources to complete the
development and use or sell the software product are available; and
· the expenditure attributable to the software product during its
development can be reliably measured.
Directly attributable costs that are capitalised as part of the software
product include the software development employee costs and an appropriate
portion of relevant overheads.
Other development expenditure that does not meet these criteria is recognised
as an expense as incurred.
Development costs previously recognised as an expense are not recognised as an
asset in a subsequent period.
Software development costs recognised as assets are amortised over their
estimated useful lives, which do not exceed 5 years. Amortisation commences
when regulatory approval is obtained, and the product is commercially
available.
Impairment of Non-Financial Assets
Intangible assets that have an indefinite useful life or intangible assets not
ready to use are not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for
the amount by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset's fair value less
costs of disposal and value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are largely
independent cash inflows (cash-generating units). Prior impairments of
non-financial assets (other than goodwill) are reviewed for possible reversal
at each reporting date.
Financial instruments
Financial assets and financial liabilities are recognised in the Group's
balance sheet when the Group becomes a party to the contractual provisions of
the instrument.
Financial assets
The Group classifies its financial assets in the following categories
financial assets as "at fair value through profit and loss" and "loans and
receivables". The classification depends on the nature and purpose of the
financial assets and is determined at the time of initial recognition.
Management determines the classification of its financial assets at initial
recognition.
Loans and receivables
Trade receivables are amounts due from customers for merchandise sold or
services performed in the ordinary course of business. Trade receivables are
held with the objective of collecting the contractual cash flows. If
collection is expected in one year or less (or in the normal operating cycle
of the business if longer), they are classified as current assets. If not,
they are presented as non-current assets.
Trade receivables are recognised initially at fair value, and subsequently
measured at amortised cost using the effective interest method, less provision
for impairment. The Group applies the IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss allowance for all
trade receivables and contract assets.
Due to the short-term nature of the other current receivables, their carrying
amount is considered to be the same as their fair value.
A financial asset is assessed at each reporting date to determine whether
there is any evidence that it is impaired. A financial asset is considered
impaired if objective evidence indicates that one or more events have had a
negative effect on the estimated future cash flows of that asset. Individual
significant financial assets are tested for impairment on an individual basis.
The remaining financial assets are assessed collectively in groups that share
similar credit risk characteristics. All impairment losses are recognised in
the consolidated income statement.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks and other short-term highly liquid investments with maturities of three
months or less. In the consolidated Statement of Financial Position, bank
overdrafts are shown within borrowings in current liabilities.
Financial liabilities and equity instruments issued by the group
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities. Equity instruments issued by the Group
are recorded at the proceeds received, net of direct issued costs.
Non-Current Assets (or Disposal Groups) Held-for-Sale and discontinued
operations
Non-current assets (or disposal groups) are classified as assets held for sale
when their carrying amount is to be recovered principally through a sale
transaction and a sale is considered highly probable. They are stated at the
lower of carrying amount and fair value less costs to sell. A discontinued
operation is a component of the Group that is classified as held for sale and
that represents a separate line of business or geographical area of
operations. The results of discontinued operations are presented separately in
the Consolidated Income Statement.
Convertible loan notes
The convertible loan note ("CLN") is a compound financial instrument that can
be converted to share capital at the option of the holder. As the CLN, and the
accrued interest, can only be repaid by the issue of shares, it has been
recognised in equity only, with no liability component. Interest is accounted
for on an accruals basis and charged to the Consolidated Income Statement and
added to the carrying amount of the equity component of the CLN.
Trade and other payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade and other payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method. The carrying amounts of trade and other payables are considered to be the same as their fair values.
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares and share options are recognised
as a deduction from equity, net of any tax effects, from the proceeds.
Share-Based Payments
The Company operates an equity-settled, share-based compensation plan, under
which the entity receives services from employees as consideration for equity
instruments (options) of the Company. The fair value of the employee
services received in exchange for the grant of the options is recognised as an
expense. The total amount to be expensed is determined by reference to the
fair value of the options granted:
· including any market performance conditions (for example, an
entity's share price);
· excluding the impact of any service and non-market performance
vesting conditions (for example, profitability or sales growth targets, or
remaining an employee of the entity over a specified time period); and
· including the impact of any non-vesting conditions (for example,
the requirement for employees to save or holding shares for a specific period
of time).
At the end of each reporting period, the group revises its estimates of the
number of options that are expected to vest based on the non-market vesting
conditions and service conditions. It recognises the impact of the revision to
original estimates, if any, in the income statement, with a corresponding
adjustment to equity.
In addition, in some circumstances employees may provide services in advance
of the grant date and therefore the grant date fair value is estimated for the
purposes of recognising the expense during the period between service
commencement period and grant date.
When the options are exercised, the company issues new shares. The proceeds
received net of any directly attributable transaction costs are credited to
share capital (nominal value) and share premium.
The grant by the Company of options over its equity instruments to the
employees of subsidiary undertakings in the Group is treated as a capital
contribution. The fair value of employee services received, measured by
reference to the grant date fair value, is recognised over the vesting period
as an increase in investment in subsidiary undertakings, with a corresponding
credit to equity in the parent entity accounts.
The social security contributions payable in connection with the grant of the
share options is considered an integral part of the grant itself, and the
charge will be treated as a cash-settled transaction.
Revenue recognition
The group derives revenue from the transfer of goods and services at a point
in time and over time. Revenue from external customers arise on the sales of
software licences, including associated maintenance, and consultancy services.
Revenue from licence sales is measured at the agreed transaction price at a
point in time. A receivable is recognised when access to the software is
granted, since this is the point in time that the consideration is
unconditional because only the passage of time is required before the payment
is due. Support and maintenance services are provided on the product supplied;
this is deemed to be a separately identifiable product and is recognised over
time. Revenue from consulting services are recognised in the accounting period
in which the services are rendered.
Taxation
The Company is registered in Jersey, Channel Islands and is taxed at the
Jersey Company standard rate of 0%. However, the Company's subsidiaries are
situated in jurisdictions where taxation may become applicable to local
operations.
The major components of income tax on profit or loss include current and
deferred tax.
The tax currently payable is based on the taxable profit for the period using
the tax rates that have been enacted or substantially enacted by the balance
sheet date. Taxable profit differs from the net profit as reported in the
income statement 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.
Deferred tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the Group financial statements. Deferred tax is determined
using tax rates that have been enacted or substantially enacted at the balance
sheet date and are expected to apply when the related deferred income tax
asset is realised of the deferred tax liability is settled.
Deferred tax assets are only recognised to the extent that it is probable that
future taxable profit will be available against which the asset can be
utilised. Deferred tax is charged or credited in the income statement, except
when it relates to items charged or credited to equity, in which case the
deferred tax is also dealt with in equity.
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Critical Accounting Estimates and Assumptions
The Group makes estimates and assumptions concerning the future. The
resulting accounting estimates will, by definition, seldom equal the related
actual results. The estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
Fair value measurement
Management uses valuation techniques to determine the fair value of assets
held for sale. This involves developing estimates and assumptions consistent
with how market participants would price the instrument. Management bases its
assumptions on best observable data available as far as possible. Estimated
fair values may vary from the actual prices that would be achieved in an arm's
length transaction at the reporting date.
Critical judgments in applying the entity's accounting policies
The following are the critical judgements that the Directors have made in the
process of applying the Group's accounting policies and that have the most
significant effect on the amounts recognised in the financial statements.
Capitalisation of internally developed software
Distinguishing the research and development phases of the software suites and
determining whether the recognition requirements for the capitalisation of
development costs are met requires judgement. After capitalisation, management
monitors whether the recognition requirements continue to be met and whether
there are any indicators that capitalised costs may be impaired.
Earnings per share
Basic and diluted
Earnings per share is calculated by dividing the loss attributable to the
equity holders of the Company by the weighted average number of Ordinary
shares in issue during the period, excluding Ordinary shares purchased by the
Company and held as treasury shares.
Half year Audited Half year
ended Full year ended ended
30 Jun 2022 31 Dec 2021 30 Jun 2021
Loss attributable to equity holders of the Company (£) (330,584) (501,058) (207,135)
Loss from discontinued operation attributable to equity holders of the parent - -
(£)
Weighted average number of shares in issue (number) 182,595,616 172,757,472 170,107,609
Loss per share (pence)
-From continuing operations (0.18) (0.29) (0.12)
-From discontinued operations (0.00) (0.00) (0.00)
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