REG - Narf Industries PLC - Half-year Report
30/09/2022 07:15
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RNS Number : 3144B Narf Industries PLC 30 September 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK
VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH
LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED. ON
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.
30 September 2022
NARF INDUSTRIES PLC
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2022
Narf Industries plc ("Narf", the "Company", or the "Group") (LSE: NARF)(OTCQB:
NFIN.F) the cybersecurity group specialising in high-end threat intelligence
and critical infrastructure security, announces its unaudited interim results
for the six months ending 30 June 2022.
CHAIRMAN'S STATEMENT
I am pleased to present the results for the interim period to 30 June 2022.
Financial review
The Company's primary focus during the period was the funding and completion
of the acquisition of Narf Industries LLC and Narf Industries PR LLC for a
total consideration of $25.6 million which was announced to the market in
March 2022. These results therefore mainly reflect the costs of the
transaction and only include the results of our operating Group for the
quarter ended 30 June 2022. Accordingly, the comparative numbers, both for the
previous interim period and the prior audited accounts show the results of the
Company prior to those acquisitions.
On 20 June 2022, the Company announced the change of its name to Narf
Industries plc and the appointment of Steve Bassi as its Chief Executive
Officer and I would refer shareholders to yesterday's corporate update for a
more detailed description of the Company and its main revenue streams as well
as this year's revenue expectations and next year's forecast.
Immediately following the completion of the acquisitions, the Company
announced the signing of a licensing agreement with one of the world's largest
research institutes, SRI International ("SRI"). This agreement related to its
suite of cyber defence technologies for industrial control systems which form
part of the Company's flagship product TIGR. TIGR is a hardware and software
product developed to apply continual integrity monitoring and detect even
stealthy cyberattacks deep inside critical infrastructure Industrial Control
System ("ICS") devices. As a result of the agreement SRI became a significant
shareholder in Narf and we are delighted to have them as our partner as we
commence the commercialisation of TIGR In the Industrial Control System
Market, in particular within the US Oil & Gas and Electricity distribution
utilities sector.
Outlook
Narf is poised to become a market-leading supplier of cybersecurity products
at a time when the need couldn't be clearer. The board is excited about the
potential of the opportunities available to the Company and looks forward to
delivering further news as events unfold.
We look forward to updating shareholders on our progress in due course.
Robert Mitchell
Chairman
DIRECTORS REPORT AND STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF
THE CONDENSED INTERIM REPORT AND CONDENSED FINANCIAL STATEMENTS
The results of the Group have been addressed above in the Chairman's
statement. The loss for the interim period was $168,073 (interim period to 30
June 2021 (unconsolidated): $1,178,529) and the Group's unaudited net assets
as at 30 June 2022 were $26,248,878 (30 June 2021 (unconsolidated);
$2,721,468).
Directors
The following directors held office during the period:
Robert Mitchell
Rory Heier
Steven Bassi
John Herring
Responsibility Statement
The Directors confirm that to the best of their knowledge:
a) the condensed set of financial statements has been prepared in
accordance with International Accounting Standard 34 'Interim Financial
Reporting';
b) the interim management report includes a fair review of the
information required by DTR 4.2.7R - namely an indication of important events
that have occurred during the first six months and their impact on the
condensed interim financial information, and a description of principal risks
and uncertainties for the remaining six months of the financial year; and
c) the interim management report includes a fair review of the
information required by DTR 4.2.8R - disclosure of material related parties'
transactions in the first six months and any material changes therein).
Cautionary Statement
This Interim Management Report (IMR) has been prepared solely to provide
additional information to shareholders to assess the Group's strategies and
the potential for those strategies to succeed. The IMR should not be relied on
by any other party or for any other purpose.
Going Concern
The Directors' assessment of going concern is detailed in Note 2.
Principal Risks and Uncertainties
The principal risks and uncertainties affecting the business activities of the
Group remain those detailed in the Prospectus dated 17 February 2022, a copy
of which is available on the Company website at
https://narfgroup.com/investor-relations/corporate-documents (about%3Ablank) .
The Board considers that these remain a current reflection of the risks and
uncertainties facing the business for the remaining six months of the
financial year.
By order of the Board
Rory Heier
Director
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Notes (Consolidated) (Unconsolidated) (Unconsolidated)
Six months ended Six months ended Year ended
30 June 2022
30 June 2021
31 December 2021
(Unaudited)
(Unaudited)
(Unaudited)
US$
*US$
**US$
Continuing operations
Revenue 990,750
Operating expenses (3,859,703) (1,178,455) (2,003,637)
Operating Loss (2,868,953) (1,178,455) (2,003,637)
Foreign exchange gain on investments 2,701,006 - -
Finance costs (126) (74) 39
Loss before taxation (168,073) (1,178,529) (2,003,598)
Income tax expense - - -
Loss for the period attributable to equity holders of the parent company (168,073) (1,178,529) (2,003,598)
Earnings per share
Earnings per share (basis and diluted) attributable to the equity holders 3 (0.01c) (0.2c) (0.3c)
(pence)
The Group has no items of other comprehensive income.
* - Previously reported numbers have been converted from GBP£ to USD$ at the
average exchange rate for the period of 0.7205
** - Previously reported numbers have been converted from GBP£ to USD$ at the
average exchange rate for the period of 0.7409
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Notes (Consolidated) (Unconsolidated) (Unconsolidated)
30 June 2022 30 June 2021 31 Dec 2021
(Unaudited)
(Unaudited)
(Unaudited)
US$
*US$
**US$
Non-current assets
Intangible assets 23,053,842 - -
Tangible assets 1,218,714 - -
Total Non-current assets 24,272,556 - -
Current assets
Trade and other receivables 1,207,847 2,038,980 1,945,204
Cash and cash equivalents 1,511,152 1,227,878 274,982
Total current assets 2,718,999 3,266,858 2,220,186
Total assets 26,991,555 3,266,858 2,220,186
Liabilities
Current liabilities
Trade and other payables 742,677 545,390 311,078
Total current liabilities 742,677 545,390 311,078
Net current assets 1,976,322 2,721,468 1,909,108
Total liabilities 742,677 545,390 311,078
Capital and reserves attributable to shareholders
Share capital 4 204,286 86,225 84,293
Share premium 4 31,167,428 7,397,554 7,297,380
Warrants reserve - 33,325 32,578
Accumulated losses (5,122,836) (4,795,636) (5,505,143)
Total capital and reserves 26,248,878 2,721,468 1,909,108
Total equity and liabilities 26,991,555 3,266,858 2,220,186
Company number: 11701224
* - Previously reported numbers have been converted from GBP£ to USD$ at the
spot exchange rate of 0.7243
** - Previously reported numbers have been converted from GBP£ to USD$ at the
spot exchange rate of 0.7409
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share capital Share premium Warrant reserve *Forex reserve Accumulated losses Total
US$ US$ US$ US$ US$ US$
At 1 July2021 (Unaudited)/(Unconsolidated) 86,225 7,397,554 33,325 - (4,795,636) 2,721,468
Loss for the period - - - - (825,069) (825,069)
Foreign exchange movement (1,932) (100,174) (747) - 115,562 12,709
At 31 December 2021 (Unaudited)/(Unconsolidated) 84,293 7,297,380 32,578 - (5,505,143) 1,909,108
Loss for the period - - - - (168,073) (168,073)
Issue of shares 128,420 25,531,334 (6,110) - - 25,653,644
Share issue costs - (931,726) - - - (931,726)
Warrants expired - - (23,212) - - (23,212)
Foreign exchange movement (8,427) (729,560) (3,256) - 550,380 (190,863)
At 30 June 2022 204,286 31,167,428 - - (5,122,836) 26,248,878
(Unaudited)/(Consolidated)
*Full analysis of the impact of the foreign exchange movements will be
provided for the audited annual accounts for the period ended 31 December 2022
CONSOLIDATED STATEMENT OF CASH FLOWS
(Consolidated) (Unconsolidated) (Unconsolidated)
Six Months Six Months Year
Ended Ended Ended
30 June 2022 30 June 2021 31 Dec 2021
(Unaudited) (Unaudited) (Unaudited)
US$ US$ US$
OPERATING ACTIVITIES
Loss for the period before taxation (168,073) (1,178,529) (2,003,598)
(Increase)/decrease in trade and other receivables (495,296) (10,408) 219,986
(Decrease)/increase in trade and other payables 241,877 40,638 (186,344)
Share based payment (23,212) - -
Foreign exchange movements (26,167) 34,462 30,539
Depreciation and amortisation 585,123 - -
Net cash generated from/(used in) operating activities 114,252 (1,113,837) (1,939,417)
FINANCING ACTIVITIES
Proceeds from share issues 5,053,644 2,755,200 2,755,200
Costs related to share issue (931,726) (137,760) (265,076)
Net cash inflow from financing activities 4,121,918 2,617,440 2,490,124
INVESTING ACTIVITIES
Increase in prepaid consideration - (2,000,000) (2,000,000)
Investment in subsidiary (3,000,000) - -
Net cash outflow from investing activities (3,000,000) (2,000,000) (2,000,000)
Net increase/(decrease) in cash and cash equivalents 1,236,170 (496,397) (1,449,293)
Cash and cash equivalents at beginning of period 274,982 1,724,275 1,724,275
Cash and cash equivalents at end of period 1,511,152 1,227,878 274,982
Notes to the CONSOLIDATED Financial Statements
interim results to 30 june 2022
1. Organisation and Trading Activities
The principal activity of Narf Industries plc (the "Company'') together with
its operating subsidiaries (together, the "Group") is high-end threat
intelligence. Its strategy is focussed on building a group capable of offering
Cyber and Cybersecurity solutions in the US and beyond. The Company is
domiciled in the United Kingdom and incorporated and registered in England and
Wales as a public limited company. The Company's registered office is 5 Fleet
Place, London EC4M 7RD. The Company's registered number is 11701224.
2. Summary of Significant Accounting Policies
The principal accounting policies adopted and applied in the preparation of
these interim Group Financial statements are set out below.
These have been consistently applied to all the periods presented unless
otherwise stated:
Basis of accounting
These interim financial statements of Narf Industries plc (the "Group") have
been prepared in accordance with UK adopted international accounting standards
("UK-adopted IAS") applied in accordance with the provisions of the Companies
Act 2006.
The interim financial statements have been prepared under the historical cost
convention on the basis of the accounting policies as set out in the Group's
audited annual financial statements and are presented in US Dollars the
presentational and functional currency of the Group. The Group has applied IAS
34 in the preparation of these interim financial statements.
This announcement was approved and authorised by the Board of directors on 29
September 2022. Copies of this interim report can be found on the Company's
website at https://narfgroup.com/investor-relations/corporate-documents
(about%3Ablank) .
These condensed interim financial statements for the six months ended 30 June
2022 are unaudited and do not constitute fully prepared statutory accounts.
The comparative figures for the year ended 31 December 2021 are extracted from
the 2021 audited unconsolidated financial statements of the Company. The
independent auditor's report on the 2021 financial statements was not
qualified.
Going concern
Any consideration of the foreseeable future involves making a judgement, at a
particular point in time, about future events which are inherently uncertain.
The ability of the Group to carry out its planned business objectives is
dependent on its continuing ability to raise adequate financing from equity
investors and/or the achievement of profitable operations.
The Directors have a reasonable expectation that the Group will be able to
achieve the above in order to meet any future obligations and thus to continue
operating for the foreseeable future. For this reason, they continue to adopt
the going concern basis in preparing the interim financial statements.
Basis of consolidation
The Group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair
values of the assets transferred, the liabilities incurred to the former
owners of the acquiree and the equity interests issued by the group. The
consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition
date.
2. Summary of Significant Accounting Policies (contiNUED)
Basis of consolidation (continued)
The Group recognises any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest's proportionate share of the recognised amounts of
acquiree's identifiable net assets.
3. LOSS per Share
The basic earnings per share is based on the loss for the period divided by
the weighted average number of shares in issue during the period. The weighted
average number of ordinary shares for the Company the period ended 30 June
2022 assumes that all shares have been included in the computation based on
the weighted average number of days since issue. Since the Group has made a
loss in the current and each of the prior periods, the warrants in issue are
not dilutive.
six months to six months to Year to
30 June 2022 30 June 2022 31 Dec 2021
US$ US$ US$
Loss attributable to owners of the Group (unaudited): 168,073 1,178,529 2,003,598
Weighted average number of ordinary shares in issue for basic earnings 1,243,631,762 548,969,444 588,086,664
Weighted average number of shares in issue for fully diluted earnings 1,243,631,762 548,969,444 588,086,664
LOSS PER SHARE (CENTS PER SHARE) 0.01 0.2 0.3
BASIC AND FULLY DILUTED:
- from continuing and total operations (cents) 0.01 0. 2 0.3
4. Share capital AND SHARE PREMIUM
The following table is presented in US Dollar equivalents:
Ordinary shares of £0.0001 each Share Capital Share Premium
Number $ $
At 1 July 2021 86,225 7,397,554
624,525,000
At 31 December 2021 624,525,000 84,293 7,297,380
On 14 March 2022 the Company issued 300 million ordinary shares of £0.0001 300,000,000 33,707 5,815,000
each at a price of 2p per share under a placing
On 14 March 2022 the Company issued 699.6 million ordinary shares of £0.0001 699,600,000 78,606 16,609,000
each at a price of 2p per share in partial payment for Narf industries LLC and
Narf Industries PR LLC
On 1 April 2022 the Company issued 7.5 million ordinary shares of £0.0001 7,500,000 843 82,890
each at a price of 1.0p per share on exercise of warrants
On 16 May 2022 the Company issued 59,856,100 ordinary shares of £0.0001 each 59,856,100 6,725 1,341,089
at a price of 2.0p per share as part of the SRI International subscription
27 May 2022 the Company issued 1,000,000 ordinary shares of £0.0001 each at a 1,000,000 112 22,069
price of 2.0p per share as settlement of fees
At 30 June 2022 1,692,481,100 204,286 31,167,428
5. BUSINESS COMBINATIONs
On 17 March 2022, the Company acquired 100% of Narf Industries LLC and Narf
Industries PR LLC. These acquisitions were made at a combined acquisition
price of $25.6 million and were financed through prepaid investment
consideration of $2 million, a cash payment to the former owners of $3 million
and $20.6 million in Ordinary shares at an effective issue price of 2p per
share. This is a transformative deal for Narf Industries plc and represents a
significant building block in the Company's continued evolution. The deal adds
substantial intellectual property and high quality individuals to the Group
and will be earnings accretive from the second half of 2022.
The assets acquired have been restated within the measurement period, in
accordance with IFRS, however the Directors are still considering the
treatment of the subsidiaries under IFRS and the treatment is subject to
change.
Amount recognised on acquisition
$
Total intangible fixed assets in acquired businesses 17,563,918
Total tangible fixed assets in acquired businesses 1,293,761
Total current assets in acquired businesses 981,298
Total liabilities in acquired business (238,977)
Identifiable assets less liabilities 19,600,000
Goodwill 6,000,000
Consideration 25,600,000
Satisfied by:
Cash 3,000,000
Prepaid investment consideration 2,000,000
Shares 20,600,000
25,600,000
6. post period end events
There were no significant events subsequent to the balance sheet date.
ENDS
For further information on the Group please visit www.narfgroup.com or
contact:
Robert Mitchell NARF Tel: +44 (0) 20 3468 2212
Catherine Leftley/Charlotte Page/Isabel de Salis St Brides Partners narf@stbridespartners.co.uk
Peter Krens Tennyson Securities Tel: +44 (0)207 186 9030
About NARF Industries plc
Narf Industries (LSE: NARF)(OTCQB: NFIN.F) is a US based cyber security group
specialising in high-end threat intelligence with a focus on critical
infrastructure. The Group leads commissioned cyber security R&D and is
commercialising a portfolio of products including a DARPA-backed product (an
agency within the US Department of Defence) that can be used by utilities and
cyber first responders to restore power to electric grids and protecting other
key infrastructure that have suffered a cyber-attack. The Group aims to
further strengthen its portfolio organically and via acquisition; its team of
highly qualified cyber security experts is well placed to identify
opportunities.
Important notice
The content of this announcement has not been approved by an authorised person
within the meaning of the Financial Services and Markets Act 2000 (FSMA). This
announcement has been issued by and is the sole responsibility of the Company.
The information in this announcement is subject to change. This announcement
is not an offer of securities for sale into the United States. The securities
referred to herein have not been and will not be registered under the U.S.
Securities Act of 1933, as amended (the Securities Act), and may not be
offered or sold, directly or indirectly, in or into the United States, except
pursuant to an applicable exemption from registration. No public offering of
securities is being made in the United States. This announcement is not for
release, publication or distribution, directly or indirectly, in or into
Australia, the Republic of South Africa, Japan or any jurisdiction where to do
so might constitute a violation of local securities laws or regulations (a
Prohibited Jurisdiction). This announcement and the information contained
herein are not for release, publication or distribution, directly or
indirectly, to persons in a Prohibited Jurisdiction unless permitted pursuant
to an exemption under the relevant local law or regulation in any such
jurisdiction.
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